EXHIBIT 10.16
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DW CAPITAL TRUST 1
7.20% CUMULATIVE RECOURSE OFFERED PREFERRED SECURITIES
(LIQUIDATION PREFERENCE $1,000,000 PER PREFERRED SECURITY)
GUARANTEED BY DIAMOND WALNUT GROWERS, INC.
PREFERRED SECURITIES PURCHASE AGREEMENT
Dated as of August 20, 1998
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TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. AUTHORIZATION OF PREFERRED SECURITIES........................................ 1
SECTION 2. SALE AND PURCHASE OF PREFERRED SECURITIES.................................... 1
SECTION 3. CLOSING...................................................................... 2
SECTION 4. CONDITIONS TO CLOSING........................................................ 2
Section 4.1. Representations and Warranties.............................................. 2
Section 4.2. Performance................................................................. 2
Section 4.3. Compliance Certificates..................................................... 2
Section 4.4. Opinions of Counsel......................................................... 2
Section 4.5. Purchase Permitted by Applicable Law, etc................................... 3
Section 4.6. Payment of Special Counsel Fees............................................. 3
Section 4.7. Transaction Documents....................................................... 3
Section 4.8. Subsequent Changes.......................................................... 3
Section 4.9. Proceedings and Documents................................................... 3
Section 4.10. Certified Resolutions....................................................... 4
Section 4.11. Consents.................................................................... 4
Section 4.12. Good Standing Certificates.................................................. 4
Section 4.13. Private Placement Number.................................................... 4
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS............................... 4
Section 5.1. Organization; Power and Authority........................................... 4
Section 5.2. Authorization, etc.......................................................... 4
Section 5.3. Ownership of the Trust; Trust Affiliates.................................... 6
Section 5.4. Financial Statements........................................................ 6
Section 5.5. Compliance with Laws, Other Instruments, etc................................ 6
Section 5.6. Governmental Authorizations, etc............................................ 7
Section 5.7. Litigation; Observance of Statute; Orders................................... 7
Section 5.8. Taxes....................................................................... 7
Section 5.9. Title to Property; Leases................................................... 8
Section 5.10. Licenses, Permits, etc...................................................... 8
Section 5.11. Compliance with ERISA....................................................... 8
Section 5.12. Private Offering by the Trust............................................... 9
Section 5.13. Use of Proceeds; Margin Regulations......................................... 9
Section 5.14. Existing Debt............................................................... 10
Section 5.15. Foreign Assets Control Regulations, etc..................................... 10
Section 5.16. Status under Certain Statutes............................................... 10
Section 5.17. Environmental Matters....................................................... 10
Section 5.18. Solvency.................................................................... 11
Section 5.19. Disclosure.................................................................. 11
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SECTION 6. REPRESENTATIONS OF THE PURCHASER............................................. 12
Section 6.1. Purchase for Investment, etc................................................ 12
Section 6.2. Source of Funds............................................................. 12
SECTION 7. INFORMATION AS TO THE OBLIGORS............................................... 13
Section 7.1. Financial and Business Information.......................................... 13
Section 7.2. Inspection.................................................................. 14
SECTION 8. COVENANTS.................................................................... 16
Section 8.1. Existence................................................................... 16
Section 8.2. Ownership of the Trust...................................................... 16
Section 8.3. Insurance................................................................... 16
Section 8.4. Taxes, Claims for Labor and Materials, Compliance with Laws................. 16
Section 8.5. Regulatory Compliance....................................................... 17
Section 8.6. Transactions with Affiliates................................................ 17
SECTION 9. EXPENSES, ETC................................................................ 17
Section 9.1. Transaction Expenses........................................................ 17
Section 9.2. Survival.................................................................... 17
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT............................................................. 18
SECTION 11. AMENDMENT AND WAIVER......................................................... 18
Section 11.1 Requirements................................................................ 18
Section 11.2 Solicitation of Holders of Preferred Securities............................. 18
Section 11.3 Binding Effect, etc......................................................... 19
Section 11.4 Preferred Securities Held by Obligor, etc................................... 19
SECTION 12. NOTICES...................................................................... 19
SECTION 13. REPRODUCTION OF DOCUMENTS.................................................... 20
SECTION 14. CONFIDENTIAL INFORMATION..................................................... 20
SECTION 15. SUBSTITUTION OF THE PURCHASER................................................ 21
SECTION 16. MISCELLANEOUS................................................................ 21
Section 16.1 Successors and Assigns...................................................... 21
Section 16.2. Severability................................................................ 21
Section 16.3. Construction................................................................ 21
Section 16.4. Counterparts................................................................ 22
Section 16.5. Governing Law............................................................... 22
Section 16.6. Consent to Jurisdiction and Service; Waiver of Trial by Jury................ 22
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SCHEDULES AND EXHIBITS
SCHEDULE A - Defined Terms
SCHEDULE B - Information Relating to Purchaser
SCHEDULE 5.3 - Affiliates of the Trust and the Company
SCHEDULE 5.4 - Financial Statements
SCHEDULE 5.10 - Trademarks
SCHEDULE 5.14 - Debt
SCHEDULE 5.19 - Agreements Entered Into by Company on August 1, 1998
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DW CAPITAL TRUST I
DIAMOND WALNUT GROWERS, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
As of August 20, 1998
TO THE PURCHASER WHOSE NAME
APPEARS IN THE ACCEPTANCE FORM
AT THE END HEREOF:
Re: 7.20% Cumulative Recourse Offered Preferred Securities (Liquidation
Preference $1,000,000 per Preferred Security)
Ladies and Gentlemen:
DW Capital Trust I, a statutory business trust organized under the
Business Trust Act of the State of Delaware (the "Trust"), and Diamond Walnut
Growers, Inc., an incorporated non-stock cooperative marketing association
organized under the Food and Agricultural Code of the State of California (the
"Company" and together with the Trust, the "Obligors"), agree with the purchaser
whose name appears in the acceptance form at the end hereof (the "Purchaser"),
as follows:
SECTION 1. AUTHORIZATION OF PREFERRED SECURITIES.
The Trust will authorize the issue and sale of fifteen (15) of its 7.20%
Cumulative Recourse Offered Preferred Securities (Liquidation Preference
$1,000,000 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities shall be substantially in the form set out in Exhibit C to the Trust
Agreement, with such changes therefrom, if any, as may be approved by the
Purchaser and the Trust. The Preferred Securities will be guaranteed by the
Company with respect to distributions and amounts payable upon liquidation or
redemption pursuant to the Guarantee Agreement. The entire proceeds from the
sale of the Preferred Securities will be combined with the entire proceeds from
the sale by the Trust to the Company of the Common Securities and will be used
by the Trust to make the Loan to the Company under the Subordinated Loan
Agreement. The Preferred Securities and the Common Securities will be issued
pursuant to the Trust Agreement. The Subordinated Note will be issued pursuant
to the Subordinated Loan Agreement to evidence the Loan. Certain capitalized
terms used in this Agreement are defined in Schedule A; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF PREFERRED SECURITIES.
Subject to the terms and conditions of this Agreement, the Trust will
issue and sell to the Purchaser and the Purchaser will purchase from the Trust,
at the Closing provided for in Section 3, Preferred Securities with an aggregate
Liquidation Preference of $15,000,000 at the purchase price of 100% of such
Liquidation Preference.
SECTION 3. CLOSING.
The sale and purchase of the Preferred Securities shall occur at the
offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ at 11:00 a.m., Eastern time, at a closing (the "Closing") on August
20, 1998 or on such other Business Day thereafter as may be agreed upon by the
Obligors and the Purchaser (the "Closing Date"). At the Closing, the Trust will
deliver to the Purchaser a certificate (in definitive form) representing the
Preferred Securities to be purchased by the Purchaser in the form of a single
certificate (or such greater number of certificates in denominations of at least
U.S. $1,000,000 Liquidation Preference as the Purchaser may request) dated the
date of the Closing and registered in the Purchaser's name (or in the name of
the Purchaser's nominee), against delivery by the Purchaser to the Trust of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Trust to Account
at Bank of America, San Francisco. If, at the Closing, the Trust shall fail to
tender such Preferred Securities to the Purchaser as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have been
fulfilled to the Purchaser's satisfaction, the Purchaser shall, at its election,
be relieved of all further obligations under this Agreement, without thereby
waiving any rights the Purchaser may have by reason of such failure or such
nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING.
The Purchaser's obligation to purchase and pay for the Preferred
Securities to be sold to the Purchaser at the Closing is subject to the
fulfillment to the Purchaser's satisfaction, prior to or at the Closing, of the
following conditions:
Section 4.1. Representations and Warranties. The representations and
warranties of the Obligors contained in this Agreement shall be true and correct
when made and at the time of Closing, after giving effect to the transactions
contemplated by this Agreement.
Section 4.2. Performance. Each Obligor shall have performed and complied
with all agreements and conditions contained in this Agreement required to be
performed or complied with by it prior to or at the Closing and after giving
effect to the issue and sale of the Preferred Securities no Default or Event of
Default (as defined in the Trust Agreement) shall have occurred and be
continuing.
Section 4.3. Compliance Certificates. The Trust shall have delivered to
the Purchaser an Administrator's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1 and 4.2 with respect to
the Trust have been fulfilled. The Company shall have delivered to such
Purchaser an Officer's Certificate signed by the President and Chief Executive
Officer or Chief Financial Officer of the Company and dated the date of Closing,
certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 with
respect to the Company have been fulfilled.
Section 4.4. Opinions of Counsel. The Purchaser shall have received
opinions in the form and substance satisfactory to the Purchaser, dated the date
of the Closing, from (i) A. ▇▇▇▇▇ ▇▇▇▇▇▇▇, III, Esq., counsel for the Company;
(ii) ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel for
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the Company; (iii) ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, counsel for the Trust and the
Trustee; and (iv) ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, the Purchaser's special counsel in
connection with the transactions contemplated hereby.
Section 4.5. Purchase Permitted by Applicable Law, etc. On the date of the
Closing, the Purchaser's purchase of Preferred Securities (a) shall be permitted
by the laws and regulations of each jurisdiction to which the Purchaser is
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by life insurance companies
without restriction as to the character of the particular investment, (b) shall
not violate any applicable law or governmental regulation (including, without
limitation, Regulation T, X or U of the Board of Governors of the Federal
Reserve System) and (c) shall not subject the Purchaser to any tax, penalty or
liability under or pursuant to any applicable law or regulation. If requested by
the Purchaser, the Purchaser shall have received an Officer's Certificate from
the Company certifying as to such matters of fact as the Purchaser may
reasonably specify to enable the Purchaser to determine whether such purchase is
so permitted.
Section 4.6. Payment of Special Counsel Fees. Without limiting the
provisions of Section 10.1, the Obligors shall have paid on or before the
Closing the fees, charges and disbursements of the Purchaser's special counsel
referred to in Section 4.4 to the extent reflected in a statement of such
counsel rendered to the Obligors at least one Business Day prior to the Closing.
Section 4.7. Transaction Documents. The Company shall have executed and
delivered the Guarantee Agreement, the Trust Agreement, the Subordinated Loan
Agreement, the Expense Agreement and the Subordinated Note and such documents
shall be in full force and effect. The Administrators, on behalf of the Trust
shall have executed and delivered the Common Securities, the Expense Agreement
and the Trust Agreement and such documents shall be in full force and effect.
Section 4.8. Subsequent Changes. The Trust shall not have entered into any
Material transactions or conducted any business, except in connection with the
issuance of the Preferred Securities.
