-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IuINYmRn9Hv7WS2QX49jD/OHmKlfp9sYXi8HRqHYKDMZfXmsootPz8oVPVYNfm91 nDhLuwYWsQXvRq+r9G9Hyg== 0000950134-98-004523.txt : 19980518 0000950134-98-004523.hdr.sgml : 19980518 ACCESSION NUMBER: 0000950134-98-004523 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUIZA FOODS CORP CENTRAL INDEX KEY: 0000931336 STANDARD INDUSTRIAL CLASSIFICATION: ICE CREAM & FROZEN DESSERTS [2024] IRS NUMBER: 752559681 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12755 FILM NUMBER: 98625600 BUSINESS ADDRESS: STREET 1: 3811 TURTLE CREEK BLVD STREET 2: STE 1300 CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2145289922 MAIL ADDRESS: STREET 1: 3811 TURTLE CREEK BLVD STREET 2: SUITE 1300 CITY: DALLAS STATE: TX ZIP: 75219 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 1998 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [x] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1998 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 001-12755 SUIZA FOODS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 75-2559681 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) 3811 Turtle Creek Boulevard, Suite 1300 Dallas, Texas 75219 (214) 528-9922 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of April 30, 1998 the number of shares outstanding of each class of common stock was: Common Stock, $.01 par value: 31,664,611 2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SUIZA FOODS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1998 1997 ---------- ---------- (unaudited) (Dollars in thousands, except share data) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 84,025 $ 24,388 Receivables, net of allowance for doubtful accounts of $4,909 and $3,589, respectively 222,004 164,284 Inventories 105,444 76,087 Prepaid expenses and other current assets 10,433 7,978 Refundable income taxes 33,103 19,836 Deferred income taxes 3,617 2,718 Net assets of discontinued operations 112,103 100,785 ---------- ---------- Total current assets 570,729 396,076 PROPERTY, PLANT AND EQUIPMENT 462,156 363,649 DEFERRED INCOME TAXES 3,831 4,484 INTANGIBLE AND OTHER ASSETS 910,032 639,253 ---------- ---------- TOTAL $1,946,748 $1,403,462 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 241,160 $ 178,021 Income taxes payable 2,990 4,006 Current portion of long-term debt 57,134 50,846 ---------- ---------- Total current liabilities 301,284 232,873 LONG-TERM DEBT 493,973 777,813 OTHER LONG-TERM LIABILITIES 20,751 13,230 DEFERRED INCOME TAXES 25,618 20,236 COMMITMENTS AND CONTINGENCIES MANDATORILY REDEEMABLE CONVERTIBLE TRUST ISSUED PREFERRED SECURITIES 682,500 SUBSIDIARY PREFERRED STOCK 20,000 STOCKHOLDERS' EQUITY: Preferred stock, 11,691 shares of Series A preferred stock issued and outstanding, with stated value of $320 per share 3,741 3,741 Common stock, 31,399,489 and 30,463,312 shares issued and outstanding 314 305 Additional paid-in capital 310,272 281,774 Retained earnings 88,295 73,490 ---------- ---------- Total stockholders' equity 402,622 359,310 ---------- ---------- TOTAL $1,946,748 $1,403,462 ========== ==========
See notes to condensed consolidated financial statements. 2 3 SUIZA FOODS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended March 31, -------------------------------- 1998 1997 ------------- ------------- (Dollars in thousands, except share data) NET SALES $ 593,121 $ 365,584 COST OF SALES 456,148 286,003 ------------- ------------- GROSS PROFIT 136,973 79,581 OPERATING COSTS AND EXPENSES: Selling and distribution 70,201 41,338 General and administrative 19,445 14,024 Amortization of intangibles 5,738 2,643 ------------- ------------- Total operating costs and expenses 95,384 58,005 ------------- ------------- INCOME FROM OPERATIONS 41,589 21,576 OTHER (INCOME) EXPENSE: Interest expense, net 13,402 5,769 Financing charges on preferred securities 1,249 Other income, net (702) (18,466) ------------- ------------- Total other (income) expense 13,949 (12,697) ------------- ------------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 27,640 34,273 INCOME TAXES 9,587 11,868 ------------- ------------- INCOME FROM CONTINUING OPERATIONS 18,053 22,405 LOSS FROM DISCONTINUED OPERATIONS (3,161) (1,666) ------------- ------------- INCOME BEFORE EXTRAORDINARY LOSS 14,892 20,739 EXTRAORDINARY LOSS FROM EARLY EXTINGUISHMENT OF DEBT (3,270) ------------- ------------- NET INCOME $ 14,892 $ 17,469 ============= ============= NET INCOME APPLICABLE TO COMMON STOCK $ 14,805 $ 17,394 ============= ============= AVERAGE COMMON SHARES: Basic 30,727,958 28,034,025 Diluted 33,821,891 29,494,741 BASIC EARNINGS PER SHARE: Income from continuing operations $ 0.58 $ 0.80 Loss from discontinued operations (0.10) (0.06) Extraordinary loss (0.12) ------------- ------------- Net income $ 0.48 $ 0.62 ============= ============= DILUTED EARNINGS PER SHARE: Income from continuing operations $ 0.54 $ 0.76 Loss from discontinued operations (0.09) (0.06) Extraordinary loss (0.11) ------------- ------------- Net income $ 0.45 $ 0.59 ============= =============
See notes to condensed consolidated financial statements. 3 4 SUIZA FOODS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended March 31, (Dollars in thousands) 1998 1997 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 14,892 $ 17,469 Adjustments to reconcile net income to net cash provided by operating activities: Loss from discontinued operations 3,161 1,666 Depreciation and amortization 16,110 9,187 Extraordinary loss from early extinguishment of debt 3,270 Other (69) (616) Deferred income taxes 5,136 3,660 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (12,199) 5,631 Inventories (10,844) (3,583) Prepaid expenses and other assets 1,647 (18,958) Accounts payable and accrued expenses 13,509 (6,549) Income taxes payable 816 1,672 ---------- ---------- Net cash provided by continuing operations 32,159 12,849 Net cash used by discontinued operations (3,712) (437) ---------- ---------- Net cash provided by operating activities 28,447 12,412 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (20,004) (6,921) Cash outflows for acquisitions (259,355) (7,000) Other 282 (801) ---------- ---------- Net cash used by continuing operations (279,077) (14,722) Net cash used by discontinued operations (7,379) (6,802) ---------- ---------- Net cash used in investing activities (286,456) (21,524) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the issuance of debt 237,278 33,750 Repayment of debt (515,016) (112,795) Payment of deferred financing, debt restructuring and merger costs (4,670) Issuance of common stock, net of expenses 13,034 88,872 Issuance of trust issued preferred securities, net of expenses 582,500 Other (150) (150) ---------- ---------- Net cash provided by financing activities 317,646 5,007 ---------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 59,637 (4,105) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 24,388 23,823 ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 84,025 $ 19,718 ========== ==========
See notes to condensed consolidated financial statements. 4 5 SUIZA FOODS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated financial statements as of March 31, 1998 and for the three month periods ended March 31, 1998 and 1997 have been prepared by Suiza Foods Corporation (the "Company" or "Suiza") without audit and have been prepared to give retroactive effect to the November 1997 mergers with Country Fresh, Inc. and The Morningstar Group Inc. which have been accounted for as poolings of interests. In the opinion of management, all necessary adjustments (which include only normal recurring adjustments) to present fairly, in all material respects, the consolidated financial position, results of operations and cash flows of the Company as of March 31, 1998 and for the three month periods ended March 31, 1998 and 1997 have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. These financial statements should be read in conjunction with the Company's 1997 financial statements contained in its Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 31, 1998. 2. INVENTORIES
At March 31, At December 31, 1998 1997 ---------- ---------- (in thousands) Raw materials and supplies $ 54,276 $ 43,764 Finished goods 51,168 32,323 ---------- ---------- $ 105,444 $ 76,087 ========== ==========
3. LONG-TERM DEBT
At March 31, At December 31, 1998 1997 ---------- ---------- (in thousands) Senior credit facility: Revolving loan facility $ -- $ 265,500 Term loan facility 537,500 550,000 Industrial development revenue bonds 12,660 12,660 Capital lease obligations and other debt 947 499 ---------- ---------- 551,107 828,659 Less: current portion (57,134) (50,846) ---------- ---------- $ 493,973 $ 777,813 ========== ==========
5 6 SUIZA FOODS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 1998 3. LONG-TERM DEBT (Continued) Senior Credit Facilities - On November 26, 1997, the Company entered into a credit facility with a group of lenders, including First Union National Bank of North Carolina, as administrative agent, and The First National Bank of Chicago, as syndication agent, which provides for an aggregate senior credit facility (the "Senior Credit Facility") of $1.25 billion comprised of a $550.0 million term loan facility and a $700.0 million revolving credit facility. The proceeds from this new facility were used to repay all amounts due under the separate senior credit facilities maintained by the Company and certain of its subsidiaries. Under the terms of the Senior Credit Facility, the term loan is amortized, on a quarterly basis, over six years in increasing amounts beginning March 31, 1998, and the revolving credit facility expires on December 31, 2003. Amounts outstanding under the Senior Credit Facility bear interest at a rate per annum equal to one of the following rates, at the Company's option: (i) a base rate equal to the higher of the Federal Funds rate plus 50 basis points or the prime rate or (ii) The London Interbank Offering Rate ("LIBOR") plus a margin that varies from 40 to 100 basis points depending on the Company's ratio of defined indebtedness to EBITDA (as defined in the Senior Credit Facility). The Company pays a commitment fee on unused amounts of the revolving credit facility that ranges from 15 to 25 basis points, based on the Company's ratio of defined indebtedness to EBITDA. The interest rate in effect at March 31, 1998, on the Senior Credit Facility was 6.44%. Interest is payable quarterly, and scheduled principal installments on the term loan facilities are due in quarterly installments of approximately $12.5 million through December 1998, increasing to $18.75 million on March 31, 1999, $25.0 million on March 31, 2001, $28.125 million on March 31, 2002, and $34.375 million on March 31, 2003, with the balance maturing on December 31, 2003. Loans under the Senior Credit Facility are collateralized by substantially all the Company's assets. Industrial Development Revenue Bonds - Certain of the Company's subsidiaries have revenue bonds outstanding, certain of which require aggregate annual sinking fund redemptions aggregating $0.7 million and are secured by irrevocable letters of credit issued by financial institutions, along with first mortgages on certain real property and equipment. Interest on these bonds is due semiannually at interest rates that vary based on market conditions which, at December 31, 1997, ranged from 3.7% to 4.3%. Other Debt - Other debt includes various promissory notes for the purchase of property, plant and equipment and capital lease obligations. The various promissory notes payable provide for interest at varying rates and are payable in monthly installments of principal and interest until maturity, when the remaining principal balances are due. Capital lease obligations represent machinery and equipment financing obligations which are payable in monthly installments of principal and interest and are collateralized by the related assets financed. 6 7 SUIZA FOODS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) March 31, 1998 3. LONG-TERM DEBT (Continued) Interest Rate Agreements - The Company has interest rate derivative agreements in place, including interest rate caps and interest rate swaps, that have been designated as hedges against the Company's variable interest rate exposure on its loans under the Senior Credit Facility. At March 31, 1998, the interest rate caps have aggregate notional amounts of $60 million, which mature in March 2000, and caps interest on LIBOR loans at 8.0%, plus the applicable LIBOR margin. The interest rate swaps have aggregate notional amounts of $490 million at interest rates ranging from 6.0% to 6.14%, plus the applicable LIBOR margin, and include $55 million of swaps that mature in June 1998; $60 million of swaps that mature in September 2000; $100 million of swaps that mature in December 2000; $225 million of swaps that mature in December 2002; and $50 million of swaps that mature in December 2003. In addition, the Company has entered into $100 million of interest rate collars, which mature from December 2002 to June 2003, and provide for an interest rate floor and limit of approximately 6.11% and 7.5%, respectively, plus the applicable LIBOR margin. These derivative agreements provide hedges for senior credit facility loans by limiting or fixing the LIBOR interest rates specified in the senior credit facilities (5.63% at March 31, 1998, excluding the LIBOR margin) at the above rates until the indicated expiration dates of these interest-rate-derivative agreements. The original costs and premiums of these derivative agreements are being amortized on a straight-line basis as a component of interest expense. The Company is exposed to market risk under these arrangements due to the possibility of exchanging a lower interest rate for a higher interest rate. The counterparties are major financial institutions and the risk of incurring losses related to credit risk is considered by the Company to be remote. Debt Covenants - The Company's Senior Credit Facility contains various financial and other restrictive covenants and requirements that the Company maintain certain financial ratios, including a leverage ratio (computed as the ratio of the aggregate outstanding principal amount of defined indebtedness to EBITDA, as defined), a fixed charges ratio (computed as the ratio of the EBITDA to defined fixed charges) and an interest coverage ratio (computed as the ratio of EBITDA to interest expense), and requires the Company to maintain a minimum level of net worth. The Senior Credit Facility also contains limitations on capital expenditures, investments and the incurrence of additional indebtedness and requires certain mandatory prepayments from the proceeds of certain dispositions of property. 4. TAXES In December 1995, the Commonwealth of Puerto Rico adopted the Puerto Rico Agricultural Tax Incentives Act of 1995, which reduced the effective income tax rate for qualified agricultural businesses from 39% to 3.9% and provided for a 50% tax credit for certain "eligible investments" in qualified agricultural businesses in Puerto Rico. 7 8 SUIZA FOODS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) March 31, 1998 4. TAXES (Continued) During the first quarter of 1997, the Company obtained a ruling from the Commonwealth of Puerto Rico confirming that its investments in its Suiza-Puerto Rico fruit and plastics subsidiaries qualified for the 50% tax credit. Accordingly, in March 1997, the Company recognized a nonrecurring gain of $18.1 million, net of discounts and related expenses ($11.5 million after income taxes) for the sale of earned tax credits to third parties. The Company has been informed by Puerto Rico tax authorities that its investment in its coffee business qualifies for additional tax credits. These tax credits were sold in April 1998, and will be accounted for in the second quarter of 1998 as an adjustment to the original purchase price of the coffee business, which will result in a reduction of goodwill. 5. MERGERS AND ACQUISITIONS On January 14, 1998, Suiza signed a definitive agreement to acquire Continental Can Company, Inc. ("Continental Can"). The purchase price for Continental Can is payable through the issuance by Suiza of approximately 2.1 million shares of common stock, the assumption by Suiza of outstanding options of Continental Can, which will become exercisable to purchase approximately 0.4 million shares of Suiza's common stock, and the assumption of Continental Can's long-term indebtedness outstanding at closing. Continental Can is primarily engaged in the packaging business through a number of operating subsidiaries in the United States and in Europe, and reported net sales of approximately $546 million for the fiscal year ended December 31, 1997. The Continental Can merger, which is subject to the approval of the stockholders of Continental Can and customary closing conditions, is expected to close in the second quarter of 1998, and will be accounted for using the purchase method of accounting. There can be no assurance, however, that the acquisition of Continental Can will be completed as currently contemplated or at all. On February 20, 1998, Suiza completed the acquisition of Land-O-Sun Dairies, L.L.C., ("Land-O-Sun") for a purchase price of approximately $248 million, including approximately $128 million in cash. The non-cash portion of the purchase price was funded through the issuance of $100 million of company-obligated 5% mandatorily redeemable convertible preferred securities of a Delaware business trust formed by Suiza, and the issuance of $20 million of preferred interests of Land-O-Sun. In addition, Suiza refinanced Land-O-Sun's existing outstanding long-term indebtedness, which totaled approximately $52 million as of the closing date. Suiza financed the cash portion of the purchase price and refinanced the existing long-term indebtedness with borrowings of $180 million under its Senior Credit Facility. Land-O-Sun is based in Johnson City, Tennessee and operates 13 fluid dairy and ice cream processing facilities in Tennessee, North Carolina, South Carolina, Georgia, Illinois, Kentucky and Virginia. Land-O-Sun reported net sales of approximately $464 million for its fiscal year ended December 31, 1997. The Land-O-Sun acquisition was accounted for using the purchase method of accounting. 8 9 SUIZA FOODS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 1998 5. MERGERS AND ACQUISITIONS (Continued) Following is a summary of unaudited pro forma results of operations of Suiza Foods which gives effect to the acquisitions of Dairy Fresh, Garelick Farms, and Franklin Plastics in 1997 and the acquisitions of Continental Can and Land-O-Sun in 1998 as if these acquisitions had occurred at the beginning of 1997.
Three Months Ended March 31, ---------------------------- 1998 1997 ------------- ------------ (in thousands, except per share data) Revenues $ 781,973 $ 724,674 Income from continuing operations 20,178 27,639 Net income 17,017 22,703 Income from continuing operations per share: Basic 0.61 0.91 Diluted 0.57 0.82 Net income per share: Basic 0.52 0.75 Diluted 0.48 0.70
Suiza has also recently acquired or agreed to acquire a number of smaller dairy and plastic packaging businesses, including the completed acquisitions of Louis Trauth Dairy, Inc. ("Trauth"), a Newport, Kentucky-based manufacturer and distributor of fresh milk, ice cream and related dairy products and Oberlin Farms Dairy, Inc. ("Oberlin"), a Cleveland, Ohio-based processor of milk and cultured dairy products. Trauth and Oberlin recorded net sales of approximately $67 million and $76 million, respectively, for their most recent fiscal year ends. 6. DISCONTINUED OPERATIONS On April 30, 1998, Suiza consummated its previously announced sale of Reddy Ice to Packaged Ice, Inc. ("Packaged Ice") for approximately $172.5 million in cash. Reddy Ice had revenues during 1997 of approximately $66.3 million. The assets and operations of Reddy Ice are presented as discontinued operations in the accompanying condensed consolidated financial statements. Net sales of Reddy Ice were $11.1 million and $8.2 million for the three month periods ended March 31, 1998 and 1997 respectively. Interest expense of $1.8 million was charged to the discontinued operations during the first quarters of 1998 and 1997, based on debt specifically attributed to Reddy Ice. The loss from discontinued operations as reported in the condensed consolidated statements of income is presented net of the related income tax benefit of $1.9 million and $1.0 million for the periods ended March 31, 1998 and 1997, respectively. 9 10 SUIZA FOODS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 1998 7. TRUST ISSUED PREFERRED SECURITIES In connection with the Land-O-Sun acquisition, Suiza issued $100 million of company-obligated 5% mandatorily redeemable convertible preferred securities of a Delaware business trust. On March 24, 1998, the Company also completed the sale of $600 million of company-obligated 5.5% mandatorily redeemable convertible preferred securities of a Delaware business trust in a private placement to "qualified institutional buyers" under Rule 144A under the Securities Act of 1933, as amended. These trust issued preferred securities, which are recorded net of related fees and expenses, are convertible at the option of the holders into an aggregate of approximately 9.1 million shares of the Company's common stock, subject to adjustment in certain circumstances. These preferred securities are also redeemable, at the Company's option, at any time after three years from their respective issue dates at specified amounts and are mandatorily redeemable at their liquidation preference amount of $50 per share after 30 years from their respective issue dates or upon occurrence of certain specified events, as defined. 8. COMPREHENSIVE INCOME As of January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income," issued in June 1997. For interim periods, SFAS 130 requires disclosure of comprehensive income, which is composed of net income and other comprehensive income items. Other comprehensive income items are revenues, expenses, gains and losses that under generally accepted accounting principles are excluded from net income and reflected as a component of equity. For the three month period ended March 31, 1998 consolidated comprehensive income was $29,991 which includes tax benefits of $15,099 related to the exercise of certain employees' stock options. Consolidated comprehensive income was equal to consolidated net income for the three-month period ended March 31, 1997. 10 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Suiza Foods Corporation (the "Company" or "Suiza") is a leading manufacturer and distributor of fresh milk and related dairy products and plastic packaging in the United States. Suiza also manufactures, distributes and markets refrigerated, shelf-stable and frozen food products. Suiza has grown primarily through a successful acquisition strategy, having consummated more than 15 dairy and packaging acquisitions since its initial public offering in April 1996. Through these acquisitions, Suiza has realized economies of scale, operating efficiencies and added complimentary product lines. The Company conducts its dairy operations primarily through its Puerto Rico subsidiaries ("Suiza-Puerto Rico"), Velda Farms, Inc. ("Velda Farms"), Swiss Dairy Corporation ("Swiss Dairy"), Model Dairy, Inc. ("Model Dairy"), Dairy Fresh, Inc. ("Dairy Fresh"), Garelick Farms, Inc. and certain related dairy subsidiaries ("Garelick Farms"), Country Delite Farms Inc. ("Country Delite"), Country Fresh, Inc. ("Country Fresh"), The Morningstar Group Inc. ("Morningstar"), LOS Holdings, Inc. ("Land-O-Sun") and Louis Trauth Dairy Inc. ("Trauth"). The Company conducts its plastics operations through Franklin Plastics, Inc. and subsidiaries ("Franklin Plastics" or "Plastics"). Each of the Company's dairy and plastic packaging operating subsidiaries is a leading competitor in its market, with an established reputation for customer service and product quality. The Company's dairy subsidiaries market their products through extensive distribution networks to a diverse group of customers, including convenience stores, grocery stores, schools and institutional food service customers. The Company's customers in the plastic packaging business include regional dairy manufacturers, bottled water processors, beverage manufacturers, and consumer and industrial products companies. Outlook and Uncertainties Certain statements and information in this Quarterly Report constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be indicated by phrases such as "believes," "anticipates," "expects," "intends," "foresees," "projects," "forecasts" or words of similar meaning or import. Such statements are subject to certain risks, uncertainties, or assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in applicable forward-looking statements. Among the key factors that may have a direct bearing on the Company's results and financial condition are (i) risks associated with the Company's acquisition strategy, (ii) risks relating to the Company's leverage position, (iii) risks associated with intense competition in the Company's industries and (iv) the impact of governmental regulations affecting the dairy industry. Any forward-looking statements made or incorporated by reference herein speak only as of the date of this Quarterly Report. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements, to reflect any change in its expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based. Additional information concerning these and other risk factors is contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, a copy of which may be obtained from the Company upon request. 11 12 Results of Operations The Company currently operates in two distinct businesses as shown below (dollars in thousands):
Three months ended March 31, --------------------------------------------------------------------- 1998 1997 ---- ---- Percent Percent of of Dollars Net Sales Dollars Net Sales ------- --------- ------- --------- Net sales: Dairy $ 555,973 $ 365,584 Plastics 37,148 ----------- ----------- Net sales 593,121 100.0% 365,584 100.0% Cost of sales 456,148 76.9 286,003 78.2 ----------- ----------- ----------- ----------- Gross profit 136,973 23.1 79,581 21.8 Operating expenses: Selling and distribution 70,201 11.8 41,338 11.3 General and administrative 19,445 3.3 14,024 3.8 Amortization of intangibles 5,738 1.0 2,643 0.8 ----------- ----------- ----------- ----------- Total operating expenses 95,384 16.1 58,005 15.9 ----------- ----------- ----------- ----------- Operating income (loss): Dairy 41,330 7.0 23,463 6.4 Plastics 4,310 0.7 Corporate office (4,051) (0.07) (1,887) (0.5) ----------- ----------- ----------- ----------- Total operating income $ 41,589 7.0% $ 21,576 5.9% =========== =========== =========== ===========
First Quarter 1998 Compared to First Quarter 1997 Net Sales. The Company's net sales increased 62.2% to $593.1 million in the first quarter of 1998 from $365.6 million in 1997. Dairy net sales increased 52.1% or $190.4 million to $556.0 million in the first quarter of 1998 primarily due to (i) the acquisitions of Garelick Farms, Dairy Fresh and Country Delite in the last half of 1997, (ii) the acquisitions of Land-O-Sun and Trauth in the first quarter of 1998 and (iii) strong sales of branded products at Morningstar. The Company began operating in the plastics business with the acquisition of Franklin Plastics in July, 1997. Cost of Sales. The Company's cost of sales margin was 76.9% in the first quarter of 1998 compared to 78.2 % for the same period in 1997. Dairy cost of sales margins improved from the prior year due to (i) operating efficiencies in the Company's fluid dairy division and (ii) increased branded and specialty product sales at Morningstar. Operating Expenses. The Company's operating expense ratios were 16.1% for the first quarter of 1998 compared to 15.9% for the same period in 1997. Dairy operating expense margins increased slightly in the quarter because of additional goodwill amortization for the acquired companies. Operating Income. The Company's operating income increased 92.8% to $41.6 million in the first quarter of 1998 from $21.6 million in the first quarter of 1997 primarily as a result of the aforementioned acquisitions and the increased sales at Morningstar. The Company's operating income 12 13 margin increased to 7.0% in the first quarter of 1998 from 5.9% in the first quarter of 1997 for the same reasons. Other (Income) Expense. Interest expense increased to $13.4 million in the first quarter of 1998 from $5.8 million in the first quarter of 1997 primarily due to the increased level of debt used to finance the aforementioned acquisitions. Financing charges on preferred securities amounted to $1.2 million in the first quarter of 1998, reflecting (i) the issuance on February 20, 1998 of $100 million of company-obligated mandatorily redeemable preferred securities related to the acquisition of Land-O-Sun and (ii) the issuance on March 24, 1998 of $600 million of company-obligated mandatorily redeemable preferred securities. Other income decreased to $0.7 million in the first quarter of 1998 from $18.5 million in the first quarter of 1997 due to the recognition in the 1997 period of a $18.1 million gain from the sale of tax credits (see Note 4 to the condensed consolidated financial statements). Extraordinary Items. The Company incurred a $3.3 million extraordinary loss (net of a $2.0 million tax benefit) on January 28, 1997 related to the early extinguishment of subordinated debt, which included the write-off of deferred financing costs and certain prepayment penalties. Net Income. The Company reported net income of $14.9 million in the first quarter of 1998 compared to net income of $17.5 million in the first quarter of 1997 ($9.3 million excluding the after-tax gain on the sale of tax credits of $11.5 million and the extraordinary loss of $3.3 million). Liquidity and Capital Resources As of March 31, 1998, the Company had total stockholders' equity of $402.6 million and total indebtedness of $551.1 million (including long-term debt and the current portion of long-term debt). The Company is currently in compliance with all covenants and financial ratios contained in its debt agreements. Cash Flow. Historically, the working capital needs of the Company have been met with cash flow from operations along with borrowings under revolving credit facilities. Net cash provided by operating activities was $28.4 million for the first three months of 1998 as contrasted to $12.4 million for the first three months of 1997. Investing activities in the first three months of 1998 included approximately $20.0 million in capital expenditures of which $17.0 million was spent at Dairy and $3.0 million was spent at Plastics. Investing activities also included $259.4 million for acquisitions. On February 20, 1998, Suiza completed the acquisition of Land-O-Sun for a purchase price of approximately $248 million, including approximately $128 million in cash. The non-cash portion of the purchase price was funded through the issuance of $100 million of company-obligated 5% mandatorily redeemable convertible preferred securities of a Delaware business trust formed by Suiza, and the issuance of $20 million of preferred interests of Land-O-Sun. In addition, Suiza refinanced Land-O-Sun's existing outstanding long-term indebtedness, which totaled approximately $52 million as of the closing date. Suiza financed the cash portion of the purchase price and refinanced the existing long-term indebtedness with borrowings of $180 million under its Senior Credit Facility. During the quarter the Company also acquired Trauth and two small plastic packaging businesses. Suiza financed these acquisitions with borrowings under its Senior Credit Facility. On March 24, 1998, the Company completed the sale of $600 million of company-obligated 5.5% mandatorily redeemable convertible preferred securities of a Delaware business trust in a private placement, resulting in net proceeds after expenses of approximately $582.5 million. The net proceeds were used to repay $502.5 million under the revolving loan facility of the Company's Senior Credit Facility and the remainder was placed in short-term cash investments. 13 14 Future Capital Requirements. During 1998, the Company intends to invest a total of approximately $101.0 million in its manufacturing facilities and distribution capabilities. Of this amount, Dairy intends to spend approximately $85.0 million for the year to expand and maintain its manufacturing facilities and for fleet replacement and Plastics intends to spend approximately $16.0 million. The Company plans to substantially expand its Plastics operations by opening new locations and the majority of Plastics' capital spending will be for this purpose. Current Debt Obligations. On November 26, 1997, the Company entered into a new credit facility with a group of lenders, including First Union National Bank of North Carolina, as administrative agent, and The First National Bank of Chicago, as syndication agent, which provides for an aggregate Senior Credit Facility of $1.25 billion comprised of a $550.0 million term loan facility and a $700.0 million revolving credit facility. At March 31, 1998, $674.0 million was available under the revolving loan facilities. In connection with the closing of the sale of Reddy Ice on April 30, 1998, the Company used the cash received to repay additional Senior Credit Facility outstanding borrowings. The Company expects that cash flow from operations will be sufficient to meet the Company's requirements for its existing businesses for the remainder of 1998 and for the foreseeable future. During the remainder of 1998 and in the future, the Company intends to pursue additional acquisitions in its existing regional markets and to seek strategic acquisition opportunities that are compatible with it core businesses. Management believes that the Company has the ability to secure additional financing to pursue its acquisition and consolidation strategy. There can be no assurance, however, that the Company will have sufficient available capital resources to realize its acquisition and consolidation strategy. 14 15 PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 4.1 Certificate of Trust of Suiza Capital Trust II. 4.2 Amended and restated Declaration of Trust of Suiza Capital Trust II, dated as of March 24, 1998, among Suiza Foods Corporation, as Sponsor, Wilmington Trust Company, as Property Trustee, Wilmington Trust Company, as Delaware Trustee, and Tracy L. Noll, J. Michael Lewis and Joseph B. Armes, as Regular Trustees. 4.3 Indenture for the 5.5% Convertible Subordinated Debentures, dated as of March 24, 1998, among Suiza Foods Corporation and Wilmington Trust Company, as Indenture Trustee. 4.4 Form of 5.5% Preferred Securities. 4.5 Form of 5.5% Convertible Subordinated Debenture. 4.6 Preferred Securities Guarantee Agreement, dated as of March 24, 1998, between Suiza Foods Corporation, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee. 10.1 Registration Rights Amendment, dated March 24, 1998, between Suiza Foods Corporation, Suiza Capital Trust II, and Donaldson, Lufkin, Jenrette Securities Corporation, Bear, Stearns & Co. Inc. and J.P. Morgan & Co. 10.2 Agreement and Plan of Merger dated as of January 14, 1998 by and among Suiza Foods Corporation, CC Acquisition Corporation, and Continental Can Company, Inc. (filed as Exhibit 2.1 to the Registration Statement on Form S-4, Commission File No. 333-46519, and incorporated herein by reference). 11. Statement re computation of per share earnings. 27. Financial Data Schedule. (b) Reports on Form 8-K (1) Form 8-K filed on January 15, 1998 to report the definitive merger agreement between Suiza Foods and Continental Can. (2) Form 8-K filed on February 25, 1998 to report various matters including fourth quarter 1997 earnings, potential packaging operations, the closing of the Land-O-Sun acquisition, and the signing of a merger agreement with Oberlin. (3) Form 8-K filed on March 9, 1998 (amended April 7, 1998) to report the completion of the acquisition of Land-O-Sun. (4) Form 8-K filed on March 10, 1998 to report the adoption of a shareholders' rights plan. (5) Form 8-K filed on March 18, 1998 to report the sale of $600 million of 5.5% company-obligated mandatorily redeemable preferred securities. (6) Form 8-K filed on March 20, 1998 to provide pro forma financial statements related to the issuance of $600 million of 5.5% company-obligated mandatorily redeemable preferred securities. 15 16 SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SUIZA FOODS CORPORATION /s/ Tracy L. Noll --------------------------------------- Tracy L. Noll Executive Vice President, Chief Financial Officer (Principal Accounting Officer) Date: May 14, 1998 16 17 EXHIBIT INDEX
Exhibits No. Descriptions ------------ ------------ 4.1 Certificate of Trust of Suiza Capital Trust II. 4.2 Amended and restated Declaration of Trust of Suiza Capital Trust II, dated as of March 24, 1998, among Suiza Foods Corporation, as Sponsor, Wilmington Trust Company, as Property Trustee, Wilmington Trust Company, as Delaware Trustee, and Tracy L. Noll, J. Michael Lewis and Joseph B. Armes, as Regular Trustees. 4.3 Indenture for the 5.5% Convertible Subordinated Debentures, dated as of March 24, 1998, among Suiza Foods Corporation and Wilmington Trust Company, as Indenture Trustee. 4.4 Form of 5.5% Preferred Securities. 4.5 Form of 5.5% Convertible Subordinated Debenture. 4.6 Preferred Securities Guarantee Agreement, dated as of March 24, 1998, between Suiza Foods Corporation, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee. 10.1 Registration Rights Amendment, dated March 24, 1998, between Suiza Foods Corporation, Suiza Capital Trust II, and Donaldson, Lufkin, Jenrette Securities Corporation, Bear, Stearns & Co. Inc. and J.P. Morgan & Co. 10.2 Agreement and Plan of Merger dated as of January 14, 1998 by and among Suiza Foods Corporation, CC Acquisition Corporation, and Continental Can Company, Inc. (filed as Exhibit 2.1 to the Registration Statement on Form S-4, Commission File No. 333-46519, and incorporated herein by reference). 11. Statement re computation of per share earnings. 27. Financial Data Schedule.
EX-4.1 2 CERTIFICATE OF TRUST OF SUIZA CAPITAL TRUST II 1 EXHIBIT 4.1 CERTIFICATE OF TRUST OF SUIZA CAPITAL TRUST II THIS Certificate of Trust of Suiza Capital Trust II (the "Trust") is being duly executed and filed by the undersigned, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. C. Section 3801, et. seq.). 1. NAME. The name of the business trust formed hereby is Suiza Capital Trust II. 2. DELAWARE TRUSTEE. The name and business address of the trustee of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware, 19890-0001, Attention: Corporate Trust Administration. 3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon filing. IN WITNESS WHEREOF, the undersigned, being the trustee of the Trust, has duly executed this Certificate of Trust. WILMINGTON TRUST COMPANY, as trustee By: /s/ W. Chris Sponenberg -------------------------------------- Name: W. Chris Sponenberg ------------------------------------ Title: Senior Financial Services Officer ----------------------------------- 1 EX-4.2 3 AMENDED & RESTATED DECLARATION OF TRUST 1 EXHIBIT 4.2 ================================================================================ AMENDED AND RESTATED DECLARATION OF TRUST AMONG SUIZA FOODS CORPORATION AS DEPOSITOR, WILMINGTON TRUST COMPANY AS PROPERTY TRUSTEE, WILMINGTON TRUST COMPANY AS DELAWARE TRUSTEE, AND THE ADMINISTRATIVE TRUSTEES NAMED HEREIN DATED AS OF MARCH 24, 1998 SUIZA CAPITAL TRUST II ================================================================================ 2 SUIZA CAPITAL TRUST II* Certain Sections of this Declaration relating to Sections 310 through 318 of the Trust Indenture Act of 1939:
TRUST INDENTURE DECLARATION ACT SECTION SECTION Section 310 (a) (1) ......................................................... 8.7 (a) (2) ......................................................... 8.7 (a) (4) ......................................................... 2.7(a)(ii) (b) ......................................................... 8.8 Section 311 (a) ......................................................... 8.12 (b) ......................................................... 8.12 Section 312 (a) ......................................................... 5.7 (b) ......................................................... 5.7 (c) ......................................................... 5.7 Section 313 (a) ......................................................... 8.13(a) (c) ......................................................... 10.8 (d) ......................................................... 8.13(c) (a) (4) ......................................................... 8.13(b) (b) ......................................................... 8.13(b) Section 314 (a) ......................................................... 8.14 (b) ......................................................... Not Applicable (c) (1) ......................................................... 8.15 (c) (2) ......................................................... 8.15 (c) (3) ......................................................... Not Applicable (d) ......................................................... Not Applicable (e) ......................................................... 1.1, 8.15 Section 315 (a) ......................................................... 8.1(a), 8.3(a) (b) ......................................................... 8.2, 10.8 (c) ......................................................... 8.1(a) (d) ......................................................... 8.1, 8.3 (e) ......................................................... Not Applicable Section 316 (a) ......................................................... Not Applicable (a) (1)(A) ......................................................... Not Applicable (a) (1)(B) ......................................................... Not Applicable (a) (2) ......................................................... Not Applicable (b) ......................................................... Not Applicable (c) ......................................................... 6.7 Section 317 (a) (1) ......................................................... Not Applicable (b) ......................................................... 5.9 Section 318 (a) ......................................................... 10.10
- ----------------------------- * Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to be a part of the Declaration. 3 TABLE OF CONTENTS
PAGE ARTICLE 1 - DEFINED TERMS.........................................................................................1 SECTION 1.1. Definitions........................................................................1 ARTICLE 2 - ESTABLISHMENT OF THE TRUST...........................................................................13 SECTION 2.1. Name..............................................................................13 SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business.......................13 SECTION 2.3. Organizational Expenses...........................................................13 SECTION 2.4. Issuance of the Preferred Securities..............................................13 SECTION 2.5. Subscription and Purchase of Debentures; Issuance of the Common Securities.............................................................14 SECTION 2.6. Declaration of Trust; Intent Clause...............................................14 SECTION 2.7. Authorization to Enter into Certain Transactions..................................14 SECTION 2.8. Assets of Trust...................................................................19 SECTION 2.9. Title to Trust Property...........................................................19 ARTICLE 3 - PROPERTY ACCOUNT.....................................................................................19 SECTION 3.1. Property Account..................................................................19 ARTICLE 4 - DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION......................................................20 SECTION 4.1. Distributions.....................................................................20 SECTION 4.2. Redemption........................................................................20 SECTION 4.3. Conversion........................................................................23 SECTION 4.4. Special Event Exchange or Redemption..............................................25 SECTION 4.5. Subordination of Common Securities................................................27 SECTION 4.6. Payment Procedures................................................................27 SECTION 4.7. Tax Returns and Reports...........................................................27 SECTION 4.8. Payment of Taxes, Duties, Etc. of the Trust.......................................28 SECTION 4.9. Payments under Indenture..........................................................28 ARTICLE 5 - TRUST SECURITIES CERTIFICATES........................................................................28 SECTION 5.1. Initial Ownership.................................................................28 SECTION 5.2. The Trust Securities Certificates.................................................28 SECTION 5.3. Delivery of Trust Securities Certificates.........................................29 SECTION 5.4. Registration of Transfer and Exchange of Preferred Securities; Restrictions on Transfer....................................29 SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates................31 SECTION 5.6. Persons Deemed Securityholders....................................................32 SECTION 5.7. Access to List of Securityholders' Names and Addresses............................32 SECTION 5.8. Maintenance of Office or Agency...................................................32 SECTION 5.9. Appointment of Paying Agent.......................................................32
i 4
SECTION 5.10. Ownership of Common Securities by Depositor.......................................33 SECTION 5.11. Global Securities; Non-Global Securities; Common Securities Certificate............................................................33 SECTION 5.12. Notices to Clearing Agency........................................................34 SECTION 5.13. Definitive Preferred Securities Certificates......................................35 SECTION 5.14. Rights of Securityholders.........................................................35 SECTION 5.15. Restrictive Legends...............................................................35 ARTICLE 6 - ACT OF SECURITYHOLDERS; MEETINGS; VOTING; AMENDMENT OF THE DECLARATION.............................................................................36 SECTION 6.1. Limitations on Voting Rights......................................................36 SECTION 6.2. Notice of Meetings................................................................39 SECTION 6.3. Meetings of Preferred Securityholders.............................................39 SECTION 6.4. Voting Rights.....................................................................40 SECTION 6.5. Proxies, Etc......................................................................40 SECTION 6.6. Securityholder Action by Written Consent..........................................40 SECTION 6.7. Record Date for Voting and Other Purposes.........................................40 SECTION 6.8. Acts of Securityholders...........................................................40 SECTION 6.9. Inspection of Records.............................................................42 ARTICLE 7 - REPRESENTATIONS AND WARRANTIES.......................................................................42 SECTION 7.1. Representations and Warranties of the Property Trustee and the Delaware Trustee..............................................................42 SECTION 7.2. Representations and Warranties of Depositor.......................................43 ARTICLE 8 - THE TRUSTEES.........................................................................................44 SECTION 8.1. Certain Duties and Responsibilities...............................................44 SECTION 8.2. Notice of Defaults................................................................46 SECTION 8.3. Certain Rights of Property Trustee................................................48 SECTION 8.4. Not Responsible for Recitals or Issuance of Securities............................51 SECTION 8.5. May Hold Securities...............................................................51 SECTION 8.6. Compensation; Indemnity; Fees.....................................................51 SECTION 8.7. Property Trustee Required; Eligibility of Trustees................................52 SECTION 8.8. Disqualification: Conflicting Interest...........................................52 SECTION 8.9. Resignation and Removal; Appointment of Successor.................................53 SECTION 8.10. Acceptance of Appointment by Successor............................................54 SECTION 8.11. Merger, Conversion, Consolidation or Succession to Business.......................55 SECTION 8.12. Preferential Collection of Claims Against Depositor or Trust......................55 SECTION 8.13. Reports by Property Trustee.......................................................56 SECTION 8.14. Reports to the Property Trustee...................................................56 SECTION 8.15. Evidence of Compliance with Conditions Precedent..................................56 SECTION 8.16. Number of Trustees................................................................57 SECTION 8.17. Delegation of Power...............................................................57
ii 5 ARTICLE 9 - DISSOLUTION, LIQUIDATION, TERMINATION AND MERGER.....................................................57 SECTION 9.1. Dissolution upon Expiration Date..................................................57 SECTION 9.2. Early Dissolution.................................................................57 SECTION 9.3. Termination.......................................................................58 SECTION 9.4. Liquidation.......................................................................58 SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of the Trust.........................................................60 ARTICLE 10 - MISCELLANEOUS PROVISIONS............................................................................61 SECTION 10.1. Limitation of Rights of Securityholders...........................................61 SECTION 10.2. Amendment.........................................................................61 SECTION 10.3. Separability......................................................................61 SECTION 10.4. GOVERNING LAW.....................................................................61 SECTION 10.5. Payments Due on Non-Business Day..................................................62 SECTION 10.6. Successors........................................................................62 SECTION 10.7. Headings..........................................................................62 SECTION 10.8. Reports, Notices and Demands......................................................62 SECTION 10.9. Agreement Not to Petition.........................................................63 SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act............................63 SECTION 10.11. ACCEPTANCE OF TERMS OF DECLARATION, GUARANTEE AND INDENTURE...........................................................64 SECTION 10.12. Counterparts......................................................................64 ARTICLE 11 - REGISTRATION RIGHTS.................................................................................64 SECTION 11.1. Registration Rights...............................................................64
EXHIBIT A: The Certificate of Trust iii 6 AMENDED AND RESTATED DECLARATION OF TRUST, dated as of March 24, 1998 among (i) Suiza Foods Corporation, a Delaware corporation (including any successors or assigns, the "DEPOSITOR"), (ii) Wilmington Trust Company, a Delaware banking corporation, as property trustee (in such capacity, the "PROPERTY TRUSTEE" and, in its personal capacity and not in its capacity as Property Trustee, the "BANK"), (iii) Wilmington Trust Company, a Delaware banking corporation, as Delaware trustee (in such capacity, the "DELAWARE TRUSTEE"), (iv) Tracy L. Noll, an individual, J. Michael Lewis, an individual, and Joseph B. Armes, an individual, each of whose address is c/o Suiza Foods Corporation, 3811 Turtle Creek Boulevard, Dallas, Texas 75219, (each, an "ADMINISTRATIVE TRUSTEE" and, collectively, the "ADMINISTRATIVE TRUSTEES" and, collectively with the Property Trustee and Delaware Trustee, the "TRUSTEES") and (v) the several Holders as hereinafter defined. W I T N E S S E T H: WHEREAS, the Depositor and certain of the Trustees have heretofore duly declared and established a business trust pursuant to the Delaware Business Trust Act by the entering into that certain Declaration of Trust, dated as of March 18, 1998 (the "ORIGINAL DECLARATION"), and by the execution and filing by certain of the Trustees with the Secretary of State of the State of Delaware of the Certificate of Trust, filed on March 18, 1998 (the "CERTIFICATE OF TRUST"), attached as Exhibit A, for the sole purpose of issuing and selling certain securities representing undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in the Debentures (as defined herein); WHEREAS, as of the date hereof, no interests in the Trust have been issued; and WHEREAS, the Depositor and the Trustees desire to amend and restate the Original Declaration in its entirety as set forth herein to provide for, among other things, (i) the issuance and sale of the Common Securities by the Trust to the Depositor, (ii) the issuance and sale of the Preferred Securities by the Trust pursuant to the Purchase Agreement and (iii) the acquisition by the Trust from the Depositor of all of the right, title and interest in the Debentures; NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, each party, for the benefit of the other party and for the benefit of the Holders of the Preferred Securities, hereby amends and restates the Original Declaration in its entirety and agrees as follows: ARTICLE 1 DEFINED TERMS SECTION 1.1. Definitions. For all purposes of this Declaration, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; 1 7 (b) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (c) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Declaration; (d) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Declaration as a whole and not to any particular Article, Section or other subdivision; (e) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles," with respect to any computation required or permitted hereunder, shall mean such accounting principles which are generally accepted at the date or time of such computation; (f) "or" is not exclusive; (g) provisions apply to successive events and transactions; and (h) each reference herein to a rule or form of the Commission shall mean such rule or form and any rule or form successor thereto, in each case as amended from time to time. "ACT" has the meaning specified in Section 6.8. "ADDITIONAL AMOUNT" means, with respect to the Trust Securities, the amount of Additional Interest (as defined in the Indenture) paid and identified as such to the Property Trustee or other holders of the Debentures by the Depositor on the Debentures. "ADDITIONAL SUMS" means, with respect to the Trust Securities, the amount of Additional Sums (as defined in the Indenture) paid and identified as such to the Property Trustee or other holders of the Debentures by the Depositor on the Debentures. "ADMINISTRATIVE TRUSTEE" means each of Tracy L. Noll, J. Michael Lewis and Joseph B. Armes, each solely in his capacity as Administrative Trustee of the Trust formed and continued hereunder and not in his individual capacity, or such Administrative Trustee's successor in interest in such capacity, or any successor in interest in such capacity, or any successor administrative trustee appointed as herein provided. "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; provided, however, that an Affiliate of the Depositor shall not be deemed to include the Trust. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or 2 8 indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "APPLICABLE PROCEDURES" means, with respect to any transfer or transaction involving a Rule 144A Global Certificate or beneficial interest therein, the rules and procedures of the Clearing Agency for such security, in each case to the extent applicable to such transaction and as in effect from time to time. "BANK" has the meaning specified in the preamble to this Declaration. "BANKRUPTCY EVENT" means, with respect to any Person: (a) the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of such Person in an involuntary case or proceeding under United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency, or other similar law or (ii) a decree or order adjudging such Person a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjudication or composition of, or in respect of, such Person under any United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency, or similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of such Person or of any substantial part of such Person's property or assets, or ordering the winding-up or liquidation of the affairs of such Person, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (b) (i) the commencement by such Person of a voluntary case or proceeding under United States bankruptcy laws, as now or hereafter constituted, or any other applicable Federal, state or foreign bankruptcy, insolvency or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent; or (ii) the consent by such Person to the entry of a decree or order for relief in respect of such Person in an involuntary case or proceeding under United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against such Person; or (iii) the filing by such Person of a petition or answer or consent seeking reorganization or relief under United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law; or (iv) the consent by such Person to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of such Person or any substantial part of such Person's property or assets, or the making by such Person of an assignment for the benefit of creditors; or (v) the admission by such Person in writing of its inability to pay its debts generally as they become due; or (vi) the taking of corporate action by such Person in furtherance of any such actions. 3 9 "BANKRUPTCY LAWS" has the meaning specified in Section 10.9. "BOARD OF DIRECTORS" means either the board of directors of the Depositor or any committee of that board duly authorized to act hereunder. "BOARD RESOLUTION" means a copy of the resolution certified by the Secretary or an Assistant Secretary of the Depositor to have been duly adopted by the Board of Directors, or such committee of the Board of Directors or officers of the Depositor to which authority to act on behalf of the Board of Directors has been delegated, and to be in full force and effect on the date of such certification, and delivered to the Property Trustee. "BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES" means a beneficial interest in the Preferred Securities Certificates, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 5.11. "BUSINESS DAY" means any day other than a Saturday or Sunday, or a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office or the corporate trust office of the Indenture Trustee, is closed for business. "CAPITAL STOCK" means, with respect to any Person, any and all shares, interest, participations, rights in or other equivalents (however designated) of such Person's capital stock, and any rights (other than debt securities convertible into capital stock), warrants or options exchangeable for or convertible into such capital stock. "CERTIFICATE DEPOSITARY AGREEMENT" means the letter agreement among the Trust, the Depositor and The Depository Trust Company, as the initial Clearing Agency, dated as of the Closing Date, relating to the Trust Securities Certificates, as the same may be amended and supplemented from time to time. "CERTIFICATE OF TRUST" has the meaning specified in the preamble to this Declaration. "CERTIFICATED PREFERRED SECURITY" has the meaning specified in Section 5.2. "CHANGE IN 1940 ACT LAW" has the meaning specified in the definition of Investment Company Event. "CLEARING AGENCY" means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The Depository Trust Company will be the initial Clearing Agency. "CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. 4 10 "CLOSING DATE" means the first Time of Delivery (as defined in the Purchase Agreement), which date is also the date of execution and delivery of this Declaration. "COMMISSION" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "COMMON SECURITIES CERTIFICATE" means a certificate evidencing ownership of Common Securities, substantially in the form attached as Exhibit B. "COMMON SECURITY" means an undivided beneficial interest in the assets of the Trust, having a Liquidation Amount with respect to the assets of the Trust of $50 and having the rights provided therefor in this Declaration, including the right to receive Distributions and a Liquidation Distribution as provided herein. "COMMON STOCK" means common stock, par value $0.01 per share, of the Depositor or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Depositor and which are not subject to redemption by the Depositor. "CONVERSION AGENT" has the meaning specified in Section 4.3. "CONVERSION DATE" has the meaning specified in Section 4.3. "CONVERSION EXPIRATION DATE" means the close of business on the Business Day prior to the maturity date of the Debentures, or in the case of Preferred Securities called for redemption, the close of business on the Business Day prior to the Debenture Redemption Date. "CONVERSION PRICE" has the meaning specified in Section 4.3. "CORPORATE TRUST OFFICE" means the principal corporate trust office of the Property Trustee at which at any particular time its corporate trust business shall be administered, which office at the date hereof is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration. "CURRENT MARKET PRICE", with respect to the Common Stock of the Depositor, means for any day the last reported sale price, regular way, on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the NYSE, or, if such Common Stock is not admitted to trading on the NYSE on such day, on the principal national securities exchange or quotation system on which such Common Stock is listed or admitted to trading, or, if not listed or admitted to trading or quoted on any national securities exchange or quotation system, the average closing bid and asked prices 5 11 of such Common Stock in the over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated, or a similar generally accepted reporting service, or, if not so available in such manner, as furnished by any NASD member firm selected from time to time by the Board of Directors for that purpose or, if not so available in such manner, as otherwise determined in good faith by the Board of Directors. "DEBENTURE EVENT OF DEFAULT" means an "Event of Default" as defined in the Indenture. "DEBENTURE REDEMPTION DATE" means, with respect to any Debentures to be redeemed under the Indenture, the date fixed for redemption thereof under the Indenture. "DEBENTURES" means up to $618,556,750 aggregate principal amount of the Depositor's 5 1/2% Convertible Subordinated Debentures due April 1, 2028 issued or to be issued pursuant to the Indenture. "DECLARATION" means this Amended and Restated Declaration of Trust, as the same may be modified, amended or supplemented in accordance with the applicable provisions hereof, including all exhibits hereto, including, for all purposes of this Declaration, any such modification, amendment or supplement, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this Declaration and any such modification, amendment or supplement, respectively. "DEFINITIVE PREFERRED SECURITIES CERTIFICATES" means either or both (as the context requires) of (a) Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.11(b) and (b) Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.13. "DELAWARE BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. ss.ss. 3801, et. seq., as it may be amended from time to time. "DELAWARE TRUSTEE" means the Person identified as the "Delaware Trustee" in the preamble to this Declaration solely in its capacity as Delaware Trustee of the Trust continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor Delaware trustee appointed as herein provided. "DEPOSITOR" has the meaning specified in the preamble to this Declaration. "DIRECT ACTION" has the meaning specified in Section 6.8. "DISTRIBUTION DATE" has the meaning specified in Section 4.1(a). "DISTRIBUTIONS" means amounts payable in respect of the Trust Securities as provided in Section 4.1. Distributions include, but are not limited to, Additional Sums, Additional Amounts and Liquidated Damages. 6 12 "EARLY DISSOLUTION EVENT" has the meaning specified in Section 9.2. "EVENT OF DEFAULT" means the occurrence of a Debenture Event of Default "EXCHANGE NOTICE" has the meaning specified in Section 4.4(b). "EXPIRATION DATE" has the meaning specified in Section 9.1. "RULE 144A GLOBAL CERTIFICATE" means a Preferred Security that is registered in the Securities Register in the name of a Clearing Agency or a nominee thereof. "GUARANTEE" means the Guarantee Agreement executed and delivered by the Depositor and Wilmington Trust Company, a Delaware banking corporation, as guarantee trustee, contemporaneously with the execution and delivery of this Declaration, for the benefit of the Holders of the Preferred Securities, as amended from time to time. "HOLDER" or "SECURITYHOLDER" means a Person in whose name a Trust Security or Securities is registered in the Securities Register, such Person being a beneficial owner within the meaning of the Delaware Business Trust Act. "INDENTURE" means the Convertible Subordinated Indenture, dated as of March 24, 1998 between the Depositor and the Indenture Trustee, as amended or supplemented from time to time. "INDENTURE TRUSTEE" means Wilmington Trust Company, a Delaware banking corporation, as trustee under the Indenture, until a successor Indenture Trustee shall have become such pursuant to the applicable provision of the Indenture, and thereafter "Indenture Trustee" shall mean such successor trustee and shall include each Person who is then a Indenture Trustee hereunder if at any time there is more than one such Person. "INVESTMENT COMPANY EVENT" means the receipt by the Property Trustee, on behalf of the Trust, of an opinion of counsel, rendered by a law firm having a recognized national tax and securities practice (which opinion shall not have been rescinded by such law firm), to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), that there is more than an insubstantial risk that the Trust is or will be considered an "investment company" that is required to be registered under the 1940 Act, which Change in 1940 Act Law becomes effective on or after March 18, 1998. "LIEN" means any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever. "LIQUIDATED DAMAGES" means, with respect to the Trust Securities, the amount of Liquidated Damages (as defined in the Indenture) paid and identified as such to the Property Trustee or other holders of the Debentures by the Depositor on the Debentures. 7 13 "LIQUIDATION AMOUNT" means an amount with respect to the assets of the Trust equal to $50 per Trust Security. "LIQUIDATION DATE" means each date on which Debentures or cash are to be distributed to Holders of Trust Securities in connection with a termination and liquidation of the Trust pursuant to Section 9.4(a). "LIQUIDATION DISTRIBUTION" has the meaning specified in Section 9.4(d). "1940 ACT" means the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder. "NOTICE OF CONVERSION" means the notice given by a holder of Preferred Securities to the Conversion Agent directing the Conversion Agent to exchange such Preferred Security for Debentures and to convert such Debentures into Common Stock on behalf of such holder. Such notice is substantially in the form set forth in Exhibit E. "NYSE" means the New York Stock Exchange. "OFFICER'S CERTIFICATE" means a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, any Vice President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Assistant Secretary, of the Depositor, and delivered to the Property Trustee. The officer signing an Officer's Certificate given pursuant to Section 8.15 shall be the principal executive, financial or accounting officer of the Depositor. Any Officer's Certificate delivered with respect to compliance with a condition or covenant provided for in this Declaration shall include: (a) a statement that each officer signing the Officer's Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officer's Certificate; (c) a statement that each officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel for the Trust, the Property Trustee or the Depositor, and who may be an employee of any thereof, and who shall be reasonably acceptable to the Property Trustee. Any Opinion of Counsel delivered 8 14 with respect to compliance with a condition or covenant provided for in this Declaration shall include: (a) a statement that each individual signing the Opinion of Counsel has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each individual in rendering the Opinion of Counsel; (c) a statement that each individual has made such examination or investigation as is necessary to enable such individual to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. "OPTIONAL REDEMPTION PRICE" means, except as set forth below, with respect to the Preferred Securities, the following percentages of the Liquidation Amounts thereof, and accumulated and unpaid Distributions, if any, to the date fixed for redemption if redeemed during the twelve-month period commencing April 1 (April 2 in the case of 2001) in each of the following years indicated:
Year Redemption Price Year Redemption Price ---- ---------------- ---- ---------------- 2001 103.438% 2004 101.375% 2002 102.750 2005 100.688 2003 102.063 2008 and thereafter 100.000