The Company shall not have changed its jurisdiction of incorporation,
changed its status as a cooperative under the laws of California or been a party
to any merger or consolidation or sold all or substantially all of its assets
and shall not have succeeded to substantially all the liabilities of any other
entity, at any time following the date of the most recent financial statements
referred to in Schedule 5.4.
Section 4.9. Proceedings and Documents. All trust, corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all agreements, documents and instruments incident to such transactions
shall be satisfactory to the Purchaser and the Purchaser's special counsel, and
the Purchaser and such special counsel shall have received all such counterpart
originals or certified or other copies of such agreements, documents and
instruments as the Purchaser or they may reasonably request.
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Section 4.10. Certified Resolutions. The Company shall have provided to
the Purchaser a certificate of its secretary certifying as to the resolutions
attached thereto and other corporate proceedings relating to the authorization,
execution and delivery of the Guarantee Agreement, the Trust Agreement, the
Subordinated Loan Agreement, the Subordinated Note, the Expense Agreement and
this Agreement.
Section 4.11. Consents. The Obligors shall have obtained all required
approvals, permits, consents, waivers or amendments, if any, with respect to the
transactions contemplated by this Agreement and the issuance of the Preferred
Securities.
Section 4.12. Good Standing Certificates. The Obligors shall have provided
to the Purchaser certificates from the Secretary of State of Delaware and
California as to the good standing of the Trust and the Company, respectively.
Section 4.13. Private Placement Number. A Private Placement number issued
by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Preferred Securities.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.
The Obligors jointly and severally represent and warrant to the Purchaser
that:
Section 5.1. Organization; Power and Authority. (a) The Trust has been
duly created and is validly existing in good standing as a business trust under
the Delaware Act with the power and authority to own its property and to conduct
its business and to enter into and perform its obligations under this Agreement,
the Preferred Securities, the Common Securities, the Trust Agreement and the
Subordinated Loan Agreement; the Trust is duly qualified to transact business as
a foreign corporation and is in good standing in each jurisdiction in which such
qualification is necessary, except to the extent that the failure to so qualify
or be in good standing would not have a Material Adverse Effect.
(b) The Company is an incorporated non-stock cooperative marketing
association duly organized, validly existing and in good standing under the Food
and Agricultural Code of the State of California, and is not required to be duly
qualified as a foreign corporation in any jurisdiction. The Company has all
requisite power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact its business, to execute and
deliver this Agreement, the Guarantee Agreement, the Trust Agreement, the
Subordinated Loan Agreement, the Expense Agreement and the Subordinated Note and
to perform its obligations under the provisions hereof and thereof.
Section 5.2. Authorization, etc. (a) This Agreement has been duly
authorized by each of the Obligors, and this Agreement constitutes a valid and
binding obligation of each of the Obligors, enforceable against such Obligor in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
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(b) The Common Securities have been duly authorized by the Trust Agreement
and, when issued and delivered by the Trust to the Company against payment
therefor, will be validly issued and (subject to the terms of the Trust
Agreement) fully paid and nonassessable undivided beneficial interests in the
assets of the Trust; the issuance of the Common Securities is not subject to
preemptive or other similar rights; and on the Closing Date, all of the issued
and outstanding Common Securities of the Trust will be directly owned by the
Company free and clear of any Lien.
(c) The Trust Agreement has been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered by the Company,
and, assuming the due authorization, execution and delivery thereof by the
Delaware Trustee and the Property Trustee (as defined in the Trust Agreement),
the Trust Agreement will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(d) The Guarantee Agreement has been duly authorized by the Company and,
on the Closing Date, will have been duly executed and delivered by the Company
and will constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(e) The Preferred Securities have been duly authorized by the Trust
Agreement and, when issued and delivered pursuant to this Agreement against
payment therefor, will be validly issued and fully paid and nonassessable
undivided beneficial interests in the assets of the Trust; the issuance of the
Preferred Securities is not subject to preemptive or other similar rights, and,
subject to the terms of the Trust Agreement, holders of Preferred Securities
will be entitled to the same limitation of personal Iiability extended to
stockholders of private corporations for profit incorporated under the General
Corporation Law of the State of Delaware.
(f) The Subordinated Loan Agreement has been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered by
the Company and, assuming the due authorization, execution and delivery thereof
by the Trustee, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(g) The Expense Agreement has been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered by the Company and
will constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency,
5
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(h) The Subordinated Note has been duly authorized by the Company and,
when executed, authenticated, issued and delivered in the manner provided for in
the Subordinated Loan Agreement and sold to and paid for by the Trust, the
Subordinated Note will constitute a valid and binding obligation of the Company
and will be enforceable against the Company in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
Section 5.3. Ownership of the Trust; Trust Affiliates. The Trust has no
subsidiaries. The Company has no Subsidiaries. Schedule 5.3 is a complete and
correct list of the Affiliates of the Company showing, as to each such entity,
the correct name thereof, the jurisdiction of its organization and the
percentage ownership interest(s) of the Company.
Section 5.4. Financial Statements. (a) The Trust has not conducted any
business or prepared any accounts.
(b) The Company has delivered to each Purchaser copies of the financial
statements of the Company listed on Schedule 5.4. All of said financial
statements (including in each case the related schedules and notes) fairly
present in all material respects the financial position of the Company as of the
respective dates specified in such Schedule and the results of their operations
for the respective periods so specified and have been prepared in accordance
with U.S. GAAP consistently applied throughout the periods involved except as
set forth in the footnotes, if any, thereto (subject, in the case of any interim
financial statements, to normal year-end adjustments).
Section 5.5. Compliance with Laws, Other Instruments, etc. (a) The
execution, delivery and performance (i) by the Trust of this Agreement and the
issuance and sale of the Preferred Securities and Common Securities, and (ii) by
the Company of this Agreement, the Guarantee Agreement, the Trust Agreement, the
Subordinated Loan Agreement, the Expense Agreement and the Subordinated Note,
will not (i) contravene, result in a breach of or constitute a default under, or
result in the creation of any Lien in respect of any property of the Trust or
the Company under any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, operating agreement, corporate charter, bylaws or other
constituent documents, or any other agreement or instrument to which the Company
is bound or by which the Company or the Trust or any of their respective
properties may be bound or affected, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable to the
Company or the Trust or (iii) violate any provision of any statute or other rule
or regulation of any Governmental Authority applicable to the Company or the
Trust.
(b) Neither the Trust nor the Company is in violation or breach of or
default under any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, operating agreement, corporate charter or bylaws or any other
agreement or instrument to which it is bound
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or by which its properties are bound or affected, which violation, breach or
default, individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect.
Section 5.6. Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Trust of this Agreement, the Preferred Securities or the Common
Securities, or by the Company of this Agreement, the Guarantee Agreement, the
Trust Agreement, the Subordinated Loan Agreement, the Expense Agreement or the
Subordinated Note.
Section 5.7. Litigation; Observance of Statute; Orders. (a) There are no
actions, suits or proceedings pending or, to the knowledge of any executive
officer of the Company or either of the Administrators of the Trust, threatened
against or affecting either the Company or the Trust, respectively, or any
property of either the Company or the Trust, respectively, in any court or
before any arbitrator of any kind or before or by any Governmental Authority
which individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect.
(b) Neither of the Obligors is in default under any term of any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority or
is in violation of any statute or other rule or regulation (including without
limitation Environmental Laws) or order of any Governmental Authority, which
default or violation individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.
(c) Each of the Obligors has in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of its properties or to the conduct of its businesses, in each case to
the extent necessary to ensure that the failure to have in effect such licenses,
permits, franchises and other governmental authorizations would not reasonably
be expected to, individually and in the aggregate, have a Material Adverse
Effect.
Section 5.8. Taxes. The Trust has not yet been required to file any
Federal income tax return. The Company is taxed as a cooperative under Subtitle
A, Chapter 1, Subchapter T, Section 1381 et. seq. of the Internal Revenue Code
of 1986, as amended, and has filed all income tax returns which are required to
have been filed in any jurisdiction, and has paid all taxes shown to be due and
payable on such returns and all other taxes and assessments payable by it, to
the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings diligently conducted and with respect to which the
Company, has established adequate reserves in accordance with U.S. GAAP. The
Obligors know of no basis for any other tax or assessment that could reasonably
be expected to have a Material Adverse Effect. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of Federal,
state or other taxes for all fiscal periods are adequate in all material
respects. No charges or taxes will be imposed by any Governmental Authority on
the Trust in connection with the consummation of the transactions contemplated
by this Agreement or the issuance and sale of the Preferred Securities or the
performance of the Trust Agreement (including receipt of interest on the Loan).
7
Section 5.9. Title to Property; Leases. (a) The Obligors have good and
sufficient title to their respective Material properties, including all such
properties reflected in the most recent audited balance sheet referred to in
Section 5.4 or purported to have been acquired by either Obligor after said date
(except as sold or otherwise disposed of in the ordinary course of business). On
the Closing Date, the Trust will have good and indefeasible title to the
Subordinated Note free and clear of any Lien.
(b) Each of the Obligors enjoys peaceful and undisturbed possession under
all leases necessary in any material respect for the conduct of its businesses,
and all such leases are valid and subsisting and are in full force and effect.
Section 5.10. Licenses, Permits, etc. Except as disclosed in Schedule
5.10,
(a) the Obligors own or possess all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade
names, or rights thereto, that individually or in the aggregate are
Material, without known conflict with the rights of others;
(b) no product of either Obligor infringes in any Material respect
any license, permit, franchise, authorization, patent, copyright,
servicemark, trademark, trade name or other right owned by any other
Person; and
(c) there is no Material violation by any Person of any right of
either Obligor with respect to any patent, copyright, service ▇▇▇▇,
trademark, trade name or other right owned, licensed or used by the
Company.
Section 5.11. Compliance with ERISA. (a) The Trust does not have and has
never maintained any employee benefit plan. The Company has operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. The Company has not incurred
any liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in Section
3 of ERISA), and no event, transaction or condition has occurred or exists which
could result in the incurrence of any such liability by either Obligor, or in
the imposition of any Lien on any of the rights, properties or assets of either
Obligor, in either case pursuant to Title I or IV of ERISA or to such penalty or
excise tax provisions or to Sections 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company has no
ERISA Affiliates.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than $1,000,000 in the case of any
single Plan and by more than $5,000,000 in the aggregate for all Plans. The term
"benefit liabilities" has the meaning specified in Section 4001 of ERISA and the
terms "current value" and "present value" have the meanings specified in Section
3 of ERISA.
8
(c) The Company has not incurred withdrawal liabilities (and are not
subject to contingent withdrawal liabilities) under Sections 4201 or 4204 of
ERISA in respect of Multiemployer Plans that individually or in the aggregate
are Material.
(d) The expected post-retirement benefit obligation (determined as of the
last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company is as set forth in Note 4 to the Company's financial
statements included in the Company's 1997 Annual Report.
(e) The execution and delivery of this Agreement and the issuance and sale
of the Preferred Securities hereunder will not constitute a non-exempt
prohibited transaction under Section 406 of ERISA. The representation by the
Obligors in the first sentence of this Subsection 5.11(e) is made in reliance
upon and subject to the accuracy of the representation of the Purchaser in
Section 6.2 as to the sources of the funds used to pay the purchase price of the
Preferred Securities to be purchased by the Purchaser.