In the event of a redemption of Trust Securities upon the occurrence of a Tax Event, Trust Securities shall be redeemed at the Redemption Price. In the event of a redemption of Trust Securities pursuant to Section 4.2(a), Trust Securities shall be redeemed as the redemption price specified therein. "ORIGINAL DECLARATION" has the meaning specified in the recitals to this Declaration. "OUTSTANDING" when used with respect to Trust Securities, means, as of the date of determination, all Trust Securities theretofore executed and delivered under this Declaration, except: (a) Trust Securities theretofore canceled by the Securities Registrar or delivered to the Securities Registrar for cancellation or tendered for conversion; (b) Trust Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent for 9 15 the Holders of such Trust Securities; provided that, if such Trust Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Declaration; and (c) Trust Securities which have been paid or in exchange for or in lieu of which other Trust Securities have been executed and delivered pursuant to Section 5.5 unless proof satisfactory to the Property Trustee is presented that any Preferred Securities are held by Holders in whose hands such Preferred Securities are valid, binding and legal obligations of the Trust. provided, however, that in determining whether the Holders of the requisite Liquidation Amount of the Outstanding Trust Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, any Preferred Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor or any Trustee shall be disregarded and deemed not to be Outstanding, except that (a) in determining whether any Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Preferred Securities that such Trustee actually knows to be so owned shall be so disregarded and (b) the foregoing shall not apply at any time when all of the Outstanding Preferred Securities are owned by the Depositor, one or more of the Trustees and/or any such Affiliate. Preferred Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Securities Registrar the pledgee's right so to act with respect to such Preferred Securities and that the pledgee is not the Depositor or any Affiliate of the Depositor. "OWNER" means each Person who is the beneficial owner of a Book-Entry Preferred Securities Certificate as reflected in the records of the Clearing Agent or, if a Clearing Agency Participant is not the Owner, then as reflected in the records of a Person maintaining an account with such Clearing Agent (directly or indirectly, in accordance with the rules of such Clearing Agent). "PAYING AGENT" means any paying agent or co-paying agent appointed pursuant to Section 5.9. "PERSON" means any individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof or other entity. "PREFERRED SECURITIES CERTIFICATE" means a certificate evidencing ownership of Preferred Securities, substantially in the form attached as Exhibit C. "PREFERRED SECURITY" means an undivided beneficial interest in the assets of the Trust, having a Liquidation Amount with respect to the assets of the Trust of $50 and having the rights provided therefor in this Declaration, including the right to receive Distributions and a Liquidation Distribution as provided herein. 10 16 "PROPERTY ACCOUNT" means a segregated non-interest bearing corporate trust account maintained by the Property Trustee with the Bank (or any successor appointed by the Property Trustee) in its trust department for the benefit of the Holders of the Trust Securities in which all amounts paid in respect of the Debentures will be held and from which the Property Trustee shall make payments to the Securityholders in accordance with Section 4.1. "PROPERTY TRUSTEE" means the Person identified as the "Property Trustee" in the preamble to this Declaration solely in its capacity as Property Trustee of the Trust heretofore formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor property trustee appointed as herein provided. "PURCHASE AGREEMENT" means the Purchase Agreement, dated as of March 18, 1998 among the Trust, the Depositor and the Purchasers named therein. "REDEMPTION DATE" means, with respect to any Trust Security to be redeemed, each Debenture Redemption Date. "REDEMPTION PRICE" means, with respect to any Trust Security, $50 per Trust Security, plus accumulated and unpaid Distributions to the date of redemption. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated March 24, 1998, among the Depositor, the Trust, and the Purchasers named in the Purchase Agreement. "RELEVANT RECORD DATE" has the meaning specified in Section 4.1(d). "RELEVANT TRUSTEE" has the meaning specified in Section 8.9. "RESPONSIBLE OFFICER" means any officer within the Corporate Trust Office of the Property Trustee with direct responsibility for the administration of this Declaration and also means, with respect to a particular corporate trust matter, any other officer of the Property Trustee to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "RESTRICTED PERIOD" means, with respect to the Preferred Securities and with respect to the Debentures or the Common Stock issuable on conversion of the Preferred Securities, the one-year period, in either case following the last original issue date of the Preferred Securities (including any Preferred Securities issued to cover over-allotments). "RESTRICTED SECURITIES" means all Preferred Securities required pursuant to Section 5.4 to bear any Restricted Securities Legend. Such term includes the Rule 144A Global Certificate and the Institutional Accredited Investor Global Certificate. "RESTRICTED SECURITIES CERTIFICATE" means a certificate substantially in the form set forth in Exhibit D. 11 17 "RESTRICTED SECURITIES LEGEND" has the meaning specified in Section 5.15(a). "RULE 144A GLOBAL CERTIFICATE" has the meaning specified in Section 5.2. "RULE 144A PREFERRED SECURITIES" has the meaning specified in Section 5.2. "SECURITIES ACT LEGEND" means a Restricted Securities Legend or a Regulation S Legend. "SECURITIES REGISTER" and "SECURITIES REGISTRAR" have the respective meanings specified in Section 5.4. "SHELF REGISTRATION STATEMENT" means that certain shelf registration statement to be filed with the Commission in accordance with the Registration Rights Agreement. "SPECIAL EVENT" means a Tax Event or an Investment Company Event. "SUCCESSOR PROPERTY TRUSTEE" has the meaning specified in Section 8.9. "SUCCESSOR DELAWARE TRUSTEE" has the meaning specified in Section 8.9. "SUCCESSOR SECURITIES" has the meaning specified in Section 9.5. "TAX EVENT" means the receipt by the Property Trustee, on behalf of the Trust, of an opinion of counsel, rendered by a law firm having a national tax and securities practice (which opinion shall not have been rescinded by such law firm), to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such pronouncement or decision is announced on or after March 18, 1998, there is more than an insubstantial risk in each case after the date hereof that (i) the Trust is, or will be within 90 days of the date thereof, subject to United States federal income tax with respect to income received or accrued on the Debentures, (ii) interest paid by the Depositor on the Debentures is not, or within 90 days of the date thereof will not be, deductible by the Depositor when paid, in whole or in part, for United States federal income tax purposes, or (iii) the Trust is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "TRUST" means the Delaware business trust continued hereby and identified on the cover page of this Declaration. "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture 12 18 Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "TRUST PROPERTY" means (a) the Debentures, (b) any cash on deposit in, or owing to, the Property Account and (c) all proceeds and rights in respect of the foregoing to be held by the Property Trustee pursuant to the terms of this Declaration for the benefit of the Securityholders. "TRUST SECURITY" means any one of the Common Securities or the Preferred Securities. "TRUST SECURITIES CERTIFICATE" means any one of the Common Securities Certificates, the Rule 144A Global Certificates or the Certificated Preferred Securities. "TRUSTEES" means, collectively, the Property Trustee, the Delaware Trustee and the Administrative Trustees. "UNRESTRICTED SECURITIES CERTIFICATE" means a certificate substantially in the form set forth in Exhibit C, but without the Restricted Securities Legend. ARTICLE 2 ESTABLISHMENT OF THE TRUST SECTION 2.1. Name. The Trust continued hereby shall be known as "SUIZA CAPITAL TRUST II", as such name may be modified from time to time by the Administrative Trustees following written notice to the Holders of Trust Securities and the other Trustees, in which name the Trustees may conduct the business of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business. The address of the Delaware Trustee in the State of Delaware is Rodney Square North, 1100 North Market Street, Wilmington, Delaware, 19890-0001, Attention: Corporate Trust Administration, or such other address in the State of Delaware as the Delaware Trustee may designate by written notice to the Securityholders and the Depositor. The principal executive office of the Trust is 3811 Turtle Creek Boulevard, Suite 1300, Dallas, Texas 75219. SECTION 2.3. Organizational Expenses. The Depositor shall pay organizational expenses of the Trust as they arise or shall, upon request of any Trustee, promptly reimburse such Trustee for any such expenses paid by such Trustee; provided, however, that such expenses paid by any Trustee shall have been paid in accordance with the limitations enumerated in Section 2.6 hereof. The Depositor shall make no claim upon the Trust Property for the payment of such expenses. SECTION 2.4. Issuance of the Preferred Securities. As of March 18, 1998, the Depositor as sponsor of the Trust executed and delivered the Purchase Agreement. Contemporaneously with the execution and delivery of this Declaration, an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.2 and deliver to the 13 19 Purchasers named therein Preferred Securities Certificates, in an aggregate amount of 12,000,000 Preferred Securities having an aggregate Liquidation Amount of $600,000,000, against receipt of the aggregate purchase price of such Preferred Securities of $600,000,000, which amount the Administrative Trustees shall promptly deliver to the Property Trustee. SECTION 2.5. Subscription and Purchase of Debentures; Issuance of the Common Securities. Contemporaneously with the execution and delivery of this Declaration, (a) an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.2 and deliver to the Depositor Common Securities Certificates registered in the name of the Depositor, in an aggregate amount of 371,135 Common Securities having an aggregate Liquidation Amount of $18,556,750 against receipt of the aggregate purchase price of such Common Securities from the Depositor of the sum of $18,556,750 and (b) the Administrative Trustees, on behalf of the Trust, shall subscribe to and purchase from the Depositor the Debentures, registered in the name of the Property Trustee (in its capacity as such) and having an aggregate principal amount equal to $618,556,750, and, in satisfaction of the purchase price for such Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of $618,556,750. SECTION 2.6. Declaration of Trust; Intent Clause. The exclusive purposes and functions of the Trust are (a) to issue and sell Trust Securities and use the proceeds from such sale to acquire the Debentures, (b) to distribute the Trust's income as provided in this Declaration and (c) to engage in only those other activities necessary or incidental thereto, including, without limitation, those activities specified in Sections 2.7(a), 2.7(c), 8.1 and 8.3. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, mortgage or pledge any of its assets or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified for United States Federal income tax purposes as a grantor trust. It is the intent of the parties hereto that the Trust qualify as a grantor trust for United States federal income tax purposes. Securityholders, by their purchase of Trust Securities, agree to treat the Trust as such in all tax and accounting filings. Any ambiguity in this Agreement shall be interpreted in a manner consistent with such classification. The Depositor hereby appoints the Trustees as trustees of the Trust, to have all the rights, powers and duties to the extent set forth herein, and the Trustees hereby accept such appointment. The Property Trustee hereby declares that it will hold the Trust Property in trust upon and subject to the conditions set forth herein for the benefit of the Trust and the Securityholders. The Administrative Trustees shall have all rights, powers and duties set forth herein and in accordance with applicable law with respect to accomplishing the purposes of the Trust. The Delaware Trustee shall not be entitled to exercise any powers of, nor shall the Delaware Trustee have any of the duties and responsibilities of, the Property Trustee or the Administrative Trustees set forth herein. The Delaware Trustee shall be a Trustee of the Trust for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Delaware Business Trust Act. In the event the Delaware Trustee shall at any time be required to take any action or perform any duty under this Declaration, the Delaware Trustee shall be entitled to the benefits of Sections 8.1 and 8.3. No implied covenants or obligations shall be read into this Declaration against the Delaware Trustee. SECTION 2.7. Authorization to Enter into Certain Transactions. (a) The Trustees shall conduct the affairs of the Trust in accordance with the terms of this Declaration. Subject to 14 20 the limitations set forth in Section 2.6 and paragraph (b) of this Section 2.7, and in accordance with the following provisions (i) and (ii), the Property Trustee and the Administrative Trustees shall have the exclusive power and authority, and are hereby authorized and directed to, cause the Trust to engage in the following activities: (i) As among the Trustees, each Administrative Trustee shall have the power and authority and is hereby authorized and directed to act on behalf of the Trust with respect to the following matters: (A) to execute, deliver, issue and sell the Trust Securities; provided, however, that the Trust may issue no more than one series of Preferred Securities and no more than one series of Common Securities; and, provided, further, that there shall be no interests in the Trust other than the Trust Securities; and, provided, further, that the issuance of Trust Securities shall be limited to simultaneous issuance of both Preferred Securities and Common Securities on the Closing Date and any other date Preferred Securities and Common Securities are sold pursuant to the exercise of the over-allotment option granted to the Initial Purchasers in the Purchase Agreement, subject to the issuance of Trust Securities pursuant to Section 5.5 and Successor Securities pursuant to Section 9.5; (B) to acquire the Debentures with the proceeds of the sale of the Preferred Securities and the Common Securities; provided, however, that the Administrative Trustees shall cause legal title to the Debentures to be held of record in the name of the Property Trustee for the benefit of the Securityholders; (C) to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, the Registration Rights Agreement, the Purchase Agreement and each other agreement and instrument (including, without limitation, such certificates and cross-receipts as may be necessary in connection with the issuance and sale of the Trust Securities and the purchase of the Debentures) as such Administrative Trustee deems necessary or incidental to the purposes and function of the Trust; (D) to assist in the registration of the Preferred Securities, Guarantee and the shares of Common Stock underlying the Debentures upon conversion thereof under the Securities Act of 1933, as amended, and under state securities or blue sky laws, and the qualification of this Declaration as a trust indenture under the Trust Indenture Act and to cause the Trust to take any action deemed in such Administrative Trustee's discretion to be necessary, advisable or convenient to comply with the Trust's obligations under the Trust Indenture Act; (E) to assist in the listing of the Preferred Securities upon such securities exchange or exchanges as shall be determined by the Depositor and the registration of the Preferred Securities under the Securities Exchange Act of 1934, as amended, and the preparation and filing of all periodic and other reports 15 21 and other documents pursuant to the foregoing (only to the extent that such listing or registration is requested by the Depositor); (F) to appoint a Paying Agent, Conversion Agent, authenticating agent and a Securities Registrar in accordance with this Declaration; (G) to the extent provided in this Declaration, to wind up the affairs of and liquidate the Trust and prepare, execute and file the certificate of cancellation with the Secretary of State of the State of Delaware; (H) to execute on behalf of the Trust (either acting alone or together with any other Administrative Trustees) any documents that the Administrative Trustees have the power to execute pursuant to this Declaration; and (I) to take any action incidental to the foregoing as the Administrative Trustees may from time to time determine in their discretion is necessary, advisable or convenient to give effect to the terms of this Declaration, including, but not limited to: (i) causing the Trust not to be deemed to be an "investment company" required to be registered under the 1940 Act; (ii) ensuring the Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Trust Securities are outstanding; (iii) causing the Trust not to be classified for United States Federal income tax purposes as a corporation; and (iv) cooperating with the Depositor to ensure that the Debentures will be treated as indebtedness of the Depositor for United States Federal income tax purposes; provided that such action does not adversely affect in any material respect the interests of Securityholders except as otherwise provided in Section 10.2(a). (ii) As among the Trustees, the Property Trustee shall have the power and authority and is hereby authorized and directed to act on behalf of the Trust with respect to the following matters: (A) the establishment of the Property Account; (B) to authenticate Preferred Securities delivered to it for authentication by or on behalf of an Administrative Trustee; 16 22 (C) the receipt of and taking title to the Debentures; (D) the collection of interest, principal and any other payments made in respect of the Debentures in the Property Account; (E) the distribution from the Trust Property of amounts owed to the Securityholders in respect of the Trust Securities pursuant to this Declaration; (F) the exercise of all of the rights, powers and privileges of a holder of the Debentures; (G) the sending of notices of default, other notices and other information regarding the Trust Securities and the Debentures to the Securityholders in accordance with this Declaration; (H) the distribution of the Trust Property in accordance with the terms of this Declaration; (I) to the extent provided in this Declaration, the winding up of the affairs of and liquidation of the Trust and the preparation, execution and filing of the certificate of cancellation with the Secretary of State of the State of Delaware; (J) the taking of any action incidental to the foregoing (including executing any certificate or acknowledgment of the Property Trustee's receipt of the Debentures) as the Property Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Declaration and protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder); (K) subject to this Section 2.7(a)(ii), the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Administrative Trustees set forth in Section 2.7(a)(i); (L) to act as Paying Agent, Conversion Agent and/or Securities Registrar to the extent appointed as such hereunder and executing and delivering letters, documents or instruments with the Clearing Agency relating to the Preferred Securities; including, without limitation, the Certificate Depositary Agreement, and (M) to appoint an authenticating agent in accordance with this Declaration. (b) So long as this Declaration remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, the Trust shall not, the Trustees shall not 17 23 and the Administrative Trustees shall cause the Trust not to (i) invest any proceeds received by the Trust from holding the Debentures (rather, the Trustees shall distribute all such proceeds to the Securityholders pursuant to the terms of this Declaration and the Trust Securities), acquire any investments or engage in any activities not authorized by this Declaration, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Securityholders, except as expressly provided herein, (iii) take any action that, to such Trustee's actual knowledge, would cause the Trust to fail or cease to qualify as a "grantor trust" for United States Federal income tax purposes, (iv) make any loans or incur any indebtedness for borrowed money or issue any other debt, (v) take or consent to any action that would result in the placement of a Lien on any of the Trust Property, (vi) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Trust Securities in any way whatsoever except as permitted by the terms of this Declaration, or (vii) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Trust Securities. The Administrative Trustees shall defend all claims and demands of all Persons at any time claiming any Lien on any of the Trust Property adverse to the interest of the Trust or the Securityholders in their capacity as Securityholders. (c) In connection with the issue and sale of the Preferred Securities, the Depositor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following actions (and any actions taken by the Depositor in furtherance of the following prior to the date of this Declaration are hereby ratified and confirmed in all respects): (i) to cause the Trust to file, at the expense of the Depositor, with the Commission and to execute on behalf of the Trust a registration statement on the appropriate form in relation to the Preferred Securities, including any amendments thereto; (ii) to determine the states and foreign jurisdictions in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and to do any and all such acts, other than actions which must be taken by or on behalf of the Trust, and advise the Trustees of actions which they must take on behalf of the Trust, and prepare for execution and filing any documents to be executed and filed by the Trust or on behalf of the Trust, as the Depositor deems necessary or advisable in order to comply with the applicable laws of any such states and foreign jurisdictions; (iii) to the extent the Administrative Trustees deem necessary, to prepare for filing by the Trust with the Commission and to execute on behalf of the Trust a registration statement on Form 8-A relating to the registration of the Preferred Securities under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, including any amendments thereto (it being understood that neither the Trust nor the Depositor has any obligation under the Indenture, the Purchase Agreement or the Declaration to register any Trust Securities under the Securities Exchange Act of 1934, as amended, or to list any Trust Securities on any securities exchange); (iv) to cause the Trust to enter into, and execute, deliver and perform on behalf of the Trust, the Registration Rights Agreement, the Purchase Agreement and the 18 24 Certificate Depositary Agreement and such other agreements as may be necessary or incidental to the purposes and functions of the Trust; and (v) any other actions necessary or incidental to carry out any of the foregoing activities. (d) Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that the Trust will not be deemed to be an "investment company" required to be registered under the 1940 Act, or taxed as a corporation for United States Federal income tax purposes and so that the Debentures will be treated as indebtedness of the Depositor for United States Federal income tax purposes. In this connection, the Depositor and the Administrative Trustees are authorized to take any action, not inconsistent with applicable law, the Certificate of Trust or this Declaration, that each of the Depositor and the Administrative Trustees determines in their discretion to be necessary or desirable for such purposes, so long as such action does not adversely affect in any material respect the interests of the Holders of the Preferred Securities except as otherwise provided in Section 10.2(a). SECTION 2.8. Assets of Trust. The assets of the Trust shall consist of only the Trust Property. SECTION 2.9. Title to Trust Property. Legal title to all Trust Property shall be vested at all times in the Property Trustee (in its capacity as such) and shall be held and administered by the Property Trustee for the benefit of the Trust and the Securityholders in accordance with this Declaration. The Securityholder shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial interest in the assets of the Trust. ARTICLE 3 PROPERTY ACCOUNT SECTION 3.1. Property Account. (a) On or prior to the Closing Date, the Property Trustee shall establish the Property Account. The Property Trustee and any agent of the Property Trustee shall have exclusive control and sole right of withdrawal with respect to the Property Account for the purpose of making deposits in and withdrawals from the Property Account in accordance with this Declaration. All monies and other property deposited or held from time to time in the Property Account shall be held by the Property Trustee in the Property Account for the exclusive benefit of the Securityholders and for distribution as herein provided including (and subject to) any priority of payments provided for herein. (b) The Property Trustee shall deposit in the Property Account, promptly upon receipt, all payments of principal of or interest on, and any other payments or proceeds with respect to, the Debentures. Amounts held in the Property Account shall not be invested by the Property Trustee pending distribution thereof. 19 25 ARTICLE 4 DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION SECTION 4.1. Distributions. (a) Distributions on the Trust Securities will accumulate from March 24, 1998, or the most recent Distribution Date to which Distributions have been paid in full and, except in the event that the Depositor exercises its right to defer the payment of amounts due under the Debentures pursuant to the Indenture, shall be payable quarterly in arrears on January 1, April 1, July 1, and October 1 of each year to the holders of record of the Preferred Securities on the Relevant Record Date, commencing on July 1, 1998 (which dates correspond to the interest payment dates on the Debentures), when, as and if available for payment by the Property Trustee, as further described in paragraph (c) of this Section 4.1. In the event any date on which Distributions are payable on the Trust Securities is not a Business Day, the payment of such Distributions payable on such date shall be made on the next succeeding day that is a Business Day and without any additional Distributions or other payment in respect of any such delay, except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the relevant Distribution Payment date (each date on which Distributions are payable in accordance with this Section 4.1(a), a "DISTRIBUTION DATE"). (b) The Trust Securities represent undivided beneficial interests in the Trust Property, and the Distributions on the Trust Securities shall be payable at a rate of 5 1/2% per annum of the Liquidation Amount of the Trust Securities, such rate being the rate of interest payable on the Debentures to be held by the Property Trustee. The amount of Distributions payable for any period shall be computed on the basis of a 360-day year of twelve 30-day months. For periods less than three months, Distributions shall reflect interest on Debentures computed on the basis of the actual number of elapsed days in such period based on 30-day months. The amount of Distributions payable for any period shall include any accrued and unpaid Additional Sums, Additional Amounts and Liquidated Damages, if any. (c) Distributions on the Trust Securities shall be made by the Property Trustee from the Property Account and shall be payable on each Distribution Date only to the extent that the Trust has funds actually received by the Property Trustee and then on hand and available in the Property Account for the payment of such Distributions. (d) Distributions on the Trust Securities with respect to a Distribution Date or Redemption Date, if applicable, shall be payable to the Holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be the date which is the fifteenth day (whether or not a Business Day) next preceding such Distribution Date or Redemption Date (the "RELEVANT RECORD DATE"). Subject to Section 4.5 hereof, all Distributions shall be made pro rata. SECTION 4.2. Redemption. (a) (i) Upon an optional redemption (as provided for in the Indenture) of Debentures, the proceeds from such redemption to the extent actually received by the Property Trustee shall be applied to redeem Trust Securities having an aggregate 20 26 Liquidation Amount equal to the aggregate principal amount of the Debentures so redeemed by the Depositor, including pursuant to Section 4.4, at the Optional Redemption Price, and upon a mandatory redemption (as set forth in the Indenture) of Debentures, the proceeds from such redemption shall be applied to redeem Trust Securities, pro rata, having an aggregate Liquidation Amount equal to the aggregate principal amount of the Debentures so redeemed by the Depositor, at the Redemption Price. The Trust shall not redeem the Trust Securities unless, on or before the date the Trust gives notice of redemption to the Securityholders, all accrued and unpaid Distributions for all quarterly payment periods ending on or prior to the most recent Distribution Date have been paid in full on all outstanding Preferred Securities. (ii) If at any time less than five percent (5%) in principal amount of the Debentures originally issued by the Depositor remain outstanding, such Debentures shall be redeemable, at the option of the Depositor, in whole but not in part, at the Redemption Price; in such event, the proceeds from such redemption to the extent actually received by the Property Trustee shall be applied to redeem the Outstanding Trust Securities. (b) Notice of any redemption (optional or mandatory) of Trust Securities (which notice will be irrevocable) shall be prepared by or on behalf of the Administrative Trustees and delivered to the Property Trustee, and shall then be given by the Property Trustee by first-class mail, postage prepaid, mailed to the Depositor and each Holder of Trust Securities to be redeemed not less than 30 nor more than 60 days prior to the Redemption Date, at such Holder's address as it appears in the Securities Register. All notices of redemption shall state: (i) the Redemption Date; (ii) the Redemption Price or the Optional Redemption Price, as the case may be; (iii) the applicable CUSIP number; (iv) if less than all of the Outstanding Trust Securities are to be redeemed, the identification and the aggregate Liquidation Amount of the particular Trust Securities to be redeemed in accordance with Section 4.2(e); (v) if the Preferred Securities are convertible, (A) that a Holder of Preferred Securities who desires to convert such Preferred Securities called for redemption must satisfy the requirements for conversion contained in Section 4.3 below, (B) the Conversion Price and (C) the date and time when the option to convert shall expire; (vi) that on the Redemption Date the Redemption Price or the Optional Redemption Price, as the case may be, will become due and payable upon each such Trust Security to be redeemed and that Distributions thereon will cease to accrue on and after said date and the Trust Security will cease to have conversion privileges; and 21 27 (vii) the place or places where such Trust Securities are to be surrendered for payment of the Redemption Price or the Optional Redemption Price, as the case may be. (c) The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price or the Optional Redemption Price, as the case may be, with the proceeds from the contemporaneous redemption of Debentures. Redemption of the Trust Securities shall be made and the Redemption Price or the Optional Redemption Price, as the case may be, shall be payable on each Redemption Date only to the extent that the Trust has funds actually received by the Property Trustee and then on hand and available in the Property Account for the payment of such Redemption Price or the Optional Redemption Price, as the case may be. (d) If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption Date, subject to Section 4.2(c), the Property Trustee shall, so long as and to the extent the Preferred Securities are in book-entry-only form, irrevocably deposit with the Clearing Agency for the Preferred Securities funds sufficient to pay the applicable Redemption Price and will give the Clearing Agency irrevocable instructions and authority to pay the Redemption Price or the Optional Redemption Price, as the case may be, to the Holders of such Preferred Securities. If the Preferred Securities are no longer in book-entry only form, the Property Trustee, subject to Section 4.2(c), will irrevocably deposit with the Paying Agent funds sufficient to pay the applicable Redemption Price or Optional Redemption Price, as the case may be, on such Preferred Securities held in certificated form and will give the Paying Agent irrevocable instructions and authority to pay the Redemption Price or the Optional Redemption Price, as the case may be, to the Holders thereof upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Securities Register for the Trust Securities on the Relevant Record Dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then, upon the date of such deposit, all rights of Securityholders holding Trust Securities so called for redemption will cease (including the accumulation of Distributions and conversion rights of Trust Securities), except the right of such Securityholders to receive the Redemption Price or the Optional Redemption Price, as the case may be, but without interest on such Redemption Price or Optional Redemption Price, as the case may be, and such Trust Securities will cease to be Outstanding. In the event that any date fixed for redemption of Trust Securities is not a Business Day, then payment of the Redemption Price or the Optional Redemption Price, as the case may be, payable on such date shall be made on the next succeeding day which is a Business Day (without interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of Preferred Securities called for redemption is improperly withheld or refused and not paid by the Trust or by the Depositor pursuant to the Guarantee, Distributions on such Preferred Securities will continue to accumulate at the then applicable rate, from the Redemption Date originally established by the Trust to the date such Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purpose of calculating the Redemption Price. 22 28 (e) If less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated on a pro rata basis (based on Liquidation Amounts) among the Common Securities and the Preferred Securities that are to be redeemed. The particular Preferred Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Property Trustee from the Outstanding Preferred Securities not previously called for redemption, by lot or by such other method as the Property Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $50 or an integral multiple of $50 in excess thereof) of the Liquidation Amount of the Preferred Securities. The Property Trustee shall promptly notify the Securities Registrar and the Conversion Agent (unless the Property Trustee is then serving as the Securities Registrar and Conversion Agent) in writing of the Preferred Securities selected for partial redemption and, in the case of any Preferred Securities selected for redemption, the Liquidation Amount thereof to be redeemed; it being understood that, in the case of Preferred Securities registered in the name of and held of record by the Clearing Agency or its nominee, the distribution of the proceeds of such redemption will be made in accordance with the procedures of the Clearing Agency or its nominee. For all purposes of this Declaration, unless the context otherwise requires, all provisions relating to the redemption of Trust Securities shall relate, in the case of any Trust Securities redeemed or to be redeemed only in part, to the portion of the Liquidation Amount of Trust Securities which has been or is to be redeemed. In the event of any redemption in part, the Trust shall not be required to (i) issue, or register the transfer of or exchange of, any Preferred Security during a period beginning at the opening of business 15 days before any selection of the Preferred Securities to be redeemed and ending at the close of business on the earliest date in which the relevant notice of redemption is deemed to have been given to all holders of Preferred Securities to be so redeemed pursuant to Section 10.8 or (ii) register the transfer of or exchange of any Preferred Securities so selected for redemption, in whole or in part, except for the unredeemed portion of any Preferred Securities being redeemed in part. SECTION 4.3. Conversion. The Holders of Trust Securities, subject to the limitations set forth in this Section 4.3, shall have the right at any time beginning 90 days following the first date of original issuance of the Trust Securities through the Conversion Expiration Date, at their option, to cause the Conversion Agent to convert Trust Securities, on behalf of the converting Holders, into shares of Common Stock in the manner described herein on and subject to the following terms and conditions: (a) The Trust Securities will be convertible into fully paid and nonassessable shares of Common Stock pursuant to the Holder's direction to the Conversion Agent to exchange such Trust Securities for a portion of the Debentures equal in principal amount to the aggregate Liquidation Amount of the Trust Securities to be converted, and immediately convert such amount of Debentures into fully paid and nonassessable shares of Common Stock at an initial conversion price of $78.25 per share of Common Stock, subject to certain adjustments set forth in the Indenture (as so adjusted, the "CONVERSION PRICE"), which is equivalent to an initial conversion rate of 0.6390 shares of Common Stock for each Trust Security. 23 29 (b) In order to convert Trust Securities into Common Stock, the Holder of such Trust Securities shall submit to the Conversion Agent an Irrevocable Notice of Conversion (in substantially the form of Exhibit E hereto) to convert Trust Securities on behalf of such Holder, together, if the Trust Securities are in certificated form, with such certificates. The Notice of Conversion shall (i) set forth the number of Trust Securities to be converted and the name or names, if other than the Holder, in which the shares of Common Stock should be issued and (ii) direct the Conversion Agent (a) to exchange such Trust Securities for a portion of the Debentures equal in principal amount to the aggregate Liquidation Amount of the Trust Securities to be converted held by the Property Trustee (at the rate of exchange specified in the preceding paragraph) and (b) to immediately convert such Debentures, on behalf of such Holder, into Common Stock and, if applicable, other securities, cash or property (at the conversion rate specified in the preceding paragraph). The Conversion Agent shall notify the Property Trustee of the Holder's election to exchange Trust Securities for a portion of the Debentures held by the Property Trustee and the Property Trustee shall, upon receipt of such notice, deliver to the Conversion Agent the appropriate principal amount of Debentures for exchange in accordance with this Section 4.3. The Conversion Agent shall thereupon notify the Depositor of the Holder's election to convert such Debentures into shares of Common Stock. Holders of Trust Securities at the close of business on a Relevant Record Date for a Distribution will be entitled to receive the Distribution paid on such Trust Securities on the corresponding Distribution Date notwithstanding the conversion of such Trust Securities following such Relevant Record Date but prior to such Distribution Date. Except as provided above, neither the Trust nor the Depositor will make, or be required to make, any payment, allowance or adjustment upon any conversion on account of any accumulated and unpaid Distributions whether or not in arrears, as a result of the Depositor's exercise of its right to defer payment of amounts due under the Debentures pursuant to the Indenture or otherwise, accrued on the Trust Securities surrendered for conversion, or on account of any accumulated and unpaid dividends on the shares of Common Stock issued upon such conversion. The Depositor, and accordingly the Trust, will make no payment or allowance for dividends paid on shares of Common Stock prior to the date shares of Common Stock are issued upon such conversion. Trust Securities shall be deemed to have been converted immediately prior to the close of business on the day on which an irrevocable Notice of Conversion relating to such Trust Securities is received by the Conversion Agent in accordance with the foregoing provision (the "CONVERSION DATE"). The Person or Persons entitled to receive the Common Stock issuable upon conversion of the Debentures shall be treated for all purposes as the record holder or holders of such Common Stock on the date of conversion. As promptly as practicable on or after the Conversion Date, the Depositor shall issue and deliver at the office of the Conversion Agent a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion, together with the cash payment, if any, in lieu of any fraction of any share to the Person or Persons entitled to receive the same pursuant to Section 4.3(d), and the Conversion Agent shall distribute such certificate or certificates to such Person or Persons. (c) Each Holder of a Trust Security by its acceptance thereof initially appoints the Property Trustee as conversion agent (the "CONVERSION AGENT"), for the purpose of effecting the conversion of Trust Securities in accordance with this Section 4.3. In effecting the conversion and transactions described in this Section 4.3, the Conversion Agent shall be acting as agent of the Holders of Trust Securities directing it to effect such conversion transactions. The Conversion 24 30 Agent is hereby authorized (i) to exchange Trust Securities from time to time for Debentures held by the Trust in connection with the conversion of such Trust Securities in accordance with this Section 4.3 and (ii) to convert all or a portion of the Debentures into Common Stock and thereupon to deliver such shares of Common Stock in accordance with the provisions of this Section 4.3 and to deliver to the Property Trustee any new Debenture or Debentures for any resulting unconverted principal amount delivered to the Conversion Agent by the Indenture Trustee. (d) No fractional shares of Common Stock will be issued as a result of conversion, but, in lieu thereof, such fractional interest will be paid in cash by the Depositor to the Conversion Agent in an amount equal to the Current Market Price of such fractional share on the date on which Trust Securities were duly surrendered to the Conversion Agent for conversion, and the Conversion Agent will in turn make such payment to the Holder or Holders of Trust Securities so converted. (e) Nothing in this Section 4.3 shall limit the requirement of the Trust to withhold taxes pursuant to the terms of the Trust Securities or as set forth in this Declaration or otherwise required of the Property Trustee or the Trust to pay any amounts on account of such withholdings, except that such amounts will not be withheld if Securityholders satisfy the Property Trustee in its sole discretion that no taxes are due. (f) The provisions of this Declaration, including Sections 8.1, 8.3 and 8.6, shall apply to the Property Trustee also in its capacity as Conversion Agent. SECTION 4.4. Special Event Exchange or Redemption. (a) If a Special Event shall occur and be continuing, the Administrative Trustees shall direct the Conversion Agent to exchange all Outstanding Trust Securities for Debentures having a principal amount equal to the aggregate Liquidation Amount of the Trust Securities to be exchanged and to dissolve the Trust; provided, however, that, in the case of a Tax Event, the Depositor shall have the right to (i) direct that less than all, or none, as appropriate, of the Trust Securities be so exchanged if and for so long as the Depositor shall have elected to pay any Additional Sums such that the net amounts received by Holders of Trust Securities not so exchanged in respect of Distributions are not reduced as a result of such Tax Event, and shall not have revoked any such election or failed to make such payments or (ii) cause the Trust Securities to be redeemed in the manner set forth below; provided, however, that the Depositor shall be required to comply with Section 4.4(a)(i) to the extent Trust Securities are not exchanged or redeemed. If a Tax Event shall occur or be continuing, the Depositor shall have the right, upon not less than 30 nor more than 60 days' notice, to redeem the Debentures, in whole or in part, for cash upon the later of (i) 90 days following the occurrence of such Tax Event or (ii) April 2, 2001. Promptly following such redemption, Trust Securities with an aggregate Liquidation Amount equal to the aggregate principal amount of the Debentures so redeemed will be redeemed by the Trust at the Redemption Price on a pro rata basis, except as provided for in Section 4.5. (b) Notice of any exchange pursuant to this Section 4.4 (an "EXCHANGE NOTICE") of the Trust Securities, which Exchange Notice shall be irrevocable, will be given by the Property 25 31 Trustee by first-class mail to the Depositor and to each record Holder of Trust Securities to be exchanged not fewer than 30 nor more than 60 days prior to the date fixed for exchange thereof. For purposes of the calculation of the date of exchange and the dates on which notices are given pursuant to this paragraph (b), an Exchange Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, to each Holder. Each Exchange Notice shall be addressed to each Holder of Trust Securities at the address of such Holder appearing in the Securities Register. Each Exchange Notice shall state: (A) the exchange date; (B) the aggregate Liquidation Amount on the Trust Securities to be exchanged and the aggregate principal amount of the Debentures to be exchanged therefor; (C) that on the exchange date the Trust Securities to be so exchanged shall be exchanged for Debentures and that Distributions on the Trust Securities so exchanged will cease to accumulate on and after said date; and (D) the identity of the Conversion Agent, if any, and the place or places where each Trust Certificate to be exchanged is to be surrendered in exchange for Debentures. No defect in the Exchange Notice or in the mailing thereof with respect to any Trust Security shall affect the validity of the exchange proceedings for any other Trust Security. (c) In the event that fewer than all the Outstanding Preferred Securities are to be exchanged, then, on the exchange date, (i) if all of the Outstanding Preferred Securities are represented by Definitive Preferred Securities Certificates, the particular Preferred Securities to be exchanged will be selected by the Property Trustee from the Outstanding Preferred Securities not previously called for redemption or exchange on a pro rata basis (based on Liquidation Amounts), (ii) if all of the Outstanding Preferred Securities are represented by Book-Entry Preferred Securities Certificates, the Property Trustee shall provide for the selection for exchange of a portion of the Rule 144A Global Certificate representing the Book-Entry Preferred Securities Certificates on a pro rata basis (based on Liquidation Amounts) and (iii) if Outstanding Trust Securities are represented by both Definitive Preferred Securities Certificates and Book-Entry Preferred Securities Certificates, the Property Trustee shall select the portion of the Rule 144A Global Certificate representing the Book-Entry Preferred Securities Certificates and the particular Outstanding Preferred Securities represented by Definitive Preferred Securities Certificates to be exchanged on a pro rata basis. In the case of clause (ii) or (iii) above, the particular Book-Entry Preferred Securities Certificates to be exchanged shall be selected in accordance with the applicable rules and procedures for the Clearing Agency in whose name, or whose nominee's name, such Rule 144A Global Certificate is then held. Any Preferred Securities Certificate that is to be exchanged only in part shall be surrendered with due endorsement or by a written instrument of transfer fully executed by the Holder thereof (or its attorney duly authorized in writing) and the Administrative Trustees shall prepare and the Property Trustee shall authenticate and deliver to such Holder, without service charge, a new Preferred Securities Certificate or Certificates in aggregate stated Liquidation Amount equal to, and in exchange for, the unexchanged portion of the Preferred Securities Certificate so surrendered. The Common Securities shall be exchanged in a similar manner. (d) In the event of an exchange pursuant to this Section 4.4, on the date fixed for any such exchange, (i) if the Preferred Securities are represented by Book-Entry Preferred Securities Certificates, the Clearing Agency or its nominee, as the record Holder of the Preferred Securities, will exchange through the Conversion Agent the Rule 144A Global Certificate representing the 26 32 Preferred Securities to be exchanged for a registered Rule 144A Global Certificate or certificates representing the Debentures to be delivered upon such exchange, (ii) if the Preferred Securities are represented by Definitive Preferred Securities Certificates, the certificates representing the Preferred Securities to be so exchanged will be deemed to represent Debentures having a principal amount equal to the aggregate stated Liquidation Amount of such Preferred Securities until such certificates are presented to the Conversion Agent for exchange for definitive certificates representing Debentures and (iii) all rights of the Holders of the Preferred Securities so exchanged will cease, except for the right of such Holders to receive Debentures. The Common Securities shall be exchanged in a similar manner. (e) Each Holder, by becoming a party to this Declaration pursuant to Section 10.11 of this Declaration, will be deemed to have agreed to be bound by these exchange provisions in regard to the exchange of Trust Securities for Debentures pursuant to the terms described above. (f) Nothing in this Section 4.4 shall limit the requirement of the Trust to withhold taxes pursuant to the terms of the Trust Securities or as set forth in this Declaration or otherwise require the Property Trustee or the Trust to pay any amounts on account of such withholdings. SECTION 4.5. Subordination of Common Securities. Payment of Distributions on, and the Redemption Price or Optional Redemption Price of, the Trust Securities, as applicable, shall be made pro rata based on the Liquidation Amount of the Trust Securities; provided, however, that if on any Distribution Date or Redemption Date a Responsible Officer of the Property Trustee has actual knowledge that a Debenture Event of Default under clauses (a) or (b) of Section 5.1 of the Indenture shall have occurred and be continuing, no payment of any Distribution on, or the Redemption Price or Optional Redemption Price of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions on all Outstanding Preferred Securities for all Distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price or Optional Redemption Price on all Outstanding Preferred Securities, shall have been made or provided for, and all funds immediately available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions on, or the Redemption Price or Optional Redemption Price of, Preferred Securities then due and payable. SECTION 4.6. Payment Procedures. Payments in respect of the Preferred Securities shall be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Securities Register or, if the Preferred Securities are held by a Clearing Agency, such Distributions shall be made to the Clearing Agency in immediately available funds, in accordance with the Certificate Depositary Agreement on the applicable Distribution Dates or Redemption Dates. Payments, if any, in respect of the Common Securities shall be made in such manner as shall be mutually agreed between the Property Trustee and the Holder of the Common Securities. SECTION 4.7. Tax Returns and Reports. The Administrative Trustees shall prepare (or cause to be prepared), at the Depositor's expense, and file all United States Federal, 27 33 State and local tax and information returns and reports required to be filed by or in respect of the Trust. In this regard, the Administrative Trustees shall (a) prepare and file (or cause to be prepared or filed) Form 1041 or the appropriate Internal Revenue Service form required to be filed in respect of the Trust in each taxable year of the Trust and (b) prepare and furnish (or cause to be prepared and furnished) to each Holder a Form 1099 or the appropriate Internal Revenue Service form required to be furnished to such Holder or the information required to be provided on such form. The Administrative Trustees shall provide the Depositor and the Property Trustee with a copy of all such returns, reports and schedules promptly after such filing or furnishing. The Administrative Trustees and the Property Trustee shall comply with United States Federal withholding and backup withholding tax laws and information reporting requirements with respect to any payments to Securityholders under the Trust Securities. SECTION 4.8. Payment of Taxes, Duties, Etc. of the Trust. Upon receipt under the Debentures of Additional Sums, the Property Trustee, upon receipt of written notice from the Depositor or the Administrative Trustees, shall promptly pay from such Additional Sums any taxes, duties or governmental charges of whatsoever nature (other than withholding taxes) imposed on the Trust by the United States or any other taxing authority. SECTION 4.9. Payments under Indenture. Any amount payable hereunder to any Holder of Preferred Securities (and any Owner with respect thereto) shall be reduced by the amount of any corresponding payment such Holder (or Owner) has directly received pursuant to Section 5.8 of the Indenture in accordance with the terms of Section 6.8 hereof. ARTICLE 5 TRUST SECURITIES CERTIFICATES SECTION 5.1. Initial Ownership. Upon the formation of the Trust and until the issuance of the Trust Securities, and at any time during which no Trust Securities are Outstanding, the Depositor shall be the sole beneficial owner of the Trust. SECTION 5.2. The Trust Securities Certificates. The Preferred Securities Certificates shall be issued in minimum denominations of $50 Liquidation Amount and integral multiples of $50 in excess thereof, and the Common Securities Certificates shall be issued in denominations of $50 Liquidation Amount and integral multiples thereof. The consideration received by the Trust for the issuance of the Trust Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust. Preferred Securities initially sold to qualified institutional buyers in reliance on Rule 144A under the Securities Act ("RULE 144A PREFERRED SECURITIES") initially will be represented by one or more certificates in registered, global form (collectively, the "RESTRICTED RULE 144A GLOBAL CERTIFICATE"). Preferred Securities transferred in accordance with Section 5.4 in a manner exempt from the registration requirements of the Securities Act or pursuant to Section 5.13 will be exchanged for Preferred Securities in registered, certificated form (the "CERTIFICATED PREFERRED SECURITIES"). The Preferred Securities Certificates shall be executed on behalf of the Trust by manual or facsimile signature of at least one 28 34 Administrative Trustee and authenticated by the Property Trustee. The Common Securities Certificate shall be executed on behalf of the Trust by manual signature of at least one Administrative Trustee. Trust Securities Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefit of this Declaration, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the delivery of such Trust Securities Certificates or did not hold such offices at the date of delivery of such Trust Securities Certificates. A transferee of a Trust Securities Certificate shall become a Securityholder, and shall be entitled to the rights and subject to the obligations of a Securityholder hereunder, upon due registration of such Trust Securities Certificate in such transferee's name pursuant to Section 5.4. SECTION 5.3. Delivery of Trust Securities Certificates. On the Closing Date, the Administrative Trustees shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as provided in Sections 2.4 and 2.5, to be executed by an Administrative Trustee on behalf of the Trust and delivered to or upon the written order of an Administrative Trustee or authorized agent thereof without further action by the Trust, in authorized denominations. A Preferred Security Certificate shall not be valid until authenticated by the manual signature of an authorized signatory of the Property Trustee and shall be dated as of the date of such authentication. The signature shall be conclusive evidence that the Trust Security Certificate has been authenticated under this Declaration. Upon a written order of the Trust signed by one Administrative Trustee, the Property Trustee shall authenticate the Trust Security Certificates for original issue. The Property Trustee may appoint an authenticating agent acceptable to the Administrative Trustees to authenticate Preferred Security Certificates. An authenticating agent may authenticate Preferred Security Certificates whenever the Property Trustee may do so. Each reference in this Declaration to authentication by the Property Trustee includes authentication by such agent. An authenticating agent has the same rights as the Property Trustee to deal with the Depositor or an Affiliate with respect to the authentication of Preferred Securities. SECTION 5.4. Registration of Transfer and Exchange of Preferred Securities; Restrictions on Transfer. (a) The Securities Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 5.8, a register in which, subject to such reasonable regulations as it may prescribe, such register shall provide for the registration of Preferred Securities Certificates and Common Securities Certificates (subject to Section 5.10 in the case of the Common Securities Certificates) and registration of transfers and exchanges of Preferred Securities Certificates as herein provided (such register is herein sometimes referred to as the "SECURITIES REGISTER"). The Property Trustee shall be the initial Securities Registrar. The provisions of this Declaration, including Sections 8.1, 8.3 and 8.6, shall apply to the Property Trustee in its role as Securities Registrar. Subject to the other provisions of this Declaration regarding restrictions on transfer, upon surrender for registration of transfer of any Preferred Security at an office or agency of the Depositor designated pursuant to Section 5.8 for such purpose, an Administrative Trustee shall execute, and the Property Trustee shall authenticate and deliver, in the name of the designated 29 35 transferee or transferees, one or more new Preferred Securities of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Declaration. At the option of the Holder, and subject to the other provisions of this Section 5.4, Preferred Securities may be exchanged for other Preferred Securities of any authorized denomination and of a like Liquidation Amount, upon surrender of the Preferred Securities to be exchanged at any such office or agency of the Depositor. Whenever any Preferred Securities are so surrendered for exchange, an Administrative Trustee shall execute, and the Property Trustee shall authenticate and deliver, the Preferred Securities which the Holder making the exchange is entitled to receive. All Preferred Securities issued upon any registration of transfer or exchange of Preferred Securities shall be entitled to the same benefits under this Declaration as the Preferred Securities surrendered upon such registration of transfer or exchange. Every Preferred Security presented or surrendered for registration of transfer or for exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Depositor and the Securities Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Preferred Securities Certificates, but the Securities Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Securities Certificates, other than exchanges pursuant to Sections 4.2(c), 4.4 and 5.13. (b) A beneficial interest in a Rule 144A Global Certificate may be exchanged for a Certificated Preferred Security in connection with certain transfers exempt from registration under the Securities Act, but only upon the delivery of such certificates and legal opinions as may be required by, and to the satisfaction of, the Administrative Trustees and the Property Trustee. (c) Securities Act Legends. Rule 144A Securities, Certificated Preferred Securities and their respective Successor Securities shall bear a Restricted Securities Legend as set forth in Section 5.15, subject to the following: (i) subject to the following Clauses of this Section 5.4(c), a Certificated Preferred Security or any portion thereof which is exchanged upon transfer or otherwise, for a Rule 144A Global Certificate or any portion thereof shall bear the Securities Act Legend borne by such Rule 144A Global Certificate while represented thereby; (ii) Any Preferred Securities which are sold or otherwise disposed of pursuant to an effective registration statement under the Securities Act (including the Shelf Registration Statement), together with their Successor Securities shall not bear a Securities Act Legend; the Depositor shall inform the Property Trustee in writing of the 30 36 effective date of any such registration statement registering the Preferred Securities under the Securities Act and shall notify the Property Trustee at any time when prospectuses may not be delivered with respect to Preferred Securities to be sold pursuant to such registration statement. The Property Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned registration statement; (iii) at any time after the Preferred Securities may be freely transferred without registration under the Securities Act or without being subject to transfer restrictions pursuant to the Securities Act, a new Preferred Security which does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Preferred Security (other than a Rule 144A Global Certificate) or any portion thereof which bears such a legend if the Property Trustee has received an Unrestricted Securities Certificate, satisfactory to the Property Trustee and duly executed by the Holder of such legended Preferred Security or his attorney duly authorized in writing, and after such date and receipt of such certificate, an Administrative Trustee shall execute on behalf of the Trust and the Property Trustee shall authenticate and deliver such a new Preferred Security in exchange for or in lieu of such other Preferred Security as provided in this Article 5; and (iv) notwithstanding the foregoing provisions of this Section 5.4(c), a Successor Security of a Preferred Security that does not bear a particular form of Securities Act Legend shall not bear such form of legend unless an Administrative Trustee has reasonable cause to believe that such Successor Security is a "restricted security" within the meaning of Rule 144, in which case an Administrative Trustee shall execute on behalf of the Trust and the Property Trustee, at the direction of any Administrative Trustee, shall authenticate and deliver a new Preferred Security bearing a Restricted Securities Legend in exchange for such Successor Security as provided in this Article 5. SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates. If (a) any mutilated Trust Securities Certificate shall be surrendered to the Securities Registrar, or if the Securities Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Trust Securities Certificate and (b) there shall be delivered to the Securities Registrar and the Administrative Trustees such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Trust Securities Certificate shall have been acquired by a protected purchaser, the Administrative Trustees, or any one of them, on behalf of the Trust shall execute and make available to the Property Trustee for authentication in the case of the Preferred Securities Certificates and delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust Securities Certificate, and the Property Trustee shall authenticate a new Trust Securities Certificate of like denomination. In connection with the issuance of any new Trust Securities Certificate under this Section 5.5, the Securities Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicative Trust Securities Certificate issued pursuant to this Section 5.5 shall constitute conclusive evidence of an undivided beneficial interest in the assets of the Trust, as if originally issued, whether or not the lost, stolen or destroyed Trust Securities Certificate shall be found at any time. 31 37 The provisions of this Section 5.5 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Trust Securities. SECTION 5.6. Persons Deemed Securityholders. The Property Trustee and the Securities Registrar shall treat the Person in whose name any Trust Securities Certificate shall be registered in the Securities Register as the owner of such Trust Securities Certificate for the purpose of receiving Distributions and for all other purposes whatsoever, and neither the Property Trustee nor the Securities Registrar shall be bound by any notice to the contrary. SECTION 5.7. Access to List of Securityholders' Names and Addresses. The Administrative Trustees or the Depositor shall furnish or cause to be furnished (unless the Property Trustee is acting as Securities Registrar with respect to the Trust Securities under the Declaration) a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Securityholders as of the most recent record date (a) to the Property Trustee, quarterly at least five Business Days before each Distribution Date, and (b) to the Property Trustee, promptly after receipt by the Depositor of a request therefor from the Property Trustee in order to enable the Property Trustee to discharge its obligations under this Declaration, in each case to the extent such information is in the possession or control of the Administrative Trustees or the Depositor and is not identical to a previously supplied list or has not otherwise been received by the Property Trustee in its capacity as Securities Registrar. The rights of Securityholders to communicate with other Securityholders with respect to their rights under this Declaration or under the Trust Securities, and the corresponding rights of the Property Trustee shall be as provided in the Trust Indenture Act, except to the extent Section 3819 of the Delaware Business Trust Act would require greater access to such information, in which case the latter shall apply. Each Holder, by receiving and holding a Trust Securities Certificate, and each Owner shall be deemed to have agreed not to hold the Depositor, the Property Trustee or the Administrative Trustees accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. SECTION 5.8. Maintenance of Office or Agency. The Securities Registrar shall maintain an office or offices or agency or agencies where Preferred Securities Certificates may be surrendered for registration of transfer, exchange or conversion and where notices and demands to or upon the Trustees in respect of the Trust Securities Certificates may be served. The Securities Registrar initially designates Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration, as its principal corporate trust office for such purposes. The Securities Registrar shall give prompt written notice to the Depositor and to the Securityholders of any change in the location of the Securities Register or any such office or agency. SECTION 5.9. Appointment of Paying Agent. In the event that the Preferred Securities are not in book-entry form only, the Trust shall maintain an office or agency (the "PAYING AGENT") where the Preferred Securities may be presented for payment. The Paying Agent shall make Distributions to Securityholders from the Property Account and shall report the 32 38 amounts of such Distributions to the Property Trustee and the Administrative Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Property Account for the purpose of making the Distributions referred to above. The Administrative Trustees may revoke such power and remove the Paying Agent if such Trustees determine in their sole discretion that the Paying Agent shall have failed to perform its obligations under this Declaration in any material respect. The Paying Agent shall initially be the Property Trustee, and any co-paying agent chosen by the Property Trustee and acceptable to the Administrative Trustees and the Depositor. Any Person acting as Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Property Trustee and the Depositor. In the event that the Property Trustee shall no longer be the Paying Agent or a successor Paying Agent shall resign or its authority to act be revoked, the Administrative Trustees shall appoint a successor that is acceptable to the Property Trustee and the Depositor to act as Paying Agent (which shall be a bank or trust company). Each successor Paying Agent or any additional Paying Agent shall agree with the Trustees that, as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Securityholders in trust for the benefit of the Securityholders entitled thereto until such sums shall be paid to each Securityholder. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of this Declaration, including Sections 8.1, 8.3 and 8.6, shall apply to the Property Trustee also in its role as Paying Agent, for so long as the Property Trustee shall act as Paying Agent and, to the extent applicable, to any other paying agent appointed hereunder. Any reference in this Declaration to the Paying Agent shall include any co-paying agent unless the context requires otherwise. SECTION 5.10. Ownership of Common Securities by Depositor. On the Closing Date provided for in Section 2.5, the Depositor shall acquire and retain beneficial and record ownership of the Common Securities. Except in connection with mergers, acquisitions, consolidations or other transactions provided for in Section 8.1 of the Indenture and the pledge of Common Securities by the Depositor to secure indebtedness, to the fullest extent permitted by law, any attempted transfer of the Common Securities shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating "THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE REGISTRATION STATEMENT." SECTION 5.11. Global Securities; Non-Global Securities; Common Securities Certificate. (a) Each Rule 144A Global Certificate authenticated under this Declaration shall be registered in the name of the Clearing Agency designated by the Depositor for such Rule 144A Global Certificate or a nominee thereof and delivered to such Clearing Agency or a nominee thereof or custodian therefor, which initially shall be the Property Trustee, and each such Rule 144A Global Certificate shall constitute a Preferred Security for all purposes of this Declaration. (b) If a Rule 144A Global Certificate is to be exchanged for Certificated Preferred Securities or canceled in whole, it shall be surrendered by or on behalf of the Clearing Agency, its 33 39 nominee or custodian to the Property Trustee, as Securities Registrar, for exchange or cancellation as provided in this Article 5. If any Rule 144A Global Certificate is to be exchanged for Certificated Preferred Securities or canceled in part, or if another Preferred Security is to be exchanged in whole or in part for a beneficial interest in any Rule 144A Global Certificate, in each case, as provided in Section 5.4, then either (i) such Rule 144A Global Certificate shall be so surrendered for exchange or cancellation as provided in this Article 5 or (ii) the Liquidation Amount (or share amount) thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the Liquidation Amount (or share amount) of such Certificated Preferred Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Property Trustee, as Securities Registrar, whereupon the Property Trustee shall instruct the Clearing Agency or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Rule 144A Global Certificate, the Property Trustee shall, subject to Section 5.4 and as otherwise provided in this Article 5, authenticate and deliver any Preferred Securities issuable in exchange for such Rule 144A Global Certificate (or any portion thereof) to or upon the order of, and registered in such names as may be directed by, the Clearing Agency or its authorized representative. Upon the request of the Property Trustee in connection with the occurrence of any of the events specified in the preceding paragraph, the Depositor shall promptly make available to the Property Trustee a reasonable supply of Preferred Securities that are not in the form of Rule 144A Global Certificates. The Property Trustee shall be entitled to rely upon any order, direction or request of the Clearing Agency or its authorized representative which is given or made pursuant to this Article 5. (c) Every Preferred Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Rule 144A Global Certificate or any portion thereof, whether pursuant to this Article 5 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Rule 144A Global Certificate, unless such Preferred Security is registered in the name of a Person other than the Clearing Agency for such Rule 144A Global Certificate or a nominee thereof. (d) The Clearing Agency or its nominee, as registered owner of a Rule 144A Global Certificate, shall be the holder of such Rule 144A Global Certificate for all purposes under the Declaration and the Preferred Securities, and owners of beneficial interests in a Rule 144A Global Certificate shall hold such interests pursuant to the Applicable Procedures. Accordingly, any such Owner's beneficial interest in a Rule 144A Global Certificate will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Clearing Agency or its nominee or its participants and such owners of beneficial interests in a Rule 144A Global Certificate will not be considered the owners or holders of such Rule 144A Global Certificate for any purpose of this Declaration or the Preferred Securities. (e) A single Common Securities Certificate representing the Common Securities shall be issued to the Depositor in the form of a definitive Common Securities Certificate. SECTION 5.12. Notices to Clearing Agency. To the extent that a notice or other communication to the Owners is required under this Declaration, unless and until Definitive 34 40 Preferred Securities Certificates shall have been issued to Owners pursuant to Section 5.13, the Trustees shall give all such notices and communications specified herein to be given to Owners to the Clearing Agency, and shall have no obligations to provide notices directly to the Owners. SECTION 5.13. Definitive Preferred Securities Certificates. Notwithstanding any other provision in this Declaration other than as provided for in Section 5.4(b), no Rule 144A Global Certificate may be exchanged in whole or in part for Preferred Securities registered, and no transfer of a Rule 144A Global Certificate in whole or in part may be registered, in the name of any Person other than the Clearing Agency for such Rule 144A Global Certificate or a nominee thereof unless (i) such Clearing Agency has notified the Depositor and the Property Trustee that it is (A) unwilling or unable to continue as Clearing Agency for such Rule 144A Global Certificate or (B) has ceased to be a "clearing agency" registered as such under the Securities Exchange Act of 1934, as amended, and in either case the Trust and the Depositor thereupon fail to appoint a successor Clearing Agency within 90 days thereafter, (ii) the Trust and the Depositor, at their option, notify the Property Trustee in writing that they elect to cause the issuance of the Preferred Securities in certificated form or (iii) there shall have occurred and be continuing an Event of Default or any event which after notice or lapse of time or both would be an Event of Default. In all cases, Certificated Preferred Securities delivered in exchange for an Rule 144A Global Certificate or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the Clearing Agency (in accordance with its customary procedures). SECTION 5.14. Rights of Securityholders. The legal title to the Trust Property is vested exclusively in the Property Trustee (in its capacity as such) in accordance with Section 2.9, and the Securityholders shall not have any right or title therein other than the undivided beneficial interest in the assets of the Trust conferred by their Trust Securities and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Trust Securities shall be personal property giving only the rights specifically set forth therein and in this Declaration. The Trust Securities shall have no preemptive or similar rights to subscribe for additional Trust Securities and, when issued and delivered to Securityholders against payment of the purchase price therefor, will be validly issued, fully paid and nonassessable beneficial interests in the assets of the Trust. The Holders of the Trust Securities, in their capacities as such, shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. SECTION 5.15. Restrictive Legends. The Restricted Rule 144A Global Certificate and the Certificated Preferred Securities shall bear the following legend (the "RESTRICTED SECURITIES LEGEND") unless the Depositor determines otherwise in accordance with applicable law: THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGE OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE 35 41 ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OR EXCHANGE OF SUCH SECURITY EXCEPT (A) TO SUIZA FOODS CORPORATION OR A SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, OR (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR THE PREFERRED SECURITIES OR THE DEBENTURES, AS THE CASE MAY BE (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE TRANSFER AGENT), TOGETHER WITH SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUIZA FOODS CORPORATION, THE TRUSTEE OR THE TRANSFER AGENT, AS APPLICABLE, MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. ARTICLE 6 ACT OF SECURITYHOLDERS; MEETINGS; VOTING; AMENDMENT OF THE DECLARATION" SECTION 6.1. Limitations on Voting Rights. (a) Except as provided in this Section 6.1 and Sections 8.9 and 10.2, in the Indenture, in the Guarantee and as otherwise required by law, no Holder of Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Trust Securities Certificates, be construed so as to constitute the Securityholders from time to time as partners or members of an association. 