Section 5.12. Private Offering by the Trust. Neither of the Obligors nor
anyone acting on behalf of either Obligor has offered the Preferred Securities
or any similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than the Purchaser and not more than 27 other Institutional
Investors, each of which has been offered the Preferred Securities at a private
sale for investment. Neither of the Obligors has directly, or through any agent,
(i) sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any Security which is or will be integrated with the sale of the
Preferred Securities or the Subordinated Note in a manner that would require the
registration under the Securities Act of the Preferred Securities or the
Subordinated Note or (ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Preferred Securities or the
Subordinated Note (as those terms are used in Regulation D under the Securities
Act) or in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act. Neither of the Obligors nor anyone acting on behalf
of . either Obligor has taken, or will take, any action which would subject the
issuance or sale of the Preferred Securities to the registration requirements of
Section 5 of the Securities Act or to the registration provisions of any
securities or Blue Sky law of any jurisdiction applicable to the stated address
of the Purchaser of the Preferred Securities as set forth in Schedule B.
Section 5.13. Use of Proceeds; Margin Regulations. (a) The Trust will use
all of the proceeds from the issuance and sale of the Preferred Securities and
the Common Securities to purchase the Subordinated Note from the Company. The
Company will use all of the proceeds from the issuance and sale of the
Subordinated Note for refinancing of existing Debt and for general corporate
purposes, including repayment of Member retains.
(b) No part of the proceeds from the sale of the Preferred Securities
hereunder or the proceeds received by the Company pursuant to the Subordinated
Loan Agreement, will be used directly or indirectly, whether immediate,
incidental or ultimate,. for the purpose of buying or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System (12 CFR 207) or for any other purpose which might constitute this
9
transaction a "purpose credit" within the meaning of Regulation U, or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve either Obligor in a violation of Regulation X of
said Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not constitute more
than 5% of the value of the assets of the Trust or of the Company and neither
such party has any present intention that margin stock will constitute more than
5% of the value of such assets. As used in this Section 5.13, the terms "margin
stock" and "for the purpose of buying or carrying" shall have the meanings
assigned to them in said Regulation U.
Section 5.14. Existing Debt. (a) The Trust has no outstanding Debt.
Schedule 5.14 sets forth a complete and correct list of all outstanding Debt of
the Company as of July 31, 1998 indicating which of such Debt was secured at
such date and describing such security. Since such date there has been no
material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Debt of the Company. The Company is not in default
in, and no waiver of default is currently in effect as to, the payment of any
principal or interest on any Debt of the Company, and no event or condition
exists, and no waiver of any such event or condition exists, with respect to any
Debt for borrowed money of the Company which would permit (or which with notice
or the lapse of time, or both, would permit) one or more Persons to cause such
Debt to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b) Neither of the Obligors has agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien.
Section 5.15. Foreign Assets Control Regulations, etc. Neither the sale of
the Preferred Securities by the Trust hereunder nor its use of the proceeds
thereof nor the use of proceeds received by the Company pursuant to the
Subordinated Loan Agreement will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
Section 5.16. Status under Certain Statutes. Neither of the Obligors is
required to be registered as an "investment company" under the Investment
Company Act or is subject to regulation under the Public Utility Holding Company
Act of 1935, as amended, the ICC Termination Act of 1995, as amended, or the
Federal Power Act, as amended.
Section 5.17. Environmental Matters. Neither of the Obligors has knowledge
of any claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against either Obligor or any of their respective
real properties now or formerly owned, leased or operated by any of them or
other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. The term "knowledge" as used in
this Section 5.17 means the direct knowledge of any executive officer of the
Company or either of the Administrators of the Trust, as applicable. Except as
otherwise disclosed to the Purchasers in writing,
10
(a) neither of the Obligors has knowledge of any facts which would
give rise to any claim, public or private, of violation of Environmental
Laws or damage to the environment emanating from, occurring on or in any
way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such
as could not reasonably be expected to result in a Material Adverse
Effect;
(b) neither of the Obligors has (i) stored any Hazardous Materials
on real properties now or formerly owned, leased or operated by any of
them or (ii) disposed of any Hazardous Materials in a manner contrary to
any Environmental Laws in the case of each of clauses (i) and (ii) in any
manner that could reasonably be expected to result in a Material Adverse
Effect;
(c) all buildings on all real properties now owned, leased or
operated by either Obligor are in compliance with applicable Environmental
Laws, except where failure to comply could not reasonably be expected to
result in a Material Adverse Effect; and
(d) Each of the Obligors has obtained all permits, licenses and
other authorizations and has made all filings, registrations and other
submittals which are required of it under all Environmental Laws except to
the extent the failure to have any such permits, licenses or
authorizations or to have made any such filings, registrations or
submittals individually and in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
Section 5.18. Solvency. After giving effect to the transactions
contemplated by this Agreement, each of the Obligors and the Affiliates of the
Company is a solvent entity.
Section 5.19. Disclosure. The Obligors, through their agents, SPP Hambro &
Co. and CoBank ACB, have delivered to the Purchaser a copy of a Private
Placement Memorandum, dated July, 1998 (the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company. On August 1, 1998, the Company entered into the agreements
listed on Schedule 5.19, the effects of which are summarized in such Schedule.
This Agreement, the Memorandum, the documents, certificates or other writings
delivered to the Purchaser by or on behalf of the Obligors in connection with
the transactions contemplated hereby and the financial statements listed in
Schedule 5.4, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which they
were made. Except as disclosed in the Memorandum or in one of the documents,
certificates or other writings identified therein, or in the financial
statements listed in Schedule 5.4, since June 30, 1998 there has been no change
in the financial condition, operations, business, properties or prospects of
either Obligor except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. Except as disclosed in
the Memorandum or there has been no dividend or distribution of any kind
declared, paid or made by the Company since June 30, 1998; there have been
payments made to Members in the ordinary course of business. There is no fact
known to either Obligor that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the Memorandum or in the
other
11
documents, certificates and other writings delivered to the Purchaser by or on
behalf of either Obligor specifically for use in connection with the
transactions contemplated hereby.
SECTION 6. REPRESENTATIONS OF THE PURCHASER.
The Purchaser represents and warrants to the Obligors as follows.
Section 6.1. Purchase for Investment, etc. (a) The Purchaser represents
that it is purchasing the Preferred Securities for its own account or for one or
more separate accounts maintained by it or for the account of one or more
pension or trust funds or for resale to an Institutional Investor in a
transaction which will not require registration of the Preferred Securities
under the Securities Act and not with a view to the distribution thereof;
provided, that the disposition of the Purchaser's or its property shall at all
times be within the Purchaser's or its control. The Purchaser understands that
the Preferred Securities have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Trust is not required to register the Preferred Securities
under the Securities Act.
(b) The Purchaser represents that it is an "accredited investor" within
the meaning of Rule 501 under the Securities Act.
Section 6.2. Source of Funds. The Purchaser represents that at least one
of the following statements is an accurate representation as to each source of
funds (a "Source") to be used by the Purchaser to pay the purchase price of the
Preferred Securities to be purchased by the Purchaser hereunder:
(a) the Source is an "insurance company general account" (as the
term is defined in PTCE 95-60 (issued July 12, 1995)) in respect of which
the reserves and liabilities (as defined by the annual statement for life
insurance companies approved by the National Association of Insurance
Commissioners (the "NAIC Annual Statement")) for the general account
contract(s) held by or on behalf of any employee benefit plan together
with the amount of the reserves and liabilities for the general account
contract(s) held by or on behalf of any other employee benefit plans
maintained by the same employer (or affiliate thereof as defined in PTCE
95-60) or by the same employee organization in the general account do not
exceed 10% of the total reserves and liabilities of the general account
(exclusive of separate account liabilities) plus surplus as set forth in
the NAIC Annual Statement filed with the Purchaser's state of domicile; or
(b) the Source is a separate account that is maintained solely in
connection with the Purchaser's fixed contractual obligations under which
the amounts payable, or credited, to any employee benefit plan (or its
related trust) that has any interest in such separate account (or to any
participant or beneficiary of such plan (including any annuitant)) are not
affected in any manner by the investment performance of the separate
account; or
(c) the Source is either (i) an insurance company pooled separate
account, within the meaning of ▇▇▇▇ ▇▇-▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇), ▇▇
(▇▇) a bank collective
12
investment fund, within the meaning of the PTCE 91-38 (issued June 12,
1991), and no employee benefit plan or group of plans maintained by the
same employer or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account or collective
investment fund and the requirements of ▇▇▇▇ ▇▇-▇ or PTCE 91-38 will be
satisfied with respect to such account's or fund's purchase of the
Preferred Securities; or
(d) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of PTCE 84-14) managed by a "qualified professional
asset manager" or "QPAM" (within the meaning of Part V of the PTCE 84-14),
no employee benefit plan's assets that are included in such investment
fund, when combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate (within
the meaning of Section V(c)(1) of PTCE 84-14) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c) and
(g) of PTCE 84-14 are satisfied, neither the QPAM nor a Person controlling
or controlled by the QPAM (applying the definition of "control" in Section
V(e) of PTCE 84-14) owns a 5% or more interest in the Trust and (i) the
identity of such QPAM, (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the
Trust in writing pursuant to this Subsection (d) and (iii) the
requirements of PTCE 84-14 will be satisfied with respect to such fund's
purchase of the Preferred Securities; or
(e) the Source is a governmental plan; or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan," "governmental
plan" and "separate account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
SECTION 7. INFORMATION AS TO THE OBLIGORS.
Section 7.1. Financial and Business Information. The Obligors shall
deliver to the Holder of Preferred Securities that is an Institutional Investor:
(a) Quarterly Statements of the Company. As soon as available and in
any event within sixty (60) days after the end of each quarterly fiscal
period (except the last) of each fiscal year of the Company, duplicate
copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such quarter, and
(2) consolidated statements of income of the Company and its
Subsidiaries for such quarterly period, and (in the case of the
second and third quarters) for the portion of the fiscal year ending
with such quarter, in each case setting forth in comparative form
the figures for the corresponding period of the
13
preceding fiscal year, all in reasonable detail and certified as
complete and correct by an authorized financial officer of the
Company;
(b) Annual Statements of the Company. As soon as available and in
any event within 120 days after the close of each fiscal year of the
Company, duplicate copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such fiscal year, and
(2) consolidated statements of income and retained earnings
and cash flows of the Company and its Subsidiaries for such fiscal
year,
in each case setting forth in comparative form the consolidated figures for the
preceding fiscal year, all in reasonable detail and accompanied by an opinion
thereon, unqualified as to scope limitations imposed by the Company, of a firm
of independent public accountants of recognized national standing selected by
the Company to the effect that the consolidated financial statements have been
prepared in accordance with U.S. GAAP consistently applied (except for noted
changes in application in which such accountants concur) and present fairly the
financial condition of the Company and its Subsidiaries and that the examination
of such accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards and accordingly,
includes such tests of the accounting records and such other auditing procedures
as were considered necessary in the circumstances;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of
the Trust or the Company or any Subsidiary;
(d) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Trust or the Company to securities holders generally and of
each regular or periodic report, and any registration statement or
prospectus filed by the Trust or the Company or any Subsidiary with the
Securities and Exchange Commission or any successor agency, and copies of
any orders in any proceedings to which the Trust or the Company or any of
its Subsidiaries is a party, issued by any Governmental Authority;
(e) Requested Information. With reasonable promptness, such other
data and information as any such Institutional Investor may reasonably
request;
(f) Officers' Certificates. Within the periods provided in
paragraphs (a) and (b) above, a certificate of an authorized financial
officer of the Company stating that such officer has reviewed the
provisions of this Agreement and the Subordinated Loan Agreement and
setting forth: (i) the information and computations (in sufficient detail)
required in order to establish whether the Company was in compliance with
the requirements of Sections 7.02, 7.03, 7.07, 7.08, 7.09, 7.10, 7.12,
7.13, 7.15 and 7.16 of the Subordinated Loan Agreement, at the end of the
period covered by the financial statements then being furnished, (ii)
whether there existed as of the date of such financial statements and
whether, to the best of such officer's knowledge, there exists on the date
of the certificate or existed at any time during the period covered by
such financial
14
statements any Default or Event of Default or Suspension Event under the
Subordinated Loan Agreement and, if any such condition or event existed
during such period or then exists on the date of the certificate,
specifying the nature and period of existence thereof and the action the
Company has taken, is taking and proposes to take with respect thereto;
and (iii) without limiting the generality of the foregoing, a specific
statement that the Company is on the date of such certificate, and was at
all times during the period covered by such financial statements, in
compliance with the provisions of Section 7.02 of the Subordinated Loan
Agreement.