36 42 (b) (i) The Declaration may be amended from time to time by the Depositor and the Trustees, without the consent of the Holders of the Preferred Securities, (i) to cure any ambiguity, correct or supplement any provisions in the Declaration that may be inconsistent with any other provisions, or to make any other provisions with respect to matters or questions arising under the Declaration that shall not be inconsistent with the other provisions of the Declaration, (ii) to modify, eliminate or add to any provision of the Declaration to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Trust Securities are outstanding or to ensure that the Trust will not be required to register as an "investment company" under the 1940 Act or (iii) to qualify or maintain the qualification of the Declaration under the Trust Indenture Act; provided, however, that in the case of clause (i), such action shall not adversely affect in any material respect the interests of any Holder of Trust Securities, and any amendments of the Declaration shall become effective when notice thereof is given to the Holders of Trust. (ii) The Declaration may be amended by the Depositor and the Trustees with (i) the consent of Holders representing not less than a majority (based upon Liquidation Amounts) of the Outstanding Trust Securities, acting as a single class, and (ii) receipt by the Trustees of an Opinion of Counsel having a national tax and securities practice (which opinion shall not have been rescinded) to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from the status of an "investment company" under the 1940 Act; provided, further, that (a) without the consent of each Holder of Trust Securities, the Declaration may not be amended to (i) change the amount or timing of any Distribution on the Trust Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Trust Securities as of a specified date or (ii) restrict the right of a Holder of Securities to institute suit for the enforcement of any such payment on or after such date. (iii) Subject to Section 8.2 hereof, if an Event of Default with respect to the Preferred Securities has occurred and been subsequently cured, waived or otherwise eliminated, the provisions of Section 6.1(b)(iii)(2) hereof shall apply. During (x) the period commencing on the date of the occurrence of an Event of Default with respect to the Preferred Securities and ending on the date when such Event of Default is cured, waived or otherwise eliminated, or (y) any period not described in either the preceding sentence or the preceding clause (x), the provisions of this Section 6.1(b)(iii)(1) shall apply. (1) The Holders of a majority in aggregate Liquidation Amount of the Preferred Securities will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee or to direct the exercise of any trust or power conferred upon the Property Trustee under the Declaration, including the right to direct the Property Trustee to exercise the remedies available to it as a holder of the Debentures, but excluding the right to direct the Property Trustee to consent to an amendment, modification or termination of the Indenture (which shall be as provided below). So long as any Debentures are held by the Property Trustee, the Administrative Trustees and the Property Trustee shall not (A) direct the time, method 37 43 and place of conducting any proceeding for any remedy available to the Indenture Trustee or executing any trust or power conferred on the Indenture Trustee with respect to such Debentures, (B) waive any past default that is waivable under Section 5.13 of the Indenture, (C) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable or (D) consent to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of a majority in aggregate Liquidation Amount of all Outstanding Preferred Securities (except in the case of clause (D), which consent, in the event that no Event of Default shall occur and be continuing, shall be of the Holders of all Trust Securities, voting together as a single class); provided, however, that where a the Indenture expressly provides that a consent thereunder would require the consent of each holder of Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior written consent of each Holder of Preferred Securities. The Administrative Trustees and the Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities except by a subsequent vote of the Holders of the Preferred Securities. The Property Trustee shall notify each Holder of the Preferred Securities of any notice of default received from the Indenture Trustee with respect to the Debentures. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities, prior to taking any of the foregoing actions, the Administrative Trustees and the Property Trustee shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that the Trust will not be classified as an association taxable as a corporation or partnership for United States Federal income tax purposes on account of such action. (2) Subject to Section 8.2 of this Declaration and only after the Event of Default with respect to the Preferred Securities has been cured, waived, or otherwise eliminated, the holders of a majority in aggregate Liquidation Amount of the Common Securities will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee or to exercise any trust or power conferred upon the Property Trustee under the Declaration, including the right to direct the Property Trustee to exercise the remedies available to it as a holder of the Debentures but excluding the right to direct the Property Trustee to consent to an amendment, modification or termination of the Indenture (which shall be as provided below). So long as any Debentures are held by the Property Trustee, the Administrative Trustees and the Property Trustee shall not (A) direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or executing any trust or power conferred on the Indenture Trustee with respect to such Debentures, (B) waive any past default that is waivable under Section 5.13 of the Indenture, (C) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable or (D) consent to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of a majority in aggregate Liquidation Amount of all Common Securities (except in the case of clause (D), which consent, in the event that no Event of Default shall occur and be continuing, shall be 38 44 of the Holders of all Trust Securities, voting together as a single class); provided, however, that where the Indenture expressly provides that a consent thereunder would require the consent of each holder of Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior written consent of each Holder of Common Securities. The Administrative Trustees and the Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Common Securities, except by a subsequent vote of the Holders of the Common Securities. The Property Trustee shall notify all Holders of record of the Common Securities of any notice of default received from the Indenture Trustee with respect to the Debentures. In addition to obtaining the foregoing approvals of the Holders of the Common Securities, prior to taking any of the foregoing actions, the Administrative Trustees and the Property Trustee shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that the Trust will not be classified as an association taxable as a corporation or partnership for United States Federal income tax purposes on account of such action. (c) If any proposed amendment of the Declaration provides for, or the Administrative Trustees and the Property Trustee otherwise propose to effect, the dissolution, winding-up or termination of the Trust, other than pursuant to the terms of this Declaration, then the Holders of Outstanding Preferred Securities, as a class, will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of a majority in aggregate Liquidation Amount of the Outstanding Preferred Securities. SECTION 6.2. Notice of Meetings. Notice of all meetings of the Holders of the Preferred Securities, stating the time, place and purpose of the meeting, shall be given by the Administrative Trustees pursuant to Section 10.8 to each Preferred Securityholder of record, at its registered address, at least 15 days and not more than 90 days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice. SECTION 6.3. Meetings of Preferred Securityholders. No annual meeting of Securityholders is required to be held. The Administrative Trustees, however, shall call a meeting of Securityholders to vote on any matter upon the written request of the Preferred Securityholders of record of 25% of the Preferred Securities (based upon their Liquidation Amount) and the Administrative Trustees or the Property Trustee may, at any time in their discretion, call a meeting of the Holders of Preferred Securities to vote on any matters as to which such Holders are entitled to vote. Holders of record of 50% of the Preferred Securities (based upon their Liquidation Amount), present in person or by proxy, shall constitute a quorum at any meeting of Securityholders. If a quorum is present at a meeting, an affirmative vote by the Holders of record of Preferred 39 45 Securities present, in person or by proxy, holding more than a majority of the Preferred Securities (based upon their Liquidation Amount) held by Holders of record of Preferred Securities present, either in Person or by proxy, at such meeting shall constitute the action of the Securityholders, unless this Declaration requires a greater number of affirmative votes. SECTION 6.4. Voting Rights. Securityholders shall be entitled to one vote for each $50 of Liquidation Amount represented by their Trust Securities in respect of any matter as to which such Securityholders are entitled to vote. Notwithstanding that holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned at such time by the Depositor, the Trustees or any affiliate of any Trustee shall, for purposes of such vote or consent, be treated as if such Preferred Securities were not Outstanding. SECTION 6.5. Proxies, Etc. At any meeting of Securityholders, any Securityholders entitled to vote thereat may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. Only Securityholders of record shall be entitled to vote. When Trust Securities are held jointly by several Persons, any one of them may vote at any meeting in Person or represented by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Securityholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. No proxy shall be valid more than three years after its date of execution. SECTION 6.6. Securityholder Action by Written Consent. Any action which may be taken by Securityholders at a meeting may be taken without a meeting if Securityholders holding more than a majority of all Outstanding Trust Securities (based upon their Liquidation Amount) entitled to vote in respect of such action (or such larger proportion thereof as shall be required by any express provision of this Declaration) shall consent to the action in writing. SECTION 6.7. Record Date for Voting and Other Purposes. For the purposes of determining the Securityholders who are entitled to notice of and to vote at any meeting or by written consent, or to participate in any Distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Declaration, or for the purpose of any other action, the Property Trustee on behalf of the Trust may from time to time fix a date, not more than 90 days prior to the date of any meeting of Securityholders or the payment of Distributions or other action, as the case may be, as a record date for the determination of the identity of the Securityholders of record for such purposes. SECTION 6.8. Acts of Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Declaration to be given, made or taken by Securityholders or Owners may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders or Owners in 40 46 person or by an agent duly appointed in writing; and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to an Administrative Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "ACT" of the Securityholders or Owners signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Declaration and (subject to Section 8.1) conclusive in favor of the Trustees, if made in the manner provided in this Section 6.8. The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which any Trustee receiving the same deems sufficient. The ownership of Preferred Securities shall be proved by the Securities Register. Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Securityholder of any Trust Security shall bind every future Securityholder of the same Trust Security and the Securityholder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security. Without limiting the foregoing, a Securityholder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such Liquidation Amount. If any dispute shall arise between the Securityholders and the Administrative Trustees or among such Securityholders or Trustees with respect to the authenticity, validity or binding nature of any request, demand, authorization, direction, consent, waiver or other Act of such Securityholder or Trustee under this Article 6, then the determination of such matter by the Property Trustee shall be conclusive with respect to such matter. Upon the occurrence and continuation of an Event of Default, the Holders of Preferred Securities shall rely on the enforcement by the Property Trustee of its rights as holder of the Debentures against the Depositor. If the Property Trustee fails to enforce its rights as holder of the Debentures after a request therefor by a Holder of Preferred Securities, such Holder may proceed to enforce such rights directly against the Depositor. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the 41 47 Depositor to pay interest or principal on the Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, on the Redemption Date), then a Holder of Preferred Securities shall have the right to institute a proceeding directly against the Depositor for enforcement of payment to such Holder of the principal amount of or interest on Debentures having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such Holder after the respective due date specified in the Debentures (a "Direct Action"). In connection with any such Direct Action, the rights of the Depositor will be subrogated to the rights of any Holder of the Preferred Securities to the extent of any payment made by the Depositor to such Holder of Preferred Securities as a result of such Direct Action. If the Guarantee Trustee (as defined in the Guarantee) fails to enforce the Guarantee, any Holder of the Preferred Securities may institute a legal proceeding directly against the Depositor under the Guarantee to enforce its rights under the Guarantee without first instituting a legal proceeding against the Guarantee Trustee, the Trust or any other Person. In addition, any Holder of Preferred Securities shall have the right, which is absolute and unconditional, to proceed directly against the Depositor to obtain payments under the Guarantee, without first waiting to determine if the Guarantee Trustee has enforced the Guarantee or instituting a legal proceeding against the Trust, the Guarantee Trustee or any other Person. Similarly, a Holder of Common securities shall have the right, which is absolute and unconditional, to proceed against the Depositor to obtain payment under that certain Guarantee Agreement dated March 24, 1998, of the Guarantor relating to the Common Securities. SECTION 6.9. Inspection of Records. Upon reasonable notice to the Administrative Trustees and the Property Trustee, the records of the Trust shall be open to inspection by Securityholders during normal business hours for any purpose reasonably related to such Securityholder's interest as a Securityholder. ARTICLE 7 REPRESENTATIONS AND WARRANTIES SECTION 7.1. Representations and Warranties of the Property Trustee and the Delaware Trustee. The Property Trustee and the Delaware Trustee, each severally on behalf of and as to itself, hereby represents and warrants for the benefit of the Depositor and the Securityholders that (each such representation and warranty made by the Property Trustee and the Delaware Trustee being made only with respect to itself): (a) the Property Trustee is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (b) the Delaware Trustee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (c) each of the Property Trustee and the Delaware Trustee has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Declaration and 42 48 has taken all necessary action to authorize the execution, delivery and performance by it of this Declaration; (d) this Declaration has been duly authorized, executed and delivered by each of the Property Trustee and the Delaware Trustee and constitutes the valid and legally binding agreement of the Property Trustee and the Delaware Trustee enforceable against each in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (e) the execution, delivery and performance by each of the Property Trustee and the Delaware Trustee of this Declaration have been duly authorized by all necessary corporate or other action on the part of the Property Trustee and the Delaware Trustee and does not require any approval of stockholders of the Property Trustee or the Delaware Trustee and such execution delivery and performance will not (i) violate either of the Property Trustee's or the Delaware Trustee's charter or by-laws, (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any Lien on any properties included in the Trust Property pursuant to the provisions of, any indenture, mortgage, credit agreement, license or other agreement or instrument which is not included or related to the transactions contemplated by this Declaration and to which the Property Trustee or the Delaware Trustee is a party or by which it is bound, or (ii) violate any law, governmental rule or regulation of the United States or the State of Delaware, as the case may be, governing the banking or trust powers of the Property Trustee or the Delaware Trustee (as appropriate in context) or any order, judgment or decree applicable to the Property Trustee or the Delaware Trustee; (f) neither the authorization, execution or delivery by the Property Trustee or the Delaware Trustee of this Declaration nor the consummation of any of the transactions by the Property Trustee or the Delaware Trustee (as appropriate in context) contemplated herein or therein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to, any Delaware or United States federal governmental authority or agency under the laws of the United States or the State of Delaware governing the banking or trust powers of the Property Trustee or the Delaware Trustee, as the case may be; (g) there are no proceedings pending or, to the best of each of the Property Trustee's and the Delaware Trustee's knowledge, threatened against or affecting the Property Trustee or the Delaware Trustee in any court or before any governmental authority, agency or arbitration board or tribunal which, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Property Trustee or the Delaware Trustee, as the case may be, to enter into or perform its obligations as one of the Trustees under this Declaration. SECTION 7.2. Representations and Warranties of Depositor. The Depositor hereby represents and warrants for the benefit of the Securityholders that: 43 49 (a) the Trust Securities Certificates issued on the Closing Date on behalf of the Trust have been duly authorized and will have been duly and validly executed, issued and delivered by the Trustees pursuant to the terms and provisions of, and in accordance with the requirements of, this Declaration and the Securityholders will be, as of such date, entitled to the benefits of this Declaration; and (b) there are no taxes, fees or other governmental charges payable by the Trust (or the Trustees on behalf of the Trust) under the laws of the State of Delaware or any political subdivision thereof in connection with the execution, delivery and performance by the Property Trustee or the Delaware Trustee, as the case may be, of this Declaration. ARTICLE 8 THE TRUSTEES SECTION 8.1. Certain Duties and Responsibilities. (a) The duties and responsibilities of the Trustees shall be as provided by this Declaration and, in the case of the Property Trustee, by the Trust Indenture Act. The Property Trustee, before the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred, shall undertake to perform only such duties and obligations as are specifically set forth in this Declaration and the Trust Indenture Act and no implied covenants shall be read into this Declaration against the Property Trustee. In case an Event of Default has occurred (and has not been cured or waived pursuant to Section 8.2) of which a Responsible Officer of the Property Trustee has actual knowledge, the Property Trustee shall exercise such rights and powers vested in it by this Declaration and the Trust Indenture Act, and use the same degree of care and skill in its exercise, as a prudent individual would exercise or use under the circumstances in the conduct of his or her own affairs. Notwithstanding the foregoing, no provision of this Declaration shall require the Trustees to expend or risk their own funds or otherwise incur any financial liability in the performance of any of their duties hereunder, or in the exercise of any of their rights or powers, if they shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to them. Whether or not herein expressly so provided, every provision of this Declaration relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section 8.1. Nothing in this Declaration shall be construed to release the Administrative Trustees from liability for their own grossly negligent action, their own grossly negligent failure to act, or their own willful misconduct. To the extent that, at law or in equity, an Administrative Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to the Securityholders, such Administrative Trustee shall not be liable to the Trust or to any Securityholder for such Administrative Trustee's good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of the Administrative Trustees otherwise existing at law or in equity, are agreed by the Depositor and the Securityholders to replace such other duties and liabilities of the Administrative Trustees. (b) Subject to any Direct Action by Holders of Preferred Securities, all payments made by the Property Trustee or a Paying Agent in respect of the Trust Securities shall be made only 44 50 from the revenue and proceeds from the Trust Property and only to the extent that there shall be sufficient revenue or proceeds from the Trust Property to enable the Property Trustee or a Paying Agent to make payments in accordance with the terms hereof. Each Securityholder, by its acceptance of a Trust Security, agrees that it will look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to it as herein provided and that the Trustees are not personally liable to it for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.1(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Declaration or, in the case of the Property Trustee, in the Trust Indenture Act. (c) No provision of this Declaration shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this subsection shall not be construed to limit the effectiveness of Subsection (a) of this Section 8.1; (ii) the Property Trustee shall not be liable for any error of judgment made in good faith by an authorized officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority of the aggregate Liquidation Amount of the Trust Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Declaration; and (iv) the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Depositor with their respective duties under this Declaration, nor shall the Property Trustee be liable for the default or misconduct of the Administrative Trustees or the Depositor. (d) The Property Trustee's sole duty with respect to the custody, safekeeping and physical preservation of the Debentures and the Property Account shall be to deal with such property as fiduciary assets, subject to the protections and limitations on liability afforded to the Property Trustee under this Declaration and the Trust Indenture Act. (e) The Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree in writing with the Depositor and money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Property Account maintained by the Property Trustee pursuant to Section 3.l and except to the extent otherwise required by law. 45 51 SECTION 8.2. Notice of Defaults. (a) Within ten days after a Responsible Officer shall obtain actual knowledge of the occurrence of any Event of Default, the Property Trustee shall transmit, in the manner and to the extent provided in Section 10.8, notice of such Event of Default to the Holders of Preferred Securities, the Administrative Trustees and the Depositor, unless such Responsible Officer shall have actual knowledge that such Event of Default shall have been cured or waived, provided that, except for a default in the payment of principal of (or premium, if any) or interest (including Additional Sums, Additional Amounts and Liquidated Damages, if applicable) on any of the Debentures, the Property Trustee shall be protected in withholding such notice if and so long as a Responsible Officer in good faith determines that the withholding of such notice is in the interests of the Holders of the Preferred Securities. (b) Within ten days after the receipt of written notice of the Depositor's exercise of its right to defer the payment of interest on the Debentures pursuant to the Indenture, the Property Trustee shall transmit, in the manner and to the extent provided in Section 10.8, notice of such exercise to the Securityholders, unless such exercise shall have been revoked. (c) The Holders of a majority of the aggregate Liquidation Amount of Outstanding Preferred Securities may, by vote, on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default in respect of the Preferred Securities and its consequences, provided that, if the underlying Debenture Event of Default: (i) is not waivable under the Indenture, the Event of Default under the Declaration shall also not be waivable; or (ii) requires the consent or vote of greater than a majority in principal amount of the holders of the Debentures (a "SUPER MAJORITY") to be waived under the Indenture, the Event of Default under the Declaration may only be waived by the vote of the Holders of the same proportion in aggregate Liquidation Amount of the Preferred Securities that the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding. The provisions of Sections 6.1(b) and 8.2(d) and this Section 8.2(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Preferred Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such default shall cease to exist, and any Event of Default with respect to the Preferred Securities arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or an Event of Default with respect to the Preferred Securities or impair any right consequent thereon. Any waiver by the Holders of the Preferred Securities of an Event of Default with respect to the Preferred Securities shall also be deemed to constitute a waiver by the Holders of the Common Securities of any such Event of Default with respect to the Common Securities for all purposes of this Declaration without any further act, vote, or consent of the Holders of the Common Securities. 46 52 (d) The Holders of a majority in aggregate Liquidation Amount of the Common Securities may, by vote, on behalf of the Holders of all of the Common Securities, waive any past Event of Default with respect to the Common Securities and its consequences, provided that, if the underlying Debenture Event of Default: (i) is not waivable under the Indenture, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 8.2(d), the Event of Default under the Declaration shall also not be waivable; or (ii) requires the consent or vote of a Super Majority to be waived, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 8.2(d), the Event of Default under the Declaration may only be waived by the vote of the Holders of the same proportion in aggregate Liquidation Amount of the Common Securities that the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding; provided, further, that each Holder of Common Securities will be deemed to have waived any such Event of Default and all Events of Default with respect to the Common Securities and its consequences until all Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated, and until such Events of Default have been so cured, waived or otherwise eliminated. In such a case, the Property Trustee will be deemed to be acting solely on behalf of the Holders of the Preferred Securities and only the Holders of the Preferred Securities will have the right to direct the Property Trustee in accordance with the terms of the Preferred Securities to act on their behalf. The provisions of Section 6.1(b) and 8.2(c) and this Section 8.2(d) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Preferred Securities, as permitted by the Trust Indenture Act. Subject to the foregoing provisions of this Section 8.2(d), upon such waiver, any such default shall cease to exist and any Event of Default with respect to the Common Securities arising therefrom shall be deemed to have been cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of Default with respect to the Common Securities or impair any right consequent thereon. (e) A waiver of an Event of Default under the Indenture by the Property Trustee at the direction of the Holders of the Preferred Securities constitutes a waiver of the corresponding Event of Default under this Declaration. The foregoing provisions of this Section 8.2(e) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Preferred Securities, as permitted by the Trust Indenture Act. 47 53 SECTION 8.3. Certain Rights of Property Trustee. Subject to the provisions of Section 8.1: (a) the Property Trustee may conclusively rely and shall be protected in acting or refraining from acting in good faith upon any resolution, Opinion of Counsel, certificate, written representation or instruction of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; (b) if, (i) in performing its duties under this Declaration the Property Trustee is required to decide between alternative courses of action or (ii) in construing any of the provisions in this Declaration the Property Trustee finds the same ambiguous or inconsistent with any other provisions contained herein or (iii) the Property Trustee is unsure of the application of any provision of this Declaration, then, except as to any matter as to which the Holders of Preferred Securities are specifically entitled to vote under the terms of this Declaration, the Property Trustee shall deliver a notice to the Depositor requesting written instructions of the Depositor as to the course of action to be taken and the Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor and shall have no liability whatsoever for such action or inaction except for its own bad faith, negligence or willful misconduct; provided, however, that if the Property Trustee does not receive such instructions of the Depositor within ten Business Days after it has delivered such notice, or such shorter period of time set forth in such notice (which to the extent practicable shall not be less than two Business Days), it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Declaration as it shall deem advisable and in the best interests of the Securityholders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct; (c) if a Responsible Officer of the Property Trustee has obtained actual knowledge that an Event of Default has occurred and is continuing and, (i) in performing its duties under this Declaration the Property Trustee is required to decide between alternative courses of action or (ii) in construing any of the provisions in this Declaration the Property Trustee finds the same ambiguous or inconsistent with any other provisions contained herein or (iii) the Property Trustee is unsure of the application of any provision of this Declaration, then, except as to any matter as to which the Holders of Preferred Securities are specifically entitled to vote under the terms of this Declaration, the Property Trustee may deliver a notice to the Holders requesting written instructions of the Holders as to the course of action to be taken and the Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by a majority in interest of the Outstanding Preferred Securities and shall have no liability whatsoever for such action or inaction; provided, however, that if the Property Trustee does not receive such instructions of the Holders within ten Business Days after it has delivered such notice, or such shorter period of time set forth in such notice (which to the extent practicable shall not be less than two Business Days), it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Declaration as 48 54 it shall deem advisable and in the best interests of the Holders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct; (d) any direction or act of the Depositor or the Administrative Trustees contemplated by this Declaration shall be sufficiently evidenced by an Officer's Certificate and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (e) whenever in the administration of this Declaration, the Property Trustee shall deem it desirable that a matter be established before undertaking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officer's Certificate and an Opinion of Counsel which, upon receipt of such request, shall be promptly delivered by the Depositor or the Administrative Trustees; (f) the Property Trustee shall have no duty to accomplish any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any re-recording, refiling or re-registration thereof; (g) the Property Trustee may consult with counsel and other experts of its selection (which counsel may be counsel to the Depositor or any of its Affiliates, and may include any of its employees) and the advice or opinion of such counsel and experts or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and in accordance with such advice or opinion; and the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Declaration from any court of competent jurisdiction; (h) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any of the Securityholders pursuant to this Declaration, unless such Securityholders shall have offered to the Property Trustee security and indemnity, reasonably satisfactory to the Property Trustee, against the costs, expenses (including reasonable attorneys' fees and expenses and the expenses of the Property Trustee's agents, nominees or custodians) and liabilities which might be incurred by it in compliance with such request or direction, including such reasonable advances as may be requested by the Property Trustee; (i) the Property Trustee shall not be bound to make an investigation into the facts or matters stated in any resolutions, certificate, statement, instrument, opinion, report, notice, request, consent, direction, order, approval, bond, debenture, note or other evidence of indebtedness or other paper or document, unless specifically requested and directed in writing to do so by Holders of record of 25% or more of the Preferred Securities (based upon their aggregate Liquidation Amount), but the Property Trustee may in its discretion make such further inquiry or investigation into such facts or matters as it may see fit; (i) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents, custodians, 49 55 nominees or attorneys or an Affiliate, provided that the Property Trustee shall be responsible for its own negligence with respect to selection of any agent or attorney appointed by it hereunder but shall not be responsible for any misconduct or negligence on the part of such Person; (ii) whenever in the administration of this Declaration the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (i) may request instructions from the Holders of the Trust Securities, which instructions may only be given by the Holders of the same proportion in Liquidation Amount of the Trust Securities as would be entitled to direct the Property Trustee under the terms of the Trust Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions; and (iii) except as otherwise expressly provided by this Declaration, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Declaration. (j) whenever in the administration of this Declaration the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (i) may request instructions from the Holders which instructions may only be given by the Holders of the same proportion in Liquidation Amount of the Securities as would be entitled to direct the Property Trustee under the terms of the Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions; (k) except as otherwise expressly provided by this Declaration, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Declaration; and (l) the Property Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence or willful misconduct, and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Declaration. No provision of this Declaration shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty. 50 56 SECTION 8.4. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Trust Securities Certificates shall not be taken as the statements of the Trustees, and the Trustees do not assume any responsibility for their correctness. The Trustees shall not be accountable for the use or application by the Depositor of the proceeds of the Debentures. The Trustees make no representations as to the value or condition of the Trust Property or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration or the Trust Securities. SECTION 8.5. May Hold Securities. Except as provided in the definition of the term "OUTSTANDING" in Article 1, any Trustee or any other agent of any Trustee or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and, subject to Section 8.8 and 8.12, may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent. SECTION 8.6. Compensation; Indemnity; Fees. The Depositor agrees: (a) to pay each of the Trustees from time to time such compensation for all services rendered by such Trustee hereunder as the Depositor and such Trustee may agree upon in writing from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse each Trustee upon request for all reasonable expenses, disbursements and advances incurred or made by such Trustee in accordance with any provision of this Declaration (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; (c) to the fullest extent permitted by applicable law, to indemnify and hold harmless (i) the Bank, (ii) each Trustee, (iii) any Affiliate of the Bank or any Trustee, (iii) any officer, director, shareholder, employee, representative or agent of any Trustee, and (iv) any employee or agent of the Trust or its Affiliates (each referred to herein as an "INDEMNIFIED PERSON") from and against any loss, damage, liability, tax, penalty, expense or claim of any kind or nature whatsoever incurred by such Indemnified Person by reason of the creation, operation, dissolution or termination of the Trust or any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this Declaration, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim to the extent incurred by such Indemnified Person by reason of its own negligence or willful misconduct with respect to such acts or omissions; (d) to the fullest extent permitted by applicable law, to advance, from time to time, prior to the final disposition of any claim, demand, action, suit or proceeding for which indemnification is authorized pursuant to subsection (c) above, any expenses (including reasonable 51 57 legal fees) incurred by an Indemnified Person in defending such claim, demand, action, suit or proceeding upon receipt by the Depositor of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified as authorized in subsection (c) above. This indemnification shall survive the termination of this Declaration. (e) no Trustee may claim any lien or charge on any Trust Property as a result of any amount due pursuant to this Section 8.6; and (f) The obligations to indemnify and hold harmless, to advance expenses and to provide reimbursement and pay compensation as set forth in this Section 8.6 shall survive the resignation or removal of the Property Trustee or the Delaware Trustee and the satisfaction and discharge of this Declaration. SECTION 8.7. Property Trustee Required; Eligibility of Trustees. (a) There shall at all times be a Property Trustee, which is a corporation organized and doing business under the laws of the United States of America or of any State, Territory or the District of Columbia, authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal, state, territorial or District of Columbia authority hereunder with respect to the Trust Securities. The Property Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $100,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section 8.7, the combined capital and surplus of such person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee with respect to the Trust Securities shall cease to be eligible in accordance with the provisions of this Section 8.7, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. (b) There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind that entity. (c) There shall at all times be a Delaware Trustee with respect to the Trust Securities. The Delaware Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware or (ii) a legal entity with its principal place of business in the State of Delaware and that otherwise meets the requirements of applicable Delaware law that shall act through one or more persons authorized to bind such entity. SECTION 8.8. Disqualification: Conflicting Interest. The Property Trustee shall be subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing herein shall prevent the Property Trustee from filing with the Commission the application referred to in the second to last paragraph of Section 310(b) of the Trust Indenture Act. The Indenture and the 52 58 Guarantee shall be deemed to be specifically described in this Declaration for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. SECTION 8.9. Resignation and Removal; Appointment of Successor. (a) Subject to Sections 8.9(b) and 8.9(c), Trustees (the "RELEVANT TRUSTEE") may be appointed or removed without cause at any time: (i) until the issuance of any Trust Securities, by written instrument executed by the Depositor; and (ii) after the issuance of any Securities, (1) if the Property Trustee or the Delaware Trustee, by the Administrative Trustees and (2) if an Administrative Trustee, by vote of the Holders of a majority in Liquidation Amount of the Common Securities voting as a class. (b) The Trustee that acts as Property Trustee shall not be removed in accordance with Section 8.9(a) until a successor possessing the qualifications to act as a Property Trustee under Section 8.7 (a "SUCCESSOR PROPERTY TRUSTEE") has been appointed and has accepted such appointment by instrument executed by such Successor Property Trustee and delivered to the Trust, the Depositor and the removed Property Trustee. (c) The Trustee that acts as Delaware Trustee shall not be removed in accordance with Section 8.9(a) until a successor possessing the qualifications to act as Delaware Trustee under Section 8.7 (a "SUCCESSOR DELAWARE TRUSTEE") has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Depositor and the removed Delaware Trustee. (d) A Trustee appointed to office shall hold office until his, her or its successor shall have been appointed or until his, her or its death, removal, resignation, dissolution or liquidation. Any Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and delivered to the Depositor and the Trust, which resignation shall take effect upon such delivery or upon such later date as is specified therein; provided, however, that: (i) No such resignation of the Trustee that acts as the Property Trustee shall be effective: (1) until a Successor Property Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Property Trustee and delivered to the Trust, the Sponsor and the resigning Property Trustee; or (2) until the assets of the Trust have been completely liquidated and the proceeds thereof distributed to the holders of the Securities; and 53 59 (ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be effective until a Successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Depositor and the resigning Delaware Trustee. (e) The Administrative Trustees shall use their best efforts to promptly appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be, if the Property Trustee or the Delaware Trustee delivers an instrument of resignation in accordance with Section 8.9(d). (f) If no Successor Property Trustee or Successor Delaware Trustee shall have been appointed and accepted appointment as provided in this Section 8.9 within 60 days after delivery pursuant to this Section 8.9 of an instrument of resignation or removal, the Property Trustee or Delaware Trustee resigning or being removed, as applicable, may petition any court of competent jurisdiction for appointment of a Successor Property Trustee or Successor Delaware Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper and prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be. (g) No Property Trustee or Delaware Trustee shall be liable for the acts or omissions to act of any Successor Property Trustee or Successor Delaware Trustee, as the case may be. (h) The Property Trustee shall give notice of each resignation and each removal of a Trustee and each appointment of a successor Trustee to all Securityholders in the manner provided in Section 10.8 and shall give notice to the Depositor. Each notice shall include the name of the successor Relevant Trustee and the address of its Corporate Trust Office if it is the Property Trustee. (i) Notwithstanding the foregoing or any other provision of this Declaration, in the event any Administrative Trustee or a Delaware Trustee who is a natural person dies or becomes, in the opinion of the Depositor, incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by (a) the unanimous act of the remaining Administrative Trustees if there are at least two of them or (b) otherwise by the Depositor (with the successor in each case being a Person who satisfies the eligibility requirement for Administrative Trustees or the Delaware Trustee, as the case may be, set forth in Section 8.7). (j) The indemnity provided to a Trustee under Section 8.6 shall survive any Trustee's resignation or removal. SECTION 8.10. Acceptance of Appointment by Successor. In case of the appointment hereunder of a successor Trustee, such successor Trustee so appointed shall execute, acknowledge and deliver to the Trust and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of 54 60 the Depositor or the successor Trustee, such retiring Trustee shall, upon payment of all amounts due to it under this Declaration, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and if the Property Trustee is the resigning Trustee shall duly assign, transfer and deliver to the successor Trustee all property and money held by such retiring Property Trustee hereunder. In case of the appointment hereunder of a successor Relevant Trustee, the retiring Relevant Trustee and each successor Relevant Trustee shall execute and deliver an amendment hereto wherein each successor Relevant Trustee shall accept such appointment and which (a) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Relevant Trustee all the rights, powers, trusts and duties of the retiring Relevant Trustee and (b) shall add to or change any of the provisions of this Declaration as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Relevant Trustee, it being understood that nothing herein or in such amendment shall constitute such Relevant Trustees co-trustees and upon the execution and delivery of such amendment the resignation or removal of the retiring Relevant Trustee shall become effective to the extent provided therein and each such successor Relevant Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee; but, on request of the Trust or any successor Relevant Trustee, such retiring Relevant Trustee shall, upon payment of all amounts due to it under this Declaration, duly assign, transfer and deliver to such successor Relevant Trustee all Trust Property, all proceeds thereof and money held by such retiring Relevant Trustee hereunder. Upon request of any such successor Relevant Trustee, the Trust shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Relevant Trustee all such rights, powers and trusts referred to in the first or second preceding paragraph, as the case may be. No successor Relevant Trustee shall accept its appointment unless at the time of such acceptance such successor Relevant Trustee shall be qualified and eligible under this Article. SECTION 8.11. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Property Trustee, the Delaware Trustee or any Administrative Trustee that is not a natural person may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Relevant Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of such Relevant Trustee, shall be the successor of such Relevant Trustee hereunder, provided that such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. SECTION 8.12. Preferential Collection of Claims Against Depositor or Trust. If and when the Property Trustee shall be or become a creditor of the Depositor or the Trust (or any other obligor upon the Debentures or the Trust Securities), the Property Trustee shall be subject to and shall take all actions necessary in order to comply with the provisions of the Trust 55 61 Indenture Act regarding the collection of claims against the Depositor or Trust (or any such other obligor). SECTION 8.13. Reports by Property Trustee. (a) To the extent required by the Trust Indenture Act, within 60 days after May 15 of each year commencing with May 15, 1998 the Property Trustee shall transmit to all Securityholders in accordance with Section 10.8 and to the Depositor, a brief report dated as of such December 31 with respect to: (i) its eligibility under Section 8.7 or, in lieu thereof, if to the best of its knowledge it has continued to be eligible under said Section, a written statement to such effect; (ii) a statement that the Property Trustee has complied with all of its obligations under this Declaration during the twelve-month period (or, in the case of the initial report, the period since the Closing Date) ending with such December 31 or, if Property Trustee has not complied in any material respects with such obligations, a description of such noncompliance; and (iii) any change in the property and funds in its possession as Property Trustee since the date of its last report and any action taken by the Property Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Trust Securities. (b) In addition, the Property Trustee shall transmit to Securityholders such reports concerning the Property Trustee and its actions under this Declaration as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. (c) A copy of such report shall, at the time of such transmissions to Holders, be filed by the Property Trustee with each national securities exchange or self-regulatory organization upon which the Trust Securities are listed, with the Commission and with the Depositor. SECTION 8.14. Reports to the Property Trustee. The Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act (if any) and the compliance certificate required by Section 314(a) of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. SECTION 8.15. Evidence of Compliance with Conditions Precedent. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Declaration that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c) (1) of the Trust Indenture Act shall be given in the form of an Officer's Certificate. 56 62 SECTION 8.16. Number of Trustees. (a) The number of Trustees shall be five, provided that the Holder of all of the Common Securities by written instrument may increase or decrease the number of Administrative Trustees. The Property Trustee and the Delaware Trustee may be the same Person. (b) If a Trustee ceases to hold office for any reason and the number of Administrative Trustees is not reduced pursuant to Section 8.16(a), or if the number of Trustees is increased pursuant to Section 8.16(a), a vacancy shall occur. (c) The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.9. The Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Declaration), shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Declaration. SECTION 8.17. Delegation of Power. (a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 2.7(a), including any registration statement or amendment thereof filed with the Commission, or making any other governmental filing. (b) The Administrative Trustees shall have power to delegate from time to time to such of their number or to the Depositor the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. ARTICLE 9 DISSOLUTION, LIQUIDATION, TERMINATION AND MERGER SECTION 9.1. Dissolution upon Expiration Date. Unless earlier dissolved, the Trust shall automatically dissolve on April 1, 2028 (the "EXPIRATION DATE"). SECTION 9.2. Early Dissolution. The first to occur of any of the following events is an "EARLY DISSOLUTION EVENT": (a) the occurrence of a Bankruptcy Event in respect of, or the dissolution or liquidation of, the Depositor; (b) the distribution of Debentures to the Holders of the Trust Securities, if the Depositor has given written direction to the Property Trustee to terminate the Trust (which direction is optional and wholly within the discretion of the Depositor); 57 63 (c) the occurrence of a Special Event except in the case of a Tax Event following which the Depositor has elected (i) to pay any Additional Sums (in accordance with Section 4.4) such that the net amount received by Holders of Preferred Securities not otherwise redeemed in respect of Distributions are not reduced as a result of such Tax Event and the Depositor has not revoked any such election or failed to make such payments or (ii) to redeem all of the Debentures pursuant to Section 4.4(a); (d) the redemption, conversion or exchange of all of the Trust Securities; (e) an order for dissolution of the Trust shall have been entered by a court of competent jurisdiction; and (f) receipt by the Property Trustee of written notice from the Depositor at any time (which direction is optional and wholly within the discretion of the Depositor) of its intention to dissolve the Trust and distribute the Debentures in exchange for the Preferred Securities. SECTION 9.3. Termination. The respective obligations and responsibilities of the Trustees and the Trust created and continued hereby shall terminate upon the latest to occur of the following: (a) the distribution by the Property Trustee to Securityholders upon the liquidation of the Trust pursuant to Section 9.4, or upon the redemption of all of the Trust Securities pursuant to Section 4.2, of all amounts required to be distributed hereunder upon the final payment of the Trust Securities; (b) the payment of all expenses owed by the Trust; and (c) the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Securityholders. SECTION 9.4. Liquidation. (a) If an Early Dissolution Event specified in clause (a), (b), (c), (e) or (f) of Section 9.2 occurs or upon the Expiration Date, the Trust shall be liquidated by the Administrative Trustees as expeditiously as the Administrative Trustees determine to be possible by distributing, after paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with Section 3808(e) of the Business Trust Act, to each Securityholder an aggregate principal amount of Debentures equal to the aggregate Liquidation Amount of Trust Securities held by such Holder, subject to Section 9.4(d). Notice of liquidation shall be prepared by or on behalf of the Administrative Trustees and given by the Property Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust Securities at such Holder's address as it appears in the Securities Register. All notices of liquidation shall: (i) state the Liquidation Date; (ii) state that, from and after the Liquidation Date, the Trust Securities will no longer be deemed to be Outstanding and any Trust Securities Certificates not surrendered for exchange will be deemed to represent an aggregate principal amount of Debentures equal to the aggregate Liquidation Amount of Preferred Securities held by such Holder; and 58 64 (iii) provide such information with respect to the mechanics by which Holders may exchange Trust Securities Certificates for Debentures, or, if Section 9.4(d) applies, receive a Liquidation Distribution, as the Administrative Trustees or the Property Trustee shall deem appropriate. (b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the liquidation of the Trust and distribution of the Debentures to Securityholders, the Property Trustee shall establish a record date for such distribution (which shall be not more than 45 days prior to the Liquidation Date) and, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish such procedures as it shall deem appropriate to effect the distribution of Debentures in exchange for the Outstanding Trust Securities Certificates. (c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii) the Clearing Agency or its nominee, as the record holder of such Trust Securities, will receive a registered Rule 144A Global Certificate or certificates representing the Debentures to be delivered upon such distribution and (iii) any Trust Securities Certificates not held by or on behalf of the Clearing Agency will be deemed to represent an aggregate principal amount of Debentures equal to the aggregate Liquidation Amount of Preferred Securities held by such Holders, and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid Distributions on such Trust Securities until such certificates are presented to the Property Trustee for transfer or reissuance. (d) In the event that, notwithstanding the other provisions of this Section 9.4, whether because of an order for dissolution entered by a court of competent jurisdiction or otherwise, distribution of the Debentures in the manner provided herein is determined by the Property Trustee not to be practicable, the Trust Property shall be liquidated, and the Trust shall be dissolved, wound-up and terminated, by the Property Trustee after paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with Section 3808(e) of the Business Trust Act in such manner as the Property Trustee determines. In such event, on the date of the dissolution, Securityholders will be entitled to receive out of the assets of the Trust available for distribution to Securityholders, after paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with Section 3808(e) of the Business Trust Act, an amount equal to the Liquidation Amount per Trust Security plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "LIQUIDATION DISTRIBUTION"). If, upon any such dissolution, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets legally available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common Securities will be entitled to receive Liquidation Distributions upon any such dissolution pro rata (determined as aforesaid) with Holders of Preferred Securities, except that, if an Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities. (e) As soon as is practicable after the occurrence of an Early Dissolution Event or the Expiration Date and upon completion of the winding up of the Trust, the Trustees (each of whom 59 65 is authorized to take such action) shall terminate the Trust by filing a certificate of cancellation with the Secretary of State of the State of Delaware. SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of the Trust. The Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other Person, except as described below. The Trust may, at the request of the Depositor, with the consent of the Administrative Trustees and without the consent of the Property Trustee, the Delaware Trustee or the Holders of the Trust Securities, merge with or into, consolidate, amalgamate, be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any state; provided, however, that (i) such successor entity either (a) expressly assumes all of the obligations of the Trust with respect to the Trust Securities or (b) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "SUCCESSOR SECURITIES"), so long as the Successor Securities rank the same as the Preferred Securities rank in priority with respect to Distributions and payments upon liquidation, redemption and otherwise, (ii) the Depositor expressly appoints a trustee of such successor entity possessing the same powers and duties as the Property Trustee as the holder of the Debentures, (iii) the Successor Securities are listed, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange or other organization on which the Preferred Securities are then listed, if any, (iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization, (v) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Preferred Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the holders' interest in the new entity), (vi) such successor entity has a purpose identical to that of the Trust, (vii) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Depositor has received an opinion from counsel to the Trust (which may be counsel to the Depositor) having a national tax and securities law practice (which opinion shall not have been rescinded) to the effect that (a) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Preferred Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the holders' interest in the new entity) and (b) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor such successor entity will be required to register as an "investment company" under the 1940 Act, and (viii) the Depositor or any permitted successor or assignee owns all of the Common Securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of holders of 100% in aggregate Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge with or into, be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease would for United States federal income tax purposes cause (i) the holders of the Preferred Securities to 60 66 recognize gain or loss or (ii) the Trust or the successor entity to be classified as other than a grantor trust. ARTICLE 10 MISCELLANEOUS PROVISIONS SECTION 10.1. Limitation of Rights of Securityholders. The death or incapacity of any person having an interest, beneficial or otherwise, in Trust Securities shall not operate to terminate this Declaration, nor entitle the legal representatives or heirs of such person or any Securityholder for such person to claim an accounting, take any action or bring any proceeding in any court for a partition or winding-up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them. SECTION 10.2. Amendment. (a) Notwithstanding anything in this Declaration to the contrary, without the consent of the Depositor, this Declaration may not be amended in a manner which imposes any additional obligation on the Depositor. (b) In the event that any amendment to this Declaration is made, the Administrative Trustees shall promptly provide to the Depositor a copy of such amendment. (c) None of the Bank, the Property Trustee nor the Delaware Trustee shall be required to enter into any amendment to this Declaration, including to this Section 10.2(c), which affects its own rights, power, duties, obligations or immunities under this Declaration without its prior written consent, and any such amendment or purported amendment, including to this Section 10.2(c), shall be void and ineffective without such prior written consent, which consent may be withheld in its sole discretion. The Property Trustee shall be entitled to receive an Opinion of Counsel and an Officer's Certificate stating that any amendment to this Declaration is in compliance with this Declaration. SECTION 10.3. Separability. In case any provision in this Declaration or in the Trust Securities Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 10.4. GOVERNING LAW. THIS DECLARATION AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION THAT WOULD CALL FOR THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE; PROVIDED, HOWEVER, THAT, TO THE FULLEST EXTENT PERMITTED BY LAW, THERE SHALL NOT BE APPLICABLE TO THE PARTIES HEREUNDER OR THIS DECLARATION ANY PROVISION OF THE LAWS (COMMON OR STATUTORY) OF THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT RELATE TO OR REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF (A) THE 61 67 FILING WITH ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR SCHEDULES OF TRUSTEE FEES AND CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST BONDS FOR TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (C) THE NECESSITY FOR OBTAINING COURT OR OTHER GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION, HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS PAYABLE TO TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (E) THE ALLOCATION OF RECEIPTS AND EXPENDITURES TO INCOME OR PRINCIPAL, (F) RESTRICTIONS OR LIMITATIONS ON THE PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO THE TITLING, STORAGE OR OTHER MANNER OF HOLDING OR INVESTING TRUST ASSETS OR (G) THE ESTABLISHMENT OF FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITY OR LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES THAT ARE INCONSISTENT WITH THE LIMITATIONS OR AUTHORITIES AND POWERS OF THE TRUSTEES HEREUNDER AS SET FORTH OR REFERENCED IN THIS DECLARATION. SECTION 3540 OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THE TRUST. SECTION 10.5. Payments Due on Non-Business Day. If the date fixed for any payment on any Trust Security shall be a day which is not a Business Day, then such payment need not be made on such date but may be made on the next succeeding day which is a Business Day (except as otherwise provided in Section 4.1(a) and Section 4.2(d)), with the same force and effect as though made on the date fixed for such payment, and no interest shall accrue thereon for the period after such date. SECTION 10.6. Successors. This Declaration shall be binding upon and shall inure to the benefit of any successor to the Depositor, the Trust or the Relevant Trustee, including any successor by operation of law. Except in connection with a consolidation, merger or sale involving the Depositor that is permitted under Article 8 of the Indenture and pursuant to which the assignee agrees in writing to perform the Depositor's obligations hereunder, the Depositor shall not assign its obligations hereunder. SECTION 10.7. Headings. The Article and Section headings are for convenience only and shall not affect the construction of this Declaration SECTION 10.8. Reports, Notices and Demands. Any report, notice, demand or other communications which by any provision of this Declaration is required or permitted to be given or served to or upon any Securityholder or the Depositor may be given or served in writing by deposit thereof, first-class postage prepaid, in the United States mail, hand delivery or facsimile transmission, in each case, addressed, (a) in the case of a Holder of Preferred Securities, and (b) in the case of the Holder of the Common Securities, to such Holder as such Holder's name and address may appear on the Securities Register;. Any notice to Preferred Securityholders shall also be given to such Owners as have, within two years preceding the giving of such notice, filed their names and addresses with the Property 62 68 Trustee for that purpose. Such notice, demand or other communication to or upon a Securityholder shall be deemed to have been sufficiently given, or made, for all purposes, upon hand delivery, mailing or transmission . Any notice, demand or other communication which by any provision of this Declaration is required or permitted to be given or served to or upon the Trust, the Property Trustee, the Delaware Trustee or the Administrative Trustees shall be given in writing addressed (until another address is published by the Trust) as follows: (a) with respect to the Property Trustee, to Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware, 19890-0001, Attention: Corporate Trust Administration, (b) with respect to the Delaware Trustee, to Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware, 19890-0001, Attention: Corporate Trust Administration, with a copy of any such notice to the Property Trustee at its address above, and (c) with respect to the Administrative Trustees, to them at the address for notices to the Depositor, marked "Attention: General Counsel". Such notice, demand or other communication to or upon the Trust or the Property Trustee shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the Trust or the Property Trustee. SECTION 10.9. Agreement Not to Petition. Each of the Trustees and the Depositor agrees for the benefit of the Securityholders that, until at least one year and one day after the Trust has been terminated in accordance with Article 9, it shall not file, or join in the filing of, a petition against the Trust under any bankruptcy, insolvency, reorganization or other similar law (including, without limitation, the United States Bankruptcy Code) (collectively, "BANKRUPTCY LAWS") or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. In the event the Depositor takes action in violation of this Section 10.9, the Property Trustee agrees, for the benefit of Securityholders, that, at the expense of the Depositor, it shall file an answer with the bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be stopped and precluded therefrom and such other defenses, if any, as counsel for the Trustee or the Trust may assert. The provisions of this Section 10.9 shall survive the termination of this Declaration. SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act. (a) This Declaration is subject to the provisions of the Trust Indenture Act that are required to be part of this Declaration and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee which is the trustee for the purposes of the Trust Indenture Act. (c) If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Declaration by any of the provisions of the Trust Indenture Act, such required provision shall control. If any provision of this Declaration modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Declaration as so modified or to be excluded, as the case may be. 63 69 (d) The application of the Trust Indenture Act to this Declaration shall not affect the nature of the Trust Securities as equity securities representing undivided beneficial interests in the assets of the Trust. SECTION 10.11. ACCEPTANCE OF TERMS OF DECLARATION, GUARANTEE AND INDENTURE. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS DECLARATION AND AGREEMENT TO SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS DECLARATION SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS. SECTION 10.12. Counterparts. This Declaration may contain more than one counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of the Trustees and the Depositor to one of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. ARTICLE 11 REGISTRATION RIGHTS SECTION 11.1. Registration Rights. The Holders of the Preferred Securities, the Debentures and the Guarantee and the shares of Common Stock of the Depositor issuable upon conversion of the Debentures and/or the Preferred Securities (collectively, the "REGISTRABLE SECURITIES") are entitled to the benefits of a Registration Rights Agreement. 64 70 IN WITNESS WHEREOF, the parties hereto have caused this Declaration to be duly executed as of the day and year first above written. SUIZA FOODS CORPORATION, as Depositor By: /s/ Gregg L. Engles ---------------------------------------- Name: Gregg L. Engles Title: Chairman & CEO WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Property Trustee By: /s/ Patricia A. Evans ---------------------------------------- Name: Patricia A. Evans Title: Financial Services Officer WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Delaware Trustee By: /s/ Patricia A. Evans ---------------------------------------- Name: Patricia A. Evans Title: Financial Services Officer /s/ Tracy L. Noll ------------------------------------------- Tracy L. Noll, not in his individual capacity but solely as Administrative Trustee /s/ J. Michael Lewis ------------------------------------------- J. Michael Lewis, not in his individual capacity but solely as Administrative Trustee /s/ Joseph B. Armes -------------------------------------------- Joseph B. Armes, not in his individual capacity but solely as Administrative Trustee 65 71 EXHIBIT A CERTIFICATE OF TRUST OF SUIZA CAPITAL TRUST II A-1 72 EXHIBIT B THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGE OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OR EXCHANGE OF SUCH SECURITY EXCEPT (A) TO SUIZA FOODS CORPORATION OR A SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, OR (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR THE PREFERRED SECURITIES (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE TRANSFER AGENT), TOGETHER WITH SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUIZA FOODS CORPORATION, THE TRUSTEE OR THE TRANSFER AGENT, AS APPLICABLE, MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. B-1 73 THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE REGISTRATION STATEMENT Certificate Number Number of Common Securities [ ] [ ] Certificate Evidencing Common Securities of Suiza Capital Trust II 5 1/2% Trust Convertible Common Securities (Liquidation Amount $50 per Common Security) Suiza Capital Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that Suiza Foods Corporation (the "Holder") is the registered owner of [ ] 5 1/2% Trust Convertible Common Securities of the Trust representing undivided beneficial interests in the assets of the Trust (the "Common Securities"). In accordance with Section 5.10 of the Declaration (as defined below) the Common Securities are not transferable (except in connection with mergers, acquisitions, consolidations, or other transactions provided for in Section 8.1 of the Indenture (as defined in the Amended and Restated Declaration of Trust dated as of March 24, 1998, as the same may be amended from time to time (the "DECLARATION")) and the pledge of the Common Securities by the Depositor to secure indebtedness) and any attempted transfer hereof shall be void. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to, the terms and provisions of, the Declaration, including the designation of the terms of the Common Securities as set forth therein. The Holder is entitled to the benefits of the Common Securities Guarantee Agreement entered into by Suiza Foods Corporation, a Delaware corporation, dated as of March 24, 1998 (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Declaration and the Guarantee to the Holder without charge upon written request to the Trust at its principal place of business or registered office. As set forth in the Declaration, where an Event of Default has occurred and is continuing, the rights of Holders of Common Securities to payment in respect of Distributions and payments upon Liquidation, redemption or otherwise are subordinated to the rights of payment of Holders of the Preferred Securities. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. B-2 74 By acceptance of this Certificate, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Common Securities as evidence of undivided beneficial ownership in the Debentures. B-3 75 IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate this 24th day of March, 1998. SUIZA CAPITAL TRUST II By: ------------------------------ Name: As Administrative Trustee B-4 76 EXHIBIT C {IF THE PREFERRED SECURITY IS TO BE A RULE 144A GLOBAL CERTIFICATE, INSERT - This Preferred Security is a Book-Entry Preferred Securities Certificate within the meaning of the Declaration hereinafter referred to and is registered in the name of The Depository Trust Company ("DTC") or a nominee of DTC. This Preferred Security is exchangeable for Preferred Securities registered in the name of a person other than DTC or its nominee only in the limited circumstances described in the Declaration and no transfer of this Preferred Security (other than a transfer of this Preferred Security as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC) may be registered except in limited circumstances.} Unless this Preferred Security is presented by an authorized representative of DTC (55 Water Street, New York), to Suiza Capital Trust II or its agent for registration of transfer, exchange or payment, and any Preferred Security issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. Certificate Number Number of Preferred Securities --- CUSIP NO. Certificate Evidencing Preferred Securities of Suiza Capital Trust II 5 1/2% Trust Convertible Preferred Securities (Liquidation Amount $50 per Preferred Security) Suiza Capital Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that _____________________ (the "Holder") is the registered owner of _____________ preferred securities of the Trust representing an undivided beneficial interest in the assets of the Trust and designated the Suiza Capital Trust II 5 1/2% Trust Convertible Preferred Securities (Liquidation Amount $50 per Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.4 of the Declaration (as defined below). The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Declaration of Trust, dated as of March 24, 1998 as the same may be amended from time to time (the "Declaration") including the designation of the terms of Preferred Securities as set forth therein. The Holder is entitled to the benefits of the Guarantee Agreement entered into C-1 77 by Suiza Foods Corporation, a Delaware corporation, and Wilmington Trust Company, as Guarantee Trustee, dated as of March 24, 1998 (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Declaration and the Guarantee to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. C-2 78 IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate. SUIZA CAPITAL TRUST II By: ----------------------------- Name: an Administrative Trustee PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Preferred Securities referred to in the within-mentioned Declaration. Dated: WILMINGTON TRUST COMPANY, as Property Trustee By: ----------------------------- Authorized Signatory C-3 79 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert address and zip code of assignee) and irrevocably appoints - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- agent to transfer this Preferred Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: -------------------------------- Signature: --------------------------- (Sign exactly as our name appears on the other side of this Preferred Security Certificate) C-4 80 {TO BE ATTACHED TO RULE 144A GLOBAL CERTIFICATE} SCHEDULE A The initial number of Preferred Securities represented by this Rule 144A Global Certificate shall be _____________. The following increases or decreases in the number of Preferred Securities represented by this Rule 144A Global Certificate have been made:
===================================================================================================================== Date Made Amount of increase Amount of increase Number of Preferred Signature of in number of in number of Securities authorized officer Preferred Securities Preferred Securities represented by this of Trustee or represented by this represented by this Global Certificate Securities Custodian Rule 144A Global Rule 144A Global following such Certificate Certificate decrease or increase - ------------------------ ---------------------- ---------------------- ----------------------- ---------------------- - ------------------------ ---------------------- ---------------------- ----------------------- ---------------------- - ------------------------ ---------------------- ---------------------- ----------------------- ---------------------- - ------------------------ ---------------------- ---------------------- ----------------------- ---------------------- - ------------------------ ---------------------- ---------------------- ----------------------- ---------------------- - ------------------------ ---------------------- ---------------------- ----------------------- ---------------------- - ------------------------ ---------------------- ---------------------- ----------------------- ---------------------- - ------------------------ ---------------------- ---------------------- ----------------------- ---------------------- - ------------------------ ---------------------- ---------------------- ----------------------- ---------------------- =====================================================================================================================
C-5 81 EXHIBIT D -- Form of Restricted Securities Certificate RESTRICTED SECURITIES CERTIFICATE (For transfers pursuant to the Declaration) Wilmington Trust Company as Property Trustee of Suiza Capital Trust II Rodney Square North 1100 North Market Street Wilmington, Delaware, 19890-0001 Attention: Corporate Trust Administration Re: % Trust Convertible Preferred Securities (Liquidation Amount $50 per Preferred Security) of Suiza Capital Trust II (the "Securities") ------------------------------------------------------------------------- Reference is made to the Amended and Restated Declaration of Trust, dated as of March 24, 1998 (the "Declaration"), among Suiza Foods Corporation (the "Company"), and the Trustees named therein and the holders, from time to time, of undivided beneficial interests in the Trust. Terms used herein and defined in the Declaration or Rule 144 under the U.S. Securities Act of 1933, as amended (the "Securities Act") are used herein as so defined. This certificate relates to ________ shares of Securities, which are evidenced by the following certificate(s) (the "Specified Securities"): CUSIP No(s). ------------------------------------- CERTIFICATE No(s). -------------------------------- The Person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Securities or (ii) it is acting on behalf of all the beneficial owners of the Specified Securities and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Securities are represented by a Rule 144A Global Certificate, they are held through the Clearing Agency or participant (a "Clearing Agency") in the name of the Undersigned, as or on behalf of the Owner. If the Specified Securities are not represented by a Rule 144A Global Certificate, they are registered in the name of the Undersigned, as or on behalf of the Owner. D-1 82 The Owner has requested that the Specified Securities be transferred to a person (the "Transferee") who will take delivery in the form of a Restricted Security. In connection with such transfer, the Owner hereby certifies that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, it is being effected in accordance with Rule 144A or Rule 144 under the Securities Act and all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies as follows: RULE 144 TRANSFERS. IF THE TRANSFER IS BEING EFFECTED PURSUANT TO RULE 144: (A) the transfer is occurring after a holding period of at least two years (computed in accordance with paragraph (d) of Rule 144) has elapsed since the Specified Securities were last acquired from the Trust or from an affiliate of the Trust, whichever is later, and is being effected in accordance with the applicable amount, manner of sale, and notice requirements of Rule 144; or (B) the transfer is occurring after a holding period of at least three years has elapsed since the Specified Securities were last acquired from the Trust or from an affiliate of the Trust, whichever is later, and the Owner is not, and during the preceding three months has not been, an affiliate of the Trust. This certificate and the statements contained herein are made for your benefit and benefit of the Trust and the Trustees of the Trust. Dated: ------------------------------------------ (Print the name of the Undersigned, as such term is defined in the second paragraph of this certificate.) By: ------------------------------------ Name: Title: (If the Undersigned is a corporation, partnership or fiduciary, the title of the person signing on behalf of the Undersigned must be stated.) D-2 83 EXHIBIT E IRREVOCABLE NOTICE OF CONVERSION (pursuant to Section 4.3) To: Wilmington Trust Company as Property Trustee of Suiza Capital Trust II and Conversion Agent The undersigned owner of these Preferred Securities hereby irrevocably exercises the option to convert these Preferred Securities, or the portion below designated, into Common Stock, par value $0.01 of SUIZA FOODS CORPORATION (the "Suiza Common Stock") in accordance with the terms of the Amended and Restated Declaration of Trust of Suiza Capital Trust II (the "Declaration"), dated as of March 24, 1998, by Suiza Foods Corporation, as Depositor, the Trustees of the Trust named therein, and the Holders, from time to time, of undivided beneficial interests in the Trust to be issued pursuant to the Declaration. Pursuant to the aforementioned exercise of the option to convert these Preferred Securities, the undersigned hereby directs the Conversion Agent to (i) exchange such Preferred Securities for a portion of the Debentures held by the Trust (at the rate of exchange specified in the terms of the Preferred Securities set forth in the Declaration) and (ii) immediately convert such Debentures on behalf of the undersigned, into Suiza Common Stock (at the conversion rate specified in the terms of the Preferred Securities set forth in the Declaration). Unless otherwise defined herein, capitalized terms used in this Notice shall have the respective meanings assigned to such terms in the Declaration. The undersigned does also hereby direct the Conversion Agent that the shares of Suiza Common Stock issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares of Suiza Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any holder, upon the exercise of its conversion rights in accordance with the terms of the Declaration and the Preferred Securities, agrees to be bound by the terms of the Registration Rights Agreement relating to the Suiza Common Stock issuable upon conversion of the Preferred Securities. Date: ----------------------- in whole in part --------- ------ E-1 84 Number of Preferred Securities to be converted: _____________-________ If a name or names other than the undersigned, please indicate in the spaces below the name or names in which the shares of Suiza Common Stock are to be issued, along with the address or addresses of such person or persons ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number ---------------------------------------- ---------------------------------------- ---------------------------------------- Signature Guarantee:* ------------------- - ----------------------------- * (Signature must be guaranteed by an institution which is a member of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs acceptable to the Trustee.) E-2 EX-4.3 4 INDENTURE FOR THE 5.5% CONVERTIBLE DEBENTURE 1 EXHIBIT 4.3 SUIZA FOODS CORPORATION to WILMINGTON TRUST COMPANY as Indenture Trustee INDENTURE Dated as of March 24, 1998 5 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE APRIL 1, 2028 2 RECONCILIATION AND TIE This reconciliation and tie between the Trust Indenture Act of 1939, as amended (including cross-references to provisions of Section 310 to and including 317 which, pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by the Trust Reform Act of 1990, are a part of and govern the Indenture whether or not physically contained therein) and the Indenture, dated as of March 24, 1998. TRUST INDENTURE ACT SECTION INDENTURE SECTION (Section) 310(a)(1), (2) and (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 (a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (Section) 311(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13 (b)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (Section) 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 7.2(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(b) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 c) (Section) 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a); 7.3(b) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(c) (Section) 314(a)(1), (2), (3) and (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (c) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 (c) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 (c) (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (Section) 315(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(b) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(c) (d) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a) (d) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.l(c)(ii) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(c)(iii) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14 (Section) 316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13 (a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
i 3 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(f) (Section) 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 (Section) 318(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Convertible Subordinated Indenture. ii 4 TABLE OF CONTENTS ARTICLE 1. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.2. Compliance Certificate and Opinions . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 1.3. Forms of Documents Delivered to Indenture Trustee . . . . . . . . . . . . . . . . . 13 SECTION 1.4. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 1.5. Notices, Etc. to Indenture Trustee and Company . . . . . . . . . . . . . . . . . . 16 SECTION 1.6. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 1.7. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 1.8. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . 17 SECTION 1.9. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 1.10. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 1.11. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 1.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 1.13. Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 1.14. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 1.15. Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 ARTICLE 2. DEBENTURE FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 2.1. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 2.2. Form of Face of Debenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 2.3. Form of Reverse of Debenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 2.4. Additional Provisions Required in Global Debenture . . . . . . . . . . . . . . . . 29 SECTION 2.5. Form of Indenture Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 SECTION 2.6. Initial Issuance to Property Trustee . . . . . . . . . . . . . . . . . . . . . . . 29 ARTICLE 3. THE DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 3.1. Title and Amount of Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 3.2. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 3.3. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . 31 SECTION 3.4. Temporary Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 3.5. Registration, Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Debentures . . . . . . . . . . . . . . . . . 33 SECTION 3.7. Payment of Interest; Interest Rights . . . . . . . . . . . . . . . . . . . . . . . 34 SECTION 3.8. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 3.9. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 3.10. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 3.11. Deferrals of Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 3.12. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 3.13. Agreed Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 3.14. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 3.15. Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
iii 5 ARTICLE 4. SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 4.1. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 4.2. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 ARTICLE 5. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 5.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 5.2. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . 43 SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 SECTION 5.4. Indenture Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . 45 SECTION 5.5. Indenture Trustee May Enforce Claim Without Possession of Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 5.6. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 5.7. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 5.9. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 5.11. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 5.12. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 5.13. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 5.14. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 5.15. Waiver of Usury, Stay, or Extension Laws . . . . . . . . . . . . . . . . . . . . . 49 ARTICLE 6. THE INDENTURE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 6.1 Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 6.2 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 6.3 Certain Rights of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 6.4 Not Responsible for Recitals or Issuance of Debentures . . . . . . . . . . . . . . 52 SECTION 6.5 May Hold Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 6.6 Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 6.7 Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 6.8 Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 6.9 Corporate Indenture Trustee Required; Eligibility . . . . . . . . . . . . . . . . . 54 SECTION 6.10 Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . 54 SECTION 6.11 Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . 56 SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 SECTION 6.13 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . 57 SECTION 6.14 Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . 57 ARTICLE 7. HOLDERS LISTS AND REPORTS BY INDENTURE TRUSTEE AND COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 SECTION 7.1 Company to Furnish Names and Addresses of Holders . . . . . . . . . . . . . . . . . 58 SECTION 7.2 Preservation of Information; Communications to Holders . . . . . . . . . . . . . . 59 SECTION 7.3 Reports by Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
iv 6 SECTION 7.4 Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 ARTICLE 8. CONSOLIDATION, MERGER, CONTINUANCE, CONVEYANCE, TRANSFER OR LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms . . . . . . . . . . . . . . . 60 SECTION 8.2 Successor Person Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 ARTICLE 9. SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 9.1 Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . 61 SECTION 9.2 Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . . . . . . 62 SECTION 9.3 Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 9.4 Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 9.5 Conformity with Trust Indentures Act . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 9.6 Reference in Debentures to Supplemental Indentures . . . . . . . . . . . . . . . . 64 ARTICLE 10. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 SECTION 10.1 Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . 65 SECTION 10.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . 65 SECTION 10.3 Money for Debenture Payments to Be Held in Trust . . . . . . . . . . . . . . . . . 65 SECTION 10.4 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 10.5 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 10.6 Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 10.7 Additional Sums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 SECTION 10.8 Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 10.9 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 10.10 Payment of Expenses of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . 69 ARTICLE 11. REDEMPTION OR EXCHANGE OF DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 11.1. Election to Redeem; Notice to Indenture Trustee . . . . . . . . . . . . . . . . . . 69 SECTION 11.2. Selection of Debentures to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . 70 SECTION 11.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 SECTION 11.4. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 SECTION 11.5. Debentures Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . 71 SECTION 11.6. Debentures Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 SECTION 11.7. Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 SECTION 11.8. Exchange of Trust Securities for Debentures . . . . . . . . . . . . . . . . . . . . 73 ARTICLE 12. SUBORDINATION OF DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 SECTION 12.1. Debentures Subordinate to Senior Debt . . . . . . . . . . . . . . . . . . . . . . . 74 SECTION 12.2. Payment Over of Proceeds Upon Dissolution, Etc. . . . . . . . . . . . . . . . . . . 74 SECTION 12.3. Prior Payment to Senior Debt upon Acceleration of Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 SECTION 12.4. Payment Limits by Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 SECTION 12.5. Payment Permitted If No Default . . . . . . . . . . . . . . . . . . . . . . . . . . 76 SECTION 12.6. Subrogation to Rights of Holders of Senior Debt . . . . . . . . . . . . . . . . . . 76
v 7 SECTION 12.7. Provisions Solely to Define Relative Rights . . . . . . . . . . . . . . . . . . . . 76 SECTION 12.8. Indenture Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . 77 SECTION 12.9. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . 77 SECTION 12.10. Notice to Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 SECTION 12.11. Reliance on Judicial Order or Certificate of Liquidating Agent . . . . . . . . . . 78 SECTION 12.12. Indenture Trustee Not Fiduciary for Holders of Senior Debt . . . . . . . . . . . . 78 SECTION 12.13. Rights of Indenture Trustee as Holder of Senior Debt; Preservation of Indenture Trustee's Rights . . . . . . . . . . . . . . . . . . . . 78 SECTION 12.14. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . 78 SECTION 12.15. Certain Conversions or Exchanges Deemed . . . . . . . . . . . . . . . . . . . . . . 78 ARTICLE 13. CONVERSION OF DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 SECTION 13.1. Conversion Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 SECTION 13.2. Conversion Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 SECTION 13.3. Expiration of Conversion Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 82 SECTION 13.4. Conversion Price Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 SECTION 13.5. Fundamental Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 SECTION 13.6. Notice of Adjustments of Conversion . . . . . . . . . . . . . . . . . . . . . . . . 88 SECTION 13.7. Prior Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . 89 SECTION 13.8. Dividend or Interest Reinvestment Plans . . . . . . . . . . . . . . . . . . . . . . 90 SECTION 13.9. Certain Additional Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 SECTION 13.10. Restrictions on Common Stock Issuable Upon Conversion . . . . . . . . . . . . . . . 91 SECTION 13.11. Indenture Trustee Not Responsible for Determining Conversion Price or Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . 91
vi 8 THIS INDENTURE, dated as of March 24, 1998 between SUIZA FOODS CORPORATION, a Delaware corporation (hereinafter called the "Company") having its principal office at 3811 Turtle Creek Boulevard, Suite 1300, Dallas, Texas 75219 and Wilmington Trust Company, a Delaware banking corporation ("WTC"), as Indenture Trustee (hereinafter called the "Indenture Trustee"). RECITALS OF THE COMPANY WHEREAS, The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its 5 1/2% Convertible Subordinated Debentures due April 1, 2028 (hereinafter called the "Debentures") as hereinafter provided which evidence loans made to the Company of the proceeds from the issuance by Suiza Capital Trust II, a Delaware statutory business trust (the "Trust"), of preferred undivided beneficial interests in the Trust (the "Preferred Securities") and common undivided beneficial interests in the Trust (the "Common Securities"), and to provide the terms and conditions upon which the Debentures are to be authenticated, issued and delivered. WHEREAS, all things necessary to make the Debentures, when executed by the Company, authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its respective terms, have been done. NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Debentures by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Debentures, as follows: ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles," with respect to any computation required or permitted hereunder shall mean such accounting principles which are generally accepted at the date or time of such computation; 1 9 (d) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (e) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or Section, as the case may be, of this Indenture; (f) "or" is not exclusive; (g) provisions apply to successive events and transactions; and (h) each reference herein to a rule or form of the Commission shall mean such rule or form and any rule or form successor thereto, in each case as amended from time to time. "ACT", when used with respect to any Holder, has the meaning specified in Section 1.4. "ADDITIONAL INTEREST" means the interest, if any, that shall accrue on any interest on the Debentures that is in arrears for more than one interest payment period or not paid during any Extension Period, which in either case (to the extent permitted by law) shall accrue at the stated rate per annum specified or determined as specified in such Debenture and compounded quarterly. "ADDITIONAL SUMS" has the meaning specified in Section 10.7 "ADDITIONAL TAXES" means the sum of any additional taxes, duties and other governmental charges to which the Trust has become subject from time to time as a result of a Tax Event. "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; provided, however, that an Affiliate of the Company shall not be deemed to include the Trust to which Debentures have been issued. For the purposes of this definition, "control" when used with respect to any Specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. The terms "controlling" and "controlled" have meanings correlative to "control." "APPLICABLE PRICE" means (i) in the case of a Non-Stock Fundamental Change in which the holders of the Common Stock receive only cash, the amount of cash received by a holder of one share of Common Stock and (ii) in the event of any other Fundamental Change, the average of the daily Current Market Prices (as defined) for one share of Common Stock during the ten trading days immediately prior to the record date for determination of the holders of Common Stock entitled to receive such securities, cash, property or other assets in connection with such Fundamental Change or, if there is no such record date, prior to the date upon which the holders of the Common Stock shall have the right to receive such securities, cash, property or other assets (such record date or distribution date being hereinafter referred to as the "Entitlement Date"), in 2 10 each case as adjusted in good faith by the Company to appropriately reflect any of the events referred to in clauses (a) through (f) of Section 13.4. "AUTHENTICATING AGENT" means any Person authorized by the Indenture Trustee pursuant to Section 6.14 to act on behalf of the Indenture Trustee to authenticate Debentures. "BOARD OF DIRECTORS" means either the board of directors of the Company or any committee thereof duly authorized to act hereunder. "BOARD RESOLUTION" means a copy of the resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, or such committee of the Board of Directors or officers of the Company to which authority to act on behalf of the Board of Directors has been delegated, and to be in full force and effect on the date of such certification, and delivered to the Indenture Trustee. "BUSINESS DAY" means any day other than a Saturday or Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Indenture Trustee, or the principal office of the Property Trustee under the Declaration, is closed for business. "CAPITAL STOCK" means, with respect to any Person, any and all shares, interests, participations, rights in or other equivalents (however designated) of such Person's capital stock, and any rights (other than debt securities convertible into capital stock), warrants or options exchangeable for or convertible into such capital stock. "CHANGE IN 1940 ACT LAW" has the meaning specified in the definition of Investment Company Event. "COMMISSION" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "COMMON SECURITIES" has the meaning specified in the first recital of this Indenture. "COMMON STOCK" means common stock, par value $0.01 per share, of the Company or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company. "COMPANY" means the Person named as the "Company" in the introductory paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. 3 11 "COMPANY REQUEST" and "Company Order" means, respectively, the written request or order signed in the name of the Company by its Chairman of the Board, its Vice Chairman, its President, any Vice President, its Treasurer, any Assistant Treasurer, its Controller, its Secretary or any Assistant Secretary, and delivered to the Indenture Trustee. "CONVERSION AGENT" has the meaning specified in Section 13.2(a). "CONVERSION DATE" has the meaning specified in Section 13.2(a). "CONVERSION EXPIRATION DATE" has the meaning specified in Section 13.3. "CONVERSION PRICE" has the meaning specified in Section 13.1. "CORPORATE TRUST OFFICE" means the principal office of the Indenture Trustee at which at any particular time its corporate trust business shall be administered which office at the date hereof is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration. "CURRENT MARKET PRICE" means, with respect to Common Stock of the Company, the last reported sale price, regular way, on such day, or if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the NYSE, or, if the Common Stock is not quoted on the NYSE on such day, on the principal national securities exchange or quotation system on which the Common Stock is listed or admitted to trading, or, if not listed or admitted to trading or quoted on any national securities exchange or quotation system, the average closing bid and asked prices of the Common Stock in the over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated, or a similar generally accepted reporting service, or, if not so available, in such manner, as furnished by the National Association of Securities Dealers, Inc. ("NASD") member firm selected from time to time in good faith by the Board of Directors of the Company for that purpose or, if not so available in such manner, as otherwise determined in good faith by the Board of Directors of the Company. "DEBENTURES" or "DEBENTURE" means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture. "DEBT" means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) every obligation of such Person under (a) interest rate swap agreements, interest rate cap agreements and interest rate 4 12 collar agreements and (b) other agreements or arrangements designed to protect such Person against fluctuations in interest rates; and (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another person the payment of which, in either case, such Person has guaranteed or for which such Person is responsible or liable, directly or indirectly, as obligor or otherwise. "DECLARATION" means the Amended and Restated Declaration of Trust for the Trust pursuant to which the Preferred Securities and Common Securities were issued substantially in the form attached hereto as Annex A, as amended from time to time. "DEFAULT" means any event that after notice or passage of time, or both, would be an Event of Default. "DEFAULTED INTEREST" has the meaning specified in Section 3.7. "DEPOSITARY" means, with respect to the Debentures issuable or issued in whole or in part in the form of one or more Global Debentures, the Person designated as Depositary by the Company (or any successor thereto). "DIRECT ACTION" has the meaning specified in Section 5.8. "DOLLAR" means the currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. "ENTITLEMENT DATE" has the meaning specified in the definition of "Applicable Price." "EVENTS OF DEFAULT" has the meaning specified in Section 5.1. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "EXPIRATION TIME" has the meaning specified in Section 13.4(e). "EXTENSION PERIOD" has the meaning specified in Section 3.11. "FUNDAMENTAL CHANGE" means the occurrence of any transaction or event or series of transactions or events pursuant to which all or substantially all of the Common Stock shall be exchanged for, converted into, acquired for, or constitute solely the right to receive securities, cash, property or other assets (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, continuance, combination, reclassification, recapitalization, or otherwise); provided, however, that, in the case of any such series of transactions or events, for purposes of adjustment of the Conversion Price, such Fundamental Change shall be deemed to have occurred when substantially all of the Common Stock shall be exchanged for, converted into, or acquired for or constitute solely the right to receive securities, cash, property or other assets, but the adjustment shall be based upon the securities, cash, property or other assets that a holder of 5 13 Common Stock received in a transaction as a result of which more than 50% of the Common Stock shall have been exchanged for, converted into, or acquired for or constitute solely the right to receive securities, cash, property or other assets. "GLOBAL DEBENTURE" has the meaning specified in Section 3.15 and complying with the form of Debenture prescribed in Section 2.4 evidencing all or part of the Debentures, issued to the Depositary or its nominee, and registered in the name of such Depositary or its nominee. "GUARANTEE" means the guarantee by the Company of distributions on the Preferred Securities of the Trust to the extent provided in the Guarantee Agreement, substantially in the form attached hereto as Annex C, as amended from time to time. "HOLDER" means a Person in whose name a Debenture is registered in the Securities Register. "INDENTURE" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. "INDENTURE TRUSTEE" means the Person named as the "Indenture Trustee" in the introductory paragraph of this instrument until a successor Indenture Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Indenture Trustee" shall mean such successor Indenture Trustee and shall include each Person who is then an Indenture Trustee hereunder if at any time there is more than one such Person. "INTEREST" with regard to the Debentures shall include quarterly interest payments, interest on quarterly interest payments not paid on an applicable Interest Payment Date, Liquidated Damages, if any, and Additional Sums, if any. "INTEREST PAYMENT DATE" means as to the Debentures the Stated Maturity of an installment of interest on such Debentures. "INTEREST RATE" means the rate of interest specified or determined as specified in each Debenture and this Indenture as being the rate of interest payable on such Debenture. "INVESTMENT COMPANY EVENT" means, in respect of the Trust, the receipt by the Property Trustee, on behalf of the Trust, of an opinion of counsel, rendered by a law firm having a recognized national tax and securities practice (which opinion shall not have been rescinded by such law firm), to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or will be considered an "investment company" that is required 6 14 to be registered under the 1940 Act, which Change in 1940 Act Law becomes effective on or after March 18, 1998. "JUNIOR SECURITIES" has the meaning specified in Section 12.15. "JUNIOR SUBORDINATED PAYMENT" has the meaning specified in Section 12.2. "LIQUIDATED DAMAGES" has the meaning specified in the form of reverse of the Debenture set forth in Section 2.3. "MATURITY" when used with respect to the Debentures, means the date on which the principal of the Debentures becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "1940 ACT" means the Investment Company Act of 1940, as amended and the rules promulgated thereunder. "NON BOOK-ENTRY PREFERRED SECURITIES" has the meaning specified in Section 3.15. "NON-STOCK FUNDAMENTAL CHANGE" means any Fundamental Change other than a Stock Fundamental Change. "NOTICE OF CONVERSION" means the notice given by a holder of Preferred Securities to the Conversion Agent directing the Conversion Agent to exchange such Preferred Securities for Debentures and to convert such Debentures into Common Stock on behalf of such holder. "NOTICE OF DEFAULT" has the meaning specified in Section 5.1(d). "OFFICER'S CERTIFICATE" means a certificate signed by the Chairman of the Board of Directors, the President, the Chief Executive Officer, the Chief Operating Officer, any Vice President, the Chief Financial Officer, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company, and delivered to the Indenture Trustee. "OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel for the Company, the Trust, or the Indenture Trustee, and who also may be an employee thereof, and who shall be reasonably acceptable to the Indenture Trustee. "OUTSTANDING" means, as of the date of determination, all Debentures theretofore authenticated and delivered under this Indenture, except: (i) Debentures theretofore canceled by the Indenture Trustee or delivered to the Indenture Trustee for cancellation; (ii) Debentures for whose payment money in the necessary amount has been theretofore irrevocably deposited with the Indenture Trustee or any Paying Agent (other 7 15 than the Company or any affiliate of the Company) in trust for the Holders of such Debentures; provided, however, that, if such Debentures are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Indenture Trustee has been made; and (iii) Debentures in substitution for or in lieu of which other Debentures have been authenticated and delivered or which have been paid pursuant to Section 3.6, or which have been converted into Common Stock pursuant to Section 13.1, unless proof satisfactory to the Indenture Trustee is presented that any Debentures are held by Holders in whose hands such Debentures are valid, binding and legal obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Debentures have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Debentures owned by the Company or any other obligor upon the Debentures or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Debentures which the Indenture Trustee actually knows to be so owned shall be so disregarded. Debentures so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's right so to act with respect to such Debentures and that the pledgee is not the Company or any other obligor upon the Debentures or any Affiliate of the Company or such other obligor. Upon request of the Indenture Trustee, the Company shall furnish to the Indenture Trustee promptly an Officer's Certificate listing and identifying all Debentures, if any, known by the Company to be owned or held by or for the account of the Company, or any other obligor on the Debentures or any Affiliate of the Company or such obligor, and, subject to the provisions of Section 6.1(a)(ii), the Indenture Trustee shall be entitled to accept and rely on such Officer's Certificate as conclusive evidence of the facts therein set forth and of the fact that all Debentures not listed therein are Outstanding for the purpose of any such determination. "PAYING AGENT" means the Indenture Trustee or any Person authorized by the Company to pay the principal of (premium, if any) or interest on any Debentures on behalf of the Company. "PERSON" means any individual, corporation, partnership, joint venture, limited liability company, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or other entity. "PREDECESSOR DEBENTURE" of any particular Debenture means every previous Debenture evidencing all or a portion of the same debt as that evidenced by such particular Debenture, and, for the purposes of this definition, any Debenture authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or stolen Debenture shall be deemed to evidence the same debt as the lost, destroyed or stolen Debenture. "PREFERRED SECURITIES" has the meaning specified in the first recital of this Indenture. 8 16 "PREFERRED STOCK", as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of common stock of such Person. "PROCEDURES" has the meaning specified in Section 3.3. "PROCEEDING" has the meaning specified in Section 12.2. "PROPERTY TRUSTEE" means, in respect of the Trust, the Person identified as the "Property Trustee" in the Declaration, solely in its capacity as Property Trustee of the Trust under the Declaration and not in its individual capacity, or its successor in interest in such capacity, or any successor Property Trustee appointed as therein provided. "PURCHASE AGREEMENT" means the Purchase Agreement dated March 18, 1998 by and among the Trust, the Company and the Purchasers. "PURCHASED SHARES" has the meaning specified in Section 13.4(e). "PURCHASERS" with respect to the Preferred Securities, means Donaldson, Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co. Inc. and J. P. Morgan Securities Inc. "PURCHASER STOCK PRICE" means, with respect to any Stock Fundamental Change, the average of the daily Current Market Price for one share of the common stock received by holders of the Common Stock in such Stock Fundamental Change during the ten consecutive trading days immediately prior to and including the Entitlement Date, as adjusted in good faith by the Company to appropriately reflect any of the events referred to in clauses (a) through (f) of Section 13.4. "RECORD EXPIRATION DATE" has the meaning specified in Section 1.4. "REDEMPTION DATE", when used with respect to any Debenture to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "REDEMPTION PRICE" when used with respect to any Debenture to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "REFERENCE DATE" has the meaning specified in Section 13.4(c). "REFERENCE MARKET PRICE" shall initially mean $42.04 (which is an amount equal to 66 2/3% of the last reported sale price for Common Stock on the NYSE on March 18, 1998) and, in the event of any adjustment of the conversion price other than as a result of a Fundamental Change, the Reference Market Price shall also be adjusted so that the ratio of the Reference Market Price to the Conversion Price after giving effect to any such adjustment shall always be 9 17 the same as the ratio of the initial Reference Market Price to the initial Conversion Price of $78.25 per share. "REGULAR RECORD DATE" means for the interest payable on any Interest Payment Date the fifteenth day next preceding such Interest Payment Date. "RESPONSIBLE OFFICER" when used with respect to the Indenture Trustee means any officer of the Indenture Trustee within the Corporate Trust Office of the Indenture Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer of the Indenture Trustee to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "RESTRICTED PREFERRED SECURITIES" means all Preferred Securities required to bear any restricted securities legend pursuant to the Declaration. "RESTRICTED SECURITIES" means all the Debentures required pursuant to Section 2.6 to bear a Restricted Securities Legend. "RESTRICTED SECURITIES LEGEND" has the meaning specified in Section 2.6. "SECURITIES REGISTER" and "SECURITIES REGISTRAR" have the respective meanings specified in Section 3.5. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "SENIOR CREDIT FACILITY" means that certain Credit Agreement, dated as of November 26, 1997, as amended by Amendment No. 1 to Credit Agreement dated as of January 2, 1998, Amendment No. 2 dated as of February 20, 1998, and Amendment No. 3 to Credit Agreement dated as of March 6, 1998, between Suiza Foods Corporation, the lenders party thereto and First Union National Bank, as administrative agent, and including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, in each case, as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement (and related document) governing Debt incurred to refinance, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or group of lenders. "SENIOR DEBT" means the principal of (and premium, if any), interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on Debt of the Company, whether incurred on or prior to the date of the Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of 10 18 payment to the Debentures or to other Debt which is pari passu with, or subordinated to, the Debentures; provided, however, that Senior Debt shall not be deemed to include: (i) any Debt of the Company which, when incurred and without respect to any election under Section 1111(b) of the Bankruptcy Code, was without recourse to the Company, (ii) any Debt of the Company to any of its Subsidiaries, (iii) Debt to any employee of the Company, (iv) any liability for taxes, and (v) Debt or other monetary obligations to trade creditors or assumed by the Company or any of its Subsidiaries in the ordinary course of business in connection with the obtaining of goods, materials or services. "SPECIAL EVENT" means a Tax Event or an Investment Company Event. "SPECIAL RECORD DATE" for the payment of any Defaulted Interest means a date fixed by the Indenture Trustee pursuant to Section 3.7. "STATED MATURITY" when used with respect to the Debentures or any installment of principal thereof or interest thereon means the date specified in the Debentures or this Indenture as the fixed date on which the principal of the Debentures or such installment of interest is due and payable. "STOCK FUNDAMENTAL CHANGE" means any Fundamental Change in which more than 50% of the value (as determined in good faith by the Board of Directors of the Company) of the consideration received by holders of Common Stock consists of common stock that, for each of the ten consecutive trading days immediately prior to the Entitlement Date, has been admitted for listing or admitted for listing subject to notice of issuance on a national securities exchange or quoted on The Nasdaq Stock Market; provided, however, a Fundamental Change shall not be a Stock Fundamental Change if either (i) the Company continues to exist after the occurrence of such Fundamental Change and the outstanding Preferred Securities continue to exist as outstanding Preferred Securities or (ii) not later than the occurrence of such Fundamental Change, the outstanding Preferred Securities are converted into or exchanged for shares of convertible preferred stock or debentures of an entity succeeding to the business of the Company or a subsidiary thereof, which convertible preferred stock has powers, preferences, and relative, participating, optional, or other rights and qualifications, limitations and restrictions, substantially identical to those of the Preferred Securities or which debentures have terms substantially similar to those of the Debentures. "SUBSIDIARY" means, with respect to any Person, (i) any corporation more than 50 percent of the outstanding shares of Voting Stock of which is owned, directly or indirectly, by such Person, or by one or more other Subsidiaries of such Person, or by such Person and one or more Subsidiaries thereof or (ii) any general partnership, joint venture or similar entity, more than 50 percent of the outstanding partnership or similar interests of which are owned, directly or indirectly, by such Person, or by one or more other Subsidiaries of such Person, or by such Person and one or more other Subsidiaries of such Person and (iii) any limited partnership of which such Person or any Subsidiary of such Person is a general partner. 11 19 "TAX EVENT" means the receipt by the Property Trustee, on behalf of the Trust, of an opinion of counsel, rendered by a law firm having a national tax and securities practice (which opinion shall not have been rescinded by such law firm), to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such pronouncement or decision is announced on or after March 18, 1998, there is more than an insubstantial risk in each case after the date hereof that (i) the Trust is, or will be within 90 days of the date thereof, subject to United States federal income tax with respect to income received or accrued on the Debentures, (ii) interest paid by the Company on the Debentures is not, or within 90 days of the date thereof will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or (iii) the Trust is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "TRADING DAY" with respect to a securities exchange or automated quotation system means a day on which such exchange or system is open for a full day of trading. "TRUST" has the meaning specified in the first recital of this Indenture. "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbb), as amended and as in effect or the date as of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "TRUST SECURITIES" means the Common Securities and Preferred Securities. "VOTING STOCK" means, with respect to any person, securities of any class or classes of Capital Stock in such Person entitling the holders thereof (whether at all times or at the times that such class of Capital Stock has voting power by reason of the happening of any contingency) to vote in the election of members of the board of directors or comparable body of such Person. "WTC" has the meaning specified in the introductory paragraph of this Indenture. SECTION 1.2. COMPLIANCE CERTIFICATE AND OPINIONS. Upon any application or request by the Company to the Indenture Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Indenture Trustee an Officer's Certificate stating that all conditions precedent (including covenants, compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitute a condition precedent), if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of 12 20 this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. The Company covenants that each such Officer's Certificate and Opinion of Counsel shall comply with the requirements of the Trust Indenture Act. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificates provided pursuant to Section 10.6 and 13.6) shall include: (a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 1.3. FORMS OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to matters upon which his certificate or opinion is based are erroneous. Any such certificate of counsel or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. 13 21 SECTION 1.4. ACTS OF HOLDERS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments is or are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "ACT" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.1(a)(ii)) conclusive in favor of the Indenture Trustee and the Company and any agent of the Indenture Trustee or the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Indenture Trustee deems sufficient and in accordance with such reasonable rules as the Indenture Trustee may determine. (d) The ownership of Debentures shall be proved by the Securities Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Debenture shall bind every future Holder of the same Debenture and the Holder of every Debenture issued upon the transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Indenture Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Debenture. (f) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to take any action under this Indenture by vote or consent; provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. Except as otherwise provided herein, such record date shall be the later of 30 days prior to the first 14 22 solicitation of such consent or vote or the date of the most recent list of Holders furnished to the Indenture Trustee pursuant to Section 7.1 prior to such solicitation. If a record date is fixed, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such Persons continue to be Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Record Expiration Date by Holders of the requisite principal amount of Outstanding Debentures on such record date; and provided, further, that for the purpose of determining whether Holders of the requisite principal amount of such Debentures have taken such action, no Debenture shall be deemed to have been Outstanding on such record date unless it is also Outstanding on the date such action is to become effective. Nothing in this paragraph shall prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), nor shall anything in this paragraph be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Debentures on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Record Expiration Date to be given to the Indenture Trustee in writing and to each Holder of Debentures in the manner set forth in Section 1.6. The Indenture Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Debentures entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 5.2, (iii) any request to institute proceedings referred to in Section 5.7(b) or (iv) any direction referred to in Section 5.12. If any record date is set pursuant to this paragraph, the Holders of Outstanding Debentures on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Record Expiration Date by Holders of the requisite principal amount of Outstanding Debentures on such record date; and provided, further, that for the purpose of determining whether Holders of the requisite principal amount of such Debentures have taken such action, no Debenture shall be deemed to have been Outstanding on such record date unless it is also Outstanding on the date such action is to become effective. Nothing in this paragraph shall be construed to prevent the Indenture Trustee from setting a new record date for any action (whereupon the record date previously set shall automatically and without any action by any Person be cancelled and of no effect), nor shall anything in this paragraph be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Debentures on the date such action is taken. Promptly after any record date is set pursuant to this Subsection, the Indenture Trustee, at the Company's expense, shall cause notice of such record date, the matter(s) to be submitted for potential action by Holders and the applicable Record Expiration Date to be given to the Company in writing in the 15 23 manner set forth in Section 1.5 and to each Holder of Debentures in the manner set forth in Section 1.6. (g) With respect to any record date set pursuant to this Section, the party hereto that sets such record date may designate any day as the "Record Expiration Date" and from time to time may change the Record Expiration Date to any earlier or later day; provided, however, that no such change shall be effective unless notice of the proposed new Record Expiration Date is given to the other party hereto in writing in the manner set forth in Section 1.5, and to each Holder of Debentures in the manner set forth in Section 1.6, on or before the existing Record Expiration Date. If a Record Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto that set such record date shall be deemed to have initially designated the 180th day after such record date as the Record Expiration Date with respect thereto, subject to its right to change the Record Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Record Expiration Date shall be later than the 180th day after the applicable record date. (h) Without limiting the foregoing, a Holder entitled hereunder to give or take any such action with regard to any particular Debenture may do so with regard to all or any part of the principal amount of such Debenture or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any different part of such principal amount. SECTION 1.5. NOTICES, ETC. TO INDENTURE TRUSTEE AND COMPANY. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with the following: (a) the Indenture Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Indenture Trustee at its Corporate Trust Office; or (b) the Company by the Indenture Trustee or by any Holder shall be sufficient for every purpose (except as otherwise provided in Section 5.1 hereof) hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Indenture Trustee by the Company. SECTION 1.6. NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Securities Register on the date such notice is mailed, which shall be not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to 16 24 any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Indenture Trustee shall constitute a sufficient notification for every purpose hereunder. SECTION 1.7. CONFLICT WITH TRUST INDENTURE ACT. If any provision of this Indenture limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the former provision shall be deemed to apply. SECTION 1.8. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 1.9. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company shall bind its successors, whether so expressed or not. SECTION 1.10. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Debentures shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 1.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in the Debentures, express or implied, shall give to any Person, other than the parties thereto, any Paying Agent and their successors and assigns and the Holders of the Debentures, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 1.12. GOVERNING LAW. This Indenture and the Debentures shall be governed by and construed in accordance with the laws of the State of New York without regard to its principles of conflicts of laws. SECTION 1.13. NON-BUSINESS DAYS. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Debenture shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Debentures) payment of interest or principal payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that if any Interest Payment Date is in the next succeeding calendar year, then such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity; provided that no interest 17 25 shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity. SECTION 1.14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, stockholder or incorporator, as such, of the Company shall not have any liability for any obligations of the Company under the Debentures or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Debenture waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Debentures. SECTION 1.15. DUPLICATE ORIGINALS. All parties may sign any number of copies or counterparts of this Indenture. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement. ARTICLE 2. DEBENTURE FORM SECTION 2.1. FORMS GENERALLY. The Debentures and the Indenture Trustee's certificate of authentication shall be in substantially the forms set forth in this Article with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with applicable tax laws or the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Debentures, as evidenced by their execution of the Debentures. The definitive Debentures shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods, if required by any securities exchange on which the Debentures may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Debentures may be listed, all as determined by the officers executing such Debentures, as evidenced by their execution of such Debentures. SECTION 2.2. FORM OF FACE OF DEBENTURE. SUIZA FOODS CORPORATION 5 1/2% CONVERTIBLE SUBORDINATED DEBENTURE DUE APRIL 1, 2028, $_________ NO. CUSIP NO. Suiza Foods Corporation, a corporation organized and existing under the laws of Delaware (hereinafter called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to _____________________, or registered assigns, the principal sum of _______________________ on April 1, 2028 and to pay interest plus Additional Interest, 18 26 Additional Sums and Liquidated Damages, if any, on said principal sum from March 24, 1998 or from the most recent Interest Payment Date on which interest has been paid or duly provided for, quarterly until the principal hereof is paid or duly provided for or made available for payment subject to deferral as set forth herein in arrears on January 1, April 1, July 1 and October 1 of each year, (each such date, an "Interest Payment Date") commencing July 1, 1998 at the rate of five and one-half percent (5 1/2%) per annum, until the principal hereof shall have become due and payable, and thereafter such interest shall be payable on demand. Reference is hereby made to the further provisions of this Debenture set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Indenture Trustee referred to on the reverse hereof by manual signature, this Debenture shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. SUIZA FOODS CORPORATION By: ----------------------------------- Title: SECTION 2.3. FORM OF REVERSE OF DEBENTURE. This Debenture is one of a duly authorized issue of Debentures of the Company (herein called the "DEBENTURES") limited to the aggregate principal amount of $618,556,750, issued and to be issued under an Indenture, dated as of March 24, 1998 (herein called the "INDENTURE"), between the Company and Wilmington Trust Company, as Indenture Trustee (herein called the "INDENTURE TRUSTEE," which term includes any successor Indenture Trustee under the Indenture), to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Indenture Trustee, the Company and the Holders of the Debentures, and of the terms upon which the Debentures are, and are to be, authenticated and delivered. All terms used in this Debenture that are defined in the Indenture shall have the meanings assigned to them in the Indenture. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. For periods of less than three months, interest shall be computed on the actual number of elapsed days over a month of 30 days. In the event that any date on which interest is payable on this Debenture is not a Business Day, then the payment of the interest on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that if any Interest Payment Date is in the next succeeding calendar year, then such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable. A "BUSINESS DAY" shall mean any day other than a Saturday or a Sunday or a day on which banking institutions in The City of New York are authorized or 19 27 required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Indenture Trustee, or the principal office of the Property Trustee under the Declaration, is closed for business. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures, as defined in the Indenture) is registered at the close of business on the Regular Record Date for such interest installment, which shall be the date which is the fifteenth day preceding such Interest Payment Date. Accrued interest that is not paid on the applicable Interest Payment Date will bear additional interest on the amount thereof (to the extent permitted by law) at the stated rate per annum, compounded quarterly. The term "interest" as used herein shall include quarterly interest payments, interest on quarterly interest payments not paid on the applicable Interest Payment Date, Liquidated Damages (if any) and Additional Sums, as applicable. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Indenture Trustee, notice whereof shall be given to Holders of Debentures not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. So long as no Event of Default under the Indenture (relating solely to clauses (a) and (b) under the definition thereof in Section 5.1 of the Indenture) has occurred and is continuing, the Company shall have the right under the Indenture to defer the payment of interest (including any Additional Sums or Liquidated Damages, if any, under this Debenture, at any time or from time to time), for a period not exceeding 20 consecutive quarters with respect to each deferral period (each such deferral period an "EXTENSION PERIOD"). During any such Extension Period, the Company shall not, and shall not permit any Subsidiary to, (a) declare or pay any dividends on, make distributions with respect to, or redeem, purchase, acquire, or make a liquidation payment with respect to, any shares of the Company's Capital Stock or (b) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees of indebtedness) issued by the Company that rank pari passu with or junior to this Debenture (other than with respect to both (a) and (b) (i) any dividend, redemption, liquidation, interest, principal or guarantee payment by the Company where the payment is made with securities (including Capital Stock) that rank pari passu with or junior to the securities on which such dividend, redemption, liquidation, interest, principal or guarantee payment is being made, (ii) payments under the Guarantee, (iii) purchases of Common Stock related to the issuance of Common Stock under any of the Company's benefit plans for its directors, officers or employees, (iv) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one series or class of the Company's Capital Stock for another series or class of the Company's Capital Stock, other than dividends with respect to the Company's Series A Preferred Stock and (v) the purchase of fractional interests in shares of the Company's Capital Stock pursuant to the conversion or exchange provisions of such Capital Stock or the security being converted or exchanged). Prior to the termination of any such Extension Period the Company may further extend the interest payment period; provided, however, that no Extension Period shall exceed 20 20 28 consecutive quarters or extend beyond the Stated Maturity of this Debenture. Upon the termination of any such Extension Period and upon the payment of all amounts then accrued and unpaid, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest, including Additional Interest, Additional Sums and Liquidated Damages, if any, shall be due and payable during an Extension Period except at the end thereof. The Company shall give the Indenture Trustee and the Property Trustee under the Declaration notice of its election to begin any Extension Period at least one Business Day prior to the earlier of (i) the record date for the date the distributions on the Preferred Securities (or if no Preferred Securities are outstanding, for the date interest on the Debentures) would have been payable except for the election to begin such Extension Period and (ii) the date the Property Trustee under the Declaration is (or if no Preferred Securities are outstanding, the Indenture Trustee is) required to give notice to the New York Stock Exchange or other applicable self-regulatory organizations or to holders of such Preferred Securities (or, if no Preferred Securities are outstanding, to the holders of such Debentures) of such election. Payment of the principal of (and premium, if any) and interest on this Debenture will be made [Insert, if a global security is issued: to the Depositary Trust Company or its nominee] [Insert if securities in definitive form are issued: at the Corporate Trust Office of the Indenture Trustee or at the office or agency of the Paying Agent or Paying Agents as the Company may designate maintained for that purpose in the United States], in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated by the Person entitled thereto as specified in the Securities Register, provided that proper transfer instructions have been received by the Regular Record Date. The indebtedness evidenced by this Debenture, including the principal thereof, premium, if any, and interest thereon is, to the extent and in the manner set forth in the Indenture, expressly subordinated and subject in right of payment to the prior payment in full of all Senior Debt, as defined in the Indenture, and this Debenture is issued subject to the provisions of the Indenture, and each Holder of this Debenture, by accepting the same, agrees to and shall be bound by such provisions and authorizes and directs the Indenture Trustee on behalf of such Holder to take such action as may be necessary or appropriate to acknowledge or effectuate, as between the Holder and the holders of Senior Debt, the subordination as provided in the Indenture and appoints the Indenture Trustee the attorney-in-fact of such Holder for any and all such purposes. At any time on or after April 2, 2001, the Company may, at its option, subject to the terms and conditions of Article 11 of the Indenture, redeem this Debenture in whole at any time or in part from time to time, at the Redemption Prices set forth in Section 11.7 of the Indenture. In the event of redemption of this Debenture in part only, a new Debenture or Debentures for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. 21 29 If a Special Event shall occur and be continuing, this Debenture shall be exchangeable for Preferred Securities in accordance with Section 11.8 of the Indenture or, in certain circumstances, redeemable by the Company in accordance with Section 11.7 of the Indenture. Subject to the terms and conditions set forth in Article 13 of the Indenture, this Debenture is convertible, at the option of the Holder hereof, into shares of Common Stock (and/or such other cash, securities or property as then provided for by the Indenture), all as provided in Article 13 of this Indenture. If an Event of Default shall occur and be continuing, the principal of the Debentures may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. As provided in and subject to the provisions of the Indenture, if an Event of Default occurs and is continuing, then and in every such case the Indenture Trustee or the Holders of not less than 25% in principal amount of the Outstanding Debentures may declare the principal amount of all the Debentures to be due and payable immediately, by a notice in writing to the Company (and to the Indenture Trustee if given by Holders); provided, however, that, if upon an Event of Default, the Indenture Trustee or the Holders of not less than 25% in principal amount of the Outstanding Debentures fail to declare the principal of all the Debentures to be immediately due and payable, the holders of at least 25% in aggregate liquidation amount of the Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Indenture Trustee. Upon any such declaration, such principal amount (or specified amount) of and the accrued interest (including any Additional Interest, Additional Sums and Liquidated Damages, if any) on all the Debentures shall become immediately due and payable, provided that the payment of principal and interest (including any Additional Interest, Additional Sums and Liquidated Damages, if any) on such Debentures shall remain subordinated to the extent provided in Article 12 of the Indenture. The Indenture contains provisions for satisfaction, discharge and defeasance of the entire indebtedness of this Debenture upon compliance by the Company with certain conditions set forth in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debentures to be affected under the Indenture at any time by the Company and the Indenture Trustee with the consent of the Holders of a majority in principal amount of the Debentures. In addition, without the consent of any Holder of a Debenture, the Indenture and the Debentures may be amended and supplemented to cure any ambiguity or inconsistency, make other changes which will not adversely affect in any material aspect the rights of the Holders or certain other matters specified in the Indenture. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Debentures at the time Outstanding, on behalf of the Holders of all Debentures, to waive compliance by the Company with certain provisions of the Indenture and certain past Defaults and Events of Default under the Indenture and their 22 30 consequences, and, should the Holders of the Debentures fail to annul and rescind such declaration, the holders of a majority in liquidation amount of the Preferred Securities then outstanding shall have the right. Any such consent or waiver shall be conclusive and binding upon the Holder of this Debenture and upon all future Holders of this Debenture and of any Debenture issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or wavier is made upon this Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest (including Additional Interest, if any, Additional Sums, if any, and Liquidated Damages, if any) on this Debenture at the times, place and rate, and in the coin or currency, herein prescribed. Before sales pursuant to Shelf Registration Statement and prior to end of Effectiveness Period: The holders of the Preferred Securities, the Debentures, the Guarantee and the shares of Common Stock of the Company issuable upon conversion of the Preferred Securities and Debentures (collectively, the "REGISTRABLE SECURITIES") are entitled to the benefits of a Registration Rights Agreement, dated as of March 24, 1998, among the Trust, the Company and the Purchasers (the "REGISTRATION RIGHTS AGREEMENT"). Pursuant to the Registration Rights Agreement, the Company and the Trust have agreed for the benefit of the holders of Registrable Securities that (i) the Company and the Trust will, at the Company's cost, within 90 days after the date of issuance of the Registrable Securities, file a shelf registration statement (the "SHELF REGISTRATION STATEMENT") with the Commission with respect to the resale of the Registrable Securities, (ii) the Company will use its best efforts to cause such Shelf Registration Statement to be declared effective by the Commission within 150 days after the date of issuance of the Registrable Securities and (iii) the Company will use its best efforts to maintain such Shelf Registration Statement continuously effective under the Securities Act until the second anniversary of the date of issuance of the Registrable Securities or such earlier date as is provided in the Registration Rights Agreement (the "EFFECTIVENESS PERIOD"). The Company will be permitted to suspend the use of the prospectus (which is a part of the Shelf Registration Statement) in connection with sales of Registrable Securities by holders during certain periods of time under certain circumstances. If (i) on or prior to the date 90 days after the date of original issuance of the Registrable Securities, a Shelf Registration Statement has not been filed with the Commission, or (ii) on or prior to the 150th day following such original issuance of the Registrable Securities, such Shelf Registration Statement is not declared effective by the Commission (each such event a "REGISTRATION DEFAULT"), additional interest ("LIQUIDATED DAMAGES") will accrue on the Debentures from and including the day following such Registration Default until such time as such Shelf Registration Statement is filed or such shelf Registration Statement is declared effective, as the case may be. Liquidated Damages will be paid quarterly in arrears (subject to the Company's ability to defer payment of Liquidated Damages during any Extension Period), with the first quarterly payment due on the first Interest Payment Date following the date on which such Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to an additional 0.25% of the principal amount to and including the 90th day following such Registration Default 23 31 and 0.50% thereof from and after the 91st day following such Registration Default. In the event that during the Effectiveness Period the Shelf Registration Statement ceases to be effective, or the Company suspends the use of the prospectus which is a part thereof, for more than 90 days, whether or not consecutive, during any 12-month period then the interest rate borne by the Debentures will increase by an additional 0.50% per annum from the 91st day of the applicable 12-month period such Shelf Registration Statement ceases to be effective or the Company suspends the use of the prospectus which is a part thereof, as the case may be, until the earlier of such time as (i) the Shelf Registration Statement again becomes effective, (ii) the use of the related prospectuses ceases to be suspended or (iii) the Effectiveness Period expires. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Debenture is registrable in the Securities Register, upon surrender of this Debenture for registration of transfer at the office or agency of the Company maintained under Section 10.2 of the Indenture duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Debenture for registration of transfer, the Company, the Indenture Trustee and any agent of the Company or the Indenture Trustee may treat the Person in whose name this Debenture is registered as the owner hereof for all purposes, whether or not this Debenture be overdue, and neither the Company, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. The Debentures are issuable only in registered form without coupons in denominations of $50 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Debentures are exchangeable for a like aggregate principal amount of Debentures of a different authorized denomination, as requested by the Holder surrendering the same. The Company and, by its acceptance of this Debenture or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, this Debenture agree that for United States federal, state and local tax purposes it is intended that this Debenture constitute indebtedness. No director, officer, employee, stockholder or incorporator of the Company shall have any liability for any obligations of the Company under this Debenture or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting this Debenture waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of this Debenture. 