(g) Accountants' Reports on Compliance. Within the period provided
in paragraph (b) above, an accountants' report on compliance from the
accountants who render an opinion with respect to such financial
statements, stating whether in making their audit, such accountants have
become aware of any failure to comply with the terms; covenants,
provisions or conditions of the Subordinated Loan Agreement insofar as any
such terms or provisions pertain to or involve accounting matters and if
any such condition or came to their attention, specifying the nature and
period of existence thereof (it being understood that the accountants'
audit was not directed primarily toward obtaining knowledge of such
noncompliance);
(h) Notice of Default or Event of Default or Suspension Event.
Immediately upon becoming aware of the existence of any condition or event
which constitutes any Default or Event of Default or Suspension Event
under the Subordinated Loan Agreement, a written notice specifying the
nature and period of existence thereof and what action the Company is
taking or proposes to take with respect thereto; and
(i) Notice of Claimed Default. Immediately upon becoming aware that
the holder or holders of any evidences of indebtedness for borrowed money
of the Company andlor one or more Subsidiaries aggregating $1,000,000 or
more has or have given notice or taken any other action with respect to a
claimed default, a written notice specifying the notice given or action
taken by such holder or holders and the nature of the claimed default, and
what action the Company is taking or proposes to take with respect
thereto.
Section 7.2. Inspection. Without limiting the foregoing, the Company will
permit any Holder of Preferred Securities which is an Institutional Investor (or
such Persons as such Holder may designate) to visit and inspect, under the
Company's guidance, any of the properties of the Company or any Subsidiary, to
examine all their books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers, employees, and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss with any such Holder the finances and affairs of the Company and its
Subsidiaries) all at such reasonable times and as often as may be reasonably
requested. During any period in which a Default or Event of Default has occurred
and is continuing under the Subordinated Loan Agreement, the Company shall pay
or reimburse any such Holder for expenses which it may incur in connection with
any such visitation or inspection, otherwise the Company shall not be required
to pay or reimburse such expenses. It is understood and agreed that the
foregoing inspection rights in no event shall extend to customer orders,
positions, reports, or similar records.
15
SECTION 8. COVENANTS.
The Trust and the Company jointly and severally covenant that so long as
any of the Preferred Securities are outstanding:
Section 8.1. Existence. (a) The Trust will at all times preserve and keep
in full force and effect its existence as a statutory Delaware business trust
and qualify and maintain its qualification to do business and good standing in
any jurisdiction where failure to do so would have a Material Adverse Effect.
The Trust will at all times preserve and keep in full force and effect all
rights and franchises of the Trust, unless the termination of or failure to
preserve and keep in full force and effect such right or franchise would not
have a Material Adverse Effect.
(b) The Company will preserve and keep in force and effect, and the
Company will cause each Subsidiary to preserve and keep in force and effect, its
legal existence as a cooperative marketing association and all licenses and
permits necessary to the proper conduct of its business, provided that the
foregoing shall not prevent any transaction permitted by Section 7.03 of the
Subordinated Loan Agreement.
Section 8.2. Ownership of the Trust. The Company will at all times own
100% of the Common Securities of the Trust (subject to the provisions of the
Trust Agreement) free and clear of any Lien.
Section 8.3. Insurance. The Obligors will maintain, and the Company will
cause each Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties; it being
understood and agreed that neither of the Obligors nor any Subsidiary maintains
surety bonds or similar misappropriation insurance with respect to employees and
that accounts of customers are insured only when required by law and nothing
herein shall be deemed to require either Obligor or any Subsidiary to carry any
such insurance.
Section 8.4. Taxes, Claims for Labor and Materials, Compliance with Laws.
The Obligors will promptly pay and discharge, and the Company will cause each
Subsidiary promptly to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon either Obligor or any such
Subsidiary, respectively, or upon or in respect of all or any part of the
property or business of either Obligor or any such Subsidiary, all trade
accounts payable in accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might become a lien or
charge upon any property of such Obligor or such Subsidiary; provided an Obligor
or such Subsidiary shall not be required to pay any such tax, assessment,
charge, levy, account payable or claim if (i) the validity, applicability or
amount thereof is being contested in good faith by appropriate actions or
proceedings which will prevent the forfeiture or sale of any property of such
Obligor or such Subsidiary or any material interference with the use thereof by
such Obligor or such Subsidiary, and (ii) such Obligor or such Subsidiary shall
set aside on its books, reserves reasonably deemed by it to be adequate with
respect thereto. The Obligors will promptly comply and the Company will cause
each Subsidiary to comply with all laws and ordinances to which it is subject,
including without limitation, and as applicable, the Occupational Safety and
Health Act of 1970, ERISA and all
16
laws, ordinances, governmental rules and regulations relating to environmental
protection in all applicable jurisdictions, unless the violation of such laws,
ordinances, rules or regulations would not have a Material Adverse Effect.
Section 8.5. Regulatory Compliance. The Obligors will and the Company will
cause each of its Subsidiaries to keep and maintain in good standing and in full
force and effect all licenses, registrations and memberships of the Obligors and
the Subsidiaries and all of their respective officers, directors and
shareholders to the full extent required under applicable law and applicable
rules and regulations.
Section 8.6. Transactions with Affiliates. Neither Obligor or any
Subsidiary will enter into or be a party to, any transaction or arrangement with
any Affiliate (including without limitation the purchase from, sale to or
exchange of property with, or the rendering of any service by or for, any
Affiliate), except in the ordinary course of and pursuant to the reasonable
requirements of the Obligor's or Subsidiary's business and upon fair and
reasonable terms no less favorable to such Obligor or Subsidiary than would
obtain in a comparable arm's-length transaction with a Person other than an
Affiliate.
SECTION 9. EXPENSES, ETC.
Section 9.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Obligors will be obligated, jointly and
severally, to pay all costs and expenses incurred by the Purchaser or other
Holders of a Preferred Security in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement, the Preferred Securities or any document related thereto (whether or
not such amendment, waiver or consent becomes effective), including, without
limitation: (a) the reasonable fees and expenses of the special counsel for the
Purchaser, (b) the costs of obtaining a private placement number from Standard &
Poor's for the Preferred Securities, (c) the costs and expenses (including
reasonable attorneys' fees and the reasonable fees of any other special or
financial advisors) incurred in evaluating, monitoring, enforcing or defending
(or determining whether or how to enforce or defend) any rights under this
Agreement, the Guarantee Agreement, the Expense Agreement, the Trust Agreement,
the Subordinated Loan Agreement, the Subordinated Note or the Preferred
Securities or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with any of such documents, or by
reason of being a Holder of any Preferred Security, and (d) the costs and
expenses incurred in connection with the insolvency or bankruptcy of the Trust
or the Company or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Preferred Securities. The Obligors
will pay, and will save the Purchaser and each other Holder of a Preferred
Security harmless from, all claims in respect of any fees, costs or expenses if
any, of brokers and finders (other than those retained by the Purchaser or other
Holder).
Section 9.2. Survival. The obligations of the Obligors under this Section
9 will survive the payment or transfer of any Preferred Security, the
enforcement, amendment or waiver of any provision of this Agreement, the
Preferred Securities or any document related. thereto, and the termination of
this Agreement.
17
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein or made in writing by
or on behalf of either of the Obligors in connection with the transactions
contemplated hereby shall survive the execution and delivery of this Agreement
and the Preferred Securities, the purchase or transfer by the Purchaser of any
Preferred Security or portion thereof or interest therein and the payment with
respect to any Preferred Security, and may be relied upon by any subsequent
Holder of a Preferred Security, regardless of any investigation made at any time
by or on behalf of such Purchaser or any other Holder of a Preferred Security.
All statements contained in any certificate or other instrument delivered by or
on behalf of either of the Obligors pursuant to this Agreement shall be deemed
representations and warranties of such Obligor under this Agreement. Subject to
the preceding sentence, this Agreement and the Preferred Securities and the
other documents referred to herein embody the entire agreement and understanding
between the Purchaser and the Obligors and supersede all prior agreements and
understandings relating to the subject matter hereof.
SECTION 11. AMENDMENT AND WAIVER.
Section 11.1. Requirements. This Agreement may be amended, and the
observance of any term or provision hereof may be waived (either retroactively
or prospectively), with (and only with) the written consent of the Obligors and
the Holders of at least 66-2/3% of the outstanding Liquidation Preference of the
Preferred Securities except that (a) no amendment or waiver of any of the
provisions of Section 1,2,3,4,5,6, or 15 hereof, or any defined term (as it is
used therein), will be effective as to the Purchaser unless consented to by the
Purchaser in writing, and (b) no such amendment or waiver may, without the
written consent of the holder of each Preferred Security at the time outstanding
affected hereby, (i) change the percentage of the Liquidation Preference of the
Preferred Securities the holders of which are required to consent to any such
amendment or waiver or (ii) amend this Section 11 or Section 14.
Section 11.2. Solicitation of Holders of Preferred Securities.
(a) Solicitation. The Trust will provide each Holder of the Preferred
Securities (irrespective of the number of Preferred Securities then owned by
it) with sufficient information, sufficiently far in advance of the date a
decision is required, to enable such Holder to make an informed decision with
respect to any proposed amendment, waiver or consent in respect of any of the
provisions hereof or of the Preferred Securities. The Trust will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 11 to each Holder of
outstanding Preferred Securities promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the requisite
Holders of Preferred Securities.
(b) Payment. Neither Obligor will directly or indirectly pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any Holder of Preferred Securities
as consideration for or as an inducement to the entering into by any such Holder
of Preferred Securities of any waiver or amendment of any of the terms and
provisions hereof unless such remuneration is concurrently paid, or security is
18
concurrently granted, on the same terms, ratably to each such Holder of
Preferred Securities then outstanding even if such Holder did not consent to
such waiver or amendment.
Section 11.3. Binding Effect, etc. Any amendment or waiver consented to as
provided in this Section 11 applies equally to all Holders of Preferred
Securities and is binding upon them and upon each future Holder of any Preferred
Security and upon the Obligors without regard to whether such Preferred Security
has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant or agreement not
expressly amended or waived or impair any right consequent thereon. No course of
dealing between either Obligor and the Holder of any Preferred Security nor any
delay in exercising any rights hereunder shall operate as a waiver of any rights
of any Holder of such Preferred Security. As used herein and in the Preferred
Securities, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
Section 11.4. Preferred Securities Held by Obligor, etc. Solely for the
purpose of determining whether the Holders of the requisite percentage of the
aggregate Liquidation Preference of Preferred Securities then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement, the Preferred Securities, the Trust Agreement, the Subordinated Loan
Agreement, the Subordinated Note, the Expense Agreement or the Guarantee
Agreement (each a "Transaction Document") or have directed the taking of any
action provided herein or in any other Transaction Document to be taken upon the
direction of the Holders of a specified percentage of the aggregate Liquidation
Preference of Preferred Securities then outstanding, Preferred Securities
directly or indirectly owned by either Obligor or any Affiliate of either
Obligor shall be deemed not to be outstanding.
SECTION 12. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by a recognized overnight delivery service (with charges prepaid). Any such
notice must be sent:
(i) if to the Purchaser or its nominee, to the Purchaser or
nominee at the address specified for such communications in Schedule
B, or at such other address as the Purchaser or nominee shall have
specified to the Obligors in writing,
(ii) if to any other Holder of any Preferred Security, to such
Holder at such address as such other Holder shall have specified to
the Obligors in writing, or
(iii) if to the Trust or the Company, to ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, to the
attention of the Chief Financial Officer, or at such other address
as the Trust or the Company shall have specified to the Holder of
each Preferred Security in writing.
Notices under this Section 12 will be deemed given only when
actually received.
19
SECTION 13. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by the Purchaser at the Closing (except the
Preferred Securities themselves), and (c) financial statements, certificates and
other information previously or hereafter furnished to the Purchaser, may be
reproduced by the Purchaser by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and the Purchaser may
destroy any original document so reproduced. The Obligors agree and stipulate
that, to the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by the Purchaser in the regular course of business) and
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 13 shall not prohibit an
Obligor or any other Holder of Preferred Securities from contesting any such
reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
SECTION 14. CONFIDENTIAL INFORMATION.
For the purposes of this Section 14, "Confidential Information" means all
information delivered to the Purchaser by or on behalf of either Obligor or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified at the time of receipt by
the Purchaser or otherwise prior to the execution of this Agreement, as being
confidential information of such Obligor or such Subsidiary; provided, that such
term does not include information (a) which was publicly known or otherwise
known to the Purchaser prior to the time of such disclosure, (b) which
subsequently becomes publicly known through no act or omission by the Purchaser
or any Person acting on the Purchaser's behalf, (c) which otherwise becomes
known to the Purchaser other than through disclosure by an Obligor or any
Subsidiary or Affiliate, or (d) which constitutes financial statements delivered
to the Purchaser under Section 7.1 that are otherwise publicly available. The
Purchaser will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by the Purchaser in good faith to protect
confidential information of third parties delivered to the Purchaser; provided,
that the Purchaser may deliver or disclose Confidential Information to (i) the
Purchaser's directors, trustees, officers, employees, agents, attorneys,
financial advisors and other professional advisors (to the extent such
disclosure reasonably relates to the administration, maintenance or analysis of
the investment represented by the Purchaser's Preferred Securities), (ii) any
other Holder of any Preferred Security, (iii) any Institutional Investor to
which the Purchaser sells or offers to sell the Preferred Security or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 14), (iv) any Person from which the Purchaser offers to purchase
any security of the Trust or the Company, (v) any federal or state regulatory
authority having jurisdiction over the Purchaser, (vi) the National Association
of Insurance Commissioners (the "NAIC"), any rating agency which generally
requires access to information about the Purchaser's investment portfolio, or
any similar organization or (vii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to the Purchaser, or (x) in response
to any
20
subpoena or other legal process, (y) in connection with any litigation to which
the Purchaser is a party, or (z) if an Event of Default has occurred under the
Trust Agreement, to the extent the Purchaser may reasonably determine such
delivery and disclosure to be necessary or appropriate in the enforcement or for
the protection of the rights and remedies under the Purchaser's Preferred
Securities, this Agreement, the Guarantee Agreement, the Subordinated Loan
Agreement, the Expense Agreement, the Subordinated Note and the Trust Agreement.
Each Holder of a Preferred Security, by its acceptance of a Preferred Security,
will be deemed to have agreed to be bound by and to be entitled to the benefits
of this Section 14 as though it were a party to this Agreement. On reasonable
request by an Obligor in connection with the delivery to any Holder of a
Preferred Security of information required to be delivered to such Holder under
this Agreement or requested by such Holder (other than a Holder that is a party
to this Agreement or its nominee), such Holder will enter into an agreement with
the Obligors embodying the provisions of this Section 14.
SECTION 15. SUBSTITUTION OF THE PURCHASER.
The Purchaser shall have the right to substitute any one of the
Purchaser's affiliates as the purchaser of the Preferred Securities which the
Purchaser has agreed to purchase hereunder, by written notice to the Trust,
which notice shall be signed by both the Purchaser and such affiliate, shall
contain such affiliate's agreement to be bound by this Agreement and shall
contain a confirmation by such affiliate of the accuracy with respect to it of
the representations set forth in Section 6. Upon receipt of such notice,
wherever the word "Purchaser" is used in this Agreement (other than in this
Section 15), such word shall be deemed to refer to such affiliate in lieu of the
Purchaser. In the event that such affiliate is so substituted as a purchaser
hereunder and such affiliate thereafter transfers to the Purchaser all. of the
Preferred Securities then held by such affiliate, upon receipt by the Trust of
notice of such transfer, wherever the word "Purchaser" is used in this Agreement
(other than in this Section 15), such word shall no longer be deemed to refer to
such affiliate, but shall refer to the Purchaser, and the Purchaser shall have
all the rights of an original holder of the Preferred Securities under this
Agreement.
SECTION 16. MISCELLANEOUS.
Section 16.1 Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent Holder of a Preferred Security) whether so
expressed or not.
Section 16.2. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 16.3. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant where any provision herein refers to
21
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
Section 16.4. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof each signed by less than all, but together signed by all, of the
parties hereto.
Section 16.5. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.
Section 16.6. Consent to Jurisdiction and Service; Waiver of Trial by
Jury. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE OBLIGORS HEREBY
ABSOLUTELY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF ANY FEDERAL COURT
LOCATED IN SAID JURISDICTION IN CONNECTION WITH ANY ACTIONS OR PROCEEDINGS
BROUGHT AGAINST IT BY ANY HOLDER ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE PREFERRED SECURITIES OR ANY OTHER DOCUMENT CONTEMPLATED HEREBY AND HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING
MAY BE HEARD and DETERMINED IN ANY SUCH COURT. EACH OF THE OBLIGORS HEREBY
WAIVES AND AGREES NOT TO ASSERT IN ANY SUCH ACTION OR PROCEEDING I.N EACH CASE,
TO THE FULLEST EXTENT PERMI'I 1'ED BY APPLICABLE LAW, ANY CLAIlM THAT (A) IT IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, (B) IT IS IMMUNE
FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT
TO IT OR ITS PROPERTY, (C) ANY SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, OR (D) THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE
ENFORCED IN OR BY ANY SUCH COURT. IN ANY SUCH ACTION OR PROCEEDING, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE OBLIGORS HEREBY
ABSOLUTELY AND IRREVOCABLY WAIVES TRIAL BY JURY AND PERSONAL IN HAND SERVICE OF
ANY SUMMONS, COMPLAINT, DECLARATION OR OTHER PROCESS AND HEREBY ABSOLU'1 ▇▇▇ AND
IRREVOCABLY AGREES THAT THE SERVICE MAY BE MADE BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO IT AT ITS ADDRESS SET FORTH IN OR
FURNISHED PURSUANT TO THE PROVISIONS OF THIS AGREEMENT, OR BY ANY OTHER MANNER
PROVIDED BY LAW. ANYTHING HEREINBEFORE TO THE CONTRARY NOTWITHSTANDING, ANY
HOLDER MAY ▇▇▇ AN OBLIGOR IN ANY OTHER APPROPRIATE JURISDICTION AND ANY PARTY
MAY ▇▇▇ ANY OTHER. PARTY ON A JUDGMENT RENDERED BY ANY COURT PURSUANT TO THE
PROVISIONS OF THE FIRST SENTENCE OF THIS SECTION 16.6 IN THE COURTS OF ANY
COUNTRY, STATE OF THE UNITED STATES OR PLACE SUCH OTHER PARTY OR ANY OF ITS
22
PROPERTY OR ASSETS MAY FOUND OR IN ANY OTHER APPROPRIATE JURISDICTION.
23
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this letter and return it to the
Company, whereupon this letter shall become a binding agreement among you, the
Company and the Trust.
VERY TRULY YOURS,
DIAMOND WALNUT GROWERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title:Vice President and Chief
Financial Officer
DW CAPITAL TRUST I
By: Wilmington Trust Company, not
in its individual capacity but
solely as Property Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Vice President
The foregoing is hereby
agreed to as of the date hereof.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: __________________________________________
Name:
Title:
24
SCHEDULE A
PREFERRED SECURITIES PURCHASE AGREEMENT
SCHEDULE OF DEFINED TERMS
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
"Administrator" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, acting in his or
her capacity as administrator of the Trust.
"Administrator's Certificate" means a certificate of an Administrator.
"Affiliate" shall have the meaning given to such term in the Trust
Agreement.
"Agreement" means this Preferred Securities Purchase Agreement dated as of
August 20, 1998, by and among the Trust, the Company and the Purchaser.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which commercial banks in The City of New York, New York, or Stockton,
California, are required or authorized to be closed.
"Capitalized Lease" means, at any time, any lease the obligations for
Rentals with respect to which is required to be capitalized on a balance sheet
of the lessee in accordance with U.S. GAAP.
"Capitalized Rentals" means, as of the date of any determination, the
amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which the Company is a lessee would be reflected as a
liability on a consolidated balance sheet of the Company in accordance with U.S.
GAAP.
"Closing" is defined in Section 3.
"Closing Date" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as the same may be amended
from time to time, and the rules and regulations promulgated thereunder, as from
time to time in effect.
"Common Securities" means the Common Securities (liquidation amount
$464,000) of the Trust issued to the Company.
"Company" shall mean Diamond Walnut Growers, Inc., an incorporated
non-stock cooperative markets association organized under the Food and
Agricultural Code of the State of California and any successor to substantially
all of the assets and business of said Diamond Walnut Growers, Inc.
"Confidential Information" is defined in Section 14.
Schedule A
(Preferred Securities Purchase Agreement)
"Consolidated Current Liabilities" means, as of the date of any
determination thereof, such liabilities of the Company and its Subsidiaries, on
a consolidated basis, as shall be determined in accordance with U.S. GAAP to
constitute current liabilities.
"Debt" shall have the meaning given to such term in the Subordinated Loan
Agreement.
"Default Rate" shall have the meaning given to such term in the
Subordinated Loan Agreement.
"Delaware Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Delaware Code Section 3801 et seq., as it may be amended from time to time.
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time, and the rules and regulations promulgated
thereunder as from time to time in effect.
"ERISA Affiliate" means with respect to any Person, any trade or business
(whether or not incorporated) that is a member of the group of which such Person
is a member or is treated as a single employer together with such Person under
Section 414 of the Code.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
dated as of the date hereof between the Company and the Trust.
"Governmental Authority" means
(a) the government of (i) the United States of America and any State
or other political subdivision thereof, or (ii) any jurisdiction in which
the Company conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guarantee" or "Guaranties" shall have the meaning given to each of such
terms in the Subordinated Loan Agreement.