24 32 THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF. 25 33 ASSIGNMENT FORM To assign this Debenture, fill in the form below: (I) or (we) assign and transfer this Debenture to - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ______________________ agent to transfer this Debenture on the books of the Company. The agent may substitute another to act for him. Your Signature: -------------------------------------------------- (Sign exactly as your name appears on the other side of this Debenture) Date: ------------------------------ Signature Guarantee:* -------------------------------------------------- [Include the following if the Debenture bears a Restricted Securities Legend:] In connection with any transfer of any of the Debentures evidenced by this certificate, the undersigned confirms that such Debentures are being: CHECK ONE BOX BELOW (1) [__] exchanged for the undersigned's own account without transfer; or (2) [__] transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933; (3) [__] transferred pursuant to and in compliance with Regulation S under the Securities Act of 1933; (4) [__] transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933; (5) [__] transferred pursuant to an effective Registration Statement under the Securities Act of 1933. - -------------------- * Signature must be guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs acceptable to the Indenture Trustee. 26 34 Unless one of the boxes is checked, the Indenture Trustee will refuse to register any of the Debentures evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if box (3) or (4) is checked, the Indenture Trustee may require, prior to registering any such transfer of the Securities such legal opinions, certifications and other information as the Company has reasonably requested in writing and directed the Indenture Trustee to require confirmation that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933 as amended (the "SECURITIES ACT"), such as the exemption provided by Rule 144 under the Securities Act; provided, further, that after the date that a shelf Registration Statement under the Securities Act has been filed and so long as such shelf Registration Statement continues to be effective, the Indenture Trustee may only permit transfers for which box (5) has been checked. ------------------------------------- - ------------------------------------- Signature Signature Guarantee:* - ------------------------------------- ------------------------------------- Signature must be guaranteed [TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED] The undersigned represents and warrants that the undersigned is purchasing this Debenture for its own account or an account with respect to which undersigned exercises sole investment discretion and that it and any such account is a "QUALIFIED INSTITUTIONAL BUYER" within the meaning of Rule 144A under the Securities Act, and is aware that the sale to undersigned is being made in reliance on Rule 144A and acknowledges that undersigned has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that undersigned is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: - ------------------------------------- ------------------------------------- ------------------------------------- Notice: To Be executed by an executive officer] - -------------------- * Signature must be guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (I) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs acceptable to the Indenture Trustee. 27 35 NOTICE OF CONVERSION To: Suiza Foods Corporation The undersigned owner of this Debenture hereby irrevocably exercises the option to convert this Debenture, or the portion below designated, into Common Stock of Suiza Foods Corporation in accordance with the terms of the Indenture referred to in this Debenture, and directs that the shares issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any Holder, upon the exercise of undersigned's conversion rights in accordance with the terms of the Indenture and the Debenture, agrees to be bound by the terms of the Registration Rights Agreement relating to the Common Stock issuable upon conversion of the Debenture. Date:_______________________ in whole ___ in part ___ Portions of Debenture to be converted ($50 or integral multiples thereof): $ --------------------------------- Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number --------------------------------- --------------------------------- --------------------------------- Signature Guarantee:* - -------------------- * Signature must be guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs acceptable to the Indenture Trustee. 28 36 SECTION 2.4. ADDITIONAL PROVISIONS REQUIRED IN GLOBAL DEBENTURE. Any Global Debenture issued hereunder shall, in addition to the provisions contained in Sections 2.2 and 2.3 bear a legend in substantially the following form: "This Debenture is a Global Debenture within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or a nominee of a Depositary. This Debenture is exchangeable for Debentures registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Indenture and may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary." SECTION 2.5. FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The form of Indenture Trustee's Certificate of Authentication shall be as follows (or in the form provided in Section 6.15 in the event that a separate Authenticating Agent is appointed pursuant thereto: "This is one of the Debentures designated therein referred to in the within mentioned Indenture. WILMINGTON TRUST COMPANY, as Indenture Trustee By: Authorized Signatory Dated: " - --------------------------------- SECTION 2.6. INITIAL ISSUANCE TO PROPERTY TRUSTEE. The Debentures initially issued to the Property Trustee of the Trust shall be in the form of one or more individual certificates in definitive, fully registered form without distribution coupons and shall bear the following legend (the "RESTRICTED SECURITIES LEGEND") unless the Company determines otherwise in accordance with applicable law: THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGE OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN 29 37 THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OR EXCHANGE OF SUCH SECURITY EXCEPT (A) TO SUIZA FOODS CORPORATION OR A SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, OR (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR THE DEBENTURES (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE TRANSFER AGENT), TOGETHER WITH SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUIZA FOODS CORPORATION, THE TRUSTEE OR THE TRANSFER AGENT, AS APPLICABLE, MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. ARTICLE 3. THE DEBENTURES SECTION 3.1. TITLE AND AMOUNT OF DEBENTURES. The aggregate principal amount at Stated Maturity of Debentures which may be authenticated and delivered under this Indenture is $618,556,750, except for Debentures authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Debentures pursuant to Sections 3.4, 3.5, 3.6, 3.15, 9.6, 11.7 or 11.8. The Debentures shall be known and designated as "5 1/2% Convertible 30 38 Subordinated Debentures due April 1, 2028." Their Maturity shall be April 1, 2028 and they shall bear interest as provided in the form of Debenture and as herein provided. SECTION 3.2. DENOMINATIONS. The Debentures shall be in registered form without coupons and shall be issuable in denominations of $50 and any integral multiple thereof. SECTION 3.3. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Debentures shall be executed on behalf of the Company by its President, Chief Executive Officer, Chief Financial Officer, or one of its Executive Vice Presidents. The signature of any of these officers on the Debentures may be manual or facsimile. Debentures bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Debentures or did not hold such offices at the date of such Debentures. Upon the execution and delivery of this Indenture, and at any time from time to time after the execution and delivery of this Indenture, Debentures may be executed by the Company and delivered to the Indenture Trustee for authentication, together with a Company Order for the authentication and delivery of such Debentures, and the Indenture Trustee, in accordance with the Company Order, shall thereupon authenticate and make said Debentures available for delivery without any further action by the Company. Debentures may be authenticated on original issuance from time to time and delivered pursuant to such procedures acceptable to the Indenture Trustee ("Procedures") as may be specified from time to time by Company Order. Procedures may authorize authentication and delivery pursuant to oral instructions of the Company or a duly authorized agent, which instructions shall be promptly confirmed in writing. Each Debenture shall be dated the date of its authentication. No Debenture shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Debenture a certificate of authentication substantially in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers, and such certificate upon any Debenture shall be conclusive evidence, and the only evidence, that such Debenture has been duly authenticated and delivered hereunder. SECTION 3.4. TEMPORARY DEBENTURES. Pending the preparation of definitive Debentures, the Company may execute, and upon Company Order the Indenture Trustee shall authenticate and deliver, temporary Debentures which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Debentures in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Debentures may determine, as evidenced by their execution of such Debentures. If temporary Debentures are issued, the Company will cause definitive Debentures to be prepared without unreasonable delay. After the preparation of definitive Debentures, the 31 39 temporary Debentures shall be exchangeable for definitive Debentures upon surrender of the temporary Debentures at the office or agency of the Company designated for the purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Debentures, the Company shall execute and the Indenture Trustee shall authenticate and make available for delivery in exchange therefor a like principal amount of definitive Debentures of authorized denominations. Until so exchanged, the temporary Debentures shall in all respects be entitled to the same benefits under this Indenture as definitive Debentures. SECTION 3.5. REGISTRATION, TRANSFER AND EXCHANGE. The Company shall cause to be kept at the Corporate Trust Office of the Indenture Trustee a register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Debentures and of transfers of Debentures (such register is herein sometimes referred to as the "Securities Register"). The Indenture Trustee is hereby appointed "Securities Registrar" for the purpose of the registering Debentures and transfers and exchanges of Debentures as herein provided. Upon surrender for registration of transfer of any Debenture at the office or agency of the Company designated pursuant to Section 10.2 for that purpose, the Company shall execute, and the Indenture Trustee shall authenticate and make available for delivery, in the name of the designated transferee or transferees, one or more new Debentures of any authorized denominations, of a like aggregate principal amount. At the option of the Holder, Debentures may be exchanged for other Debentures of any authorized denominations, of a like aggregate principal amount, upon surrender of the Debentures to be exchanged at such office or agency. Whenever any Debentures are so surrendered for exchange, the Company shall execute, and the Indenture Trustee shall authenticate and make available for delivery, the Debentures which the Holder making the exchange is entitled to receive. All Debentures issued upon any transfer or exchange of Debentures shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Debentures surrendered upon such transfer or exchange. Every Debenture presented or surrendered for transfer or exchange shall (if so required by the Company or the Securities Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made to a Holder for any transfer or exchange of Debentures, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Debentures, other than exchanges pursuant to Sections 3.4, 3.15, 9.6, 11.7 and 11.8. Notwithstanding any of the foregoing, the Global Debenture shall be exchangeable pursuant to this Section 3.5 for Debentures registered in the names of Persons other than the Depositary for such Debenture or its nominee only if (a) such Depositary notifies the Company 32 40 that it is unwilling or unable to continue as Depositary for the Global Debenture or if at any time such Depositary ceases to be a clearing agency registered under the Securities Exchange Act, and the Company shall not have appointed a successor depositary within 90 days after such notice, (b) the Company executes and delivers to the Indenture Trustee a Company Order that the Global Debenture shall be so exchangeable or (c) there shall have occurred and be continuing an Event of Default. The Global Debenture shall be exchangeable for Debentures registered in such names as such Depositary shall direct. Any Holder of a Global Debenture shall, by acceptance of such Global Debenture, agree that transfers of beneficial interests in such Global Debenture may be effected only through a book entry system maintained by the Holder of such Global Debenture (or its agent), and that ownership of a beneficial interest in the Debentures represented thereby shall be required to be reflected in book entry form. Transfers of a Global Debenture shall be limited to transfers in whole and not in part, to the Depositary, its successors, and their respective nominees. Interests of beneficial owners in a Global Debenture may be transferred in accordance with the rules and procedures of the Depositary (or its successors). Neither the Company, the Securities Registrar nor the Indenture Trustee shall be required, pursuant to the provisions of this Section, (a) to issue, transfer or exchange any Debenture during a period beginning at the opening of business 15 days before the day of selection for redemption of Debentures pursuant to Article 11 and ending at the close of business on the day of mailing of notice of redemption or (b) to transfer or exchange any Debenture so selected for redemption in whole or in part, except, in the case of any Debenture to be redeemed in part, any portion thereof not to be redeemed. The Debentures may not be transferred except in compliance with the Restricted Securities Legend unless otherwise determined by the Company in accordance with applicable law. Upon any distribution of the Debentures to the holders of the Preferred Securities in accordance with the Declaration, the Company and the Indenture Trustee shall enter into a supplemental indenture pursuant to Section 9.1(i) to provide for transfer procedures and restrictions with respect to the Debentures substantially similar to those contained in the Declaration to the extent applicable in the circumstances existing at the time of such distribution. SECTION 3.6. MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES. If any mutilated Debenture is surrendered to the Indenture Trustee, the Company shall execute and the Indenture Trustee shall authenticate and make available for delivery in exchange therefor a new Debenture and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and to the Indenture Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Debenture, and (b) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of actual notice to the Company or the Indenture Trustee that such Debenture has been acquired by a protected purchaser, the Company shall execute and upon a Company Order, the Indenture Trustee shall authenticate and make available for delivery, in lieu of any such destroyed, lost or stolen Debenture, a new Debenture bearing a number not contemporaneously outstanding. 33 41 In case any such mutilated, destroyed, lost or stolen Debenture has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Debenture, pay such Debenture. Upon the issuance of any new Debenture under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Indenture Trustee) connected therewith. Every new Debenture issued pursuant to this Section in lieu of any destroyed, lost or stolen Debenture shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debenture shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debentures duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debentures. SECTION 3.7. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest (including Additional Interest, if any, Additional Sums, if any, and Liquidated Damages, if any) on any Debenture which is payable, and is punctually paid or duly provided for, on any Interest Payment Date, shall be paid to the Person in whose name that Debenture (or one or more Predecessor Debentures) is registered at the close of business on the Regular Record Date for such interest payment, except that interest payable on the Maturity of the Debentures shall be paid to the Person to whom principal is paid. Accrued interest that is not paid on the applicable Interest Payment Date ("DEFAULTED INTEREST") will bear additional interest on the amount thereof (to the extent permitted by law) at the stated rate per annum, compounded quarterly. Defaulted Interest shall forthwith cease to be payable to the registered Holder on the Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Debentures (or their respective Predecessors Debentures) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Indenture Trustee in writing of the amount of Defaulted Interest proposed to be paid on the Debentures and the date of the proposed payment, and at the same time the Company shall deposit with the Indenture Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Indenture Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the 34 42 Persons entitled to such Defaulted Interest as in this Clause provided. Upon receipt of such deposit, the Indenture Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Indenture Trustee of the notice of the proposed payment. The Indenture Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of the Debentures at the address of such Holder as it appears in the Securities Register not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Debentures (or their respective Predecessor Debentures) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b). (b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed and, upon such notice as may be required by such exchange (or by the Indenture Trustee if the Debentures are not listed), if, after notice given by the Company to the Indenture Trustee of the proposed payment pursuant to this Clause, such payment shall be deemed practicable by the Indenture Trustee. Subject to the foregoing provisions of this Section, each Debenture delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Debenture shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Debenture. SECTION 3.8. PERSONS DEEMED OWNERS. Prior to due presentment of a Debenture for registration of transfer or exchanges, the Company, the Indenture Trustee, the Paying Agent and any agent of the Company or the Indenture Trustee or the Paying Agent may treat the Person in whose name any Debenture is registered as the owner of such Debenture for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 3.7) interest (including Additional Interest, if any, Additional Sums, if any, and Liquidated Damages, if any) on such Debenture and for all other purposes whatsoever, whether or not such Debenture be overdue, and neither the Company, the Indenture Trustee nor any agent of the Company or the Indenture Trustee shall be affected by notice to the contrary. SECTION 3.9. CANCELLATION. All Debentures surrendered for payment, redemption, conversion, transfer or exchange shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee, and any such Debentures and Debentures surrendered directly to the Indenture Trustee for any such purpose shall be promptly canceled by the Indenture Trustee. The Company may at any time deliver or cause to be delivered to the Indenture Trustee for cancellation any Debentures previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Debentures so delivered shall be promptly canceled by the Indenture Trustee. No Debentures 35 43 shall be authenticated in lieu of or in exchange for any Debentures canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Debentures shall be returned to the Company by the Indenture Trustee. SECTION 3.10. COMPUTATION OF INTEREST. Interest on the Debentures shall be computed on the basis of a 360- day year of twelve 30-day months. For periods of less than a month, interest shall be computed on the actual number of elapsed days over a month of 30 days. SECTION 3.11. DEFERRALS OF INTEREST PAYMENT DATES. So long as no Event of Default (relating solely to clauses (a) and (b) under Section 5.1 hereof) has occurred and is continuing, the Company shall have the right to defer the payment of interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) under the Debentures, at any time, or from time to time, for a period not exceeding 20 consecutive quarters with respect to each deferral period, but not to exceed the Stated Maturity (each such deferral period an "EXTENSION PERIOD"). During any such Extension Period, the Company shall not, and shall not permit any Subsidiary to, (a) declare or pay any dividends on, make distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of the Company's Capital Stock, other than dividends with respect to the Company's Series A Preferred Stock, or (b) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees of indebtedness) issued by the Company that rank pari passu with or junior to the Debentures (other than with respect to both (a) and (b) (i) any dividend, redemption, liquidation, interest, principal or guarantee payment by the Company where the payment is made with securities (including Capital Stock) that rank pari passu with or junior to the securities on which such dividend, redemption, liquidation, interest, principal or guarantee payment is being made, (ii) payments under the Guarantee, (iii) purchases of Common Stock related to the issuance of Common Stock under any of the Company's benefit plans for its directors, officers or employees, (iv) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one series or class of the Company's Capital Stock for another series or class of the Company's capital stock and (v) the purchase of fractional interests in shares of the Company's Capital Stock pursuant to the conversion or exchange provisions of such Capital Stock or the security being converted or exchanged). Prior to the termination of any such Extension Period, the Company may further extend the interest payment period; provided, however, that no such Extension Period shall exceed 20 consecutive quarters or extend beyond the Stated Maturity of the Debentures. Upon termination of any Extension Period and upon the payment of all amounts then accrued and unpaid, the Company may select a new Extension Period, subject to the above requirements. No interest including Additional Interest and Liquidated Damages, if any, shall be due and payable during an Extension Period, except at the end thereof. The Company shall give the Indenture Trustee, the Property Trustee and other trustees under the Declaration notice of its election to begin any Extension Period at least one Business Day prior to the earlier of (i) the record date for the date the distributions on the Preferred Securities of the Trust (or if no, Preferred Securities are outstanding, for the date interest on the Debentures) would have been payable except for the election to begin such Extension Period and (ii) the date the Property Trustee under the Declaration (or, if no Preferred Securities are outstanding, the Indenture Trustee) is required to give notice to the New York Stock Exchange or other applicable self-regulatory organization or to holders of such Preferred 36 44 Securities (or, if no Preferred Securities are outstanding, to the holders of such Debentures) of such record date, but in any event not less than one Business Day prior to such record date. Such notice shall specify the Expiration Period selected. The Indenture Trustee, upon receipt of notice thereof from the Company, shall promptly give notice, in the name and at the expense of the Company, of the Company's election to begin an Extension Period to the Holders of the Outstanding Debentures. SECTION 3.12. RIGHT OF SET-OFF. Notwithstanding anything to the contrary in this Indenture, the Company shall have the right to set-off any payment it is otherwise required to make thereunder in respect of the Debentures to the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment relating to the Debentures under the Guarantee. SECTION 3.13. AGREED TAX TREATMENT. Each Debenture issued hereunder shall provide that the Company and, by its acceptance of a Debenture or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, such Debenture agree that for United States Federal, state and local tax purposes it is intended that such Debenture constitute indebtedness. SECTION 3.14. CUSIP NUMBERS. The Company in issuing the Debentures may use "CUSIP" numbers (if then generally in use), and, if so, the Indenture Trustee shall use such "CUSIP" number provided to it by the Company in notices of redemption as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness of such number either as printed on the Debentures or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Debentures, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Indenture Trustee of any change in CUSIP numbers. SECTION 3.15. GLOBAL SECURITY. (a) In connection with distribution of Debentures to holders of the Preferred Securities in connection with the involuntary or voluntary dissolution, winding-up or liquidation of the Trust as a result of the occurrence of a Special Event or otherwise, (i) the Debentures in certificated form may be presented to the Indenture Trustee by the Property Trustee in exchange for one or more global certificates (each a "Global Debenture") in an aggregate principal amount equal to the aggregate principal amount of all outstanding Debentures to be registered in the name of the Depositary or its nominee, and delivered by the Indenture Trustee to the Depositary or its custodian, for crediting to the accounts of its participants pursuant to the procedures of the Depositary. The Company upon any such presentation shall execute a Global Debenture or Global Debentures in such 37 45 aggregate principal amount and deliver the same to the Indenture Trustee for authentication and delivery in accordance with this Indenture; and (ii) if any Preferred Securities are held in a form other than book-entry certificated form, the Debentures in certificated form may be presented to the Indenture Trustee by the Property Trustee under the Declaration and any Preferred Security certificate which represents Preferred Securities other than Preferred Securities held by the Depositary or its nominee ("NON BOOK-ENTRY PREFERRED SECURITIES") will be deemed to represent beneficial interests in Debentures presented to the Indenture Trustee by the Property Trustee having an aggregate principal amount equal to the aggregate liquidation amount of the Non Book-Entry Preferred Securities until such Preferred Security certificates are presented to the Securities Registrar for transfer or reissuance at which time such Non-Book Entry Preferred Security certificates will be canceled and a Debenture, registered in the name of the holder of the Preferred Security certificate or the transferee of the holder of such Preferred Security certificate, as the case may be, with an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Security certificate so canceled, will be executed by the Company and delivered to the Indenture Trustee for authentication and delivery in accordance with this Indenture. On issue of such Debentures, Debentures with an equivalent aggregate principal amount that were presented by the Property Trustee to the Indenture Trustee will be deemed to have been canceled. (b) A Global Debenture may be transferred, in whole but not in part, only to another nominee of the Depositary, or to a nominee of such successor Depositary. (c) If (i) the Depositary notifies the Company that it is unwilling or unable to continue as a depositary for such Global Debenture and no successor depositary shall have been appointed within 90 days by the Company, (ii) the Depositary, at any time, ceases to be a "clearing agency" registered under the Exchange Act at a time when the Depositary is required to be so registered to act as such Depositary and no successor Depositary shall have been appointed within 90 days by the Company, (iii) the Company, in its sole discretion, determines that such Global Debenture shall be so exchangeable or (iv) there shall have occurred an Event of Default with respect to such Debentures, as the case may be, the Company will execute, and, subject to Article 3 of this Indenture, the Indenture Trustee, upon written notice from the Company and receipt of a Company Order, will authenticate and make available for delivery the Debentures in definitive registered form without coupons, in authorized denominations, and in an 38 46 aggregate principal amount equal to the principal amount of the Global Debenture, in exchange for such Global Debenture. In addition, upon an Event of Default or if the Company may at any time determine that the Debentures shall no longer be represented by a Global Debenture, in such event the Company will execute, and subject to Section 3.5 of this Indenture, the Indenture Trustee, upon receipt of an Officer's Certificate evidencing such determination by the Company and a Company Order, will authenticate and make available for delivery the Debentures in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Debenture, in exchange for such Global Debenture. Upon the exchange of the Global Debenture for such Debentures in definitive registered form without coupons, in authorized denominations, the Global Debenture shall be canceled by the Indenture Trustee. Such Debentures in definitive registered form issued in exchange for the Global Debenture shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Indenture Trustee. The Indenture Trustee shall deliver such Debentures to the Depositary for delivery to the Persons in whose names such Debentures are so registered. Any such Debentures issued pursuant to this Section 3.15 shall include the Restricted Securities Legend, except that such legend may be removed from such Debenture as provided in the next sentence. The Restricted Securities Legend may be removed from a Debenture if there is delivered to the Company such satisfactory evidence, which may include an opinion of independent counsel as reasonably may be requested by the Company to confirm that neither such legend nor the restrictions on transfer set forth therein are required to ensure that transfers of such Debenture will not violate the registration and prospectus delivery requirements of the Securities Act; provided, however, that the Indenture Trustee shall not be required to determine (but may rely on a determination made by the Company, and shall be entitled to receive an Officer's Certificate evidencing such determination with respect to) the sufficiency of any such evidence. Upon receipt of such evidence and an Officer's Certificate, the Indenture Trustee shall authenticate and make available for delivery in exchange for such Debenture, a Debenture or Debentures (representing the same aggregate principal amount at Stated Maturity of the Debenture being exchanged) without such legend. If the Restricted Securities Legend has been removed from the Debenture, as provided above, no other Debenture issued in exchange for all or any part of such Debenture shall bear such legend unless the Company has reasonable cause to believe that such other Debenture represents a "restricted security" within the meaning of Rule 144 under the Securities Act and instructs the Indenture Trustee in writing to cause a legend to appear thereon. ARTICLE 4. SATISFACTION AND DISCHARGE SECTION 4.1. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall cease to be of further effect (except as to (i) any surviving rights of transfer, substitution and exchange of Debentures, (ii) rights hereunder of Holders to receive payments of principal of (and premium, if any) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on the Debentures and other rights, duties and obligations of the Holders as beneficiaries hereof with respect to the amounts, if any, so deposited with the Indenture Trustee, and (iii) the rights of the Indenture Trustee hereunder), and the Indenture Trustee, on written demand of and at the expense of the Company, shall execute instruments supplied by the Company acknowledging satisfaction and discharge of this Indenture, when (a) either 39 47 (i) all Debentures theretofore authenticated and delivered (other than (i) Debentures which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6 and (ii) Debentures for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Indenture Trustee for cancellation; or (ii) all such Debentures not theretofore delivered to the Indenture Trustee for cancellation (A) have become due and payable, or (B) will become due and payable at their Stated Maturity within one year of the date of deposit or are to be called for redemption within one year under irrevocable arrangements satisfactory to the Indenture Trustee for the giving of notice of redemption by the Company to the Indenture Trustee in the name, and at the expense, of the Company, and the Company has irrevocably deposited or caused to be deposited with the Indenture Trustee as (in the case of Debentures that have become due and payable) funds in trust for such purpose an amount in the currency or currencies in which the Debentures are payable sufficient (without regard to investment of such amount deposited) to pay and discharge the entire indebtedness on the Debentures not theretofore delivered to the Indenture Trustee for cancellation, for principal (and premium, if any) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) to the date of such deposit (in the case of Debentures that have become due and payable) or to the Stated Maturity, as the case may be, or (C) have been redeemed or tendered for conversion; (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company has delivered to the Indenture Trustee an Officer's Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, (i) the obligations of the Company to the Indenture Trustee under Section 6.7 and the obligations of the Company to any Authenticating Agent under Section 6.14, (ii) the conversion provisions contained in Article 13 and the redemption provisions of Article 11 prior to the Redemption Date or date of Maturity, and (iii) if money shall have been deposited with the Indenture Trustee pursuant to subclause (ii) of clause (a) of this Section, the obligations of the Indenture Trustee under Section 4.2 and the last paragraph of Section 10.3 shall survive. 40 48 SECTION 4.2. APPLICATION OF TRUST MONEY. Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by the Indenture Trustee, in accordance with the provisions of the Debentures and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Indenture Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) for whose payment such money or obligations have been deposited with or received by the Indenture Trustee; provided, however, that if any Debenture is converted after the deposit of money with the Indenture Trustee pursuant to Section 4.1, the Indenture Trustee shall pay over to the Company out of the money so deposited an amount equal to the money deposited in respect of the Debenture so converted and not previously paid with respect to the Debenture so converted; and provided, further, such moneys need not be segregated from other funds maintained by the Indenture Trustee except to the extent required by law. If the Indenture Trustee or Paying Agent is unable to apply any money in accordance with Section 4.1 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 Company's obligations under this Indenture and the Debentures shall be revived and reinstated as though no deposit had occurred pursuant to Section 4.1 until such time as the Indenture Trustee or Paying Agent is permitted to apply all such money in accordance with the first sentence of this Section 4.2; provided, however, that if the Company has made any payment of interest on or principal of any Debenture because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Debentures to receive such payment from the assets held by the Indenture Trustee or Paying Agent. ARTICLE 5. REMEDIES SECTION 5.1. EVENTS OF DEFAULT. "Event of Default," wherever used herein with respect to the Debentures, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) failure for 30 days to pay any interest upon the Debentures, including any Additional Interest and Liquidated Damages, if any, and any Additional Sums, in respect thereof, when such amounts becomes due and payable (subject to the deferral of any due date in the case of an Extension Period); or (b) failure to pay any principal of (or premium, if any, on) the Debentures when due whether at Maturity, upon redemption, by declaration or otherwise; or (c) failure by the Company to deliver shares of the Common Stock upon an appropriate election by the Holder or Holders of the Debentures to convert such Debentures into shares of Common Stock; or 41 49 (d) failure to observe or perform in any material respect any other of the covenants or agreements of the Company contained in the Debentures or contained in this Indenture and continuance of such failure for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied and stating that such notice is a "NOTICE OF DEFAULT" hereunder, shall have been given to the Company by the Indenture Trustee, or to the Company and the Indenture Trustee by a Holder or Holders of at least 25% in aggregate principal amount of the Debentures at the time Outstanding or the Holder or Holders of at least 25% in aggregate liquidation preference of the Preferred Securities at the time outstanding; or (e) the dissolution, winding up or termination of the Trust, except in connection with the distribution of Debentures to the Holders of Preferred Securities in liquidation of the Trust upon the redemption of all the outstanding Preferred Securities and upon certain mergers, consolidations or amalgamations permitted by Section 9.5 of the Declaration; or (f) the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company in an involuntary case or proceeding under United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law or (ii) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of, or in respect of, the Company under United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency, or similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of the property or assets of the Company, or ordering the winding-up or liquidation of the affairs of the Company, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (g) (i) the commencement by the Company of a voluntary case or proceeding under United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent; or (ii) the consent by the Company to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency, or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company; or (iii) the filing by the Company of a petition or answer or consent seeking reorganization or relief under United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law; or (iv) the consent by the Company to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or of any substantial part of the property or assets of the Company, or the making by the Company of an assignment for the benefit of creditors; or (v) the admission by the Company in writing of its inability to pay its debts generally as they become due; or (vi) the taking of corporate action by the Company in furtherance of any such action. 42 50 SECTION 5.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default (other than an Event of Default specified in Section 5.1(e) or (f)) occurs and is continuing, then and in every such case the Indenture Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Debentures may declare the principal amount of all the Debentures to be due and payable immediately, by a notice in writing to the Company (and to the Indenture Trustee if given by Holders); provided, however, that, if upon an Event of Default, the Indenture Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Debentures fail to declare the principal of all the Debentures to be immediately due and payable, the holders of at least 25% in aggregate liquidation amount of the Preferred Securities then outstanding shall have the right to make the declaration by a notice in writing to the Company and the Indenture Trustee, and upon any such declaration such principal amount (including premium, if any) of and the accrued interest (including Additional Interest and Liquidated Damages, if any) and Additional Sums, if any, on all the Debentures shall become immediately due and payable, provided that the payment of principal (including premium, if any) and interest (including Additional Interest and Liquidated Damages, if any) and Additional Sums, if any, on the Debentures shall remain subordinated to the extent provided in Article 12. If an Event of Default specified in Section 5.1(e) or (f) occurs, the principal amount of, premium, if any, on and any accrued interest (including Additional Interest and Liquidated Damages, if any) and Additional Sums, if any, on all of the Debentures then Outstanding shall ipso facto become immediately due and payable without any declaration or other Act on the part of the Indenture Trustee or any Holder. At any time after such a declaration of acceleration with respect to Debentures has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Debentures, by written notice to the Company and the Indenture Trustee may rescind and annul such declaration and its consequences if: (i) the Company has paid or deposited with the Indenture Trustee a sum sufficient to pay (A) all overdue installments of interest (including any Additional Interest and Liquidated Damages, if any) and Additional Sums, if any, on the Debentures; (B) the principal of (and premium, if any, on) the Debentures which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Debentures; (C) to the extent that payment of such interest is lawful, interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) upon overdue installments of interest at the rate borne by the Debentures; 43 51 (D) all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel; and (ii) all Events of Default with respect to Debentures, other than the non-payment of the principal of the Debentures which has become due solely by such acceleration, have been cured or waived as provided in Section 5.13. No such rescission shall affect any subsequent default or impair any right consequent thereon. If the holders of a majority in aggregate principal amount of the Outstanding Debentures fail to rescind and annul such declaration and its consequences, the holders of a majority in aggregate liquidation amount of the Preferred Securities then outstanding shall have such right. SECTION 5.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY INDENTURE TRUSTEE. The Company covenants that if an Event of Default under Section 5.1(a) or Section 5.1(b) shall occur, the Company will, upon demand of the Indenture Trustee, pay to it, for the benefit of the Holders of the Debentures, the whole amount then due and payable on the Debentures for principal (and premium, if any) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any), including, to the extent that payment of such interest shall be lawful, interest on any overdue principal (and premium, if any) and on any overdue installments of interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) at the rate borne by the Debentures, and, in addition thereto, all amounts owing the Indenture Trustee under Section 6.7. If the Company fails to pay such amounts forthwith upon such demand, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Debentures and, subject to the provisions of Article 12, collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Debentures, wherever situated. If an Event of Default occurs and is continuing, the Indenture Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of the Debentures by such appropriate judicial proceedings as the Indenture Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. If an Event of Default occurs and shall be continuing as to the Debentures, the Indenture Trustee will have the right to declare the principal of (premium, if any, on) and interest (including Additional Interest, Additional Sums or Liquidated Damages, if any) and any other amounts payable under the Indenture to be forthwith due and payable and to enforce the right as a creditor with respect to the Debentures. 44 52 SECTION 5.4. INDENTURE TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Debentures or the property of the Company or of such other obligor or their creditors: (a) the Indenture Trustee (irrespective of whether the principal of the Debentures shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand on the Company for the payment of overdue principal (and premium, if any) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any)) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file proof of a claim for the whole amount of principal (and premium, if any) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) owing and unpaid in respect to the Debentures and to file such other papers or documents as may be necessary or advisable and to take any and all actions as are authorized under the Trust Indenture Act in order to have the claims of the Holders, the Indenture Trustee and any predecessor to the Indenture Trustee under Section 6.7 allowed in any such judicial proceedings; and (ii) in particular, the Indenture Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same in accordance with Section 5.6; and (b) any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Indenture Trustee for distribution in accordance with Section 5.6, and in the event that the Indenture Trustee shall consent to the making of such payments directly to the Holders, to pay to the Indenture Trustee any amount due to it and any predecessor Indenture Trustee under Section 6.7. Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Debentures or the rights of any Holder thereof, or to authorize the Indenture Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Indenture Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee. SECTION 5.5. INDENTURE TRUSTEE MAY ENFORCE CLAIM WITHOUT POSSESSION OF DEBENTURES. All rights of action and claims under this Indenture or the Debentures may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Debentures or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Indenture Trustee shall be brought in its own name as a trustee of an express trust, and any recovery of judgment shall, after provision for the payment of all the amounts 45 53 owing the Indenture Trustee and any predecessor Indenture Trustee under Section 6.7, its agents and counsel, be for the ratable benefit of the Holders of the Debentures in respect of which such judgment has been recovered. SECTION 5.6. APPLICATION OF MONEY COLLECTED. Any money or property collected or to be applied by the Indenture Trustee with respect to the Debentures pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Indenture Trustee and, in case of the distribution of such money or property on account of principal (or premium, if any) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any), upon presentation of the Debentures and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Indenture Trustee and any predecessor Indenture Trustee under Section 6.7, SECOND: To the payment of the amounts then due and unpaid upon the Debentures for principal (and premium, if any) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any), in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Debentures for principal (and premium, if any) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any), respectively; and THIRD: The balance, if any, to the Company or other Person or Persons entitled thereto. SECTION 5.7. LIMITATION ON SUITS. No Holder of the Debentures, including a holder of Preferred Securities acting to enforce the rights of the Property Trustee as a Holder of the Debentures pursuant to Section 6.8 of the Declaration, shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless: (a) such Holder has previously given written notice to the Indenture Trustee of a continuing Event of Default; (b) if the Trust is not the sole holder of the Outstanding Debentures, the Holders of not less than 25% in principal amount of the Outstanding Debentures shall have made written request to the Indenture Trustee to institute proceedings in respect of such Event of Default in its own name as Indenture Trustee hereunder; (c) such Holder or Holders have offered to the Indenture Trustee security and/or indemnity reasonably satisfactory to the Indenture Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and 46 54 (e) no direction inconsistent with such written request has been given to the Indenture Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Debentures; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of the Debentures, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. SECTION 5.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Debenture shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 3.7) interest (including any Additional Interest, Additional Sums and Liquidated Damages) on such Debenture on the Maturity or to convert such Debenture in accordance with Article 13 and to institute suit for the enforcement of any such payment and right to convert, and such right shall not be impaired without the consent of such Holder. For so long as any Preferred Securities remain Outstanding, to the fullest extent permitted by law and subject to the terms of this Indenture and the Declaration, upon an Event by Default specified in Sections 5.1(a) or 5.1(b), any holder of Preferred Securities shall have the right to institute a proceeding directly against the Company for enforcement of payment to such holder of the principal amount of or interest on Debentures having a principal amount equal to the liquidation preference of the Preferred Securities of such holder (a "DIRECT ACTION"). Notwithstanding any payment made to such holder of Preferred Securities by the Company in connection with a Direct Action, the Company shall remain obligated to pay the principal of or interest on the Debentures held by the Trust or the Property Trustee. In connection with any such Direct Action, the Company will be subrogated to the rights of any holder of the Preferred Securities to the extent of any payment made by the Company to such holder of Preferred Securities as a result of such Direct Action. Except as set forth in this Article, the other holders of Preferred Securities shall have no right to exercise directly any other rights or remedy available to the Holders of or in respect of, the Debentures. SECTION 5.9. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Indenture Trustee or to such Holder, then and in every such case the Company, the Indenture Trustee and the Holder shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided in Section 3.6, no right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and 47 55 remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 5.11. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Indenture Trustee or of any Holder of the Debentures to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy, or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Indenture Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Holders, as the case may be. SECTION 5.12. CONTROL BY HOLDERS. The Holders of a majority in principal amount of the Outstanding Debentures shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee or exercising any trust or power conferred on the Indenture Trustee, with respect to the Debentures, provided that: (a) such direction shall not be in conflict with any rule of law or with this Indenture; (b) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee which is not inconsistent with such direction; and (c) subject to the provisions of Section 6.1, the Indenture Trustee shall have the right to decline to follow such direction if the Indenture Trustee in good faith shall, by a Responsible Officer or Responsible Officers of the Indenture Trustee, determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Indenture Trustee in personal liability. SECTION 5.13. WAIVER OF PAST DEFAULTS. Subject to Section 9.2 hereof, the Holders of not less than a majority in principal amount of the Outstanding Debentures may on behalf of the Holders of all the Debentures waive any past Event of Default or Default hereunder with respect to Debentures and its consequences, except a default: (a) in the payment of the principal of (or premium, if any, on) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on the Debentures (unless such default has been cured and a sum sufficient to pay all matured installments of interest and principal due otherwise than by acceleration has been deposited with the Indenture Trustee); or (b) in respect of a covenant or provision hereof which under Article 9 cannot be modified or amended without the consent of the Holder of each Outstanding Debenture; provided, however, that if the Debentures are held by the Trust or the Property 48 56 Trustee of the Trust, such waiver shall not be effective until the holders of a majority in liquidation amount of Trust Securities shall have consented to such waiver; provided, further, that if the consent of the Holder of each Outstanding Debenture affected thereby is required, such waiver shall not be effective until each holder of the Trust Securities affected thereby shall have consented to such waiver. Upon any such waiver, such Event of Default or Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Event of Default or Default or impair any right consequent thereon. If the Holders of a majority in aggregate principal amount of the Outstanding Debentures fail to waive such Event of Default, the Holders of a majority in aggregate liquidation amount of the outstanding Preferred Securities shall have such right. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 5.14. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Debenture by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken or omitted by it as Indenture Trustee the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Indenture Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Debentures, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on the Debentures on or after the Maturity of the Debentures or to convert a Debenture in accordance with Article 13. SECTION 5.15. WAIVER OF USURY, STAY, OR EXTENSION LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 49 57 ARTICLE 6. THE INDENTURE TRUSTEE SECTION 6.1. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (i) the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and (ii) in the absence of bad faith on its part, the Indenture 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 Indenture Trustee and conforming to the requirements of this Indenture, but in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Indenture Trustee, the Indenture Trustee shall be under a duty to examine the same to determine whether or not on their face they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Indenture Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct except as follows: (i) this Subsection shall not be construed to limit the effect of Subsection (a) or (b) of this Section; (ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and (iii) the Indenture Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of Holders pursuant to Section 5.12 relating to the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred upon the Indenture Trustee, under this Indenture. (d) No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of 50 58 any of its duties hereunder, or in the exercise of any of its rights or powers, the Indenture Trustee reasonably believes that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section. SECTION 6.2. NOTICE OF DEFAULTS. Within 90 days after a Responsible Officer of the Indenture Trustee obtains actual knowledge of the occurrence of any Event of Default or Default hereunder, the Indenture Trustee shall transmit by mail to all Holders of Debentures, as their names and addresses appear in the Securities Register, notice of such Event of Default or Default hereunder known to the Indenture Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of an Event of Default or Default in the payment of the principal of (or premium, if any) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on any Debenture, the Indenture Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Indenture Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of Debentures; provided, further, that, except in the case of any Event of Default or Default of the character specified in Section 5.1(d), no such notice to Holders of the Debentures shall be given until at least 30 days after the occurrence thereof. SECTION 6.3. CERTAIN RIGHTS OF INDENTURE TRUSTEE. Subject to the provisions of Section 6.1: (a) the Indenture Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Indenture Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Indenture Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate and an Opinion of Counsel; (d) the Indenture Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; 51 59 (e) the Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Indenture Trustee security and/or indemnity reasonably satisfactory to the Indenture Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Indenture Trustee is not required to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties if the Indenture Trustee reasonably believes that repayment or adequate indemnity is not reasonably assured to it. (g) the Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, Debenture or other paper or document, but the Indenture Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and (h) the Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Indenture Trustee shall not be responsible for any misconduct or negligence on any part of any agent or attorney appointed with due care by it hereunder. (i) the Indenture Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. SECTION 6.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES. The recitals contained herein and in the Debentures, except the Indenture Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Indenture Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Indenture Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Debentures. Neither the Indenture Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Debentures or the proceeds thereof. SECTION 6.5. MAY HOLD DEBENTURES. The Indenture Trustee, any Paying Agent, any Securities Registrar, any Authenticating Agent or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Debentures and, subject to Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights it would have if it were not Indenture Trustee, Paying Agent, Securities Registrar, Authenticating Agent or such other agent. 52 60 SECTION 6.6. MONEY HELD IN TRUST. Money held by the Indenture Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Indenture Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. SECTION 6.7. COMPENSATION AND REIMBURSEMENT. The Company agrees as follows: (a) to pay to the Indenture Trustee from time to time such compensation for all services rendered by it hereunder in such amounts as the Company and the Indenture Trustee shall agree in writing from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a Indenture Trustee of an express trust); (b) to reimburse the Indenture Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Indenture Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel) incurred in connection with the Indenture Trustee's discharge of its duties hereunder; and (c) to the fullest extent permitted by law to indemnify the Indenture Trustee (including in its individual capacity) for, and to hold it harmless against, any loss, liability, damages, claims or expense (including the reasonable compensation and the expenses and disbursements of its agents and counsel) to the extent incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. To secure the Company's payment obligations in this Section, the Company and the Holders agree that the Indenture Trustee shall have a lien prior to the Debentures on all money or property held or collected by the Indenture Trustee except assets held in trust to pay principal and premium, if any, or interest on particular Debentures pursuant to Section 4.1(a)(ii)(B), or pursuant to any redemption pursuant to Article 11 hereof if monies have been deposited for such redemption and notice has been given and the Redemption Date has passed. Such lien shall survive the satisfaction and discharge of this Indenture. When the Indenture Trustee incurs expenses or renders services after an Event of Default specified in Section 5.1(e) or (f) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Code or a successor statute. The provisions of this Section 6.7 shall survive the discharge or termination of this Indenture and shall survive the resignation or removal of the Indenture Trustee. 53 61 SECTION 6.8. DISQUALIFICATION; CONFLICTING INTERESTS. The Indenture Trustee shall be subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing herein shall prevent the Indenture Trustee from filing with the Commission the application referred to in the second to last paragraph of Section 310(b) of the Trust Indenture Act. The Declaration and the Guarantee shall be deemed to be specifically described in this Indenture for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. SECTION 6.9. CORPORATE INDENTURE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Indenture Trustee hereunder which shall be as follows: (a) a corporation, banking corporation, national banking association or other Person organized and doing business under the laws of the United States of America or of any State, Territory or the District of Columbia, authorized under such laws to exercise corporate trust powers and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority; or (b) a corporation or other Person organized and doing business under the laws of a foreign government that is permitted to act as Indenture Trustee pursuant to a rule, regulation or order of the Commission, authorized under such laws to exercise corporate trust powers, and subject to supervision or examination by authority of such foreign government or a political subdivision thereof substantially equivalent to supervision or examination applicable to United States institutional Indenture Trustees; in either case having a combined capital and surplus of at least $100,000,000, subject to supervision or examination by Federal or State authority. If such corporation, banking corporation, national banking association or other Person publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then, for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Indenture Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Neither the Company nor any Person directly or indirectly controlling, controlled by or under common control with the Company shall serve as Indenture Trustee hereunder. SECTION 6.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Indenture Trustee and no appointment of a successor Indenture Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Indenture Trustee under Section 6.11. (b) The Indenture Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Indenture Trustee shall not have been delivered to the Indenture Trustee, with a copy for the Company, 54 62 within 30 days after the giving of such notice of resignation, the resigning Indenture Trustee may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee. (c) The Indenture Trustee may be removed at any time by Act of the Holders of a majority in principal amount at Stated Maturity of the Outstanding Debentures, delivered to the Indenture Trustee and to the Company. (d) If at any time: (i) the Indenture Trustee shall fail to comply with Section 6.8 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Debenture for at least six months, or (ii) the Indenture Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any such Holder, or (iii) the Indenture Trustee shall become incapable of acting or shall be adjudged as bankrupt or insolvent or a receiver of the Indenture Trustee or of its property shall be appointed or any public officer shall take charge or control of the Indenture Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Company by Board Resolution may remove the Indenture Trustee, or (B) subject to Section 5.14, any Holder who has been a bona fide Holder of a Debenture for at least six months may, on behalf of himself and all other similarly situated Holders, petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee. (e) If the Indenture Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Indenture Trustee for any cause with respect to the Debentures, the Company, by a Board Resolution, shall promptly appoint a successor Indenture Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Indenture Trustee with respect to the Debentures shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Debentures delivered to the Company and the retiring Indenture Trustee, the successor Indenture Trustee so appointed shall, forthwith upon its acceptance of such appointment become the successor Indenture Trustee and supersede the successor Indenture Trustee appointed by the Company. If no successor Indenture Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Debenture for at least six months may, subject to Section 5.14, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee. 55 63 (f) The Company shall give notice of each resignation and each removal of the Indenture Trustee and each appointment of a successor Indenture Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of the Debentures as their name and addresses appear in the Securities Register. Each notice shall include the name of the successor Indenture Trustee and the address of its Corporate Trust Office. SECTION 6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) In case of the appointment hereunder of a successor Indenture Trustee, every such successor Indenture Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Indenture Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Indenture Trustee shall become effective and such successor Indenture Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Indenture Trustee, but, on the request of the Company or the successor Indenture Trustee, such retiring Indenture Trustee shall, upon payment of all amounts then due under Section 6.7, execute and deliver an instrument transferring to such successor Indenture Trustee all the rights, powers and trusts of the retiring Indenture Trustee and shall duly assign, transfer and deliver to such successor Indenture Trustee all property and money held by such retiring Indenture Trustee hereunder, subject however to its lien, if any, provided for in Section 6.7. (b) Upon request of any such successor Indenture Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Indenture Trustee all rights, power and trusts referred to in paragraph (a) of this Section. (c) No successor Indenture Trustee shall accept its appointment unless at the time of such acceptance such successor Indenture Trustee shall be qualified and eligible under this Article. SECTION 6.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation, banking corporation, national banking association or other Person into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation, banking corporation, national banking association or other Person resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation, banking corporation, national banking association or other Person succeeding to all or substantially all of the corporate trust business of the Indenture Trustee, shall be the successor of the Indenture Trustee hereunder; provided, however, that such corporation, banking corporation, national banking association or other Person shall be otherwise qualified and eligible under this Article and the Trust Indenture Act, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Debentures shall have been authenticated, but not delivered, by the Indenture Trustee then in office, any successor by merger, 56 64 conversion or consolidation to such authenticating Indenture Trustee may adopt such authentication and deliver the Debentures so authenticated, and in case any Debentures shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Debentures either in the name of any predecessor Indenture Trustee or in the name of such successor Indenture Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Debentures or in this Indenture that the certificate of the Indenture Trustee shall have. SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. If and, when the Indenture Trustee shall be or become a creditor of the Company (or any other obligor upon the Debentures), the Indenture Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT. The Indenture Trustee may appoint an Authenticating Agent or Agents with respect to the Debentures which shall be authorized to act on behalf of the Indenture Trustee to authenticate the Debentures issued upon exchange, registration of transfer or partial redemption thereof, and Debentures so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Indenture Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Debentures by the Indenture Trustee or the Indenture Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Indenture Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation, banking corporation, national banking association or other Person organized and doing business under the laws of the United States of America, or of any State, Territory or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $100,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation, banking corporation, national banking association or other Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation, banking corporation, national banking association or other Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation, banking corporation, national banking association or other Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder; provided, however, that such corporation, banking corporation, national banking association or other Person shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Indenture Trustee or the Authenticating Agent. 57 65 An Authenticating Agent may resign at any time by giving written notice thereof to the Indenture Trustee and to the Company. The Indenture Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Indenture Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 1.6 to all Holders of the Debentures. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provision of this Section. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If an appointment is made pursuant to this Section, the Debentures may have endorsed thereon, in addition to the Indenture Trustee's certificate of authentication, an alternative certificate of authentication in the following form: "This is one of the Debentures referred to in the within-mentioned indenture. ------------------------------ WILMINGTON TRUST COMPANY Dated: As Indenture Trustee -------------- By: --------------------------- As Authenticating Agent By: --------------------------- Authorized Signatory" ARTICLE 7. HOLDERS LISTS AND REPORTS BY INDENTURE TRUSTEE AND COMPANY SECTION 7.1. COMPANY TO FURNISH NAMES AND ADDRESSES OF HOLDERS. The Company will furnish or cause to be furnished to the Indenture Trustee the following: (a) quarterly at least five Business Days before each Interest Payment Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Holders as of the related Regular Record Date; and 58 66 (b) at such other times as the Indenture Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list names and addresses received by the Indenture Trustee in its capacity as Securities Registrar. SECTION 7.2. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS. (a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Indenture Trustee in its capacity as Securities Registrar. The Indenture Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Debentures, and the corresponding rights and privileges of the Indenture Trustee, shall be as provided in the Trust Indenture Act. (c) Every Holder of Debentures, by receiving and holding the same, agrees with the Company and the Indenture Trustee that neither the Company nor the Indenture Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act. SECTION 7.3. REPORTS BY INDENTURE TRUSTEE. (a) The Indenture Trustee shall transmit to Holders such reports concerning the Indenture Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act, at the times and in the manner provided pursuant thereto. (b) Reports so required to be transmitted at stated intervals of not more than 12 months shall be transmitted no later than May 15 in each calendar year, commencing with the first May 15 after the first issuance of Debentures under this Indenture. (c) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Indenture Trustee with each stock exchange or self regulatory organization of which the Indenture Trustee has received notice by the Company upon which the Debentures are listed and also with the Commission. The Company will notify the Indenture Trustee whenever the Debentures are listed on any stock exchange or self-regulatory organization. SECTION 7.4. REPORTS BY COMPANY. The Company shall file with the Indenture Trustee and with the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture 59 67 Act at the times and in the manner provided in the Trust Indenture Act, provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with the Indenture Trustee within 15 days after the same is required to be filed with the Commission. Notwithstanding that the Company may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall continue to file with the Commission and provide the Indenture Trustee and Holders with the annual reports and the information, documents and other reports which are specified in Sections 13 and 15(d) of the Exchange Act (without exhibits). The Company also shall comply with the other provisions of Section 314(a) of the Trust Indenture Act. ARTICLE 8. CONSOLIDATION, MERGER, CONTINUANCE, CONVEYANCE, TRANSFER OR LEASE SECTION 8.1. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Company shall not consolidate with or merge into any other Person, continue in another jurisdiction or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: (a) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the due and punctual payment of the principal of (and premium, if any) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on all the Debentures and the performance of every covenant of this Indenture on the part of the Company to be performed or observed and shall have provided for conversion rights in accordance with Article 13; (b) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; (c) such consolidation, merger, continuance, conveyance, transfer or lease is permitted under the Declaration and Guarantee and does not give rise to any breach or violation of the Declaration or Guarantee; and (d) the Company has delivered to the Indenture Trustee an Officer's Certificate and an Opinion of Counsel each stating that such consolidation, merger, continuance, 60 68 conveyance, transfer or lease and any such supplemental indenture complies with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with, and the Indenture Trustee, subject to Section 6.1, may rely upon such Officer's Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1. SECTION 8.2. SUCCESSOR PERSON SUBSTITUTED. Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance or transfer (other than in the case of a lease) the Company shall be discharged from all obligations and covenants under the Indenture and the Debentures and may be dissolved and liquidated. Such successor Person may cause to be signed, and may issue either in its own name or in the name of the Company, any or all of the Debentures issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Indenture Trustee, and, upon the Company Order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Indenture Trustee shall authenticate and shall make available for delivery any Debentures which previously shall have been signed and delivered by the officers of the Company to the Indenture Trustee for authentication pursuant to such Company Order and such provisions and any Debentures which such successor Person thereafter shall cause to be signed and delivered to the Indenture Trustee on its behalf for the purpose pursuant to such provisions. All the Debentures so issued shall in all respects have the same legal rank and benefit under this Indenture as the Debentures theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Debentures had been issued at the date of the execution hereof. In case of any such consolidation, merger, continuance, sale, conveyance or lease, such changes in phraseology and form may be made in the Debentures thereafter to be issued as may be appropriate and reasonably agreed to by the successor Person and the Indenture Trustee. ARTICLE 9. SUPPLEMENTAL INDENTURES SECTION 9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without the consent of or notice to any Holder, the Company, when authorized by a Board Resolution, and the Indenture Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Indenture Trustee, for any of the following purposes: 61 69 (a) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Debentures contained; or (b) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to surrender any right or power herein conferred upon the Company; or (c) to add to covenants of the Company for the benefit of the Holders of the Debentures or to surrender any right or power herein conferred upon the Company; or (d) to make provision with respect to the conversion rights of Holders pursuant to the requirements of Article 13; or (e) to add any additional Events of Default; or (f) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this clause shall not materially adversely affect the interest of the Holders of Debentures and for so long as any of the Preferred Securities shall remain outstanding, the holders of such Preferred Securities; or (g) to evidence and provide for the acceptance of appointment hereunder by successor Indenture Trustee and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the Trust hereunder by more than one Indenture Trustee, pursuant to the requirements of Section 6.11(b); or (h) to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act; or (i) to make provision for transfer procedures, certification, book-entry provisions, the form of restricted securities legends, if any, to be placed on Debentures, and all other matters required pursuant to Section 3.5 or otherwise necessary, desirable or appropriate in connection with the issuance of Debentures to holders of Preferred Securities in the event of a distribution of Debentures by the Trust if a Special Event occurs and is continuing. SECTION 9.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the consent of the Holders of not less than a majority in principal amount at Stated Maturity of the Outstanding Debentures, by Act of said Holders delivered to the Company and the Indenture Trustee, the Company, when authorized by a Board Resolution, and the Indenture Trustee may enter into an indenture or indentures supplemental hereto, in form satisfactory to the Indenture Trustee, for the purpose of adding any provisions to or changing in any manner or eliminating any 62 70 of the provisions of this Indenture or of modifying in any manner the rights of the Holders of the Debentures under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Debenture affected thereby, cause the following: (a) except to the extent permitted by Section 3.11 with respect to the extension of the interest payment period of the Debentures, change the Stated Maturity of the principal of, or any installment of interest (including any Additional Interest) on, the Debentures, or reduce the principal amount thereof or the rate of interest thereon or reduce any premium payable upon the redemption thereof, or change the place of payment where, or the coin or currency in which, any Debenture or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Maturity thereof (or, in the case of redemption, on or after the date fixed for redemption thereof); or (b) adversely affect any right to convert or exchange any Debenture; or (c) reduce the percentage in principal amount of the Outstanding Debentures, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture; or (d) modify any of the provisions of this Section, Section 4.1, Section 5.8 or Section 5.13, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Debenture affected thereby, or the consent of the holders of all the Preferred Securities as the case may be; or (e) modify the provisions in Article 12 of this Indenture with respect to the subordination of Outstanding Debentures in a manner adverse to the Holders thereof; provided, however, that, so long as any Preferred Securities remain outstanding no such amendment of the Indenture that adversely affects the holders of the Preferred Securities in any material respect shall be entered into, no termination of this Indenture shall occur and no waiver of any Event of Default or compliance with any covenant under this Indenture shall be effective, without the prior consent of the holders of at least a majority of the aggregate liquidation preference of such Preferred Securities then outstanding unless and until the principal (and premium, if any) of the Debentures and all accrued and unpaid interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) thereon have been paid in full; provided, however, that where a consent under the Indenture would require the consent of each Holder of Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior consent of each holder of Preferred Securities. 63 71 It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 9.3. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article or the modifications thereby of the trust created by this Indenture, the Indenture Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Officer's Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent have been complied with. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 9.4. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes, and every Holder of the Debentures theretofore or thereafter authenticated and delivered hereunder shall be bound thereby unless it makes a change described in any of clauses (a) through (e) of Section 9.2, in which case the supplemental indenture shall bind only each Holder of a Debenture who has consented to it and every subsequent Holder of a Debenture or portion of a Debenture that evidences the same Debt as the consenting Holder's Debenture; provided, that any such waiver shall not impair or affect the right of any Holder to receive payment of principal and premium of and interest on a Debenture, on or after the respective dates set for such amounts to become due and payable, or to bring suit for the enforcement of any such payment on or after such respective dates. SECTION 9.5. CONFORMITY WITH TRUST INDENTURES ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 9.6. REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES. Debentures authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Company, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Debentures so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and made available for delivery by the Indenture Trustee in exchange for Outstanding Debentures presented to the Indenture Trustee. Any failure to make the appropriate notation shall not affect the validity of such Debenture. 64 72 ARTICLE 10. COVENANTS SECTION 10.1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company covenants and agrees for the benefit of the Debentures that it will duly and punctually pay the principal of (and premium, if any) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on the Debentures in accordance with the terms of the Debentures and this Indenture. SECTION 10.2. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in the United States, an office or agency where Debentures may be presented or surrendered for payment and an office or agency where Debentures may be surrendered for transfer or exchange and where notices and demands to or upon the Company in respect of the Debentures and this Indenture may be served. The Company initially appoints the Indenture Trustee, acting through its Corporate Trust Office, as its agent for said purposes. The Company will give prompt written notice to the Indenture Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Indenture Trustee, and the Company hereby appoints the Indenture Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Debentures may be presented or surrendered for any or all of such purposes, and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the United States for such purposes. The Company will give prompt written notice to the Indenture Trustee of any such designation and any change in the location of any such office or agency. SECTION 10.3. MONEY FOR DEBENTURE PAYMENTS TO BE HELD IN TRUST. If the Company shall at any time act as its own Paying Agent with respect to the Debentures, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Debentures, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and premium, if any) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Indenture Trustee of its failure so to act. Whenever the Company shall have one or more Paying Agents, it will, on or before 10:00 a.m. New York City time on each due date of the principal of or interest on the Debentures, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal and 65 73 premium (if any) or interest, and (unless such Paying Agent is the Indenture Trustee) the Company will promptly notify the Indenture Trustee of its failure so to act. The Company will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee, subject to the provisions of this Section, that such Paying Agent will: (a) hold all sums held by it for the payment of the principal of (and premium, if any) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on Debentures in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (b) give the Indenture Trustee notice of any default by the Company (or any other obligor upon the Debentures) in the making of any payment of principal (and premium, if any) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any); (c) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent; and (d) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Indenture Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent, and, upon such payment by the Company or any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Indenture Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Debenture and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request, after all payments owing the Indenture Trustee have been paid, to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Debenture shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment may at the expense of the Company cause to be published once, in a 66 74 newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days after the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 10.4. EXISTENCE. Subject to Article 8, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and material franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 10.5. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (b) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 10.6. STATEMENT AS TO COMPLIANCE. The Company shall deliver to the Indenture Trustee, within 120 days after the end of each calendar year of the Company ending after the date hereof an Officer's Certificate (signed by at least one of the officers referred to in Section 314(a)(4) of the Trust Indenture Act) covering the preceding calendar year, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance, observance or fulfillment of or compliance with any of the terms, provisions, covenants and conditions of this Indenture, and if the Company shall be in default, specifying all such Defaults and the nature and status thereof of which they may have knowledge. For the purpose of this Section 10.6, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. SECTION 10.7. ADDITIONAL SUMS. In the event that (a) the Trust is the Holder of all of the Outstanding Debentures, (b) a Tax Event in respect of the Trust shall have occurred and be continuing and (c) the Company shall not have (i) redeemed all the Debentures pursuant to Section 11.6 or 11.7 or (ii) terminated the Trust pursuant to Section 9.2(b) of the Declaration, the Company shall pay to the Trust (and its permitted successors or assigns under the Declaration) for so long as the Trust (or its permitted successor or assignee) is the registered holder of the Debentures, such additional amounts as may be necessary in order that the net amount of Distributions received by holders of the outstanding Preferred Securities and Common Securities of the Trust shall not be reduced as a result of any additional taxes, duties and other governmental charges to which the Trust has become subject as a result of a Tax Event (the "ADDITIONAL SUMS"), unless the Company shall have revoked such election or failed to make such payments. Whenever in this Indenture or the Debentures there is a reference in any context to the payment of 67 75 principal of or interest on the Debentures, such mention shall be deemed to include mention of the payments of the Additional Sums provided for in this paragraph to the extent that, in such context, Additional Sums are, were or would be payable in respect thereof pursuant to the provisions of this paragraph and express mention of the payment of Additional Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Sums in those provisions hereof where such express mention is not made. SECTION 10.8. ADDITIONAL COVENANTS. The Company covenants and agrees with each Holder of Debentures that so long as the Debentures are outstanding, if (a) there shall have occurred any event of which the Company has actual knowledge that (i) is a Default and (ii) in respect of which the Company shall not have taken reasonable steps to cure, (b) the Company shall be in default with respect to its payment of any obligations under the Guarantee or (c) the Company shall have given notice of its selection of an Extension Period as provided herein and shall not have rescinded such notice, or such period, or any extension thereof, shall be continuing, then the Company shall not, and shall not permit any Subsidiary to, (x) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of the Company's Capital Stock or (y) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees of indebtedness for money borrowed) of the Company that rank pari passu with or junior to the Debentures (other than (l) any dividend, redemption, liquidation, interest, principal or guarantee payment by the Company where the payment is made by way of securities (including Capital Stock) that rank pari passu with or junior to the securities on which such dividend, redemption, interest, principal or guarantee payment is being made, (2) payments under the Guarantee, (3) purchases of Common Stock related to the issuance of Common Stock under any of the Company's benefit plans for its directors, officers or employees, (4) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one series or class of the Company's Capital Stock for another series or class of the Company's Capital Stock and (5) the purchase of fractional interests in shares of the Company's Capital Stock pursuant to the conversion or exchange provisions of such Capital Stock or the security being converted or exchanged). The Company also covenants with each Holder of the Debentures (a) that for so long as Preferred Securities are outstanding not to convert the Debentures except pursuant to a notice of conversion delivered to the Conversion Agent by a holder of Preferred Securities, (b) to maintain directly or indirectly 100% ownership of the Common Securities of the Trust; provided, however, that any permitted successor of the Company hereunder may succeed to the Company's ownership of such Common Securities, (c) not to voluntarily terminate, wind-up or liquidate the Trust, except (i) in connection with a distribution of the Debentures to the holders of Preferred Securities in liquidation of the Trust or (ii) in connection with mergers, consolidations or amalgamations permitted by Section 9.5 of the Declaration and (d) to use its reasonable efforts, consistent with the terms and provisions of the Declaration to cause the Trust to remain a business trust and not to be classified as an association taxable as a corporation for United States Federal income tax purposes. 68 76 SECTION 10.9. REGISTRATION RIGHTS. The holders of the Preferred Securities, the Holders, the holders of the Guarantee and the shares of Common Stock of the Company issuable upon conversion of the Debentures and the Preferred Securities are entitled to the benefits of a Registration Rights Agreement, dated as of March 24, 1998, among the Company, the Trust and the Purchasers (the "REGISTRATION RIGHTS AGREEMENT"). SECTION 10.10. PAYMENT OF EXPENSES OF THE TRUST. In connection with the offering, sale and issuance of the Debentures to the Trust and in connection with the sale of the Preferred Securities by the Trust, the Company shall: (a) pay for all costs, fees and expenses relating to the offering, sale and issuance of the Trust Securities, including commissions, discounts and expenses payable pursuant to the Purchase Agreement and compensation of the Indenture Trustee under the Indenture in accordance with the provisions of Section 6.7 of the Indenture; (b) be responsible for and pay for all debts and obligations (other than with respect to the Preferred Securities) of the Trust, pay for all costs and expenses of the Trust (including, but not limited to, costs and expenses relating to the organization of the Trust, the offering, sale and issuance of the Preferred Securities (including commissions, discounts and expenses in connection therewith), the fees and expenses (including reasonable legal fees and expenses) of the Property Trustee and the "Delaware Trustee" (as defined in the Declaration), the costs and expenses relating to the operation of the Trust, including without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel and telephone and other telecommunications expenses and costs and expenses incurred in connection with the acquisition, financing, and disposition of Trust assets); (c) pay the fees and expenses (including reasonable legal fees and expenses) of the Guarantee Trustee; and (d) pay any and all taxes (other than United States withholding taxes attributable to the Trust or its assets) and all liabilities, costs and expenses with respect to such taxes of the Trust. ARTICLE 11. REDEMPTION OR EXCHANGE OF DEBENTURES SECTION 11.1. ELECTION TO REDEEM; NOTICE TO INDENTURE TRUSTEE. The election of the Company to redeem any Debentures shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than 30 days nor more than 60 days prior to the date fixed for redemption (unless a shorter notice shall be satisfactory to the Indenture Trustee), notify the Indenture Trustee in writing of such date and of the principal amount of Debentures to be redeemed. In the case of any redemption of Debentures prior to the expiration of any restriction on such redemption provided 69 77 in the terms of such Debentures, the Company shall furnish the Indenture Trustee with an Officer's Certificate and an Opinion of Counsel evidencing compliance with such restriction. SECTION 11.2. SELECTION OF DEBENTURES TO BE REDEEMED. If less than all the Debentures are to be redeemed, the particular Debentures to be redeemed shall be selected not more than 45 days prior to the Redemption Date by the Indenture Trustee from the Outstanding Debentures not previously called for redemption, by lot or by such other method as the Indenture Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of the Debentures Outstanding, provided that the unredeemed portion of the principal amount of the Debentures be in an authorized denomination (which shall not be less than the minimum authorized denomination) for the Debentures. The Indenture Trustee shall promptly notify the Company in writing of the Debentures selected for partial redemption and the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Debentures shall relate, in the case of any Debenture redeemed or to be redeemed only in part, to the portion of the principal amount of such Debenture which has been or is to be redeemed. If the Company shall so direct, Debentures registered in the name of the Company, any Affiliate or any Subsidiary thereof shall not be included in the Debentures selected for redemption. SECTION 11.3. NOTICE OF REDEMPTION. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 days, and not more than 60 days, prior to the date fixed for redemption, to each Holder of Debentures to be redeemed, at the address of such Holder as it appears in the Securities Register. With respect to Debentures to be redeemed, each notice of redemption shall state: (a) the date fixed for such redemption (the "Redemption Date"); (b) the Redemption Price; (c) if less than all Outstanding Debentures are to be redeemed, the identification (and, in the case of partial redemption, the respective principle amounts) of the particular Debentures to be redeemed (including, if relevant, the CUSIP or ISIN number); (d) that on the Redemption Date the Redemption Price will become due and payable upon each such Debenture or portion thereof, and that upon deposit of the Redemption Price and any unaccrued and unpaid interest with the Paying Agent, interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) thereon, if any, shall cease to accrue on and after the Redemption Date and such Debenture or portion thereof shall cease to have conversion rights; (e) the place or places where the Debentures are to be surrendered for payment of the redemption price at which the Debentures are to be redeemed; and 70 78 (f) that a Holder of Debentures who desires to convert Debentures called for redemption must satisfy the requirements for conversion contained in the Debentures, the then existing Conversion Price or rate, and the date and time when the option to convert shall expire. Notice of redemption of Debentures to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Indenture Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Debenture designed for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Debenture. SECTION 11.4. DEPOSIT OF REDEMPTION PRICE. Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.3, the Company will deposit with the Indenture Trustee or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to redeem on the Redemption Date all the Debentures so called for redemption at the applicable Redemption Price. If any Debenture called for redemption has been converted, any money deposited with the Indenture Trustee or with any Paying Agent or so segregated and held in trust for the redemption of such Debenture shall (subject to any right of the Holder of such Debenture or any Predecessor Debenture to receive interest as provided in the last paragraph of Section 3.7) be paid to the Company upon Company Request or, if then held by the Company, shall be discharged from such trust. SECTION 11.5. DEBENTURES PAYABLE ON REDEMPTION DATE. If notice of redemption has been given as provided in Section 11.3, the Debentures so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, including any accrued interest (and Additional Interest, Additional Sums and Liquidated Damages, if any) thereon, and from and after such date (unless the Company shall default in the payment of the Redemption Price or any accrued interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) thereon) such Debentures shall cease to bear interest and such Debenture will cease to have conversion rights. Upon surrender of any such Debenture for redemption in accordance with said notice, such Debenture shall be paid by the Company at the Redemption Price, including any accrued interest (and any Additional Interest) to the Redemption Date; provided, however, that installments of interest on Debentures whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Debentures, or one of more Predecessor Debentures, registered as such at the close of business on the relevant Regular Record Dates or Special Record Dates, as the case may be, according to their terms and the provisions of Section 3.7. 71 79 If any Debenture called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Debenture and such Debenture shall continue to have conversion rights until such redemption is consummated. SECTION 11.6. DEBENTURES REDEEMED IN PART. In the event of any redemption in part, the Company shall not be required to (i) issue, register the transfer of or exchange any Debenture during a period beginning at 9:00 a.m. (New York City time) 15 Business Days before any selection for redemption of Debentures and ending at 5:00 p.m. (New York City time) on the earliest date in which the relevant notice of redemption is deemed to have been given to all holders of Debentures to be so redeemed or (ii) register the transfer of or exchange any Debentures so selected for redemption, in whole or in part, except for the unredeemed portion of any Debentures being redeemed in part. Any Debenture which is to be redeemed only in part shall be surrendered at the place of payment therefor (with, if the Company or the Indenture Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Indenture Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Indenture Trustee shall authenticate and make available for delivery to the Holder of such Debenture without service charge, a new Debenture or Debentures, of any authorized denomination as requested by such Holder, in aggregate principal amount at Stated Maturity equal to and in exchange for the unredeemed portion of the principal of the Debenture so surrendered. Each Debenture shall be subject to partial redemption only in the amount of $50 or integral multiples thereof. SECTION 11.7. OPTIONAL REDEMPTION. Except as set forth below, on and after April 2, 2001 and subject to the next succeeding sentence, the Company shall have the right, at any time and from time to time, to redeem the Debentures, in whole or in part, upon notice given as set forth in Section 11.3 during the twelve-month periods beginning on April 1 (April 2 in the case of 2001) in each of the following years at the indicated Redemption Price (expressed as a percentage of the principal amount at Stated Maturity of the Debentures being redeemed), together with any accrued but unpaid interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on the portion being redeemed:
Redemption Price Redemption Price (% of principal amount (% of principal amount Year at State Maturity) Year at State Maturity) - ---------------------- ---------------------- ---------------------- ---------------------- 2001 103.438% 2004 101.375% 2002 102.750% 2005 100.688% 2003 102.063% 2006 and thereafter 100.000%
The Company may not redeem the Debentures unless, on or before the date the Company gives notice of redemption to holders of the Debentures, all accrued and unpaid interest (including 72 80 Additional Interest, Additional Sums and Liquidated Damages, if any) for all quarterly interest periods ending on or prior to the most recent Interest Payment Date has been paid in full on all outstanding Debentures. If at any time less than five percent (5%) of the original aggregate principal amount of the Debentures remains Outstanding, such Debentures shall be redeemable at the option of the Company, in whole but not in part, at a Redemption Price equal to the principal amount thereof, plus any accrued and unpaid interest (including Additional Interest and Liquidated Damages, if any) and Additional Sums, if any, to the date of redemption. If a Tax Event shall occur and be continuing, the Company shall have the right upon not less than 30 nor more than 60 days' notice, to redeem the Debentures in whole or in part, for cash upon the later of (i) 90 days following the occurrence of such Tax Event or (ii) April 2, 2001, at a Redemption Price equal to the principal amount at Stated Maturity of such Debentures plus any accrued and unpaid interest, (including Additional Interest, Additional Sums and Liquidated Damages, if any) to the date fixed for such redemption. SECTION 11.8. EXCHANGE OF TRUST SECURITIES FOR DEBENTURES. (a) At any time, the Company shall have the right to terminate or dissolve the Trust and cause the Debentures to be distributed to the holders of the Preferred Securities and the Common Securities in liquidation of the Trust after satisfaction of the Trust's liabilities to its creditors as provided by applicable law. (b) If a Special Event in respect of the Trust shall occur, the Company shall give the Property Trustee notice of the same. If a Special Event in respect of the Trust shall occur and be continuing, the Declaration requires the Property Trustee thereunder to direct the Conversion Agent (as defined in the Declaration) to exchange all outstanding Trust Securities for the Debentures having a principal amount at Stated Maturity equal to the aggregate liquidation amount of the Trust Securities to be exchanged with accrued interest in an amount equal to any unpaid distributions (including any Additional Sums) on the Trust Securities; provided, however, that, in the case of a Tax Event, the Company shall have the right to direct the Property Trustee that less than all, or none, of the Trust Securities be so exchanged (i) if and for so long as the Company shall have elected to pay any Additional Sums such that the net amounts received by holders of the Trust Securities not so exchanged in respect of interest and other payments are not reduced as a result of such Tax Event, and shall not have revoked any such election or failed to make such payments or (ii) if and for so long as the Company shall instead elect to redeem the Debentures, in whole or in part, in the manner set forth in Section 11.7; provided, however, that the Company shall comply with Section 11.8(b)(i) to the extent the Debentures are not exchanged or redeemed. 73 81 ARTICLE 12. SUBORDINATION OF DEBENTURES SECTION 12.1. DEBENTURES SUBORDINATE TO SENIOR DEBT. The Company covenants and agrees, and each Holder of a Debenture, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article, the payment of the principal of (and premium, if any) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on each and all of the Debentures are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all amounts then due and payable in respect of all Senior Debt (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. SECTION 12.2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company (each such event, if any, herein sometimes referred to as a "PROCEEDING"), then the holders of Senior Debt shall be entitled to receive payment in full of principal of (and premium, if any) and interest (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Debt), if any, on such Senior Debt, or provision shall be made for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, before the Holders of the Debentures are entitled to receive or retain any payment or distribution of any kind or character, whether in cash, property or securities (including any payment or distribution which may be payable or deliverable by reason of the payment of any other Debt of the Company subordinated to the payment of the Debentures, but not including any payments that are made from funds on deposit pursuant to Section 4.1(a)(ii)(B) or funds on deposit for the redemption of Debentures for which notice of Redemption has been given and the applicable Redemption Date has passed, such payment or distribution being hereinafter referred to as a "JUNIOR SUBORDINATED PAYMENT"), on account of principal of (or premium, if any) or interest (including any Additional Interest, Additional Sums or Liquidated Damages) on the Debentures or on account of the purchase or other acquisition of Debentures by the Company or any Subsidiary and to that end the holders of Senior Debt shall be entitled to receive, for application to the payment thereof any payment or distribution of any kind of character, whether in cash, property or Debentures, including any Junior Subordinated Payment, which may be payable or deliverable in respect of the Debentures in any such Proceeding. For the purposes of this Article only, the words "any payment or distribution of any kind or character, whether in cash, property or securities," shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment which securities are subordinated in right of payment to all then outstanding Senior Debt to substantially the same extent as the Debentures are so subordinated as provided in this Article. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the 74 82 sale of all or substantially all of its properties and assets as an entirety to another Person or the liquidation or dissolution of the Company following the sale of all or substantially all of its properties and assets as an entirety to another Person upon the terms and conditions set forth in Article 8 shall not be deemed a Proceeding for the purposes of this Section if the Person formed by such consolidation or into which the Company is merged or the Person which acquires by sale such properties and assets as an entirety, as the case may be, shall, as a part of such consolidation, merger, or sale comply with the conditions set forth in Article Eight. SECTION 12.3. PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION OF DEBENTURES. In the event that the Debentures are declared due and payable before their Maturity, then and in such event the holders of the Senior Debt outstanding at the time the Debentures so become due and payable shall be entitled to receive payment in full of all amounts due on or in respect of such Senior Debt (including any amounts due upon acceleration), or provision shall be made for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, before the Holders of the Debentures are entitled to receive any payment or distribution of any kind or character, whether in cash, properties or securities (including any Junior Subordinated Payment) by the Company on account of the principal of (or premium, if any) or interest (including any Additional Interest, Additional Sums or Liquidated Damages) on the Debentures or on account of the purchase or other acquisition of Debentures by the Company or any Subsidiary. The provisions of this Section shall not apply to any payment with respect to which Section 12.2 would be applicable. SECTION 12.4. PAYMENT LIMITS BY SENIOR DEBT. In the event and during the continuation of any default by the Company in the payment of principal, premium, interest or any other payment due under the Senior Credit Facility or on any other Senior Debt having a principal amount then outstanding of $25 million or more (or as to which there is an obligation to lend $25 million or more) continuing beyond the period of grace, if any, specified in the instrument evidencing such Senior Debt, unless and until such default shall have been cured or waived or shall have ceased to exist, then no payment shall be made by the Company with respect to the principal of (including redemption payments if any), premium, if any, or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on the Debentures. In the event of any default (other than a default described in Section 12.3 or the preceding sentence) by the Company under the terms of any instrument evidencing any Senior Debt, continuing beyond the period of grace, if any, specified in such instrument, notice of which default shall have been given by any holder of such Senior Debt to the Indenture Trustee, unless and until the earlier of (i) such default shall have been cured or waived or shall have ceased to exist, or (ii) the continuation of such default for a period of one hundred eighty days after notice of the occurrence of such default shall have been given to the Indenture Trustee, no payment shall be made by the Company with respect to the principal of (or premium, if any) or interest (including Additional Interest, Additional Sums or Liquidated Damages, if any) on the Debentures or on account of the purchase or other acquisition of Debentures by the Company or any Subsidiary. In the event that, notwithstanding the foregoing, the Company shall make any payment to the Indenture Trustee or the Holder or Holders of the Debentures which is prohibited by the 75 83 foregoing provisions of Section 12.3 or this Section 12.4, and if such fact shall have been made known, at or prior to the time of such payment, by written notice to the Indenture Trustee or such Holder or Holders in accordance with Section 12.10, then and in such event the Indenture Trustee or such Holder or Holders shall pay over and deliver such amounts to the holders of Senior Debt or the duly authorized representative of such holders of Senior Debt. The provisions of this Section shall not apply to any payment with respect to which Section 12.2 would be applicable. SECTION 12.5. PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this Article or elsewhere in this Indenture or in any of the Debentures shall prevent (a) the Company, at any time except during the pendency of any Proceeding referred to in Section 12.2 or under the conditions described in Sections 12.3 and 12.4, from making payments at any time of principal of (and premium, if any) or interest on the Debentures, or (b) the application by the Indenture Trustee of any money deposited with it hereunder to the payment of or on account of the principal of (and premium, if any) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on the Debentures or the retention of such payment by the Holders, if, at the time of such application by the Indenture Trustee, no Responsible Officer of the Indenture Trustee had actual knowledge that such payment would have been prohibited by the provisions of this Article. SECTION 12.6. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT. Subject to the payment in full of all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactorily to the holders of Senior Debt, the Holders of the Debentures shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this Article (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Debentures are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason by any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distribution of cash, property and securities applicable to the Senior Debt until the principal of (and premium, if any, on) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on the Debentures shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Debentures or the Indenture Trustee would be entitled except for the provisions of this Article to the holders of Senior Debt by Holders of the Debentures or the Indenture Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Debentures, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt. SECTION 12.7. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Debentures on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Debentures is intended to or shall (a) impair, as between the Company and Holders of the Debentures, the obligations of the 76 84 Company, which are absolute and unconditional, to pay to the Holders of the Debentures the principal of (and premium, if any, on) and interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on the Debentures as and when the same shall become due and payable in accordance with their terms, or (b) affect the relative rights against the Company of the Holders of the Debentures and creditors of the Company other than their rights in relation to the holders of Senior Debt, or (c) prevent the Indenture Trustee or the Holder of any Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture including, without limitation, filing and voting claims in any Proceeding, subject to the rights, if any, under this Article of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Indenture Trustee or such Holder. SECTION 12.8. INDENTURE TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of a Debenture by his or her acceptance thereof authorizes and directs the Indenture Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article and appoints the Indenture Trustee his or her attorney-in-fact for any and all such purposes. SECTION 12.9. NO WAIVER OF SUBORDINATION PROVISIONS. No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. SECTION 12.10. NOTICE TO INDENTURE TRUSTEE. The Company shall give prompt written notice to the Indenture Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Indenture Trustee in respect of the Debentures. Notwithstanding the provisions of this Article or any other provisions of this Indenture, the Indenture Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Indenture Trustee in respect of the Debentures, unless and until the Indenture Trustee shall have received written notice thereof from the Company or a Person representing itself to be a holder of Senior Debt or a trustee therefor (whether or not the facts contained in such notice are true). Subject to the provisions of Section 6.1, the Indenture Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Debt (or a trustee therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee therefor). In the event that the Indenture Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article, the Indenture Trustee may request such Person to furnish evidence to the satisfaction of the Indenture Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such person under this Article, and if such evidence is not furnished, the Indenture Trustee may defer 77 85 any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 12.11. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT. Upon any payment or distribution of assets of the Company referred to in this Article, the Indenture Trustee, subject to the provisions of Article 6, and the Holders of the Debentures shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which a Proceeding is pending, or a certificate of the Indenture Trustee in bankruptcy, receiver, liquidating Indenture Trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Indenture Trustee or to the Holders of Debentures, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. SECTION 12.12. INDENTURE TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT. With respect to the holders of the Senior Debt of the Company, the Indenture Trustee undertakes to perform or observe only such of its obligations and covenants as are set forth in this Article 12, and no implied covenants or obligations with respect to the holders of such Senior Debt shall be read into this Indenture against WTC and/or the Indenture Trustee. WTC and/or the Indenture Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior Debt and neither the Indenture Trustee nor WTC shall be liable to the holder of any Senior Debt if the Indenture Trustee shall in good faith mistakenly pay over or deliver to Holders, the Company, or any other person, money or assets to which any holder of such Senior Debt shall be entitled by virtue of this Article 12 or otherwise. SECTION 12.13. RIGHTS OF INDENTURE TRUSTEE AS HOLDER OF SENIOR DEBT; PRESERVATION OF INDENTURE TRUSTEE'S RIGHTS. The Indenture Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Debt which may at any time be held by it, to the same extent as any other holder of Senior Debt, and, subject to the requirements of the Trust Indenture Act, nothing in this Indenture shall deprive the Indenture Trustee of any of its rights as such holder. SECTION 12.14. ARTICLE APPLICABLE TO PAYING AGENTS. In case at any time any Paying Agent other than the Indenture Trustee shall have been appointed by the Company and be then acting hereunder, the term "Indenture Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intent and purposes as if such Paying Agent were named in this Article in addition to or in place of the Indenture Trustee. SECTION 12.15. CERTAIN CONVERSIONS OR EXCHANGES DEEMED PAYMENT. For the purpose of this Article only, (a) the issuance and delivery of junior securities upon conversion or exchange of Debentures pursuant to Article 13 shall not be deemed to constitute a payment or distribution on account of the principal of (or premium, if any, on) or interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) on the Debentures or on 78 86 account of the purchase or other acquisition of Debentures, and (b) the payment, issuance or delivery of cash (including any payments for fractional shares), property or securities (other than junior securities) upon conversion or exchange of a Debenture shall be deemed to constitute payment on account of the principal of such security. For the purpose of this Section, the term "JUNIOR SECURITIES" means (i) shares of any stock of any class of the Company and (ii) securities of the Company which are subordinated in right of payment to all Senior Debt which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Debentures are so subordinated as provided in the Article. ARTICLE 13. CONVERSION OF DEBENTURES SECTION 13.1. CONVERSION RIGHTS. Subject to and upon compliance with the provisions of this Article, the Debentures are convertible, at the option of the Holder, at any time after 90 days following the date of this Indenture and prior to the Conversion Expiration Date, into fully paid and nonassessable shares of Common Stock of the Company at an initial conversion price of $78.25 per share of Common Stock (equal to a conversion rate of 0.6390 shares for each $50 in aggregate principal amount of Debentures), subject to adjustment as described in this Article 13 (as adjusted, the "Conversion Price"). The Company will make no payment or allowance for dividends on the shares of Common Stock issued upon such conversion. A Holder of Debentures may convert any portion of the principal amount of the Debentures into that number of fully paid and nonassessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the principal amount at Stated Maturity of the Debentures to be converted by the Conversion Price. In case a Debenture or portion thereof is called for redemption, the conversion right in respect of the Debenture or portion so called shall expire at the close of business on the Conversion Expiration Date. SECTION 13.2. CONVERSION PROCEDURES. (a) In order to convert all or a portion of the Debentures, the Holder thereof shall deliver to the Indenture Trustee, as conversion agent or to such other agent appointed for such purposes (the "CONVERSION AGENT") an irrevocable Notice of Conversion setting forth the principal amount at Stated Maturity of Debentures to be converted, together with the name or names, if other than the Holder, in which the shares of Common Stock should be issued upon conversion (subject to the limitations or disposition of any interest in such securities set forth in the Restrictive Securities Legend) and, such Debentures to be converted, duly endorsed or assigned to the Company or in blank. In addition, a holder of Preferred Securities may exercise its right under the Declaration to convert such Preferred Securities into Common Stock by delivering to the Conversion Agent an irrevocable Notice of Conversion setting forth the information called for by the preceding sentence and directing the Conversion Agent (i) to exchange such Preferred Security for a portion of the Debentures held by the Trust (at an exchange rate of $50 principal amount at Stated Maturity of Debentures for each $50 of liquidation preference of Preferred Securities) and (ii) to immediately convert such Debentures, on 79 87 behalf of such holder, into Common Stock of the Company pursuant to this Article 13 and, if such Preferred Securities are in definitive form, surrendering such Preferred Securities to the Conversion Agent. So long as the Preferred Securities are outstanding, the Trust shall not convert any Debentures except pursuant to a Notice of Conversion delivered to the Conversion Agent by a holder of Preferred Securities. If a Notice of Conversion is delivered on or after the Regular Record Date and prior to the subsequent Interest Payment Date, the Holder of record on the Regular Record Date will be entitled to receive the interest paid on the subsequent Interest Payment Date on the portion of Debentures to be converted notwithstanding the conversion thereof prior to such Interest Payment Date; provided, however, that if a Redemption Date falls between such Regular Record Date and the related Interest Payment Date, the amount of such payment shall include interest accrued to, but excluding, such Redemption Date. Except as otherwise provided in the immediately preceding sentence, in the case of any Debenture which is converted, interest whose Stated Maturity is on or after the date of conversion of such Debenture shall not be payable, and the Company shall not make nor be required to make any other payment, adjustment or allowance with respect to accrued but unpaid interest on the Debentures being converted, which shall be deemed to be paid in full. Each conversion shall be deemed to have been effected immediately prior to the close of business on the day on which the Notice of Conversion was received (the "CONVERSION DATE") by the Conversion Agent from the Holder or from a holder of the Preferred Securities effecting a conversion thereof pursuant to its conversion rights under the Declaration, as the case may be. The Person or Persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock as of the Conversion Date and such Person or Persons will cease to be a record Holder or record Holders of the Debentures on that date. As promptly as practicable on or after the Conversion Date, the Company shall issue and deliver at the office of the Conversion Agent, unless otherwise directed by the Holder or holder in the Notice of Conversion, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion, together with the cash payment, if any, in lieu of any fraction of any share to the Person or Persons entitled to receive the same. The Conversion Agent shall deliver such certificate or certificates to such Person or Persons. (b) The Company's delivery to the Holder or Holders of the Debentures (through the Conversion Agent) upon conversion of the fixed number of shares of Common Stock into which the Debentures are convertible (together with the cash payment, if any, in lieu of fractional shares) shall be deemed to satisfy the Company's obligation to pay the principal amount at Maturity of the portion of Debentures so converted and any unpaid interest (including Additional Interest, Additional Sums and Liquidated Damages, if any) accrued on such Debentures at the time of such conversion; provided, however, that if any Debenture is converted on or after a Regular Record Date for payment of interest, the interest payable on the related Interest Payment Date with respect to such Debenture shall be paid to the Trust (which will distribute the applicable portion of such interest to the holder of Preferred Securities) or other holder of Debentures, as the case may be, despite such conversion; provided, further, that if a 80 88 Redemption Date falls between such Regular Record Date and the related Interest Payment Date, the amount of such payment shall include interest accrued to, but excluding, such Redemption Date. (c) No fractional shares of Common Stock will be issued as a result of conversion, but in lieu thereof, the Company shall pay to the Conversion Agent, a cash adjustment in an amount equal to the same fraction of the Current Market Price with respect to such fractional interest on the date on which the Debentures or Preferred Securities, as the case may be, were duly surrendered to the Conversion Agent for conversion, and the Conversion Agent in turn will make such payment, if any, to the Holder of the Securities or the holder of the Preferred Securities so converted. (d) In the event of the conversion of any Debenture in part only, a new Debenture or Debentures for the unconverted portion thereof will be issued in the name of the Holder thereof upon the cancellation of the Debenture converted in part in accordance with Section 3.5. (e) In effecting the conversion transactions described in this Article 13, the Conversion Agent is acting as agent of the holders of Preferred Securities (in exchange of Preferred Securities for Debentures) and as agent of the holders of Debentures (in conversion of Debentures into Common Stock), as the case may be, directing it to effect such conversion transactions. The Conversion Agent is hereby authorized (i) to exchange Debentures held by the Trust from time to time for Preferred Securities in connection with the conversion of such Preferred Securities in accordance with this Article 13 and (ii) to convert all or a portion of the Debentures into Common Stock and thereupon to deliver such shares of Common Stock in accordance with the provisions of this Article 13 and to deliver to the Trust a new Debenture or Debentures for any resulting unconverted principal amount. (f) All shares of Common Stock delivered upon any conversion of Restricted Securities shall bear a Restrictive Securities Legend substantially in the form of the legend required to be set forth on such Debentures and shall be subject to the restrictions on transfer provided in such legend and in Section 3.15 hereof in the event such Common Stock is issued in global form. Neither the Indenture Trustee nor the Conversion Agent shall have any responsibility for the inclusion or content of any such Restrictive Securities Legend on such Common Stock; provided, however, that the Indenture Trustee or the Conversion Agent shall provide to the Company or to the Company's transfer agent for such Common Stock, prior to or concurrently with a request to the Company to deliver such Conversion Agent certificates for such Common Stock, written notice that the Debenture delivered for conversion are Restricted Securities. (g) The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized and unissued Common Stock, solely for issuance upon the conversion of the Debentures, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the Debentures then outstanding. 81 89 Notwithstanding the foregoing, the Company shall be entitled to deliver upon conversion of Debentures shares of Common Stock reacquired and held in the treasury of the Company (in lieu of the issuance of authorized and unissued shares of Common Stock) so long as any such treasury shares are free and clear of all liens, charges, security interests or encumbrances. Any shares of Common Stock issued upon conversion of the Debentures shall be duly authorized, validly issued and fully paid and nonassessable. The Conversion Agent shall deliver the shares of Common Stock received upon conversion of the Debentures to the converting Holder free and clear of all liens, charges, security interests and encumbrances, except for United States withholding taxes. The Company shall use its best efforts to obtain and keep in force such governmental or regulatory permits or other authorizations as may be required by law, and shall comply with all applicable requirements as to registration or qualification of the Common Stock (and all requirements to list the Common Stock issuable upon conversion of Debentures that are on the time applicable), in order to enable the Company to lawfully issue Common Stock to each Holder upon conversion of the Debentures. (h) Except as stated below, the Company will pay any and all taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Debentures. The Company shall not be required to pay any tax which may be payable in respect of (i) any income or gain realized or recognized as a result of such conversion and (ii) any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the Debentures so converted were registered, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Conversion Agent the amount of any such tax, or has established to the satisfaction of the Conversion Agent that such tax has been paid. (i) Nothing in this Article 13 shall limit the requirement of the Company to withhold taxes pursuant to the terms of the Debentures or as set forth in this Agreement or otherwise require the Indenture Trustee or the Company to pay any amounts on account of such withholdings. SECTION 13.3. EXPIRATION OF CONVERSION RIGHTS. The conversion rights of the Holders shall expire on the close of business on the Business Day prior to the Maturity date of the Debentures, or, in the case Debentures called for redemption, at the close of business on the Business Day prior to the Redemption Date unless the Company defaults on making the payment due upon redemption (the "CONVERSION EXPIRATION DATE"). SECTION 13.4. CONVERSION PRICE ADJUSTMENTS. The conversion price shall be subject to adjustment (without duplication) from time to time as follows: (a) In case the Company shall, while any of the Debentures are outstanding, (i) pay a dividend or make a distribution with respect to its Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares or (iv) issue by reclassification of its shares of Common Stock into shares of Common Stock and 82 90 securities other than shares of Common Stock not constituting a Fundamental Change, then the Conversion Price per share of Capital Stock of the Company and the kind of shares of Capital Stock of the Company receivable upon a conversion of Debentures outstanding immediately prior to such action by the Company shall be adjusted so that the Holder of any Debentures thereafter surrendered for conversion shall be entitled to receive the number and kind of shares of Capital Stock of the Company which he would have received in respect of the shares of Common Stock the Holder would have received had the Holder converted such Debenture had been converted immediately prior to the record date for receipt of such dividend or distribution or the effective date of such other action. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend or other distribution and shall become effective immediately after the effective date in case of a subdivision, combination or reclassification (or immediately after the record date if a record dated shall have been established for such event). If, as a result of an adjustment made pursuant to this subsection (a), the Holder of any Debenture thereafter surrendered for conversion shall become entitled to receive shares of two or more classes or series of Capital Stock of the Company, the Board of Directors (whose determination shall be conclusive and shall be described in a Board Resolution filed with the Indenture Trustee) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes or series of Capital Stock. In the event that such dividend, distribution, subdivision, combination or issuance is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such record date had not been fixed. (b) In case the Company shall, while any of the Debentures are Outstanding, issue rights or warrants to all holders of its Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price per share of Common Stock on the record date mentioned below, the Conversion Price for the Debentures shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of issuance of such rights or warrants by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the record date mentioned below plus the number of shares which the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at such Current Market Price, and of which the denominator shall be the number of shares of Common Stock outstanding at the close of business on the record date mentioned below plus the number of additional shares of Common Stock offered for subscription or purchase. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights or warrants. For the purposes of this subsection, the number of shares in Common Stock at any time outstanding shall not include shares held in the treasury of the Company. The Company shall not issue any rights or warrants in respect of shares of Common Stock held in the treasury of the Company. In case any rights or warrants referred to in this subsection in respect of which an adjustment shall have been made shall expire unexercised within 45 days after the same shall have been 83 91 distributed or issued by the Company, the Conversion Price shall be readjusted at the time of such expiration to the Conversion Price that would have been in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants. (c) Subject to the last sentence of this sub-paragraph, in case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class or series of Capital Stock, cash or assets (including securities, but excluding any rights or warrants referred to in subparagraph (b), any dividend or distribution paid exclusively in cash and any dividend or distribution referred to in subparagraph (a) of this Section 13.4), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to such distribution (the "REFERENCE DATE") by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the Reference Date less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution), on the Reference Date, of the portion of the evidences of indebtedness, shares of capital stock, cash and assets so distributed applicable to one share of Common Stock and the denominator shall be such Current Market Price per share of the Common Stock, such reduction to become effective immediately prior to the opening of business on the day following the Reference Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if the adjustment for such proposed dividend or distribution had not occurred. For purposes of this subparagraph (c), any dividend or distribution that includes shares of Common Stock or rights or warrants to subscribe for or purchase shares of Common Stock shall be deemed instead to be (i) a dividend or distribution of the evidences of indebtedness, shares of Capital Stock, cash or assets received by the holders of the Common Stock in such dividend or distribution, but such shares of Common Stock or such rights or warrants, which shall result in Conversion Price reduction required by this subparagraph (c) immediately followed by (ii) a dividend or distribution of such shares of Common Stock or such rights or warrants, which shall result in any further Conversion Price reduction required by subparagraph (a) or (b), except any shares of Common Stock included in such dividend or distribution shall not be deemed outstanding for purposes of computing any adjustment of the conversion price in subparagraph (a). (d) In case the Company shall pay or make a dividend or other distribution on its Common Stock exclusively in cash (excluding all regular cash dividends, if the annualized amount thereof per share of Common Stock does not exceed 5% of the Current Market Price per share of the Common Stock on the Trading Day immediately preceding the date of declaration of such dividend), the Conversion Price shall be reduced so that the Conversion Price shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subparagraph (d) by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the date fixed for the 84 92 payment of such distribution less the amount of cash so distributed (excluding that portion of such distribution that does not exceed 5% of the Current Market Price per share, determined as provided above) applicable to one share of Common Stock and the denominator shall be such Current Market Price per share of the Common Stock, such reduction to become effective immediately prior to the opening of business on the day following the date fixed for the payment of such distribution; provided, however, that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price per share of the Common Stock on the record date fixed for determining stockholders entitled to such dividend or distribution (excluding that portion of such distribution that does not exceed 5% of the Current Market Price per share, determined as provided above), in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of Debentures shall have the right to receive upon conversion the amount of cash such Holder would have received had such Holder converted each of the Debentures immediately prior to the record date for the distribution of the cash (less that portion of such distribution that does not exceed 5% of the Current Market Price per share, determined as provided above). In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such record date had not been fixed. (e) In case a tender or exchange offer (other than an odd-lot offer) made by the Company or any Subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer shall involve the payment by the Company or such Subsidiary of consideration per share of Common Stock having a fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) at the last time (the "EXPIRATION TIME") tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended) that exceeds 110% of the Current Market Price per share of the Common Stock on the Trading Day next succeeding the Expiration Time, the Conversion Price shall be reduced so that the Conversion Price shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subparagraph (e) by a fraction of which the numerator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time (including the Purchased Shares) (as defined below) multiplied by the Current Market Price per share of the Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "PURCHASED SHARES") (excluding that portion of such consideration that does not exceed 110% of the Current Market Price per share) and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the Current Market Price per share of the Common Stock on the trading day next succeeding the 85 93 Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that such tender or exchange offer is not so made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such record date had not been fixed. (f) The Company shall have the right to reduce from time to time the Conversion Price by any amount selected by the Company for any period of at least 30 days; provided, however, that the Company shall give at least 15 days' prior notice of such reduction to the Indenture Trustee, the Property Trustee, the holders of the Preferred Securities (if the Trust then holds Debentures) and other Holders of the Debentures. The Company may, at its option, make such reductions in the Conversion Price, in addition to those set forth above in Sections 13.4(a) through (e), as the Board of Directors deems advisable to avoid or diminish any income tax to holders of Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. No adjustment of the Conversion Price will be made upon the issuance of any shares of Common Stock of the Company pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in shares of Common Stock of the Company under any such plan, or the issuance of any shares of Common Stock or options or rights to purchase such shares pursuant to any present or future employee benefit plan or program of the Company or pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security which does not constitute an issuance to all holders of Common Stock or a class thereof, of rights or warrants entitling holders of such rights or warrants to subscribe for or purchase Common Stock at less than the Current Market Price. There shall also be no adjustment of the Conversion Price in case of the issuance of any Common Stock (or securities convertible into or exchangeable for Common Stock), except as specifically described above. (g) If any action would require adjustment of the Conversion Price pursuant to more than one of the provisions described above, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value to the Holder of the Debentures. SECTION 13.5. FUNDAMENTAL CHANGE. (a) If any transaction shall occur (including, without limitation, (i) any recapitalization or reclassification of shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value or as a result of a subdivision or combination of Common Stock), (ii) any consolidation or merger of the Company with or into another person or any merger of another person into the Company (other than a merger that does not result in a reclassification, conversion, exchange or cancellation of Common Stock), (iii) any sale or transfer of all or substantially all of the assets of the Company, or (iv) any compulsory share exchange), in each case pursuant to which either shares of Common Stock shall be converted into the right to receive other securities, cash or other property, or, in the case of a sale or transfer of all or substantially 86 94 all of the assets of the Company, the holders of Common Stock shall be entitled to receive other securities, cash or other property, then appropriate provision shall be made so that the holder of each Debenture then outstanding shall have the right thereafter to convert such Debenture only into: (x) in the case of any such transaction that does not constitute a Stock Fundamental Change (as defined) and subject to funds being legally available for such purpose under applicable law at the time of such conversion, the kind and amount of the securities, cash or other property that would have been receivable upon such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Common Stock issuable upon conversion of such Debenture immediately prior to such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange, after giving effect, in the case of any Non-Stock Fundamental Change (as defined), to any adjustment in the conversion price in accordance with clause (i) of the following paragraph, and (y) in the case of any such transaction that constitutes a Stock Fundamental Change, common stock of the kind received by holders of Common Stock as a result of such Stock Fundamental Change in an amount determined in accordance with clause (ii) of the following paragraph. The company formed by such consolidation or resulting from such merger or that acquires such assets or the Company's shares, as the case may be, shall in its certificate or articles of incorporation or other constituent document establish such a conversion right. Such certificate or articles of incorporation or other constituent document shall provide for adjustments that, for events subsequent to the effective date of such certificate or articles of incorporation or other constituent document, shall be as nearly equivalent as may be practicable to the relevant adjustments provided for in Section 13.4 and this Section 13.5. (b) The Holders of Debentures will have no voting rights with respect to any transaction described in this section. (c) Notwithstanding any other provision in the preceding Section 13.5(a) to the contrary, if any Fundamental Change occurs, then the conversion price in effect immediately prior to such Fundamental Change will be adjusted as follows: (i) in the case of a Non-Stock Fundamental Change, the conversion price of the Debentures will be adjusted to equal the lower of (A) the conversion price in effect immediately prior to such Non-Stock Fundamental Change (after giving effect to any other prior adjustments effected pursuant to the preceding paragraphs) and (B) the product of (1) the greater of the Applicable Price (as defined) and the then applicable Reference Market Price (as defined) and (2) a fraction, the numerator of which will be $50 and the denominator of which will be 87 95 (x) the amount of the redemption price for the Debenture if the redemption date were the date of such Non-Stock Fundamental Change (or, for the twelve-month periods commencing on the date of original issue of the Debentures through March 30, 1999 and the twelve-month periods commencing April 1, 1999 and 2000 (through April 1, 2001) the product of 105.500%, 104.813% and 104.125%, respectively, times $50) plus (y) any then-accrued and unpaid interest (including Additional Interest and Liquidated Damages, if any) on one Debenture; and (ii) in the case of a Stock Fundamental Change, the conversion price of the Debentures immediately following such Stock Fundamental Change will be the conversion price in effect immediately prior to such Stock Fundamental Change (after giving effect to any other prior adjustments effected pursuant to the preceding paragraphs) multiplied by a fraction, the numerator of which will be the Purchaser Stock Price (as defined) and the denominator of which will be the Applicable Price; provided, however, that in the event of a Stock Fundamental Change in which (A) 100% of the value of the consideration received by a holder of Common Stock is common stock of the successor, acquiror, or other third party (and cash, if any, paid with respect to any fractional interests in such common stock resulting from such Stock Fundamental Change) and (B) all Common Stock will have been exchanged for, converted into, or acquired for common stock of the successor, acquiror, or other third party (and cash with respect to fractional interests), the conversion price of the Debentures shall be the conversion price in effect immediately prior to such Stock Fundamental Change multiplied by a fraction, the numerator of which will be one (1) and the denominator of which will be the number of shares of common stock of the successor, acquiror, or other third party received by a holder of one share of Common Stock as a result of such Stock Fundamental Change. SECTION 13.6. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever the Conversion Price is adjusted as herein provided: (a) the Company shall compute the adjusted Conversion Price and shall prepare a certificate signed by the Chief Financial Officer or the Treasurer of the Company setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed with the Indenture Trustee, the Conversion Agent and the transfer agent for the Preferred Securities and the Debentures; and (b) a notice stating the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall as soon as practicable be mailed by the Company to all record holders of Preferred Securities and the Debentures at their last addresses as they appear upon the stock transfer books of the Company and the Trust and the Securities Registrar. 88 96 SECTION 13.7. PRIOR NOTICE OF CERTAIN EVENTS. In case: (i) the Company shall (A) declare any dividend (or any other distribution) on its Common Stock, other than (x) a dividend payable in shares of Common Stock or (y) a dividend payable in cash that would not require an adjustment pursuant to Section 13.4(c) or (B) authorize a tender or exchange offer that would require an adjustment pursuant to Section 13.4(e) (or shall amend any such tender or exchange offer to change the maximum number of shares being sought or the amount or type of consideration being offered (including by exchange) therefor); or (ii) the Company shall authorize the granting to all holders of Common Stock of rights or warrants to subscribe for or purchase any shares of Capital Stock of the Company of any class or series or of any other rights or warrants to acquire Capital Stock of the Company; or (iii) of any reclassification of Common Stock (other than a subdivision or combination of the outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Company is a party and for which approval of stockholders of the Company shall be required, or of the sale or transfer of all or substantially all of the assets of the Company or of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or other property; or (iv) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; then the Company, (A) shall if any Preferred Securities are outstanding under the Declaration, cause to be filed with the transfer agent for the Preferred Securities, and shall cause to be mailed to the holders of record of the Preferred Securities, at their last addresses as they shall appear upon the stock transfer books of the Trust or (B) shall cause to be mailed to all Holders at their last addresses as they shall appear in the Securities Register, at least 15 days prior to the applicable record, effective or expiration date hereinafter specified, a notice stating (x) the date on which a record (if any) is to be taken for the purpose of such dividend, distribution, rights or warrants or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, (y) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up or (z) the date on which such tender or exchange offer (other than an exchange offer contemplated by clause (y) above) commenced, the date on which such tender or exchange offer is scheduled to expire unless extended, the consideration offered and the other material terms thereof (or the material terms of any amendment thereto); but no failure to mail such notice or any defect therein 89 97 or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice. SECTION 13.8. DIVIDEND OR INTEREST REINVESTMENT PLANS. Notwithstanding anything to the contrary in this Article 13, no adjustment of the Conversion Price will be made upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in shares of Common Stock under any such plan, or the issuance of any shares of Common Stock or options or rights to purchase such shares pursuant to any employee benefit plan or program of the Company or pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date the Debentures were first issued, which does not constitute an issuance to all holders of Common Stock (or a class thereof) of rights or warrants entitling holders thereof to subscribe for or purchase Common Stock at less than the Current Market Price. There shall also be no adjustment of the Conversion Price in case of the issuance of any Common Stock (or securities convertible into or exchangeable for Common Stock), including, without limitation, in connection with any acquisition not constituting a Fundamental Change, except as specifically described in this Article 13. SECTION 13.9. CERTAIN ADDITIONAL RIGHTS. In case the Company shall, by dividend or otherwise, declare or make a distribution on its Common Stock referred to in Section 13.4(c) or 13.4(d) (including, without limitation, dividends or distributions referred to in the last sentence of Section 13.4(c)), the Holders of the Debentures, upon the conversion thereof subsequent to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution and prior to the effectiveness of the Conversion Price adjustment in respect of such distribution, shall also be entitled to receive for each share of Common Stock into which the Debentures are converted, the portion of the shares of Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash and assets so distributed applicable to one share of Common Stock; provided, however, that, at the election of the Company (whose election shall be evidenced by a resolution of the Board of Directors) with respect to all Holders so converting, the Company may, in lieu of distributing to such Holder any portion of such distribution not consisting of cash or securities of the Company, pay such Holder an amount in cash equal to the fair market value thereof as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors). If any conversion of Debentures described in the immediately preceding sentence occurs prior to the payment date for a distribution to holders of Common Stock which the Holder of Debentures so converted is entitled to receive in accordance with the immediately preceding sentence, the Company may elect (such election to be evidenced by a resolution of the Board of Directors) to distribute to such Holder a due bill for the shares of Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash or assets to which such Holder is so entitled, provided, that such due bill (i) meets any applicable requirements of the principal national securities exchange or other market on which the Common Stock is then traded and (ii) requires payment or delivery of such shares of Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash or assets no later than the 90 98 date of payment or delivery thereof to holders of shares of Common Stock receiving such distribution. SECTION 13.10. RESTRICTIONS ON COMMON STOCK ISSUABLE UPON CONVERSION. (a) Shares of Common Stock to be issued upon conversion of a Debenture in respect of Restricted Preferred Securities shall bear such restrictive legends as the Company may provide in accordance with applicable law. (b) If shares of Common Stock to be issued upon conversion of a Debenture in respect of Restricted Preferred Securities are to be registered in a name other than that of the Holder of such Preferred Security, then the Person in whose name such shares of Common Stock are to be registered must deliver to the Conversion Agent a certificate satisfactory to the Company and signed by such Person, as to compliance with the restrictions on transfer applicable to such Preferred Security. Neither the Company, the Indenture Trustee nor any Conversion Agent or Registrar shall be required to register in a name other than that of the Holder shares of Common Stock issued upon conversion of any such Debenture in respect of such Preferred Securities not so accompanied by a properly completed certificate. SECTION 13.11. INDENTURE TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR ADJUSTMENTS. Neither the Indenture Trustee nor any Conversion Agent shall at any time be under any duty or responsibility to any Holder of any Debenture or to any holder of a Preferred Security to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Indenture Trustee nor any Conversion Agent shall be accountable with respect to the validity or value (or the kind of account) of any shares of Common Stock or of any securities or property, which may at any time be issued or delivered upon the conversion of any Debenture; and neither the Indenture Trustee nor any Conversion Agent makes any representation with respect thereto. Neither the Indenture Trustee nor any Conversion Agent shall be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property upon the surrender of any Debenture for the purpose of conversion, or, to comply with any of the covenants of the Company contained in Article 10 or this Article 13. 91 99 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. SUIZA FOODS CORPORATION By: /s/ Gregg L. Engles ----------------------------------- Name: Gregg L. Engles Title: Chairman and Chief Executive Officer WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Indenture Trustee By: /s/ Patricia A. Evans ----------------------------------- Name: Patricia A. Evans Title: Financial Services Officer 92 100 PREFERRED SECURITIES CERTIFICATE THIS PREFERRED SECURITY IS A BOOK-ENTRY PREFERRED SECURITIES CERTIFICATE WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (55 WATER STREET, NEW YORK, NEW YORK), TO SUIZA CAPITAL TRUST II OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OR EXCHANGE OF SUCH SECURITY EXCEPT (A) TO SUIZA FOODS CORPORATION OR A SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, OR (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY 101 PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR THE PREFERRED SECURITIES OR THE DEBENTURES, AS THE CASE MAY BE (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE TRANSFER AGENT), TOGETHER WITH SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUIZA FOODS CORPORATION, THE TRUSTEE OR THE TRANSFER AGENT, AS APPLICABLE, MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. 102 Certificate Number Number of Preferred Securities 1 4,000,000 CUSIP 86507G200 Certificate Evidencing Preferred Securities of Suiza Capital Trust II 5 1/2 % Convertible Preferred Securities (Liquidation Amount $50 per Preferred Security) Suiza Capital Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of 4,000,000 preferred securities of the Trust representing an undivided beneficial interest in the assets of the Trust and designated the Suiza Capital Trust II 5 1/2% Trust Convertible Preferred Securities (liquidation amount $50 per Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.4 of the Declaration (as defined below). The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Declaration of the Trust dated as of March 24, 1998, as the same may be amended from time to time (the "Declaration"), including the designation of the terms of Preferred Securities as set forth therein. The Holder is entitled to the benefits of the Guarantee Agreement entered into by Suiza Foods Corporation, a Delaware corporation, and Wilmington Trust Company, as Guarantee Trustee, dated as of March 24, 1998 (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Declaration and the Guarantee to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. By acceptance of this Security, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Preferred Securities as evidence of beneficial ownership in the Debentures. This Preferred Security is governed by, and construed in accordance with, the laws of the State of Delaware, without regard to principles of conflict of laws. 103 IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate this ____ day of March, 1998. SUIZA CAPITAL TRUST II By: ----------------------------------- Name: not in his individual capacity but solely as an Administrative Trustee PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Preferred Securities referred to in the within-mentioned Declaration. Dated: March __, 1998 WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Property Trustee By: ----------------------------------- Authorized Signatory 104 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert address and zip code of assignee) and irrevocably appoints - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- agent to transfer this Preferred Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: ----------------------------------- Signature: ------------------------------ (Sign exactly as our name appears on the other side of this Preferred Security Certificate) 105 SCHEDULE A The initial number of Preferred Securities represented by this Rule 144A Global Certificate shall be 4,000,000. The following increases or decreases in the number of Preferred Securities represented by this Global Certificate have been made:
============================================================================================================ Date Made Amount of increase in Amount of increase in Number of Preferred Signature of number of Preferred number of Preferred Securities authorized officer of Securities represented Securities represented by this Property Trustee or by this Global represented by this Global Certificate Securities Custodian Certificate Global Certificate following such decrease or increase - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------
106 SUIZA FOODS CORPORATION 5 1/2% Convertible Subordinated Debenture due April 1, 2028, $618,556,750 No. 1 Suiza Foods Corporation, a corporation organized and existing under the laws of Delaware (hereinafter called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Suiza Capital Trust II, or registered assigns, the principal sum of six hundred eighteen million five hundred fifty-six thousand seven hundred fifty dollars and 00/100's ($618,556,750) on April 1, 2028 and to pay interest, plus Additional Interest, Additional Sums and Liquidated Damages, if any, on said principal sum from March 24, 1998 or from the most recent Interest Payment Date on which interest has been paid in full or duly provided for, quarterly until the principal hereof is paid in full or duly provided for or made available for payment, subject to deferral, as set forth herein in arrears on January 1, April 1, July 1 and October 1 of each year, (each such date, an "INTEREST PAYMENT DATE") commencing July 1, 1998 at the rate of five and one-half percent (5 1/2%) per annum, until the principal hereof shall have become due and payable, and thereafter such interest shall be payable on demand. Reference is hereby made to the further provisions of this Debenture set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Indenture Trustee referred to on the reverse hereof by manual signature, this Debenture shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. SUIZA FOODS CORPORATION By: ----------------------------------- Name: ----------------------------- Title: ----------------------------- This is one of the Debentures referred to in the within-mentioned Indenture: WILMINGTON TRUST COMPANY, as Indenture Trustee By: ----------------------------- Authorized Signatory Dated: --------------------------- 1 107 This Debenture is one of a duly authorized issue of Debentures of the Company (herein called the "DEBENTURES") limited to the aggregate principal amount of $618,556,750, issued and to be issued under an Indenture, dated as of March 24, 1998 (herein called the "INDENTURE"), between the Company and Wilmington Trust Company, as Indenture Trustee (herein called the "INDENTURE TRUSTEE," which term includes any successor Indenture Trustee under the Indenture), to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Indenture Trustee, the Company and the Holders of the Debentures, and of the terms upon which the Debentures are, and are to be, authenticated and delivered. All terms used in this Debenture that are defined in the Indenture shall have the meanings assigned to them in the Indenture. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. For periods of less than three months, interest shall be computed on the actual number of elapsed days over a month of 30 days. In the event that any date on which interest is payable on this Debenture is not a Business Day, then a payment of the interest on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on the date the payment was originally payable, except that if any Interest Payment Date is in the next succeeding calendar year, then such payment shall be made on the immediately preceding Business Day. A "BUSINESS DAY" shall mean any day other than a Saturday or a Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Indenture Trustee, or the principal office of the Property Trustee under the Declaration is closed for business. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures, as defined in the Indenture is registered at the close of business on the Regular Record Date for such interest installment, which shall be the date which is the fifteenth day preceding such Interest Payment Date. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Indenture Trustee, notice whereof shall be given to Holders of Debentures not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. So long as no Event of Default under the Indenture (relating solely to clauses (a) and (b) under the definition thereof in Section 5.1 of the Indenture) has occurred and is continuing, the Company shall have the right under the Indenture to defer the payment of interest (including any Additional Sums or Liquidated Damages, if any, under this Debenture, at any time or from time to time), for a period not exceeding 20 consecutive quarters with respect to each deferral period (each such deferral period an "EXTENSION PERIOD"). During any such Extension Period, the Company shall not, and shall not permit any Subsidiary to, (a) declare or pay any dividends on, make distributions with respect to, or redeem, purchase, acquire, or make a liquidation payment 2 108 with respect to, any shares of the Company's Capital Stock or (b) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees of indebtedness) issued by the Company that rank pari passu with or junior to this Debenture (other than with respect to both (a) and (b) (i) any dividend, redemption, liquidation, interest, principal or guarantee payment by the Company where the payment is made with securities (including Capital Stock) that rank pari passu with or junior to the securities on which such dividend, redemption, liquidation, interest, principal or guarantee payment is being made, (ii) payments under the Guarantee, (iii) purchases of Common Stock related to the issuance of Common Stock under any of the Company's benefit plans for its directors, officers or employees, (iv) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one series or class of the Company's Capital Stock for another series or class of the Company's Capital Stock and (v) the purchase of fractional interests in shares of the Company's Capital Stock pursuant to the conversion or exchange provisions of such Capital Stock or the security being converted or exchanged). Prior to the termination of any such Extension Period the Company may further extend the interest payment period; provided, however, that no Extension Period shall exceed 20 consecutive quarters or extend beyond the Stated Maturity of this Debenture. Upon the termination of any such Extension Period and upon the payment of all amounts then accrued and unpaid, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest, including Additional Interest and Liquidated Damages, if any, shall be due and payable during an Extension Period except at the end thereof. The Company shall give the Indenture Trustee and the Property Trustee under the Declaration notice of its election to begin any Extension Period at least one Business Day prior to the earlier of (i) the record date for the date the distributions on the Preferred Securities (or if no Preferred Securities are outstanding, for the date interest on the Debentures) would have been payable except for the election to begin such Extension Period and (ii) the date the Property Trustee under the Declaration is (or if no Preferred Securities are outstanding, the Indenture Trustee is) required to give notice to the New York Stock Exchange or other applicable self-regulatory organizations or to holders of such Preferred Securities (or, if no Preferred Securities are outstanding, to the holders of such Debentures) of such election. Payment of the principal of (and premium, if any) and interest on this Debenture will be made [Insert, if a global security is issued: to the Depositary Trust Company or its nominee] [Insert if securities in definitive form are issued: at the Corporate Trust Office of the Indenture Trustee or at the office or agency of the Paying Agent or Paying Agents as the Company may designate maintained for that purpose in the United States], in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated by the Person entitled thereto as specified in the Securities Register, provided that proper transfer instructions have been received by the Regular Record Date. The indebtedness evidenced by this Debenture, including the principal thereof, premium, if any, and interest thereon is, to the extent and in the manner set forth in the Indenture, expressly 3 109 subordinated and subject in right of payment to the prior payment in full of all Senior Debt, as defined in the Indenture, and this Debenture is issued subject to the provisions of the Indenture, and each Holder of this Debenture, by accepting the same, agrees to and shall be bound by such provisions and authorizes and directs the Property Trustee on behalf of such Holder to take such action as may be necessary or appropriate to acknowledge or effectuate, as between the Holder and the holders of Senior Debt, the subordination as provided in the Indenture and appoints the Property Trustee attorney-in-fact of such Holder for any and all such purposes. At any time on or after April 2, 2001, the Company may, at its option, subject to the terms and conditions of Article 11 of the Indenture, redeem this Debenture in whole at any time or in part from time to time, at the Redemption Prices set forth in Section 11.7 of the Indenture. In the event of redemption of this Debenture in part only, a new Debenture or Debentures for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If a Special Event shall occur and be continuing, this Debenture shall be exchangeable for Preferred Securities in accordance with Section 11.8 of the Indenture or, in certain circumstances, redeemable by the Company in accordance with Section 11.7 of the Indenture. Subject to the terms and conditions set forth in Article 13 of the Indenture, this Debenture is convertible, at the option of the Holder hereof, into shares of Common Stock (and/or such other cash, securities or property as then provided for by the Indenture). If an Event of Default shall occur and be continuing, the principal of the Debentures may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. As provided in and subject to the provisions of the Indenture, if an Event of Default occurs and is continuing, then and in every such case the Indenture Trustee or the Holders of not less than 25% in principal amount of the Outstanding Debentures may declare the principal amount of all the Debentures to be due and payable immediately, by a notice in writing to the Company (and to the Indenture Trustee if given by Holders); provided, however, that, if upon an Event of Default, the Indenture Trustee or the Holders of not less than 25% in principal amount of the Outstanding Debentures fail to declare the principal of all the Debentures to be immediately due and payable, the holders of at least 25% in aggregate liquidation amount of the Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Indenture Trustee. Upon any such declaration, such principal amount (or specified amount) of and the accrued interest (including any Additional Interest, Additional Sums and Liquidated Damages, if any) on all the Debentures shall become immediately due and payable, provided that the payment of principal and interest (including any Additional Interest, Additional Sums and Liquidated Damages, if any) on such Debentures shall remain subordinated to the extent provided in Article 12 of the Indenture. 4 110 The Indenture contains provisions for satisfaction, discharge and defeasance of the entire indebtedness of this Debenture upon compliance by the Company with certain conditions set forth in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debentures to be affected under the Indenture at any time by the Company and the Indenture Trustee with the consent of the Holders of a majority in principal amount of the Debentures. In addition, without the consent of any Holder of a Debenture, the Indenture and the Debentures may be amended and supplemented to cure any ambiguity or inconsistency, make other changes which will not adversely affect in any material aspect the rights of the Holders or certain other matters specified in the Indenture. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Debentures at the time Outstanding, on behalf of the Holders of all Debentures, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences, and, should the Holders of the Debentures fail to annul and rescind such declaration, the holders of a majority in liquidation amount of the Preferred Securities then outstanding shall have the right. Any such consent or waiver shall be conclusive and binding upon the Holder of this Debenture and upon all future Holders of this Debenture and of any Debenture issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or wavier is made upon this Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest (including Additional Interest, if any, Additional Sums, if any, and Liquidated Damages, if any) on this Debenture at the times, place and rate, and in the coin or currency, herein prescribed. The holders of the Preferred Securities, the Debentures, the Guarantee and the shares of Common Stock of the Company issuable upon conversion of the Preferred Securities and Debentures (collectively, the "REGISTRABLE SECURITIES") are entitled to the benefits of a Registration Rights Agreement, dated as of March 24, 1998, among the Trust, the Company and the Purchasers (the "REGISTRATION RIGHTS AGREEMENT"). Pursuant to the Registration Rights Agreement, the Company and the Trust have agreed for the benefit of the holders of Registrable Securities that (i) the Company and the Trust will, at the Company's cost, within 90 days after the date of issuance of the Registrable Securities, file a shelf registration statement (the "SHELF REGISTRATION STATEMENT") with the Commission with respect to the resales of the Registrable Securities, (ii) the Company will use its best efforts to cause such Shelf Registration Statement to be declared effective by the Commission within 150 days after the date of issuance of the Registrable Securities and (iii) the Company will use its best efforts to maintain such Shelf Registration Statement continuously effective under the Securities Act until the second anniversary of the date of issuance of the Registrable Securities or such earlier date as is provided in the Registration Rights Agreement (the "EFFECTIVENESS PERIOD"). The Company will be permitted to suspend the use of the prospectus (which is a part of the Shelf Registration Statement) in connection with sales of Registrable Securities by holders during certain periods of 5 111 time under certain circumstances relating to pending corporate developments relating to the Company and public filings with the Commission and similar events. If (i) on or prior to the date 90 days after the date of original issuance of the Registrable Securities, a Shelf Registration Statement has not been filed with the Commission, or (ii) on or prior to the 150th day following such original issuance of the Registrable Securities, such Shelf Registration Statement is not declared effective by the Commission (each such event a "REGISTRATION DEFAULT"), additional interest ("LIQUIDATED DAMAGES") will accrue on the Debentures from and including the day following such Registration Default until such time as such Shelf Registration Statement is filed or such shelf Registration Statement is declared effective, as the case may be. Liquidated Damages will be paid quarterly in arrears (subject to the Company's ability to defer payment of Liquidated Damages during any Extension Period), with the first quarterly payment due on the first Interest Payment Date following the date on which such Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to an additional 0.25% of the principal amount to and including the 90th day following such Registration Default and 0.50% thereof from and after the 91st day following such Registration Default. In the event that during the Effectiveness Period the Shelf Registration Statement ceases to be effective, or the Company suspends the use of the prospectus which is a part thereof, for more than 90 days, whether or not consecutive, during any 12-month period then the interest rate borne by the Debentures will increase by an additional 0.50% per annum from the 91st day of the applicable 12-month period such Shelf Registration Statement ceases to be effective or the Company suspends the use of the prospectus which is a part thereof, as the case may be, until the earlier of such time as (i) the Shelf Registration Statement again becomes effective, (ii) the use of the related prospectuses ceases to be suspended or (iii) the Effectiveness Period expires. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Debenture is registrable in the Securities Register, upon surrender of this Debenture for registration of transfer at the office or agency of the Company maintained under Section 10.2 of the Indenture duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Debenture for registration of transfer, the Company, the Indenture Trustee and any agent of the Company or the Indenture Trustee may treat the Person in whose name this Debenture is registered as the owner hereof for all purposes, whether or not this Debenture be overdue, and neither the Company, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. The Debentures are issuable only in registered form without coupons in denominations of $50 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Debentures are exchangeable for a like aggregate principal amount of 6 112 Debentures of a different authorized denomination, as requested by the Holder surrendering the same. The Company and, by its acceptance of this Debenture or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, this Debenture agree that for United States federal, state and local tax purposes it is intended that this Debenture constitute indebtedness. No director, officer, employee, stockholder or incorporator of the Company shall have any liability for any obligations of the Company under this Debenture or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting this Debenture waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of this Debenture. THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF. 7 113 ASSIGNMENT FORM To assign this Debenture, fill in the form below: (I) or (we) assign and transfer this Debenture to - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ______________________ agent to transfer this Debenture on the books of the Company. The agent may substitute another to act for him. Your Signature: -------------------------------------------------------- (Sign exactly as your name appears on the other side of this Debenture) Date: ------------------------------ Signature Guarantee:* ----------------------------------------------------------- [Include the following if the Debenture bears a Restricted Securities Legend:] In connection with any transfer of any of the Debentures evidenced by this certificate, the undersigned confirms that such Debentures are being: CHECK ONE BOX BELOW (1) [__] exchanged for the undersigned's own account without transfer; or (2) [__] transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933; (3) [__] transferred pursuant to and in compliance with Regulation S under the Securities Act of 1933; (4) [__] transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933; (5) [__] transferred pursuant to an effective Registration Statement under the Securities Act of 1933. - -------------------- * Signature must be guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (I) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs acceptable to the Indenture Trustee. 114 Unless one of the boxes is checked, the Indenture Trustee will refuse to register any of the Debentures evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if box (3) or (4) is checked, the Indenture Trustee may require, prior to registering any such transfer of the Securities such legal opinions, certifications and other information as the Company has reasonably requested in writing and directed the Indenture Trustee to require confirmation that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933 as amended (the "SECURITIES ACT"), such as the exemption provided by Rule 144 under the Securities Act; provided, further, that after the date that a shelf Registration Statement under the Securities Act has been filed and so long as such shelf Registration Statement continues to be effective, the Indenture Trustee may only permit transfers for which box (5) has been checked. ------------------------------ - ------------------------------ Signature Signature Guarantee:* ------------------------------ ------------------------------ Signature must be guaranteed [TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED] The undersigned represents and warrants that the undersigned is purchasing this Debenture for its own account or an account with respect to which undersigned exercises sole investment discretion and that it and any such account is a "QUALIFIED INSTITUTIONAL BUYER" within the meaning of Rule 144A under the Securities Act, and is aware that the sale to undersigned is being made in reliance on Rule 144A and acknowledges that undersigned has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that undersigned is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------------------------ ------------------------------ ------------------------------ Notice: To Be executed by an executive officer] - -------------------- * Signature must be guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (I) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs acceptable to the Indenture Trustee. 115 NOTICE OF CONVERSION To: Suiza Foods Corporation The undersigned owner of this Debenture hereby irrevocably exercises the option to convert this Debenture, or the portion below designated, into Common Stock of Suiza Foods Corporation in accordance with the terms of the Indenture referred to in this Debenture, and directs that the shares issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any Holder, upon the exercise of undersigned's conversion rights in accordance with the terms of the Indenture and the Debenture, agrees to be bound by the terms of the Registration Rights Agreement relating to the Common Stock issuable upon conversion of the Debenture. Date: ----------------------- in whole ___ in part ___ Portions of Debenture to be converted ($50 or integral multiples thereof): $ -------------------------------------- Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number -------------------------------------- -------------------------------------- -------------------------------------- Signature Guarantee:* - -------------------- * Signature must be guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs acceptable to the Indenture Trustee. EX-4.4 5 FORM OF 5.5% PREFERRED SECURITIES 1 EXHIBIT 4.4 PREFERRED SECURITIES CERTIFICATE THIS PREFERRED SECURITY IS A BOOK-ENTRY PREFERRED SECURITIES CERTIFICATE WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (55 WATER STREET, NEW YORK, NEW YORK), TO SUIZA CAPITAL TRUST II OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OR EXCHANGE OF SUCH SECURITY EXCEPT (A) TO SUIZA FOODS CORPORATION OR A SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, OR (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY 2 PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR THE PREFERRED SECURITIES OR THE DEBENTURES, AS THE CASE MAY BE (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE TRANSFER AGENT), TOGETHER WITH SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUIZA FOODS CORPORATION, THE TRUSTEE OR THE TRANSFER AGENT, AS APPLICABLE, MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT. 3 Certificate Number Number of Preferred Securities 1 4,000,000 CUSIP 86507G200 Certificate Evidencing Preferred Securities of Suiza Capital Trust II 5 1/2 % Convertible Preferred Securities (Liquidation Amount $50 per Preferred Security) Suiza Capital Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of 4,000,000 preferred securities of the Trust representing an undivided beneficial interest in the assets of the Trust and designated the Suiza Capital Trust II 5 1/2% Trust Convertible Preferred Securities (liquidation amount $50 per Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.4 of the Declaration (as defined below). The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Declaration of the Trust dated as of March 24, 1998, as the same may be amended from time to time (the "Declaration"), including the designation of the terms of Preferred Securities as set forth therein. The Holder is entitled to the benefits of the Guarantee Agreement entered into by Suiza Foods Corporation, a Delaware corporation, and Wilmington Trust Company, as Guarantee Trustee, dated as of March 24, 1998 (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Declaration and the Guarantee to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. By acceptance of this Security, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Preferred Securities as evidence of beneficial ownership in the Debentures. This Preferred Security is governed by, and construed in accordance with, the laws of the State of Delaware, without regard to principles of conflict of laws. 4 IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate this ____ day of March, 1998. SUIZA CAPITAL TRUST II By: -------------------------------------- Name: not in his individual capacity but solely as an Administrative Trustee PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Preferred Securities referred to in the within-mentioned Declaration. Dated: March , 1998 -- WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Property Trustee By: --------------------------------------- Authorized Signatory 5 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert address and zip code of assignee) and irrevocably appoints - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- agent to transfer this Preferred Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: ---------------------------------- Signature: ----------------------------- (Sign exactly as our name appears on the other side of this Preferred Security Certificate) 6 SCHEDULE A The initial number of Preferred Securities represented by this Rule 144A Global Certificate shall be 4,000,000. The following increases or decreases in the number of Preferred Securities represented by this Global Certificate have been made: ================================================================================
Date Made Amount of increase in Amount of increase in Number of Preferred Signature of number of Preferred number of Preferred Securities represented authorized officer of Securities represented Securities represented by this Global Property Trustee or by this Global by this Global Certificate following Securities Custodian Certificate Certificate such decrease or increase - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
EX-4.5 6 FORM OF 5.5% CONVERTIBLE SUBORDINATED INDENTURE 1 EXHIBIT 4.5 SUIZA FOODS CORPORATION 5 1/2% Convertible Subordinated Debenture due April 1, 2028, $618,556,750 No. 1 Suiza Foods Corporation, a corporation organized and existing under the laws of Delaware (hereinafter called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Suiza Capital Trust II, or registered assigns, the principal sum of six hundred eighteen million five hundred fifty-six thousand seven hundred fifty dollars and 00/100's ($618,556,750) on April 1, 2028 and to pay interest, plus Additional Interest, Additional Sums and Liquidated Damages, if any, on said principal sum from March 24, 1998 or from the most recent Interest Payment Date on which interest has been paid in full or duly provided for, quarterly until the principal hereof is paid in full or duly provided for or made available for payment, subject to deferral, as set forth herein in arrears on January 1, April 1, July 1 and October 1 of each year, (each such date, an "INTEREST PAYMENT DATE") commencing July 1, 1998 at the rate of five and one-half percent (5 1/2%) per annum, until the principal hereof shall have become due and payable, and thereafter such interest shall be payable on demand. Reference is hereby made to the further provisions of this Debenture set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Indenture Trustee referred to on the reverse hereof by manual signature, this Debenture shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. SUIZA FOODS CORPORATION By: ------------------------------------- Name: -------------------------------- Title: ------------------------------- This is one of the Debentures referred to in the within-mentioned Indenture: WILMINGTON TRUST COMPANY, as Indenture Trustee By: --------------------------- Authorized Signatory Dated: - ----------------------- 1 2 This Debenture is one of a duly authorized issue of Debentures of the Company (herein called the "DEBENTURES") limited to the aggregate principal amount of $618,556,750, issued and to be issued under an Indenture, dated as of March 24, 1998 (herein called the "INDENTURE"), between the Company and Wilmington Trust Company, as Indenture Trustee (herein called the "INDENTURE TRUSTEE," which term includes any successor Indenture Trustee under the Indenture), to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Indenture Trustee, the Company and the Holders of the Debentures, and of the terms upon which the Debentures are, and are to be, authenticated and delivered. All terms used in this Debenture that are defined in the Indenture shall have the meanings assigned to them in the Indenture. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. For periods of less than three months, interest shall be computed on the actual number of elapsed days over a month of 30 days. In the event that any date on which interest is payable on this Debenture is not a Business Day, then a payment of the interest on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on the date the payment was originally payable, except that if any Interest Payment Date is in the next succeeding calendar year, then such payment shall be made on the immediately preceding Business Day. A "BUSINESS DAY" shall mean any day other than a Saturday or a Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Indenture Trustee, or the principal office of the Property Trustee under the Declaration is closed for business. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures, as defined in the Indenture is registered at the close of business on the Regular Record Date for such interest installment, which shall be the date which is the fifteenth day preceding such Interest Payment Date. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Indenture Trustee, notice whereof shall be given to Holders of Debentures not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. So long as no Event of Default under the Indenture (relating solely to clauses (a) and (b) under the definition thereof in Section 5.1 of the Indenture) has occurred and is continuing, the Company shall have the right under the Indenture to defer the payment of interest (including any Additional Sums or Liquidated Damages, if any, under this Debenture, at any time or from time to time), for a period not exceeding 20 consecutive quarters with respect to each deferral period (each such deferral period an "EXTENSION PERIOD"). During any such Extension Period, the Company shall not, and shall not permit any Subsidiary to, (a) declare or pay any dividends on, make distributions with respect to, or redeem, purchase, acquire, or make a liquidation payment 2 3 with respect to, any shares of the Company's Capital Stock or (b) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees of indebtedness) issued by the Company that rank pari passu with or junior to this Debenture (other than with respect to both (a) and (b) (i) any dividend, redemption, liquidation, interest, principal or guarantee payment by the Company where the payment is made with securities (including Capital Stock) that rank pari passu with or junior to the securities on which such dividend, redemption, liquidation, interest, principal or guarantee payment is being made, (ii) payments under the Guarantee, (iii) purchases of Common Stock related to the issuance of Common Stock under any of the Company's benefit plans for its directors, officers or employees, (iv) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one series or class of the Company's Capital Stock for another series or class of the Company's Capital Stock and (v) the purchase of fractional interests in shares of the Company's Capital Stock pursuant to the conversion or exchange provisions of such Capital Stock or the security being converted or exchanged). Prior to the termination of any such Extension Period the Company may further extend the interest payment period; provided, however, that no Extension Period shall exceed 20 consecutive quarters or extend beyond the Stated Maturity of this Debenture. Upon the termination of any such Extension Period and upon the payment of all amounts then accrued and unpaid, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest, including Additional Interest and Liquidated Damages, if any, shall be due and payable during an Extension Period except at the end thereof. The Company shall give the Indenture Trustee and the Property Trustee under the Declaration notice of its election to begin any Extension Period at least one Business Day prior to the earlier of (i) the record date for the date the distributions on the Preferred Securities (or if no Preferred Securities are outstanding, for the date interest on the Debentures) would have been payable except for the election to begin such Extension Period and (ii) the date the Property Trustee under the Declaration is (or if no Preferred Securities are outstanding, the Indenture Trustee is) required to give notice to the New York Stock Exchange or other applicable self-regulatory organizations or to holders of such Preferred Securities (or, if no Preferred Securities are outstanding, to the holders of such Debentures) of such election. Payment of the principal of (and premium, if any) and interest on this Debenture will be made [Insert, if a global security is issued: to the Depositary Trust Company or its nominee] [Insert if securities in definitive form are issued: at the Corporate Trust Office of the Indenture Trustee or at the office or agency of the Paying Agent or Paying Agents as the Company may designate maintained for that purpose in the United States], in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated by the Person entitled thereto as specified in the Securities Register, provided that proper transfer instructions have been received by the Regular Record Date. The indebtedness evidenced by this Debenture, including the principal thereof, premium, if any, and interest thereon is, to the extent and in the manner set forth in the Indenture, expressly 3 4 subordinated and subject in right of payment to the prior payment in full of all Senior Debt, as defined in the Indenture, and this Debenture is issued subject to the provisions of the Indenture, and each Holder of this Debenture, by accepting the same, agrees to and shall be bound by such provisions and authorizes and directs the Property Trustee on behalf of such Holder to take such action as may be necessary or appropriate to acknowledge or effectuate, as between the Holder and the holders of Senior Debt, the subordination as provided in the Indenture and appoints the Property Trustee attorney-in-fact of such Holder for any and all such purposes. At any time on or after April 2, 2001, the Company may, at its option, subject to the terms and conditions of Article 11 of the Indenture, redeem this Debenture in whole at any time or in part from time to time, at the Redemption Prices set forth in Section 11.7 of the Indenture. In the event of redemption of this Debenture in part only, a new Debenture or Debentures for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If a Special Event shall occur and be continuing, this Debenture shall be exchangeable for Preferred Securities in accordance with Section 11.8 of the Indenture or, in certain circumstances, redeemable by the Company in accordance with Section 11.7 of the Indenture. Subject to the terms and conditions set forth in Article 13 of the Indenture, this Debenture is convertible, at the option of the Holder hereof, into shares of Common Stock (and/or such other cash, securities or property as then provided for by the Indenture). If an Event of Default shall occur and be continuing, the principal of the Debentures may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. As provided in and subject to the provisions of the Indenture, if an Event of Default occurs and is continuing, then and in every such case the Indenture Trustee or the Holders of not less than 25% in principal amount of the Outstanding Debentures may declare the principal amount of all the Debentures to be due and payable immediately, by a notice in writing to the Company (and to the Indenture Trustee if given by Holders); provided, however, that, if upon an Event of Default, the Indenture Trustee or the Holders of not less than 25% in principal amount of the Outstanding Debentures fail to declare the principal of all the Debentures to be immediately due and payable, the holders of at least 25% in aggregate liquidation amount of the Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Indenture Trustee. Upon any such declaration, such principal amount (or specified amount) of and the accrued interest (including any Additional Interest, Additional Sums and Liquidated Damages, if any) on all the Debentures shall become immediately due and payable, provided that the payment of principal and interest (including any Additional Interest, Additional Sums and Liquidated Damages, if any) on such Debentures shall remain subordinated to the extent provided in Article 12 of the Indenture. 4 5 The Indenture contains provisions for satisfaction, discharge and defeasance of the entire indebtedness of this Debenture upon compliance by the Company with certain conditions set forth in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company an the rights of the Holders of the Debentures to be affected under the Indenture at any time by the Company and the Indenture Trustee with the consent of the Holders of a majority in principal amount of the Debentures. In addition, without the consent of any Holder of a Debenture, the Indenture and the Debentures may be amended and supplemented to cure any ambiguity or inconsistency, make other changes which will not adversely affect in any material aspect the rights of the Holders or certain other matters specified in the Indenture. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Debentures at the time Outstanding, on behalf of the Holders of all Debentures, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences, and, should the Holders of the Debentures fail to annul and rescind such declaration, the holders of a majority in liquidation amount of the Preferred Securities then outstanding shall have the right. Any such consent or waiver shall be conclusive and binding upon the Holder of this Debenture and upon all future Holders of this Debenture and of any Debenture issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or wavier is made upon this Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest (including Additional Interest, if any, Additional Sums, if any, and Liquidated Damages, if any) on this Debenture at the times, place and rate, and in the coin or currency, herein prescribed. The holders of the Preferred Securities, the Debentures, the Guarantee and the shares of Common Stock of the Company issuable upon conversion of the Preferred Securities and Debentures (collectively, the "REGISTRABLE SECURITIES") are entitled to the benefits of a Registration Rights Agreement, dated as of March 24, 1998, among the Trust, the Company and the Purchasers (the "REGISTRATION RIGHTS AGREEMENT"). Pursuant to the Registration Rights Agreement, the Company and the Trust have agreed for the benefit of the holders of Registrable Securities that (i) the Company and the Trust will, at the Company's cost, within 90 days after the date of issuance of the Registrable Securities, file a shelf registration statement (the "SHELF REGISTRATION STATEMENT") with the Commission with respect to the resales of the Registrable Securities, (ii) the Company will use its best efforts to cause such Shelf Registration Statement to be declared effective by the Commission within 150 days after the date of issuance of the Registrable Securities and (iii) the Company will use its best efforts to maintain such Shelf Registration Statement continuously effective under the Securities Act until the second anniversary of the date of issuance of the Registrable Securities or such earlier date as is provided in the Registration Rights Agreement (the "EFFECTIVENESS PERIOD"). The Company will be permitted to suspend the use of the prospectus (which is a part of the Shelf Registration Statement) in connection with sales of Registrable Securities by holders during certain periods 5 6 of time under certain circumstances relating to pending corporate developments relating to the Company and public filings with the Commission and similar events. If (i) on or prior to the date 90 days after the date of original issuance of the Registrable Securities, a Shelf Registration Statement has not been filed with the Commission, or (ii) on or prior to the 150th day following such original issuance of the Registrable Securities, such Shelf Registration Statement is not declared effective by the Commission (each such event a "REGISTRATION DEFAULT"), additional interest ("LIQUIDATED DAMAGES") will accrue on the Debentures from and including the day following such Registration Default until such time as such Shelf Registration Statement is filed or such shelf Registration Statement is declared effective, as the case may be. Liquidated Damages will be paid quarterly in arrears (subject to the Company's ability to defer payment of Liquidated Damages during any Extension Period), with the first quarterly payment due on the first Interest Payment Date following the date on which such Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to an additional 0.25% of the principal amount to and including the 90th day following such Registration Default and 0.50% thereof from and after the 91st day following such Registration Default. In the event that during the Effectiveness Period the Shelf Registration Statement ceases to be effective, or the Company suspends the use of the prospectus which is a part thereof, for more than 90 days, whether or not consecutive, during any 12-month period then the interest rate borne by the Debentures will increase by an additional 0.50% per annum from the 91st day of the applicable 12-month period such Shelf Registration Statement ceases to be effective or the Company suspends the use of the prospectus which is a part thereof, as the case may be, until the earlier of such time as (i) the Shelf Registration Statement again becomes effective, (ii) the use of the related prospectuses ceases to be suspended or (iii) the Effectiveness Period expires. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Debenture is registrable in the Securities Register, upon surrender of this Debenture for registration of transfer at the office or agency of the Company maintained under Section 10.2 of the Indenture duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Debenture for registration of transfer, the Company, the Indenture Trustee and any agent of the Company or the Indenture Trustee may treat the Person in whose name this Debenture is registered as the owner hereof for all purposes, whether or not this Debenture be overdue, and neither the Company, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. The Debentures are issuable only in registered form without coupons in denominations of $50 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Debentures are exchangeable for a like aggregate principal amount of 6 7 Debentures of a different authorized denomination, as requested by the Holder surrendering the same. The Company and, by its acceptance of this Debenture or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, this Debenture agree that for United States federal, state and local tax purposes it is intended that this Debenture constitute indebtedness. No director, officer, employee, stockholder or incorporator of the Company shall have any liability for any obligations of the Company under this Debenture or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting this Debenture waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of this Debenture. THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF. 7 8 ASSIGNMENT FORM To assign this Debenture, fill in the form below: (I) or (we) assign and transfer this Debenture to - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ______________________ agent to transfer this Debenture on the books of the Company. The agent may substitute another to act for him. Your Signature: ------------------------------------------------------- (Sign exactly as your name appears on the other side of this Debenture) Date: ------------------------------ Signature Guarantee:* --------------------------------------------------------- [Include the following if the Debenture bears a Restricted Securities Legend:] In connection with any transfer of any of the Debentures evidenced by this certificate, the undersigned confirms that such Debentures are being: CHECK ONE BOX BELOW (1) [__] exchanged for the undersigned's own account without transfer; or (2) [__] transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933; (3) [__] transferred pursuant to and in compliance with Regulation S under the Securities Act of 1933; (4) [__] transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933; (5) [__] transferred pursuant to an effective Registration Statement under the Securities Act of 1933. - ------------------------------- * Signature must be guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs acceptable to the Indenture Trustee. 9 Unless one of the boxes is checked, the Indenture Trustee will refuse to register any of the Debentures evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if box (3) or (4) is checked, the Indenture Trustee may require, prior to registering any such transfer of the Securities such legal opinions, certifications and other information as the Company has reasonably requested in writing and directed the Indenture Trustee to require confirmation that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933 as amended (the "SECURITIES ACT"), such as the exemption provided by Rule 144 under the Securities Act; provided, further, that after the date that a shelf Registration Statement under the Securities Act has been filed and so long as such shelf Registration Statement continues to be effective, the Indenture Trustee may only permit transfers for which box (5) has been checked. ----------------------------- - ------------------------------------- Signature Signature Guarantee:* - ------------------------------------- ------------------------------ Signature must be guaranteed [TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED] The undersigned represents and warrants that the undersigned is purchasing this Debenture for its own account or an account with respect to which undersigned exercises sole investment discretion and that it and any such account is a "QUALIFIED INSTITUTIONAL BUYER" within the meaning of Rule 144A under the Securities Act, and is aware that the sale to undersigned is being made in reliance on Rule 144A and acknowledges that undersigned has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that undersigned is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ---------------------------- ----------------------------------- ----------------------------------- Notice: To Be executed by an executive officer] - ------------------------------ * Signature must be guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs acceptable to the Indenture Trustee. 10 NOTICE OF CONVERSION To: Suiza Foods Corporation The undersigned owner of this Debenture hereby irrevocably exercises the option to convert this Debenture, or the portion below designated, into Common Stock of Suiza Foods Corporation in accordance with the terms of the Indenture referred to in this Debenture, and directs that the shares issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Any Holder, upon the exercise of undersigned's conversion rights in accordance with the terms of the Indenture and the Debenture, agrees to be bound by the terms of the Registration Rights Agreement relating to the Common Stock issuable upon conversion of the Debenture. Date: ------------------------- in whole ___ in part ___ Portions of Debenture to be converted ($50 or integral multiples thereof): $ ------------------------------------ Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number --------------------------------------- --------------------------------------- --------------------------------------- Signature Guarantee:* - -------- * Signature must be guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs acceptable to the Indenture Trustee. EX-4.6 7 PREFERRED SECURITIES GUARANTEE AGREEMENT 1 EXHIBIT 4.6 GUARANTEE AGREEMENT SUIZA FOODS CORPORATION and WILMINGTON TRUST COMPANY Dated as of March 24, 1998 With Respect to 5 1/2% TRUST CONVERTIBLE PREFERRED SECURITIES (Liquidation Amount $50 per Preferred Security) 2 CROSS REFERENCE TABLE*
SECTION OF TRUST SECTION OF INDENTURE ACT OF GUARANTEE 1939, AS AMENDED AGREEMENT 310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a) 310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c), 2.8 310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b) 311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b) 311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a) 312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b) 313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.5, 3.2 314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d) 315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d) 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.6, 5.4 316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b) 318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
- -------------------------------------------------------------------------------- *This Cross-Reference Table does not constitute part of the Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions. i 3 TABLE OF CONTENTS ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE 2 TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 2.2 List of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 2.3 Reports by the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 2.4 Periodic Reports to Guarantee Trustee . . . . . . . . . . . . . . . . . . . . 5 SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . 5 SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 2.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE 3 POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . 6 SECTION 3.1 Powers and Duties of the Guarantee Trustee . . . . . . . . . . . . . . . . . . 6 SECTION 3.2 Certain Rights of Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . 8 SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee Agreement . . . . . . . 9 ARTICLE 4 GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 4.1 Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 4.2 Appointment, Removal and Resignation of the Guarantee Trustee . . . . . . . . 10 ARTICLE 5 GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 5.2 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 5.4 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE 6 COVENANTS AND SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 6.1 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 6.2 Certain Covenants of the Guarantor . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE 7 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 8.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 8.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 8.4 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 8.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
i 4 SECTION 8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 ARTICLE 9 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 9.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 9.2 Compensation and Indemnification . . . . . . . . . . . . . . . . . . . . . . . 19
ii 5 GUARANTEE This GUARANTEE AGREEMENT, dated as of March 24, 1998, is executed and delivered by Suiza Foods Corporation, a Delaware corporation (the "Guarantor"), and Wilmington Trust Company, a Delaware banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of Suiza Capital Trust II, a Delaware statutory business trust (the "Trust"). WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration of Trust"), dated as of March 24, 1998, among the Trustees named therein, the Guarantor, as Depositor, and the Holders from time to time of undivided beneficial interests in the assets of the Trust, the Trust is issuing 12,000,000 of its 5 1/2% Trust Convertible Preferred Securities (liquidation preference $50 per preferred security) (the "Preferred Securities") representing preferred undivided beneficial interests in the assets of the Trust and having the terms set forth in the Declaration of Trust; WHEREAS, the Preferred Securities will be issued by the Trust and the proceeds thereof, together with the proceeds from the issuance of the Trust's Common Securities (as defined below), will be used to purchase the Debentures (as defined in the Declaration of Trust) of the Guarantor which will be deposited with Wilmington Trust Company, as Property Trustee under the Declaration of Trust, as trust assets; WHEREAS, as incentive for the Holders to purchase Preferred Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth herein, to pay to the Holders of the Preferred Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein; and WHEREAS, the Guarantor is also executing and delivering a guarantee agreement (the "Common Securities Guarantee") in substantially identical terms to this Guarantee Agreement for the benefit of the holders of the Common Securities (as defined herein), except that if an event of default (as defined in the Indenture (as defined herein)), has occurred and is continuing, the rights of holders of the Common Securities to receive Guarantee Payments (as defined in the Common Securities Guarantee) under the Common Securities Guarantee shall be subordinated to the rights of Holders of Preferred Securities to receive Guarantee Payments (as defined herein) under this Guarantee Agreement. NOW, THEREFORE, in consideration of the purchase by each Holder of Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time of the Preferred Securities. 1 6 ARTICLE 1 DEFINITIONS SECTION 1.1 Definitions. As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Declaration of Trust as in effect on the date hereof. "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; provided, however, that an Affiliate of the Guarantor shall not be deemed to include the Trust. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. The terms "controlling" and "controlled" have meanings correlative to "control." "Common Securities" means the securities representing common beneficial interests in the assets of the Trust. "Common Stock" means common stock, par value $0.01 per share, of the Guarantor or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Guarantor and which are not subject to redemption by the Guarantor. "Corporate Trust Office" shall mean the office of the Guarantee Trustee at which the corporate trust business of the Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Guarantee Agreement is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Guarantee Agreement; provided, however, that, except with respect to a default in payment of any Guarantee Payments, the Guarantor shall have received written notice of default and shall not have cured such default within 60 days after receipt of such notice. "Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by or on behalf of the Trust: (a) any accumulated and unpaid Distributions required to be paid on the Preferred Securities, if and to the extent that the Trust has funds on hand available therefor at such time; (b) the redemption price of any Preferred Securities called for redemption if and to the extent that the Trust has funds on hand available therefor at such time; and (c) upon a voluntary or involuntary dissolution, winding up or liquidation of the Trust (unless the Debentures are distributed to holders of the Preferred Securities), the lesser of (a) the Liquidation Distribution, to the extent that the Trust has funds on hand available therefor at such time, and (b) the amount of assets of the Trust remaining available for distribution to holders of Preferred Securities. 2 7 "Guarantee Trustee" means Wilmington Trust Company, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement and thereafter means each such Successor Guarantee Trustee. "Holder" means any holder, as registered on the books and records of the Trust, of any Preferred Securities; provided, however, that in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor or the Guarantee Trustee. "Indemnified Person" shall mean the Guarantee Trustee (including in its individual capacity), any Affiliate of the Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Guarantee Trustee. "Indenture" means the Indenture, dated as of March 24, 1998, as supplemented and amended between the Guarantor and Wilmington Trust Company, as Indenture Trustee. "List of Holders" has the meaning specified in Section 2.2 (a). "Majority in Liquidation Preference of the Securities" means, except as provided by the Trust Indenture Act, a vote by the Holder(s), voting separately as a class, of more than 50% of the aggregate liquidation preference of all the outstanding Preferred Securities issued by the Trust. "Officers' Certificate" means a certificate signed by the Chairman of the Board of Directors, the President, the Chief Executive Officer, the Chief Operating Officer, any Vice President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Guarantor, and delivered to the Guarantee Trustee. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and 3 8 (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Person" means any individual, corporation, partnership, joint venture, limited liability company, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof, or other entity. "Responsible Officer" shall mean, with respect to the Guarantee Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee with direct responsibility for the administration of this Guarantee Agreement and also means, with respect to a particular corporate trust matter, any other officer of the Guarantee Trustee to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Successor Guarantee Trustee" means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.1. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. ARTICLE 2 TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application. (a) This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions. (b) If and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. SECTION 2.2 List of Holders. (a) The Guarantor shall furnish or cause to be furnished to the Guarantee Trustee (unless the Guarantee Trustee is acting as Securities Registrar with respect to the Debentures under the Indenture) (i) semi-annually, on or before January 15 and July 15 of each year, a list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders ("List of Holders") as of a date not more than 15 days prior to the delivery thereof, and (ii) at such other times as the Guarantee Trustee may request in writing, within 30 days after the receipt by the Guarantor of any such written request, a List of Holders as of a date not more than 15 days prior to the time such list is furnished, in each case to the extent such information is in the possession or control of the Guarantor and is not identical to a previously supplied list of Holders or has not otherwise been received by the Guarantee Trustee. Notwithstanding the foregoing, the Guarantor shall not be obligated to provide such List of Holders at any time the Preferred Securities are represented by one or more Global Certificates (as defined in the Indenture). The 4 9 Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Guarantee Trustee shall comply with its obligations under Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act. SECTION 2.3 Reports by the Guarantee Trustee. Within 60 days after December 31 in each calendar year, commencing with December 31, 1997, the Guarantee Trustee shall provide to the Holders such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. SECTION 2.4 Periodic Reports to Guarantee Trustee. The Guarantor shall provide to the Guarantee Trustee, the Securities and Exchange Commission and the Holders such documents, reports and information, if any, as required by Section 314 of the Trust Indenture Act and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act; and such compliance certificate of the Guarantor shall be delivered on or before 120 days after the end of each calendar year. Delivery of such reports, information and documents to the Guarantee Trustee is for informational purposes only and the Guarantee Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Guarantor's compliance with any of its covenants hereunder (as to which the Guarantee Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 2.5 Evidence of Compliance with Conditions Precedent. The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. SECTION 2.6 Events of Default; Waiver. The Holders of a Majority in Liquidation Preference of the Securities may, by vote, on behalf of the Holders of all Preferred Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent therefrom. SECTION 2.7 Event of Default; Notice. (a) The Guarantee Trustee shall, within 90 days after a Responsible Officer of the Guarantee Trustee obtains actual knowledge of the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders, notices of all such Events of Default actually known to a Responsible Officer of the Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, that, except in the case of a default in the payment of a 5 10 Guarantee Payment, the Guarantee Trustee shall be fully protected in withholding such notice if and so long as a Responsible Officer of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. (b) The Guarantee Trustee shall not be deemed to have actual knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice, or a Responsible Officer charged with the administration of the Declaration of Trust shall have obtained actual knowledge, of such Event of Default. SECTION 2.8 Conflicting Interests. The Declaration of Trust and the Indenture shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE 3 POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE SECTION 3.1 Powers and Duties of the Guarantee Trustee. (a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising his or her rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee. (b) If an Event of Default actually known to a Responsible Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the Holders. (c) The Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants shall be read into this Guarantee Agreement against the Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is actually known to the Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: 6 11 (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred; (A) the duties and obligations of the Guarantee Trustee shall be determined solely by the express provisions of this Guarantee Agreement, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee Agreement, and no implied covenants or obligations shall be read into this Guarantee Agreement against the Guarantee Trustee; and (B) in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof or of the Trust Indenture Act are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not on their face they conform to the requirements of this Guarantee Agreement; (ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in Liquidation Preference of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) no provision of this Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Guarantee Agreement or indemnity satisfactory to it against such risk or liability is not reasonably assured to it. 7 12 SECTION 3.2 Certain Rights of Guarantee Trustee. (a) Subject to the provisions of Section 3.1: (i) The Guarantee Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, proxy, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. (ii) Any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate unless otherwise prescribed herein. (iii) Whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting to take any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request from the Guarantee Trustee, shall be promptly delivered by the Guarantor. (iv) The Guarantee Trustee may consult with legal counsel of its selection, and the advice or opinion of such legal counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or opinion. Such legal counsel may be legal counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction. (v) The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee and its officers, directors and agents such security and indemnity, reasonably satisfactory to the Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the Guarantee Trustee's agents, nominees and custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement. (vi) The Guarantee Trustee shall have no obligation to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other 8 13 evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (vii) The Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents, custodians, nominees or attorneys or any Affiliate, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any such person appointed with due care by it hereunder. (viii) Whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (A) may request written instructions from the Holders of a Majority in Liquidation Preference of the Securities, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (C) shall be fully protected in relying on and acting in accordance with such instructions. (ix) the Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument or other document (or any rerecording, refiling or registration thereof). (x) any action taken by the Guarantee Trustee or its agents hereunder shall bind the Holders of the Preferred Securities, and the signature of the Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action; and no third party shall be required to inquire as to the authority of the Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Guarantee Agreement, both of which shall be conclusively evidenced by the Guarantee Trustee's or its agent's taking such action. (xi) the Guarantee Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence, and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Guarantee Agreement. (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty. SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee Agreement. The recitals contained in this Guarantee Agreement shall be taken as the statements of the Guarantor, and the Guarantee Trustee does not assume any responsibility for their correctness. The 9 14 Guarantee Trustee makes no representation as to the validity or sufficiency of this Guarantee Agreement. ARTICLE 4 GUARANTEE TRUSTEE SECTION 4.1 Guarantee Trustee; Eligibility. (a) There shall at all times be a Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a corporation or other Person organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia, or a corporation of other Person permitted by the Securities and Exchange Commission to act as an indenture trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority; it being understood that if such corporation or other Person publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). (c) If the Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and the Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.2 Appointment, Removal and Resignation of the Guarantee Trustee. (a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor. (c) The Guarantee Trustee appointed hereunder shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an 10 15 instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by an instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee. (d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Guarantee Trustee may petition, at the expense of the Guarantor, any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee. (e) No Guarantee Trustee shall be liable for the acts or omissions of any Successor Guarantor Trustee. (f) Upon termination of this Guarantee Agreement or the removal or resignation of the Guarantee Trustee, the Guarantor shall pay all amounts due and owing to such Guarantee Trustee. ARTICLE 5 GUARANTEE SECTION 5.1 Guarantee. The Guarantor irrevocably and unconditionally agrees to pay in full, on a subordinated basis as set forth in Section 6.1, to the extent set forth herein, the Guarantee Payments, to the Holders (without duplication of amounts theretofore paid by or on behalf of the Trust), as and when due, regardless of any defense, right of set-off or counterclaim which the Trust may have or assert, other than the defense of payment. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Trust to pay such amounts to the Holders. SECTION 5.2 Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Guarantee Trustee, Trust or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.3 Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Trust of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Trust; 11 16 (b) the extension of time for the payment by the Trust of all or any portion of the Distributions (other than an extension of time for payment of Distributions that results from the extension of any interest payment period on the Debentures as so provided in the Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities; (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Trust granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust; (e) any invalidity of, or defect or deficiency in, the Preferred Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders or the Guarantee Trustee to give notice to, or obtain the consent of, the Guarantor with respect to the happening of any of the foregoing. SECTION 5.4 Rights of Holders. The Guarantor expressly acknowledges that: (i) an executed copy of this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in Liquidation Preference of the Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or to direct the exercise of any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) if the Guarantee Trustee fails to enforce the Guarantee, any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Guarantee Trustee, the Trust or any other Person. SECTION 5.5 Guarantee of Payment. This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by 12 17 payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Trust) or upon distribution of Debentures to Holders as provided in the Declaration of Trust. SECTION 5.6 Subrogation. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Trust with respect to the Preferred Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. ARTICLE 6 COVENANTS AND SUBORDINATION SECTION 6.1 Subordination. (a) If an Event of Default (as defined in the Indenture) has occurred and is continuing, the rights of holders of Common Securities to receive payments on liquidation, redemption and otherwise are subordinate to the rights of Preferred Securities to receive Guarantee Payments under this Guarantee. (b) In the event and during the continuation of any default by the Guarantor in the payment of principal, premium, interest or any other payment due on any Senior Debt (as defined in the Indenture) continuing beyond the period of grace, if any, specified in the instrument evidencing such Senior Debt, unless and until such default shall have been cured or waived or shall have ceased to exist, and in the event that the maturity of any Senior Debt has been accelerated because of a default, then no Guarantee Payments shall be made hereunder by the Guarantor. (c) In the event of any default (other than a default described in the immediately preceding paragraph) by the Guarantor under the terms of any instrument evidencing any Senior Debt, continuing beyond the period of grace, if any, specified in such instrument, notice of which default shall have been given by any holder of such Senior Debt to the Indenture Trustee (as defined in the Indenture), unless and until the earlier of (i) such default shall have been cured or waived or shall have ceased to exist, or (ii) the continuation of such default for a period of one hundred eighty days after notice of the occurrence of such default shall have been given to such Indenture Trustee, no Guarantee Payments shall be made hereunder by the Guarantor. (d) Upon any payment by the Guarantor or distribution of assets of the Guarantor of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding up or liquidation or reorganization of the Guarantor, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all principal of, and premium, if any, and interest due or to become due on, all Senior Debt must be paid in full before any Guarantee Payment is made, and upon such dissolution or winding up or liquidation or reorganization, any payment by the Guarantor, or distribution of assets of the Guarantor of any kind or character, whether in cash, property or securities, to which the Holders or, except for payments under Article 9 hereof, the Guarantee Trustee would be entitled, except for the provisions of this 13 18 Section 6.1, shall be paid by the Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders or by the Guarantee Trustee under this Guarantee if received by them or it, directly to the holders of Senior Debt (pro rata to such holders on the basis of the respective amounts of Senior Debt held by such holders, as calculated by the Guarantor) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Debt may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Debt in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Debt, before any such payment or distribution is made to the Holders or to the Guarantee Trustee. (e) In the event that, notwithstanding the foregoing, any payment shall be received by the Guarantee Trustee when such payment is prohibited by the preceding paragraphs (a) through (d) of this Section 6.1, and if such fact, at or prior to the time of such payment, shall have been made known to the Guarantee Trustee by written notice, such payment shall be forthwith paid over and delivered to, the holders of Senior Debt or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Debt (or their representative or representatives or a trustee) notify the Guarantee Trustee in writing within 90 days of such payment of the amounts then due and owing on the Senior Debt and only the amounts specified in such notice to the Guarantee Trustee shall be paid to the holders of Senior Debt. (f) For purposes of this Section 6.1, the words, "cash, property or securities" shall not be deemed to include shares of stock of the Guarantor as reorganized or readjusted, or securities of the Guarantor or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article 6 with respect to the Guarantee Payments to the payment of all Senior Debt which may at the time be outstanding; provided, that (i) such Senior Debt is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Senior Debt are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Guarantor with, or the merger of the Guarantor with or into, another Person or the liquidation or dissolution of the Guarantor following the conveyance, transfer or lease of all or substantially all of its properties and assets on a consolidated basis to another Person upon the terms and conditions provided for in Article 8 of the Indenture shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this Section 6.1 if such other person shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions stated in Article 8 of the Indenture. (g) Amounts paid or payable by the Guarantor under Article 9 hereof shall not be subject to the provisions and operation of this Article 6. (h) This Guarantee Agreement shall rank pari passu with any guarantee now or hereafter entered into by the Guarantor in respect of any preferred or preference stock of any affiliate of the Guarantor and senior to the Common Stock. 14 19 SECTION 6.2 Certain Covenants of the Guarantor. (a) Guarantor covenants and agrees that if and so long as (i) the Trust is the holder of all the Debentures, (ii) a Tax Event (as defined in the Declaration of Trust) in respect of the Trust has occurred and is continuing and (iii) the Guarantor has elected, and has not revoked such election, to pay Additional Sums (as defined in the Declaration of Trust) in respect of the Preferred Securities and Common Securities, the Guarantor will pay to the Trust such Additional Sums. (b) The Guarantor covenants and agrees that it will not, and will not cause any Subsidiary of the Guarantor to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Guarantor's capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay or repurchase or redeem any debt securities (including guarantees of indebtedness for money borrowed) of the Guarantor that rank pari passu with or junior to the Debentures (other than, with respect to both (i) and (ii), (a) any dividend, redemption, liquidation, interest, principal or guarantee payment by the Guarantor where the payment is made by way of securities (including capital stock) that rank pari passu with or junior to the securities on which such dividend, redemption, interest, principal or guarantee payment is being made, (b) payments under the Guarantee Agreement, (c) purchases of Common Stock related to the issuance of Common Stock under any of the Guarantor's benefit plans for its directors, officers or employees, (d) as a result of a reclassification of the Guarantor's capital stock or the exchange or conversion of one series or class of Guarantor's capital stock for another series or class of the Guarantor's capital stock and (e) the purchase of fractional interests in shares of the Guarantor's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged) if at such time (x) there shall have occurred and be continuing any event of which the Guarantor has actual knowledge that with the giving of notice or the lapse of time, or both, would constitute a Debenture Event of Default, (y) the Guarantor shall be in default with respect to its payment of any obligations under the Guarantee Agreement or (z) the Guarantor shall have given notice of its exercise of its right to defer the payment of amounts under the Debenture as provided in the Indenture and shall not have rescinded such notice, or such deferral period, or any extension thereof, shall be continuing; provided, that, in the case of the immediately preceding clause (z), the Guarantor will be allowed to declare and pay dividends on its Series A Preferred Stock. (c) The Guarantor covenants and agrees for so long as Preferred Securities are outstanding (i) not to convert Debentures except pursuant to a notice of conversion delivered to the Conversion Agent by a holder of Preferred Securities, (ii) to maintain directly or indirectly 100% ownership of the Common Securities, provided that certain successors which are permitted pursuant to the Indenture may succeed to the Guarantor's ownership of the Common Securities, provided further that Guarantor may pledge the Common Securities to First United National Bank as Administrative Agent under the Security Agreement related to the credit facility with such agent and other lenders, (iii) not to voluntarily dissolve, wind-up, liquidate or terminate the Trust, except (a) in connection with the exchange of the Debentures to the holders of the Preferred Securities in liquidation of the Trust upon the redemption of all outstanding Preferred Securities 15 20 or (b) in connection with certain mergers, consolidations or amalgamations permitted by the Declaration of Trust, (iv) to maintain the reservation for issuance of the number of shares of Common Stock that would be required from time to time upon the conversion of all of the Debentures then outstanding, (v) to use its reasonable best efforts, consistent with the terms and provisions of the Declaration of Trust, to cause the Trust to remain classified as a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes and (vi) to deliver shares of Common Stock upon an election by the holders of the Preferred Securities to convert such Preferred Securities into Common Stock. ARTICLE 7 TERMINATION SECTION 7.1 Termination. This Guarantee Agreement shall terminate and be of no further force and effect upon (i) full payment of the Redemption Price of all Preferred Securities, (ii) the distribution of Debentures to the Holders in exchange for all of the Preferred Securities, (iii) full payment of the amounts payable in accordance with the Declaration of Trust upon dissolution of the Trust or (iv) the distribution, if any, of Common Stock to the holders of the Preferred Securities in respect of the conversion of all such holders' Preferred Securities into Common Stock. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to Preferred Securities or this Guarantee Agreement. ARTICLE 8 MISCELLANEOUS SECTION 8.1 Successors and Assigns. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. Except in connection with a consolidation, merger or sale involving the Guarantor that is permitted under Article 8 of the Indenture and pursuant to which the assignee agrees in writing to perform the Guarantor's obligations hereunder, the Guarantor shall not assign its obligations hereunder. SECTION 8.2 Amendments. Except with respect to any changes that do not materially adversely affect the rights of the Holders (in which case no vote will be required), this Guarantee Agreement may not be amended without the prior approval of the Holders of not less than a Majority in Liquidation Preference of the Securities. The provisions of Article 6 of the Declaration of Trust concerning meetings of the Holders shall apply to the giving of such approval. No provisions in Article 3, Article 4 or Article 9, Section 6.1(g) or this sentence may be amended without the prior written consent of the Guarantee Trustee, which consent may be granted or withheld in the sole discretion of the Guarantee Trustee. The Guarantor shall furnish the Guarantee Trustee with an Officers' Certificate and an Opinion of Counsel to the effect that any amendment of this Agreement is authorized and permitted. 16 21 SECTION 8.3 Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: (a) if given to the Guarantor, to the address set forth below or such other address as the Guarantor may give notice of to the Holders: Suiza Foods Corporation 3811 Turtle Creek Boulevard Dallas, Texas 75219 Phone: (214)528-9922 Facsimile: (214)528-9929 Attention: General Counsel (b) if given to the Trust, in care of the Guarantee Trustee, at the Trust's (and the Guarantee Trustee's) address set forth below or such other address as the Guarantee Trustee on behalf of the Trust may give notice of to the Holders: Suiza Capital Trust II c/o Suiza Foods Corporation 3811 Turtle Creek Boulevard Dallas, Texas 75219 Phone: (214)528-9922 Facsimile: (214)528-9929 Attention: General Counsel with a copy to: Wilmington Trust Company, as Guarantee Trustee 1100 N. Market Street Wilmington, Delaware 19890 Phone: (302)651-8775 Facsimile: (302)651-1576 Attention: Corporate Trust Administration (c) if given to any Holder, at the address set forth on the books and records of the Trust. All notices hereunder shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. 17 22 SECTION 8.4 Benefit. This Guarantee Agreement is solely for the benefit of the Holders, the Guarantee Trustee and other Indemnified Persons and is not separately transferable from the Preferred Securities. SECTION 8.5 Interpretation. In this Guarantee Agreement, unless the context otherwise requires: (a) Capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.1; (b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout; (c) all references to "the Guarantee Agreement" or "this Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented or amended from time to time; (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires; (f) a reference to the singular includes the plural and vice versa; and (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders. SECTION 8.6 Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. ARTICLE 9 INDEMNIFICATION SECTION 9.1 Exculpation. (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Guarantor or any Holder for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith in accordance with this Guarantee Agreement and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Guarantee Agreement or by law, except that an Indemnified Person shall be liable for any such loss, damages 18 23 or claim incurred by reason of such Indemnified Person's negligence or willful misconduct with respect to such acts or omissions. (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Guarantor and upon such information, opinions, reports or statements presented to the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Guarantor, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Preferred Securities might properly be paid. SECTION 9.2 Compensation and Indemnification. The Guarantor agrees to pay to the Guarantee Trustee such compensation for its services as shall be mutually agreed upon by the Guarantor and the Guarantee Trustee (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Guarantor shall reimburse the Guarantee Trustee upon request for all reasonable out-of-pocket expenses incurred by it, including the reasonable compensation and expenses of the Guarantee Trustee's agents and counsel, except any expense as may be attributable to the negligence or bad faith of the Guarantee Trustee. The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified Person harmless against, any and all loss, liability, damage, claim or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The provisions of this Section 9.2 shall survive the termination of this Guarantee Agreement and shall survive the resignation or removal of the Guarantee Trustee. 19 24 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. SUIZA FOODS CORPORATION, as Guarantor By: /s/ Gregg L. Engles ---------------------------------------- Name: Gregg L. Engles Title: Chairman and Chief Executive Officer WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Guarantee Trustee By: /s/ Patricia A. Evans ---------------------------------------- Name: Patricia A. Evans Title: Financial Services Officer 20 EX-10.1 8 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 10.1 10,000,000 Preferred Securities SUIZA CAPITAL TRUST II 5 1/2% Trust Convertible Preferred Securities (Liquidation Preference $50 per Preferred Security) guaranteed to a limited extent by, and convertible into Common Stock of, SUIZA FOODS CORPORATION REGISTRATION RIGHTS AGREEMENT March 24, 1998 DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION BEAR, STEARNS & CO. INC. J.P. MORGAN SECURITIES, INC. c/o Donaldson, Lufkin & Jenrette Securities Corporation 277 Park Avenue New York, New York 10172 Ladies and Gentlemen: Suiza Capital Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), and Suiza Foods Corporation, a Delaware corporation, as depositor of the Trust and as guarantor (the "Company"), proposes to issue and sell to the Initial Purchasers (as defined herein), upon the terms set forth in the Purchase Agreement (as defined) an aggregate of 10,000,000 and, at the election of the Purchasers, up to an additional 2,000,000 of 5 1/2% Trust Convertible Preferred Securities (liquidation amount $50 per preferred security) (the "Preferred Securities") of the Trust. The Preferred Securities are guaranteed on a 1 2 subordinated basis by the Company as to the payment of distributions, and as to payments on liquidation or redemption, to the extent set forth in a guarantee agreement (the "Guarantee") between the Company and Wilmington Trust Company, as guarantee trustee, and may be converted or exchanged under certain circumstances into 5 1/2% Convertible Subordinated Debentures due 2028 of the Company (the "Debentures") held by the Trust and then into Common Stock, par value $0.01 per share ("Common Stock"), of the Company. The Preferred Securities, the Debentures, the Guarantee and the Common Stock issuable upon conversion or exchange of the Preferred Securities and/or the Debentures are referred to collectively as the "Securities." As an inducement to the Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Initial Purchasers thereunder, the Trust and the Company each agree with the Initial Purchasers for the benefit of the Initial Purchasers and Holders (as defined) as follows: 1. DEFINITIONS. (a) Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Purchase Agreement. As used in this Registration Rights Agreement (as defined), the following defined terms shall have the following meanings: "ACT" or "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules promulgated thereunder. "AFFILIATE" of any specified person means any other person which, directly or indirectly is in control of, is controlled by, or is under common control with such specified person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "COMMISSION" means the Securities and Exchange Commission. "DECLARATION" means the Amended and Restated Declaration of Trust, dated as of March 24, 1998, among Suiza Foods Corporation, as Depositor, Wilmington Trust Company, as Trustee, Wilmington Trust Company, as Delaware Trustee, and the Company Trustees named therein, relating, among other things, to the Preferred Securities, as amended and supplemented from time to time in accordance with its terms. "DTC" means the Depository Trust Company. 2 3 "EFFECTIVENESS PERIOD" has the meaning assigned thereto in Section 2(b)(i). "EFFECTIVE TIME" means the date on which the Commission declares the Shelf Registration Statement effective or on which the Shelf Registration Statement otherwise becomes effective. "ELECTING HOLDER" has the meaning assigned thereto in Section 3(a)(iii). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder. "HOLDER" means, when used with respect to any Security, the holder from time to time of such Security, including the Initial Purchasers. For all purposes of this Agreement, the Company shall be entitled to treat the record owner of a Security as the beneficial owner of such Security unless the Company has been given written notice of the existence and identity of a different beneficial owner. "INDENTURE" means the Indenture, dated as of March 24, 1998, between the Company and Wilmington Trust Company, as indenture trustee, as amended and supplemented from time to time in accordance with its terms. "INITIAL PURCHASERS" means the Initial Purchasers named in Schedule I to the Purchase Agreement. "MANAGING UNDERWRITERS" means the investment banker or investment bankers and manager or managers that shall administer an underwritten offering, if any, conducted pursuant to Section 6. "NASD RULES" means the rules of the National Association of Securities Dealers, Inc., as amended. "NOTICE AND QUESTIONNAIRE" means a Notice of Registration Statement and Selling Securityholder Questionnaire substantially in the form of Exhibit A hereto. "PERSON" means an individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. 3 4 "PROSPECTUS" means the prospectus (including, without limitation, any preliminary prospectus, any final prospectus and any prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act) included in the Shelf Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by the Shelf Registration Statement and by all other amendments and supplements to such prospectus, including all material incorporated by reference in such prospectus and all documents filed after the date of such prospectus by the Company under the Exchange Act to the extent incorporated by reference therein. "PURCHASE AGREEMENT" means the Purchase Agreement dated March , 1998 among the Initial Purchasers, the Trust and the Company. "REGISTRABLE SECURITIES" means all or any portion of the Securities issued from time to time; provided, however, that a Security ceases to be a Registrable Security when it is no longer a Restricted Security. "RESTRICTED SECURITY" means any Security except any such Security which (i) has been effectively registered under the Securities Act and sold in a manner contemplated by the Shelf Registration Statement, (ii) has been transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto) or is transferable pursuant to Rule 144(k) (or any successor provision thereto), (iii) has been sold in compliance with Regulation S under the Securities Act (or any successor thereto) and does not constitute the unsold allotment of a distributor within the meaning of Regulation S under the Securities Act, or (iv) has otherwise been transferred and after such transfer is not subject to transfer restrictions under the Securities Act has been delivered by or on behalf of the Company in accordance with the terms of the Declaration or the Indenture, as the case may be. "RULES" means the published rules of the Commission promulgated under the Securities Act or the Exchange Act, as in effect at any relevant time. "SECURITIES" has the meaning assigned thereto in the first paragraph hereof. "SHELF REGISTRATION" means a registration effected pursuant to Section 2. "SHELF REGISTRATION STATEMENT" means a "shelf" registration statement filed under the Securities Act providing for the registration of, and the sale on a continuous or delayed basis by the Holders of, all of the Registrable Securities pursuant to Rule 415 under the Securities 4 5 Act and/or any similar rule that may be adopted by the Commission, filed by the Company and the Trust pursuant to the provisions of Section 2, including the Prospectus contained therein, any amendments and supplements to such registration statement, including post effective amendments, and all exhibits and all material incorporated by reference in such registration statement. "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, or any successor thereto, and the rules, regulations and forms promulgated thereunder, as the same shall be amended from time to time. "UNDERWRITER" means any underwriter of Registrable Securities in connection with an offering thereof under a Shelf Registration Statement. (b) Wherever there is a reference in this Agreement to a percentage of the "principal amount" of Registrable Securities or to a percentage of Registrable Securities, the Preferred Securities and the Debentures issuable upon conversion or exchange of the Preferred Securities will be treated as the same class of Securities and Common Stock shall be treated as representing the liquidation amount of Preferred Securities or the principal amount of Debentures that was surrendered for conversion or exchange in order to receive such number of shares of Common Stock. 2. SHELF REGISTRATION. (a) The Company and the Trust shall, within 90 calendar days following the first Time of Delivery (as defined in the Purchase Agreement), file with the Commission a Shelf Registration Statement relating to the offer and sale of the Registrable Securities and, thereafter, each of the Company and the Trust shall use its best efforts to cause such Shelf Registration Statement to be declared effective under the Act within 150 calendar days after the first Time of Delivery; provided, however, that no Holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement or to use the Prospectus forming a part thereof for resales of Registrable Securities unless such Holder is an Electing Holder. (b) Each of the Company and the Trust shall use its best efforts: (i) To keep the Shelf Registration Statement continuously effective (subject to any Suspension Period (as defined)) in order to permit the Prospectus to be usable by Electing Holders for resales of Registrable Securities for a period that will terminate upon the earlier of the following: (1) when all of 5 6 the Preferred Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement; (2) when all of the Debentures issued to Holders in respect of Preferred Securities that had not been sold pursuant to the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement; (3) when all of the shares of Common Stock issued upon conversion of any such Preferred Securities or any such Debentures that have not been sold pursuant to the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement; and (4) when, in written opinion of counsel to the Trust and the Company, all outstanding Registrable Securities held by persons which are not affiliates of the Trust or the Company may be resold without registration under the Act pursuant to Rule 144(k) under the Act or any successor provision thereto (in any such case, such period being called the "Effectiveness Period"). (ii) After the Effective Time of the Shelf Registration Statement, as promptly as practicable upon the request of any Holder that is not then an Electing Holder identified as a selling securityholder in the Prospectus at the Effective Time, to take any action reasonably necessary to enable such Holder to use the Prospectus forming a part thereof for resales of Registrable Securities, including, without limitation, any action reasonably necessary to identify such Holder as a selling securityholder in the Shelf Registration Statement; provided, however, that nothing in this Section 2(b) shall relieve such Holder of the obligation to return a completed and signed Notice and Questionnaire to the Trust and the Company in accordance with Section 3(a)(ii) and to provide to the Trust and the Company, in writing, any information with respect to such Holder or the Registrable Securities held by such Holder as is, in the reasonable opinion of counsel to the Trust or the Company, required under applicable law to enable such Holder to use such Prospectus for resales of such Registrable Securities; and (iii) If at any time prior to the end of the Effectiveness Period, the Preferred Securities and/or Debentures are convertible into securities other than Common Stock, the Company and the Trust shall, or shall cause any successor under the Declaration to, cause such securities to be included in the Shelf Registration Statement no later than the date on which the Preferred Securities and/or Debentures may then be convertible into such securities. 6 7 (c) If (i) on or prior to the date 90 days after the Closing Date a Shelf Registration Statement has not been filed with the Commission or (ii) on or prior to the date 150 days after the Closing Date such Shelf Registration Statement has not been declared effective (each such event, a "Registration Default"), additional interest ("Liquidated Damages") will accrue on the Debentures, and, accordingly, additional distributions will accrue on the Preferred Securities, from and including the day following such Registration Default until such date as the Shelf Registration Statement is filed or declared effective, as the case may be. Liquidated Damages will be paid quarterly in arrears (subject to the Company's right to defer the payment of Liquidated Damages during any Extension Period (as defined in the Indenture)), with the first quarterly payment due on the first interest or distribution payment date, as applicable, following the date on which such Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to an additional one-quarter of one percent (0.25%) of the principal amount or liquidation amount, as applicable, to and including the 90th day following such Registration Default and one-half of one percent (0.50%) thereof from and after the 91st day following such Registration Default. In the event that the Shelf Registration Statement ceases to be effective or use of the prospectus related thereto is suspended during the Effectiveness Period for more than 90 days, whether or not consecutive, during any 12-month period, then the interest rate borne by the Debentures and the distribution rate borne by the Preferred Securities will each increase by an additional one-half of one percent (0.50%) per annum from the 91st day of the applicable 12-month period such Shelf Registration Statement ceases to be effective until such time as the earlier to occur of (i) the Shelf Registration Statement again becomes effective or the use of the prospectus related thereto is no longer suspended and (ii) the end of the Effectiveness Period. (d) Each of the Company and the Trust shall be deemed not to have used its best efforts to keep the Shelf Registration Statement effective during the Effectiveness Period if either the Trust or the Company voluntarily takes any action that would result in Electing Holders not being able to offer and sell any of their Registrable Securities during such period, unless (i) such action is required by applicable law or (ii) upon the occurrence of any event contemplated by Section 3(d)(ii)(3) (even if such event results from a voluntary action of the Company or is within the control of the Company), and such action is taken by the Trust or the Company in good faith and for valid business reasons or (iii) the continued effectiveness of the Shelf Registration Statement would require the Company to disclose a material financing, acquisition or other corporate development, and the Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer and/or the General Counsel shall have determined in good faith that such disclosure is not in the best interests of the Company and its stockholders, and, in the case of clause (ii) above, the Trust and the Company thereafter promptly comply with the requirements of Section 3(j) below. Any such period during which 7 8 the Company and the Trust are permitted to suspend the effectiveness of the Shelf Registration Statement is referred to herein as the "Suspended Period." 3. REGISTRATION PROCEDURES. In connection with the Shelf Registration Statement, the following provisions shall apply: (a) (i) The Company shall not be required to take any action to name such Holder as a selling securityholder in the Shelf Registration Statement or to enable such Holder to use the Prospectus for resales of Registrable Securities until such Holder has returned a completed and signed Notice and Questionnaire to the Company and the Trust and provided to the Trust and the Company in writing such information with respect to such Holder or the Registrable Securities held by such Holder as is, in the reasonable opinion of counsel to the Trust or the Company, required to enable such Holder to use the Prospectus for resales of Registrable Securities. (ii) Not less than 30 calendar days prior to the Effective Time of the Shelf Registration Statement, the Company or the Trust shall mail the Notice and Questionnaire to each Holder. No Holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement as of the Effective Time, and no Holder shall be entitled to use the Prospectus for resales of Registrable Securities at any time, unless such Holder has returned a completed and signed Notice and Questionnaire to the Company and the Trust and provided to the Trust and the Company in writing such information with respect to such Holder of the Registrable Securities held by such Holder as is, in the reasonable opinion of counsel to the Trust or the Company, required to enable such Holder to use the Prospectus for resales of Registrable Securities; provided, however, only Holders who have completed and returned the Notice and Questionnaire and provided any such additional information requested of such Holder to the Company on or before the day that is ten days prior to the Effective Time shall be entitled to be named as a selling securityholder in the Shelf Registration Statement as of the Effective Time. (iii) The term "Electing Holder" shall mean any Holder that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(a)(i) or 3(a)(ii) and provided to the Trust and the 8 9 Company such information with respect to such Holder or the Registrable Securities held by such Holder as is, in the reasonable opinion of counsel to the Trust or the Company, required to enable such Holder to use the Prospectus for resales of Registrable Securities. (b) The Company and the Trust shall furnish to each Electing Holder, prior to the Effective Time, a copy of the Shelf Registration Statement initially filed with the Commission, and shall reasonably promptly furnish to such Holders, copies of each amendment thereto and each amendment or supplement, if any, to the Prospectus included therein and shall consider in good faith for inclusion in each such document at the Effective Time such comments as such Holders or their counsel reasonably may propose; provided, however, that the Company's obligations set forth in this Section 3(b) shall not require the Company to delay or postpone the Effective Time or prevent the Company from otherwise requesting the acceleration of the effectiveness of the Shelf Registration Statement. (c) The Company and the Trust shall as promptly as practicable take such action as may be necessary so that (i) each of the Shelf Registration Statement and any amendment thereto and the Prospectus and any amendment or supplement thereto (and each report or other document incorporated therein by reference in each case) complies in all material respects with the Securities Act, (ii) each of the Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) each of the Prospectus forming part of the Shelf Registration Statement, and any amendment or supplement to such Prospectus, does not at any time during the Effectiveness Period include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) (i) The Company shall promptly advise the Initial Purchasers and, in the case of clause (1), the Electing Holders and, if requested by the Initial Purchasers or any such Electing Holder, confirm such advice in writing: (1) when the Shelf Registration Statement and any amendment thereto has been filed with the Commission and when the Shelf Registration Statement or any post-effective amendment thereto has become effective; and 9 10 (2) of any request by the Commission for amendments or supplements to the Shelf Registration Statement or the Prospectus or for additional information. (ii) The Company shall promptly advise each Electing Holder of: (1) the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or, if the Company becomes aware of such, the initiation of any proceedings for such purpose; (2) the receipt by the Company or the Trust of any notification with respect to the suspension of the qualification of the securities included in the Shelf Registration Statement for sale in any jurisdiction or, if the Company becomes aware of such, the initiation of any proceeding for such purpose; and (3) the happening of any event that requires the making of any changes in the Shelf Registration Statement or the Prospectus so that, as of such date, such Shelf Registration Statement and Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made). (e) The Company and the Trust shall each use its best efforts to prevent the issuance and, if issued, to obtain the withdrawal, of any order suspending the effectiveness of the Shelf Registration Statement at the earliest possible time. (f) The Company and the Trust shall furnish to each Electing Holder, without charge, at least one copy of the Shelf Registration Statement and all post-effective amendments thereto, including financial statements and schedules included therein, and, if such Holder so requests in writing, all reports, other documents and exhibits that are filed with or incorporated by reference in the Shelf Registration Statement. 10 11 (g) The Company and the Trust shall, during the Effectiveness Period, deliver to each Electing Holder, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such Electing Holder may reasonably request; and the Company and the Trust each consents (except during the continuance of any event described in Section 3(d)(ii)(3) or during any Suspension Period) to the use of the Prospectus by each of the Electing Holders in connection with the offering and sale of the Registrable Securities covered by the Prospectus during the Effectiveness Period. (h) Prior to any offering of Registrable Securities pursuant to the Shelf Registration Statement, the Company and the Trust shall (i) register or qualify or cooperate with the Electing Holders and their respective counsel in connection with the registration of qualification of such Registrable Securities for offer and sale under the securities or "blue sky" laws of such jurisdictions within the United States as any Electing Holder may reasonably request, (ii) keep such registrations or qualifications in effect (subject to any Suspension Period) and comply with such laws so as to permit the continuance of offers and sales in such jurisdictions for so long as may be necessary to enable any Electing Holder or underwriter, if any, to complete its distribution of Registrable Securities pursuant to the Shelf Registration Statement, and (iii) take any and all other actions necessary or advisable to enable the disposition in such jurisdiction of such Registrable Securities; provided, however, that in no event shall the Company or the Trust be obligated to (1) qualify generally to do business or as a foreign corporation or as a dealer in securities in any jurisdiction where each would not otherwise be required to so qualify but for this Section 3(h), (2) file any general consent to service of process in any jurisdiction where it is not as of the date hereof so subject or (iii) subject itself to taxation in any jurisdiction where it is not otherwise so subject. (i) Unless any Registrable Securities shall be in book-entry only form, the Company and the Trust shall cooperate with the Electing Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to the Shelf Registration Statement free of any restrictive legends and in such permitted denominations and registered in such names as Electing Holders may request in connection with the sale of Registrable Securities pursuant to the Shelf Registration Statement. (j) Upon the occurrence of any event contemplated by Section 3(d)(ii)(3), the Company and the Trust shall as promptly as practicable prepare a post-effective amendment or supplement to the Shelf Registration Statement or the Prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the Prospectus will not 11 12 include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except, in each case, for an untrue statement of a material fact or omission of a material fact made in reliance on and in conformity with written information furnished to the Trust or the Company by or on behalf of any Electing Holders). Upon receipt of written notice from the Company or the Trust of the occurrence of any event contemplated by Section 3(d)(ii)(3) or of any Suspension Period, each Holder shall forthwith discontinue disposition of Registrable Securities (and shall cause its agents and representatives to discontinue such disposition) until such Holder has received copies of the supplemental or amended Prospectus required by this Section 3(j), or until such Holder is advised by the Company or the Trust that the use of the Prospectus may be resumed and, if so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies then in such Holder's possession (and in the possession of such Holder's agents and representatives) of the Prospectus covering such Registrable Securities current at the time of such notice. (k) Not later than the Effective Time, the Company and the Trust shall each provide a CUSIP number for the Preferred Securities registered under such Shelf Registration Statement; in the event of and at the time of any distribution of the Debentures to Holders, the Company and the Trust shall provide a CUSIP number for the Debentures and provide the applicable trustees with certificates for such Registrable Securities, in a form eligible for deposit with DTC. (l) The Company and the Trust shall each use its best efforts to comply with all applicable Rules, and to make generally available to its securityholders as soon as they become available, but in any event not later than 15 months after (i) the effective date (as defined in Rule 158(c) under the Securities Act) of the Shelf Registration Statement, (ii) the effective date of each post effective amendment to the Shelf Registration Statement and (iii) the date of each filing by the Company with the Commission of an Annual Report on Form 10-K that is incorporated by reference in the Shelf Registration Statement, an earnings statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158). (m) Each of the Company and the Trust shall use their respective reasonable best efforts to cause the Indenture, the Declaration and the Guarantee to be qualified under the Trust Indenture Act in a timely manner. 12 13 (n) In the event of an underwritten offering conducted pursuant to Section 6, the Company and the Trust shall, if requested, as promptly as practicable include or incorporate in a Prospectus supplement or post-effective amendment to the Shelf Registration Statement such information as the Managing Underwriters reasonably agree should be included therein and to which the Company does not reasonably object and shall make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after it is notified of the matters to be included or incorporated in such Prospectus supplement or post-effective amendment. (o) The Company and the Trust shall enter into such customary agreements (including an underwriting agreement in customary form in the event of an underwritten offering conducted pursuant to Section 6) and take all other appropriate action in order to expedite and facilitate the registration and disposition of the Registrable Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures reasonably similar to those set forth in Section 5 with respect to all parties to be indemnified pursuant to Section 5. (p) The Company and the Trust shall: (i)(1) make reasonably available for inspection by Electing Holders, any underwriter participating in any disposition pursuant to such Shelf Registration Statement, and any attorney, accountant, expert or other agent retained by such Holders or any such underwriter all relevant financial and other records, pertinent corporate or other documents and properties of the Company, its subsidiaries and the Trust, and (2) cause the officers, directors, employees, trustees and agents of the Company and the Trust to supply all information reasonably requested by such Holders or any such underwriter, attorney, accountant, expert or agent in connection with the Shelf Registration Statement, in each case, as is customary for similar due diligence examinations; provided, however, that each Electing Holder and its representatives and agents shall execute an agreement (in form reasonably acceptable to the Company) providing that all records, information and documents provided by the Company and the Trust, in good faith, as confidential shall be kept confidential by such Holders and any such underwriter, attorney, accountant, expert or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such records, information or documents become available to the public generally or through a third party without an accompanying obligation of confidentiality; and provided further that, if the foregoing inspection and 13 14 information gathering would, in the Company's reasonable judgment, disrupt the Company's conduct of its business, such inspection and information gathering shall be coordinated on behalf of the Electing Holders and the other parties entitled thereto by one counsel designated by and on behalf of Electing Holders and other parties; (ii) in connection with any underwritten offering conducted pursuant to Section 6, enter into such agreements (including underwriting agreements) and make such representations and warranties to the Holders participating in such underwritten offering and to the Managing Underwriters, in form, substance and scope as are customarily entered into and made by the Company and the Trust to underwriters in primary underwritten offerings of equity and convertible preferred and debt securities and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iii) in connection with any underwritten offering conducted pursuant to Section 6, obtain opinions of counsel to the Company and the Trust (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters) addressed to each Holder participating in such underwritten offering and the underwriters, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters (it being agreed that the matters to be covered by such opinions shall include, without limitation, as of the date of the opinion and as of the Effective Time of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, a statement that such counsel is not aware that the Shelf Registration Statement and the Prospectus, including the documents incorporated by reference therein, includes an untrue statement of a material fact or omits a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (iv) in connection with any underwritten offering conducted pursuant to Section 6, obtain "cold comfort" letters and updates thereof from the independent public accountants of the Company and the Trust, addressed to each Holder participating in such underwritten offering (if such Holder has provided such letter, representations or documentation, if any, required for such "cold comfort" letter to be so addressed) and the underwriters, in customary 14 15 form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings; and (v) deliver such documents and certificates as may be reasonably requested by any Holders participating in such underwritten offering and the Managing Underwriters, if any, including, without limitation, certificates to evidence compliance with Section 3(j) and with any conditions contained in the underwriting agreement or other agreements entered into by the Company and the Trust. (q) Each of the Company and the Trust will use its best efforts to cause the Common Stock issuable upon conversion of the Preferred Securities and/or Debentures to be listed, subject to official notice of issuance, on the New York Stock Exchange or other stock exchange or trading system on which the Common Stock primarily trades on or prior to the Effective Time of the Shelf Registration Statement hereunder. (r) Each of the Company and the Trust shall use their respective best efforts to take all other steps necessary to effect the registration, offering and sale of the Registrable Securities covered by the Shelf Registration Statement contemplated hereby. (s) Upon receipt of written notice from the Company that a Suspension Period is in effect, each Holder shall forthwith discontinue (and shall cause its agents and representatives to discontinue) disposition of Registrable Securities until such Holder has received copies of the supplemental or amended Prospectus required by Section 3(j), or until such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies then in such Holder's possession (and in the possession of such Holder's agents and representatives), of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. 15 16 4. REGISTRATION EXPENSES. The Company and the Trust shall bear all fees and expenses customarily borne by issuers in a non-underwritten secondary offering by selling securityholders or in an underwritten offering, as the case may be, incurred in connection with the performance of its obligations under Sections 2, 3 and 6. In addition, in the event of an underwritten offering of Registrable Securities conducted pursuant to Section 6, or if in any other event the Company requires that inspection and information gathering be coordinated by counsel for the Electing Holders as provided in Section 3(p)(i), the Company shall pay the reasonable fees and expenses of one counsel selected by the Electing Holders of not less than 25% of the principal amount of Registrable Securities to be included in such underwritten offering (or, in any such other event, included in the Shelf Registration Statement) to represent them. 5. INDEMNIFICATION AND CONTRIBUTION. (a) Indemnification by the Company. Upon the registration of the Registrable Securities pursuant to Section 2, and in consideration of the agreements of the Electing Holders and any underwriters, selling agents or other securities professionals contained in Section 5(b), the Company and the Trust jointly and severally shall, and each hereby agrees to, indemnify and hold harmless each Electing Holder and each underwriter, selling agent or other securities professional, if any, that participates in or facilitates the disposition of Registrable Securities, and each of their respective officers and directors and each person who controls such Electing Holder, underwriter, selling agent or other securities professional within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such person being sometimes referred to as an "INDEMNIFIED PERSON"), from and against any losses, claims, damages or liabilities, joint or several, to which such Indemnified Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Shelf Registration Statement under which such Registrable Securities are to be registered under the Securities Act, or any Prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company and the Trust hereby agree to reimburse such Indemnified Person for any reasonable legal or other out-of-pocket expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company or the Trust shall not be liable to any such Indemnified Person in any such case to 16 17 the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Shelf Registration Statement or Prospectus, or amendment or supplement, in reliance upon and in conformity with written information furnished to the Company or the Trust by such Indemnified Person expressly for use therein. Notwithstanding the foregoing, the Trust and the Company shall not be liable to the extent that such losses, claims, damages or liabilities arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission in a Prospectus if the Trust or the Company shall have demonstrated that (i) such untrue statement or omission or alleged untrue statement or omission is corrected in an amendment or supplement to such Prospectus and (ii) having previously been informed by or on behalf of the Trust or the Company of such untrue statement or alleged untrue statement or omission or alleged omission and having been timely furnished by or on behalf of the Trust or the Company with the requisite quantity of the Prospectus as amended or supplemented, such Indemnified Person thereafter fails to deliver such Prospectus as so amended or supplemented prior to or concurrently with the sale to the person who purchased a Registrable Security from such Indemnified Person and who is asserting such losses, claims, damages or liabilities. (b) Indemnification by the Holders and any Agents and Underwriters. Each Electing Holder agrees, as a consequence of the inclusion of any of such Holder's Registrable Securities in such Shelf Registration Statement, and each underwriter, selling agent or other securities professional, if any, which participates in or facilitates the disposition of Registrable Securities shall agree, as a consequence of facilitating such disposition of Registrable Securities, severally and not jointly, to (i) indemnify and hold harmless the Company and the Trust, their respective directors, trustees, agents and officers who sign any Shelf Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively referred to as the "INDEMNIFIED PARTY"), against any losses, claims, damages or liabilities to which the Company, the Trust or such other persons may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such Shelf Registration Statement or Prospectus, or any amendment or supplement, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or the Trust by such Holder, underwriter, selling agent or other securities professional expressly for use therein, and (ii) reimburse the Company and the Trust for any reasonable legal or other out-of-pocket expenses 17 18 reasonably incurred by the Company and the Trust in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Notices of Claims, Etc. If any action or proceeding (including any governmental investigation or inquiry) shall be brought or asserted against an Indemnified Person under Section 5(a) or an Indemnified Party under Section 5(b) (collectively referred to as the "INDEMNIFIED HOLDER") in respect of which indemnity may be sought, such Indemnified Holder shall promptly notify the indemnifying Company and Trust under Section 5(a) and the indemnifying Electing Holders under Section 5(b) (collectively the "INDEMNIFYING PARTY") in writing (provided that the failure to give such notice shall not relieve the Indemnifying Party of its obligations pursuant to this Agreement unless and only to the extent that the Indemnifying Party has been materially prejudiced by such failure), and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Holder and the payment of all expenses in connection therewith. Such Indemnified Holder shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such separate counsel shall be the expense of such Indemnified Holder unless (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii) the Indemnifying Party shall have failed to assume the defense of such action or proceeding in a timely fashion or has failed to employ counsel reasonably satisfactory to such Indemnified Holder in any such action or proceeding or (iii) the named parties to any such action or proceeding (including any impleaded parties) include both such Indemnified Holder and the Indemnifying Party, and such Indemnified Holder shall have been advised by counsel that there may be one or more legal defenses available to such Indemnified Holder that are different from or additional to those available to the Indemnifying Party or that a conflict of interest may exist between the Indemnified Holder and the Indemnifying Party. If such Indemnified Holder notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party as permitted by the provisions of the preceding sentence, the Indemnifying Party shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnified Holder. The foregoing notwithstanding, the Indemnifying Party shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Holder and any other Indemnified Holders (which firm shall be designated in writing by a majority of such Indemnified Holders) in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances and all such fees and expenses shall be reimbursed as they are incurred. The Trust and the Company shall not be liable for any loss, damage, liability or expense by reason of any settlement of any such action or proceeding effected without the Company's prior written consent, which 18 19 consent shall not be unreasonably withheld, and the Indemnifying Party shall indemnify and hold harmless any Indemnified Holder from and against any loss, damage, liability or expense by reason of any settlement of any action or proceeding (i) effected with the written consent of the Indemnifying Party or (ii) notwithstanding the foregoing, effected without its written consent if the settlement is entered into more than twenty business days after the Indemnifying Party shall have received a request from the Indemnified Holder for reimbursement of the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the Indemnifying Party) and, prior to the date of such settlement, the Indemnifying Party shall have failed to comply with such reimbursement request. No Indemnifying Party shall, without the written consent of the Indemnified Holder, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the Indemnified Holder is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the Indemnified Holder from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of, the Indemnified Holder. (d) Contribution. If the indemnification provided for in this Section 5 is unavailable to an Indemnified Holder under Section 5(a) or (b) in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Holder as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and the Indemnified Holder on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of a party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Indemnifying Party or by such Indemnified Holder, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation (even if the Electing Holders or any underwriters, selling agents or other securities professionals or all of them were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 5(d). The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal 19 20 or other fees or expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. The obligations of the Electing Holders and any underwriters, selling agents or other securities professionals in this Section 5(d) to contribute shall be several in proportion to the percentage of principal amount of Registrable Securities registered or underwritten, as the case may be, by them and not joint. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) Limitations on Liability. Notwithstanding any other provision of this Section 5, in no event will any (i) Electing Holder be required to undertake liability to any person under this Section 5 for any amounts in excess of the dollar amount of the proceeds to be received by such Holder from the sale of such holder's Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) pursuant to any Shelf Registration Statement under which such Registrable Securities are to be registered under the Securities Act and (ii) underwriter, selling agent or other securities professional be required to undertake liability to any person hereunder for any amounts in excess of the discount, commission or other compensation payable to such underwriter, selling agent or other securities professional with respect to the Registrable Securities underwritten by it and distributed to the public. (f) Other Liabilities. The obligations of the Company and the Trust under this Section 5 shall be in addition to any liability which the Company and the Trust may otherwise have to any Indemnified Person and the obligations of any Indemnified Person under this Section 5 shall be in addition to any liability which such Indemnified Person may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company, each Company Trustee of the Trust and to each person, if any, who controls the Trust and the Company within the meaning of the Act. The remedies provided in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to an indemnified party at law or in equity. 6. UNDERWRITTEN OFFERING. Any Electing Holder of Registrable Securities who desires to do so may sell Registrable Securities (in whole or in part) in an underwritten offering; provided that (a) the Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities shall request such an offering and (b) at least such aggregate principal amount of such Registrable Securities shall be included in such offering; and, provided further, that the Company shall not be obligated to cooperate with more than one underwritten offering during the Effectiveness 20 21 Period. Upon receipt of such a request, the Company and the Trust shall provide all Holders of Registrable Securities written notice of the request, which notice shall inform such Holders that they have the opportunity to participate in the offering. In any such underwritten offering, the investment bank or banks and manager or managers that will administer the offering will be selected by, and the underwriting arrangements with respect thereto (including, subject to clause (b) above, the size of the offering) will be approved by the Holders of a majority of the Registrable Securities to be included in such offering; provided, however, that such investment bankers and managers and underwriting arrangements must be reasonably satisfactory to the Company and the Trust. No Holder may participate in any underwritten offering contemplated hereby unless (a) such Holder agrees to sell such Holder's Registrable Securities to be included in the underwritten offering in accordance with any approved underwriting arrangements, (b) such Holder completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such approved underwriting arrangements, and (c) if such Holder is not then an Electing Holder, such Holder returns a completed and signed Notice and Questionnaire to the Company and the Trust in accordance with Section 3(a)(2) (but in no event later than 10 days prior to commencement of the underwritten offering) and provides to the Trust and the Company, in writing, any information with respect to such Holder or the Registrable Securities held by such Holder as is, in the reasonable opinion of counsel to the Trust or the Company, required under applicable law to enable such Holder to use such Prospectus for resales of such Registrable Securities, each within a reasonable amount of time before such underwritten offering. The Holders participating in any underwritten offering shall be responsible for any underwriting discounts and commissions. The Company and the Trust shall pay all expenses customarily borne by issuers, including but not limited to filing fees, the fees and disbursements of its counsel and independent public accountants and any printing expenses incurred in connection with such underwritten offering. Notwithstanding the foregoing or the provisions of Section 3(n), upon receipt of a request from the Managing Underwriter or a representative of Holders of a majority of the Registrable Securities to be included in an underwritten offering to prepare and file an amendment or supplement to the Shelf Registration Statement and Prospectus in connection with an underwritten offering, the Company and the Trust may delay the filing of any such amendment or supplement for up to 90 days if the Board of Directors of the Company shall have determined in good faith that the Company has a bona fide business reason for such delay. 7. MISCELLANEOUS. (a) Other Registration Rights. The Company may grant registration rights that would permit any Person that is a third party the right to piggyback on any Shelf Registration 21 22 Statement, provided that if the Managing Underwriter of any underwritten offering conducted pursuant to Section 6 notifies the Company and the Electing Holders that the total amount of securities which the Electing Holders and the holders of such piggyback rights intend to include in any Shelf Registration Statement is such as to materially threaten the success of such offering (including the price at which such securities can be sold), then the amount, number or kind of securities to be offered for the account of holders of such piggyback rights will be reduced to the extent necessary to reduce the total amount of securities to be included in such offering to the amount, number and kind recommended by the Managing Underwriter prior to any reduction in the amount of Registrable Securities to be included in such Shelf Registration Statement. (b) Amendments and Waivers. This Agreement, including this Section 7(b), may be amended, and waivers or consents to departures from the provisions hereof may be given, only by a written instrument duly executed by the Company and the Holders of a majority in aggregate principal amount of Registrable Securities then outstanding. Each Holder of Registrable Securities outstanding at the time of any such amendment, waiver or consent or thereafter shall be bound by any amendment, waiver or consent effected pursuant to this Section 7(b), whether or not any notice, writing or marking indicating such amendment, waiver or consent appears on the Registrable Securities or is delivered to such Holder. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at such address set forth on the record books of the Company or the Trust, as the case may be; (ii) if to the Initial Purchasers, initially at the address set forth in the Purchase Agreement; and (iii) if to the Company or the Trust, initially at its address set forth in the Purchase Agreement. All such notices and communications shall be deemed to have duly given when received. The Initial Purchasers or the Company and the Trust by notice to the other may designate additional or different addresses for subsequent notices or communications. 22 23 (d) Parties in Interest. The parties to this Registration Rights Agreement intend that all Holders of Registrable Securities shall be entitled to receive the benefits of this Registration Rights Agreement and that each Electing Holder shall be bound by the terms and provisions of this Registration Rights Agreement by reason of such election with respect to the Registrable Securities which are included in a Shelf Registration Statement. All the terms and provisions of this Registration Rights Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective successors and assigns of the parties hereto and any Holder from time to time of the Registrable Securities to the aforesaid extent. In the event that any transferee of any Holder of Registrable Securities shall acquire Registrable Securities, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any further writing or action of any kind, be entitled to receive the benefits of and, if an Electing Holder, be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Registration Rights Agreement to the aforesaid extent. (e) Counterparts. This Registration Rights Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Registration Rights Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. This Registration Rights Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any provisions relating to conflicts of laws. (h) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. 23 24 Please confirm that the foregoing correctly sets forth the agreement among the Company, the Trust and you. Very truly yours, SUIZA CAPITAL TRUST II By: /s/ Joseph B. Armes --------------------------------------------- Name: Joseph B. Armes , ------------------------------------------- as Administrative Trustee SUIZA FOODS CORPORATION By: /s/ Joseph B. Armes --------------------------------------------- Name: Joseph B. Armes ------------------------------------------- Title: Executive Vice President ------------------------------------------- The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written. DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION BEAR, STEARNS & CO. INC. J.P. MORGAN SECURITIES, INC. By: Donaldson, Lufkin & Jenrette Securities Corporation By: /s/ Michael L. Crow ------------------------------------------- Name: Michael L. Crow ------------------------------------------ Title: Senior Vice President ----------------------------------------- 24 EX-11 9 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 - Statement re computation of per share earnings
Three Months Ended March 31, -------------------------------- 1998 1997 ------------ ------------ (In thousands, except share and per-share amounts) Calculation of basic earnings per share: Income from continuing operations $ 18,053 $ 22,405 Less preferred stock dividends (87) (75) ------------ ------------ Income from continuing operations applicable to common stock $ 17,966 $ 22,330 ============ ============ Total weighted average shares outstanding 30,727,958 28,034,025 ============ ============ Basic EPS from continuing operations $ 0.58 $ 0.80 ============ ============ Calculation of diluted earnings per share: Income from continuing operations $ 18,053 $ 22,405 Less preferred stock dividends (87) (75) Dilutive effect on earnings from conversion of mandatorily redeemable convertible preferred securities 327 ------------ ------------ Income from continuing operations applicable to common stock $ 18,293 $ 22,330 ============ ============ Weighted average shares outstanding 30,727,958 28,034,025 Stock option conversion 2,415,405 1,460,716 Dilutive effect of conversion of mandatorily redeemable convertible preferred securities 619,048 Earnings contingency 59,480 ------------ ------------ Total weighted average shares outstanding 33,821,891 29,494,741 ============ ============ Diluted EPS from continuing operations $ 0.54 $ 0.76 ============ ============
EX-27 10 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED FINANCIAL STATEMENTS FOR THE 3-MONTH PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 84,025 0 222,004 0 105,444 570,729 462,156 0 1,946,748 301,284 493,973 682,500 3,741 314 398,567 1,946,748 593,121 593,121 456,148 95,384 (702) 0 14,651 27,640 9,587 18,053 (3,161) 0 0 14,892 0.48 0.45
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