"Guarantee Agreement" means the Guarantee Agreement, dated as of the date
hereof, executed by the Company for the benefit of the holders of Preferred
Securities.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be
A-2
required or the generation, manufacture, refining, production, processing,
treatment, storage, handling, transportation, transfer, use, disposal, release,
discharge, spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable law (including, without limitation,
asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls).
"Holder" means, with respect to any Preferred Security, the Person in
whose name such Preferred Security is registered in the Securities Register.
"Institutional Investor" means (a) the original Purchaser of a Preferred
Security and (b) any bank, trust company, savings and loan association or other
financial institution, any pension plan, any trust fund, any investment fund,
any investment company, any insurance company, any broker or dealer, or any
other similar financial institution or entity, regardless of legal form.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capitalized Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements), and any agreement to give any such Lien.
"Liquidation Preference" means the stated amount of $1,000,000 per
Preferred Security and the stated amount of $464,000 per Common Security, as
applicable, as may be reduced from time to time as contemplated by Section 4.2
of the Trust Agreement.
"Loan" shall have the meaning given to such term in the Subordinated Loan
Agreement.
"Make-Whole Loan Amount" shall have the meaning given to such term in the
Subordinated Loan Agreement.
"Material" when capitalized, means material in relation to the business,
operations, affairs, financial condition, assets, properties or prospects of (a)
the Trust or (b) the Company and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets, or properties of the
Trust or of the Company and its Subsidiaries taken as a whole, or (b) the
ability of the Trust to perform its obligations under this Agreement or the
Preferred Securities or of the Company to perform its obligations under the
Guarantee Agreement, the Subordinated Loan Agreement, the Expense Agreement, the
Subordinated Note or the Trust Agreement, or (c) the validity or enforceability
of this Agreement, the Guarantee Agreement, the Subordinated Loan Agreement, the
Expense Agreement, the Subordinated Note, the Trust Agreement or the Preferred
Securities.
"Multiemployer Plan" means any Plan which is a "multiemployer plan" (as
such term is defined in section 4001 (a) (3) of ERISA).
A-3
"Obligors" is defined in the introduction to this Agreement.
"Officer's Certificate" means a certificate of a Senior Financial Officer
of the Company or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PTCE" means a Prohibited Transaction Class Exemption issued by the
Department of Labor.
"Past Due Amounts" shall have the meaning given to such term in the
Subordinated Loan Agreement.
"Person" means an individual, partnership, corporation, trust,
association, unincorporated organization, limited liability company, limited
liability partnership, or a government or agency or political subdivision
thereof.
"Plan" means an "employee pension benefit plan" (as defined in section
3(2) of ERISA) subject to Title IV of ERISA which is or, within the preceding
five years, has been established or maintained, or to which contributions are
or, within the preceding five years, have been made or required to be made, by
the Company or any ERISA Affiliate or with respect to which the Company or any
ERISA Affiliate may have any Iiability.
"Preferred Securities" means the 7.20% Cumulative Recourse Offered
Preferred Securities (Liquidation Preference $1,000,000 per Preferred Security)
of the Trust issued and sold pursuant to this Agreement.
"property" or "properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, ▇▇▇▇▇▇ or
inchoate.
"Purchaser" means the purchaser specified in Schedule B.
"QPAM" is defined in Section 6.2(d).
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
"Rentals" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Company or any Subsidiary as lessee or sublessee under
a lease of real or personal property, but shall be exclusive of any amounts
required to be paid by the Company or any Subsidiary (whether or not designated
as rents or additional rents) on account of maintenance, repairs, insurance,
taxes and similar charges. Fixed rents under any so-called "percentage leases"
shall be computed solely on the basis of the minimum rents, if any, required to
be paid by the lessee regardless of sales volume or gross revenues.
A-4
"Securities Act" means the Securities Act of 1933, as amended.
"Security" means security as defined in section 2(1) of the Securities
Act.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company, as the case may be.
"Source" is defined in Section 6.2.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Subordinated Loan Agreement" means the Subordinated Loan Agreement dated
as of the date hereof between the Company and the Trust.
"Subordinated Note" means the Company's 7.20% subordinated promissory note
due August 20, 2011 issued in an original principal amount of $15,464,000
pursuant to the Subordinated Loan Agreement.
The term "subsidiary" means, as to any particular parent corporation, any
corporation of which more than 50% (by number of votes) of the outstanding stock
(or comparable equity interest having ordinary voting power for the election of
the Board of Directors or administrators, as applicable) shall be owned by such
parent corporation and/or one or more corporations which are themselves
subsidiaries of such parent corporation. The term "Subsidiary" shall mean a
subsidiary of the Company. For the avoidance of doubt, the Trust (as defined in
the Trust Agreement) is not a Subsidiary.
"Trust Agreement" means the Trust Agreement dated as of the date hereof
between the Company, Wilmington Trust Company, as Property Trustee and Delaware
Trustee, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, not in their individual capacity
but solely as Administrators of the Trust.
"Trust Securities" means the Common Securities and the Preferred
Securities.
"Trustee" means Wilmington Trust Company, a Delaware banking corporation.
"U.S. GAAP" means generally accepted accounting principles in effect in
the United States at the time of determination.
A-5
SCHEDULE B
INFORMATION RELATING TO PURCHASER
NAME AND ADDRESS PRINCIPAL AMOUNT
OF PURCHASER OF SECURITIES
TO BE PURCHASED
THE PRUDENTIAL INSURANCE $15,000,000
COMPANY OF AMERICA
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Payments
All payments on or in respect of the Securities to be by bank
wire transfer of Federal or other immediately available funds
(identifying each payment as 7.20% Cumulative Recourse
Offered Preferred Securities of DW Capital Trust I, PPN
23339 AA2, redemption, premium or distribution) to:
Bank of ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Notices
All notices with respect to payments to:
The Prudential Insurance Company
of America
Three Gateway Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Manager, ▇▇▇▇▇▇▇▇ and Collection
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Recipient of telephonic prepayment notices:
Manager, Trade Management
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Name of Nominee in which Securities are to be issued: None
SCHEDULE B
(to Preferred Securities Purchase Agreement)
Instruction regarding delivery of Securities:
The Prudential Capital Group
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
B-2
SCHEDULE 5.3
TO THE PREFERRED SECURITIES PURCHASE AGREEMENT
COMPANY'S
AFFILIATE OF THE TRUST AND THE JURISDICTION OF PERCENTAGE
COMPANY INCORPORATION OWNERSHIP
--------------------------------- --------------- ----------
Sun-Diamond Growers of California California 32.67%
(direct subsidiary)
(direct subsidiary)
Sun-Land Products of California California 32.67%
(indirect subsidiary)
SCHEDULE 5.4
TO THE PREFERRED SECURITIES PURCHASE AGREEMENT
Financial Statements (including in the Company's 1997 Annual Report):
Statements of Operation of the Company for the years ended July 31, 1997
and 1996.
Statements of Current Member Accounts of the Company for the years ended
July 31, 1997 and 1996.
Balance Sheets of the Company as of July 31, 1997 and 1996.
Statements of Cash Flows of the Company for the years ended July 31, 1997
and 1996.
Statements of Members' Equity of the Company for the years ended July 31,
1997 and 1996.
Notes to the Financial Statements.
SCHEDULE 5.10 TO
THE PREFERRED SECURITIES PURCHASE AGREEMENT
Material Trademarks:
Diamond Walnut
Diamond of California
Emerald
SCHEDULE 5.14
TO THE PREFERRED SECURITIES PURCHASE AGREEMENT
Debt:
1. Master Loan Agreement between CoBank, ACB and the Company, dated
January 3, 1996, as supplemented and amended.
2. Credit Agreement between Bank of America National Trust and Savings
Association and the Company, dated February 26, 1998.
3. Member Notes with maturities of less than one year.
4. Guaranty of the Company with respect to certain tax obligations of
Old Sun-Land Products of California, as set forth in the Tax Sharing
Agreement by and between Sun-Diamond, Sun-Land and each Subsidiary,
and each Distributee, dated August 1, 1998.
SCHEDULE 5.19
TO THE PREFERRED SECURITIES PURCHASE AGREEMENT
Agreement and Plan of Subsidiary Formation, Corporate Separation, and
Reorganization, dated August 1, 1998.
The Agreement provides that the ongoing business operations of Old
Sun-Land Products of California ("Sun-Land") are divided into three (3)
separate corporations to provide direct management of individual product
lines by members, including the Company, who own and manage the brands
used by Sun-Land.
Tax Sharing Agreement by and between Sun-Diamond, Sun-Land and each
Subsidiary, and each Distributee, dated August 1, 1998.
The Agreement provides for a tax-sharing arrangement between Sun-Diamond
Growers of California, Old Sun-Land Products of California ("Sun-Land")
and its subsidiaries and the various members who own and manage the brands
used by Sun-Land, including the Company, with respect to taxes owed by
Sun-Land.
TRUST AGREEMENT
among
DIAMOND WALNUT GROWERS, INC.
as Depositor,
WILMINGTON TRUST COMPANY,
as Property Trustee,
WILMINGTON TRUST COMPANY,
as Delaware Trustee,
and
the Administrators named herein
----------------------------------
DW CAPITAL TRUST I
----------------------------------
Dated as of August 19, 1998
TABLE OF CONTENTS
Page
Parties....................................................................................................... 1
Recitals...................................................................................................... 1
ARTICLE I INTERPRETATION AND DEFINITIONS..................................................... 1
Section 1.1. Interpretation................................................................. 1
Section 1.2. Certain Definitions............................................................ 2
ARTICLE II THE TRUST.......................................................................... 9
Section 2.1. Name........................................................................... 9
Section 2.2. Office of the Delaware Trustee; Principal Place of Business.................... 9
Section 2.3. Initial Contribution of Trust Property; Organizational Expenses................ 9
Section 2.4. Issuance of the Preferred Securities........................................... 9
Section 2.5. Issuance of the Common Securities; Subscription and Purchase of
Subordinated Note ............................................................. 10
Section 2.6. Declaration of Trust........................................................... 10
Section 2.7. Authorization of Enter into Certain Transactions............................... 10
Section 2.8. Assets of Trust................................................................ 13
Section 2.9. Title to Trust Property........................................................ 13
Section 2.10. Classification Matters......................................................... 13
ARTICLE III PAYMENT ACCOUNT.................................................................... 14
Section 3.1. Payment Account................................................................ 14
ARTICLE IV DISTRIBUTIONS...................................................................... 15
Section 4.1. Distributions.................................................................. 15
Section 4.2. Redemption..................................................................... 16
Section 4.3. Distributions to and Subordination of Common Securities........................ 17
Section 4.4. Payment Procedures............................................................. 18
Section 4.5. Tax Returns and Reports........................................................ 18
Section 4.6. Payment of Taxes; Duties of the Trustee........................................ 18
Section 4.7. Payments under Subordinated Loan Agreement or Guarantee
Agreement or Pursuant to Direct Actions...................................... 19
Section 4.8. Liability of the Holder of Common Securities................................... 19
ARTICLE V TRUST SECURITIES CERTIFICATES...................................................... 19
Section 5.1. Initial Ownership.............................................................. 19
Section 5.2. The Trust Securities Certificates.............................................. 19
Section 5.3. Execution and Delivery of Trust Securities Certificates........................ 19
i
Section 5.4. Registration of Transfer and Exchange of Preferred
Securities Certificates........................................................ 19
Section 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates................................................................... 21
Section 5.6. Persons Deemed Holders......................................................... 21
Section 5.7. Access to List of Holders' Names and Addresses................................. 21
Section 5.8. Maintenance of Office or Agency................................................ 21
Section 5.9. Appointment of Paying Agent.................................................... 21
Section 5.10. Ownership of Common Securities by Depositor.................................... 22
Section 5.11. Rights of Holders.............................................................. 22
Section 5.12. Transfer Limitations........................................................... 24
ARTICLE VI ACTS OF HOLDERS.................................................................... 24
Section 6.1. Limitations on Voting Rights................................................... 24
Section 6.2. Acts of Holders................................................................ 25
Section 6.3. Inspection of Records.......................................................... 25
ARTICLE VII REPRESENTATIONS AND WARRANTIES..................................................... 26
Section 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee............................................................... 26
Section 7.2. Representations and Warranties of Depositor.................................... 27
ARTICLE VIII THE Trustees; THE ADMINISTRATORS................................................... 27
Section 8.1. Certain Duties and Responsibilities............................................ 27
Section 8.2. Certain Notices................................................................ 28
Section 8.3. Certain Rights of Property Trustee............................................. 28
Section 8.4. Not Responsible for Recitals or Issuance of Securities......................... 30
Section 8.5. May Hold Securities............................................................ 30
Section 8.6. Compensation; Indemnity Fees................................................... 31
Section 8.7. Corporate Property Trustee Required; Eligibility of
Trustees and Administrators.................................................... 32
Section 8.8. Co-Trustees and Separate Trustee............................................... 32
Section 8.9. Resignation and Removal; Appointment of Successor.............................. 33
Section 8.10. Acceptance of Appointment by Successor......................................... 34
Section 8.11. Merger, Conversion, Consolidation or Succession to Business.................... 35
Section 8.12. Preferential Collection of Claims Against Depositor or Trust................... 35
Section 8.13. Reports by Property Trustee.................................................... 35
Section 8.14. Number of Trustees............................................................. 36
Section 8.15. Delegation of Power............................................................ 36
Section 8.16. Appointment of Administrators.................................................. 36
ARTICLE IX TERMINATION AND MERGER............................................................. 37
Section 9.1. Termination Upon Expiration Date............................................... 37
Section 9.2. Early Termination.............................................................. 37
ii
Section 9.3. Termination.................................................................... 38
Section 9.4. Liquidation.................................................................... 38
Section 9.5. No Mergers, Consolidations, Amalgamations or Replacements
of the Trust................................................................... 39
ARTICLE X MISCELLANEOUS PROVISIONS........................................................... 39
Section 10.1. Limitation of Rights of Holders................................................ 39
Section 10.2. Amendment...................................................................... 39
Section 10.3. Separability................................................................... 40
Section 10.4. Governing Law.................................................................. 40
Section 10.5. Payments Due on Non-Business Day............................................... 40
Section 10.6. Successors..................................................................... 40
Section 10.7. Headings....................................................................... 40
Section 10.8. Reports, Notices and Demands................................................... 40
Section 10.9. Agreement Not to Petition...................................................... 41
Section 10.10. Acceptance of Terms of Trust Agreement, Guarantee Agreement
and Subordinated Loan Agreement................................................ 41
Section 10.11. Counterparts................................................................... 42
Signature..................................................................................................... 43
EXHIBIT A (CERTIFICATE OF TRUST OF DW CAPITAL TRUST I)........................................................ A-1
EXHIBIT B (FORM OF CERTIFICATE EVIDENCING COMMON SECURITIES).................................................. B-1
EXHIBIT C (FORM OF CERTIFICATE EVIDENCING PREFERRED SECURITIES)............................................... C-1
EXHIBIT D (PRIVATE PLACEMENT LEGEND).......................................................................... D-1
iii
TRUST AGREEMENT
TRUST AGREEMENT dated as of August 19, 1998 among (i) DIAMOND WALNUT
GROWERS, INC., an incorporated non-stock cooperative marketing association
organized under the Food and Agricultural Code of the State of California
(including any successors or assigns, the "Depositor"), (ii) WIILMINGTON TRUST
COMPANY, a banking corporation organized under the laws of the State of
Delaware, as property trustee (in such capacity, the "Property Trustee" and, in
its separate corporate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) WILMINGTON TRUST COMPANY, a banking corporation organized under
the laws of the State of Delaware, as Delaware trustee (the "Delaware Trustee")
(the Property Trustee and the Delaware Trustee collectively, the "Trustees" ),
and (iv) ▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual, and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, an individual, each
of whose address is c/o Diamond Walnut Growers, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇ (each, together with any
successor thereto, an "Administrator" and, collectively, the "Administrators").
WITNESSETH:
WHEREAS, the Depositor and the Trustees hereby declare and create a
business trust pursuant to the Delaware Business Trust Act (as hereinafter
defined) by the execution and filing by the Delaware Trustee with the Secretary
of State of the State of Delaware of the Certificate of Trust, filed on August
18, 1998 and effective as of August 19, 1998, attached as Exhibit A; and
WHEREAS, the Depositor and the Trustees desire to enter into this Trust
Agreement to provide for, among, other things, (i) the issuance 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, (iii) the
acquisition by the Trust from the Depositor of all of the right, title and
interest in the Subordinated Note and (iv) the appointment of the Property
Trustee and the Administrators;
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 parties
and for the benefit of'the Holders (as hereinafter defined), hereby agrees as
follows:
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1 Interpretation. For all purposes of this Trust Agreement,
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) 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 Trust Agreement;
(c) the words "herein", "hereof and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(d) unless the context otherwise requires, any reference to a
statute, rule or regulation refers to the same (including any successor
statute, rule or regulation thereto) as it may be amended from time to
time.
Section 1.2 Certain Definitions. For all purposes of this Trust Agreement,
the following terms shall have the meanings assigned below:
"Act" has the meaning specified in Section 6.2.
"Administrators" has the meaning set forth in the preamble to this Trust
Agreement.
"Affiliate" means any Person (i) which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common control
with, the Depositor, (ii) which beneficially owns or holds 5% or more of any
class of the Voting Stock (as defined in the Subordinated Note Agreement) of the
Depositor, or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Depositor or a Subsidiary as defined in the
Subordinated Note Agreement. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of Voting Stock, by
contract or otherwise.
"Bank" has the meaning specified in the preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having
jurisdiction in .the premises judging 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 applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of such Person or of all or any
substantial part of its property or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive days;
or
(b) the institution by such Person of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or similar official) of such Person or of any
substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its
2
debts generally as they become due and its willingness to be
adjudicated a bankrupt, or the taking of corporate action by such
Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or such committee of such Board of Directors or
officers of the Depositor to which authority to act on behalf of such Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the Trustees.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in The City of New York or Stockton, California
are authorized or required by law or executive order to remain closed, or (c) a
day on which the Property Trustee's Corporate Trust Office is closed for
business.
"Closing Date" has the meaning specified in the Purchase Agreement, which
date is also the date of execution and delivery of this Trust Agreement and the
date of the initial issuance, sale and delivery of the Trust Securities and the
Subordinated Note.
"Common Securities Certificate" means a certificate evidencing the Common
Securities, substantially in the form attached as Exhibit B.
"Common Securities" means the Common Securities entitled to the beneficial
interest in the assets of the Trust, subject to the preferences of the Preferred
Securities, and having the rights provided for in this Trust Agreement,
including the right to receive Distributions and to be redeemed and to receive a
liquidation distribution, subject to the preference on redemption or liquidation
of the Preferred Securities.
"Corporate Trust Office" means the principal office of the Property
Trustee, which on the date hereof is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
"Default" has the meaning specified in the Subordinated Loan Agreement.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 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 Trust Agreement, solely in its capacity as Delaware
Trustee of the Trust and not in its individual capacity, or its successor in
interest in such capacity, or any successor trustee appointed as herein
provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement. "Direct Action" has the meaning specified in Section 5.11(c).
"Discounted Value" means, with respect to the Redemption Amount of any
Preferred Security, the amount obtained by discounting all Remaining Scheduled
Payments with respect to
3
such Redemption Amount from the respective scheduled due dates therefor to the
Settlement Date with respect to such Redemption Amount, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which Distributions on the Preferred Securities are
payable) equal to the Reinvestment Yield with respect to such Preferred
Security.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of Trust Securities as
provided in Section 4.1.
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" 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) the occurrence of a Subordinated Note Event of Default; or
(b) default by the Trust in the payment of any Distribution when it
becomes due and payable after the corresponding payment has been made to
the Trust on the Subordinated Note; or
(c) default by the Trust in the payment of any Redemption Amount of
any Trust Security when it becomes due and payable after the corresponding
payment has been made to the Trust on the Subordinated Note; or
(d) default in the performance or breach of any covenant or warranty
of the Trustees in this Trust Agreement (other than a covenant or warranty
a default in the performance or breach of which is described in clause (b)
or (c) above) or of the Trust in the Purchase Agreement and continuation
of any such default or breach for a period of 30 days after the earlier of
(i) a Responsible Officer of the defaulting Trustee obtaining actual
knowledge of such default, and (ii) there having been given, in the manner
provided in Section 10.8, to the defaulting Trustee or Trustees by any
Holder a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the
Property Trustee and a successor Property Trustee has not been appointed
within 90 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Exchange Notes" has the meaning specified in Section 9.2(b).
4
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit E, as amended from time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Guarantee Agreement" means the Guarantee Agreement dated as of August 20,
1998 executed and delivered by the Depositor contemporaneously with the
execution and delivery of this Trust Agreement, for the benefit of the holders
of the Preferred Securities, as amended from time to time.
"Holder" means a Person in whose name a Trust Security or Trust Securities
are registered in the Securities Register.
"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.
"Like Amount" means with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Preference in an amount equal to the
principal amount of the portion of the Subordinated Note to be repaid in
accordance with the Subordinated Loan Agreement, the proceeds of which will be
used to pay the Redemption Amount of such Trust Securities.
"Liquidation Date" means the date on which Exchange Notes are to be
distributed to Holders of Trust Securities in connection with a termination and
liquidation of the Trust pursuant to Section 9.2.
"Liquidation Preference" means the stated amount of $1,000,000 per
Preferred Security and the stated amount of $464,000 per Common Security, as
applicable, as may be reduced from time to time as contemplated by Section 4.2
of the Trust Agreement.
"Loan" has the meaning specified in the Subordinated Loan Agreement
"Make-Whole Loan Amount" shall mean, with respect to any Preferred
Security, an amount equal to the excess, if any, of (i) the Discounted Value of
the Remaining Scheduled Payments with respect to the Redemption Amount of such
Preferred Security over (ii) the Redemption Amount of such Preferred Security
that is to be redeemed pursuant to Section 4.2(b), provided that the Make-Whole
Loan Amount may in no event be less than zero.
"1940 Act" means the Investment Company Act of 1940, as amended.
"Officers' Certificate" means a certificate signed by the President and
Chief Executive Officer, a Senior Vice President or Vice President, and by the
Treasurer, an Associate Treasurer, an Assistant Treasurer, the Controller, the
Secretary or an Assistant Secretary, of the Depositor, and delivered to the
appropriate Trustee; provided, that a certificate with respect to any act or
direction of the Administrators shall be signed by one of the Administrators.
Any Officers' Certificate delivered with respect to compliance with a covenant
or condition provided for in this Trust Agreement shall include:
5
(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
(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 shall be
reasonably acceptable to the Property Trustee.
"Past Due Distribution Rate" has the meaning specified in Section 4.1.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.9 and, initially, the Bank.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its trust department
for the benefit of the Holders in which all amounts paid in respect of the
Subordinated Note will be held and from which the Property Trustee, through the
Paying Agent, shall make payments to the Holders in accordance with Sections 4.1
and 4.2.
"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.
"Preferred Securities Certificate" means a certificate evidencing
Preferred Securities, substantially in the form attached as Exhibit C.
"Preferred Security" means the 7.20% Cumulative Recourse Offered Preferred
Securities representing an undivided beneficial interest in the assets of the
Trust, having an original Liquidation Preference of $1,000,000 per security and
an original aggregate Liquidation Preference of $15,000,000 and having the
rights provided therefor in this Trust Agreement, including the right to receive
Distributions and Redemption Amounts as provided herein.
"Property Trustee" means the Person identified as the "Property Trustee"
in the preamble to this Trust Agreement, solely in its capacity as Property
Trustee of the Trust and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as herein
provided.
6
"Purchase Agreement" means the Preferred Securities Purchase Agreement
dated as of August 20, 1998, among the Trust, the Depositor and the Purchaser
named in Schedule B thereto.
"Redemption Amount" means, with respect to any Preferred Security, the
portion of the Liquidation Preference which shall be scheduled for redemption in
the case of a Scheduled Redemption or called for redemption in the case of an
Unscheduled Redemption.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for redemption thereof, which shall be for each
Scheduled Redemption the date scheduled therefor as provided in Section 4.2(a)
and for each Unscheduled Redemption the date notified therefor as provided in
Section 4.2(c).
"Reinvestment Yield" means, with respect to the Redemption Amount of any
Preferred Security, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date, with respect to the Redemption Amount, on the
display designated as "Page 678" on the Bridge/Telerate Market Service (or such
other display as may replace Page 678 on Bridge/Telerate Market Service) for
actively traded US Treasury securities having a maturity equal to the Remaining
Average Life of such Redemption Amount as of such Settlement bate, or (ii) if
such yields are not reported as of such time or the yields reported as of such
time are not ascertainable, the "Treasury Constant Maturity Series Yields"
reported, for the latest day for which such yields have been so reported as of
the second Business Day preceding the Settlement Date with respect to such
Redemption Amount, in Federal Reserve Statistical Release H.15(519) (or any
comparable successor publication) for actively traded US Treasury securities
having a constant maturity equal to the Remaining Average Life of such
Redemption Amount as of such Settlement Date, Such implied yield will be
determined, if necessary, by (i) converting US Treasury ▇▇▇▇ quotations to
non-equivalent yields in accordance with accepted financial practice and (ii)
interpolating linearly between (A) the actively traded US Treasury security with
the duration closest to and greater than the Remaining Average Life and (B) the
actively traded US Treasury security with the duration closest to and less than
the Remaining Average Life.
"Relevant Trustee" has the meaning specified in Section 8.9.
"Remaining Average Life" means, with respect to the Redemption Amount on
any Preferred Security, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Redemption Amount into (ii) the
sum of the products obtained by multiplying (a) the Redemption Amount component
of each Remaining Scheduled Payment with respect to such Redemption Amount by
(b) the number of years (calculated to the nearest one-twelfth year) that will
elapse between the Settlement Date with respect to such Redemption Amount and
the scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Redemption
Amount on any Settlement Date for any Preferred Security, all payments of such
Redemption Amount and Distributions in respect of the Liquidation Preference
represented thereby that would be due after the Settlement Date if no payment of
Redemption Amount were made prior to. its scheduled Redemption Date (assuming
the Distributions were duly declared and paid on the scheduled due
7
dates), provided that if such Settlement Date is not a date on which
Distributions are due to be paid under the terms of the Preferred Security, then
the amount of the next succeeding scheduled Distributions will be reduced by the
amount of accumulated Distributions accrued to such Settlement Date and required
to be paid on such Settlement Date pursuant to Section 4.2(b).
"Responsible Officer" means, when used with respect to either Trustee, any
officer in the Corporate Trust Administration Department of such Trustee and,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Restricted Legend" means a legend to be imprinted on each Preferred
Security as set forth on Exhibit D.
"Scheduled Redemption" has the meaning set forth in Section 4.2.
"Scheduled Redemption Dates" means each of the dates set forth in the
chart in Section 4.2(a).
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.4.
"Settlement Date" means, with respect to the Redemption Amount of any
Preferred Security, the date prior to the scheduled maturity thereof on which
such Preferred Security is to be redeemed pursuant to Section 4.2(b).
"Subordinated Loan Agreement" means the Subordinated Loan Agreement dated
as of August 20, 1998 between the Depositor and the Trust.
"Subordinated Note" means the Depositor's 7.20% subordinated note due
August 20, 2011 issued pursuant to the Subordinated Loan Agreement in an
original principal amount of $15,464,000.
"Subordinated Note Event of Default" means an "Event of Default" as
defined in the Subordinated Loan Agreement.
"Subordinated Note Repayment Date" means, with respect to any repayment of
the Subordinated Note under the Subordinated Loan Agreement, the date fixed for
repayment under the Subordinated Loan Agreement.
"Suspension Event" has the meaning specified in the Subordinated Loan
Agreement.
"Trust" means the Delaware business trust identified in Section 2.1.
"Trust Agreement" means this Trust Agreement, as the same may be modified,
amended or supplemented in accordance with the applicable provisions hereof,
including all exhibits hereto.
8
"Trust Property" means (i) the Subordinated Note and rights of the holder
of the Subordinated Note under the Subordinated Loan Agreement, (ii) the rights
of the Trust under the Expense Agreement, (iii) any cash on deposit in, or owing
to, the Payment Account and (iv) all proceeds and rights in respect of the
foregoing and any other property and assets for the time being held or deemed to
be held by the Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trust Security" means the Common Securities or the Preferred Securities
or both or any portion of either class, as relevant in the context in which the
term is used.
"Trustees" means, collectively, the Property Trustee and the Delaware
Trustee.
"Unscheduled Redemption" has the meaning set forth in Section 4.2.
"Unscheduled Redemption Date" means each date specified in a notice
provided for in and as defined in Section 4.2(c).
ARTICLE II
THE TRUST
Section 2.1 Name. The Trust established pursuant hereto will be known as
the "DW Capital Trust I" and shall be a statutory business trust for the
purposes permitted and with all legal rights granted under the laws of the State
of Delaware.
Section 2.2 Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is ▇▇▇▇▇▇ Square
North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
Corporate Trust Administration, or such other address in the State of Delaware
as the Delaware Trustee may designate by written notice to the Holders and the
Depositor. The principal executive office of the Trust is in care of Diamond
Walnut Growers, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
Section 2.3 Initial Contribution of Trust Property; Organizational
Expenses. The Property Trustee acknowledges receipt in trust from the Depositor
of the sum of $10, which constitutes the initial Trust Property. The Depositor
shall pay organizational and administrative 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. The Depositor shall make no claim upon the
Trust Property for the payment or reimbursement of such expenses.
Section 2.4 Issuance of the Preferred Securities. Contemporaneously with
the execution and delivery of this Trust Agreement, the Depositor and an
Administrator, on behalf of the Trust, shall execute and deliver the Purchase
Agreement. Contemporaneously with the execution and delivery of this Trust
Agreement and the Purchase Agreement, an Administrator, on behalf of the Trust,
shall execute in accordance with Section 5.2 and deliver to the Purchaser named
in the Purchase Agreement, Preferred Securities Certificates representing 15
Preferred
9
Securities, each having an initial Liquidation Preference of $1,000,000 and
having an aggregate initial Liquidation Preference of $15,000,000 against
receipt of the aggregate purchase price of such Preferred Securities of
$15,000,000 by the Trust.
Section 2.5 Issuance of the Common Securities; Subscription and Purchase
of Subordinated Note. Contemporaneously with the execution and delivery of this
Trust Agreement, an Administrator, on behalf of the Trust, shall execute in
accordance with Section 5.2 and deliver to the Depositor, the Common Securities
Certificate, registered in the name of the Depositor, representing the Common
Securities and having an aggregate liquidation amount of $464,000 against
payment by the Depositor of $464,000 to the Trust. The Administrators, on behalf
of the Trust, shall thereupon advance the aggregate purchase price of the Common
Securities and the Preferred Securities in the principal amount of $15,464,000
to the Depositor, subject to fulfillment of conditions precedent under the
Subordinated Loan Agreement, and in exchange for an executed Subordinated Note
in such principal amount issued by the Depositor to the Trust.
Section 2.6 Declaration of Trust. The sole and exclusive purpose and
function of the Trust is (i) to issue and sell the Trust Securities as provided
in Sections 2.4 and 2.5; (ii) to advance the purchase price from the issuance of
the Trust Securities as proceeds of a loan under the Subordinated Loan Agreement
evidenced by the Subordinated Note; and (iii) to engage in those activities
necessary, convenient or incidental thereto. The Trust shall not have the
authority to issue additional Common Securities or additional Preferred
Securities. The Depositor hereby appoints the Trustees as trustees of the Trust,
to have all the rights, powers and duties 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 Holders. The Administrators
shall have only those ministerial duties set forth herein with respect to
accomplishing the purposes of the Trust and shall not be trustees or fiduciaries
with respect to the Trust. The Property Trustee shall have the power to perform
those duties assigned to the Administrators. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of the Property Trustee or the Administrators set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Delaware Business Trust Act.
Section 2.7 Authorization to Enter into Certain Transactions. (a) The
Trustees and the Administrators shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in Section 2.7(b), and in accordance with the following clauses (i)
and (ii), the Trustees and the Administrators shall have the authority to enter
into all transactions and agreements determined by Trustees to be appropriate in
exercising the authority, express or implied, otherwise granted to the Trustees
or the Administrators under this Trust Agreement, and to perform all acts in
furtherance thereof, including without limitation the following:
(i) Each Administrator shall have the power and authority to
act on behalf of the Trust with respect to the following matters:
(A) the issuance and sale of the Trust Securities;
10
(B) causing the Trust to enter into, and executing,
delivering and performing on behalf of the Trust, the Expense
Agreement and such other agreements as may be necessary or
desirable in connection with the purposes and function of the
Trust;
(C) the sending of notices (other than notices of
default) and other information regarding the Trust Securities
and the Subordinated Note to the Holders in accordance with
this Trust Agreement;
(D) the consent to the appointment of a Paying Agent and
Securities Registrar in accordance with this Trust Agreement,
which consent shall not be unreasonably withheld;
(E) execution of the Trust Securities in accordance with
this Trust Agreement;
(F) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust and
the preparation and filing of the certificate of cancellation
with the Secretary of State of the State of Delaware;
(G) unless otherwise determined by the Property Trustee
or the holders of at least a majority in the then applicable
Liquidation Preference of Preferred Securities or Common
Securities, or as otherwise required by the Delaware Business
Trust Act, executing on behalf of the Trust (either acting
alone or together with any or all of the Administrators) any
documents that the Administrators have the power to execute
pursuant to this Trust Agreement; and
(H) the taking of any action incidental or convenient to
the foregoing as the Trustees may from time to time determine
is necessary or advisable to give effect to the terms of this
Trust Agreement for the benefit of the Holders (without
consideration of the effect of any such action on any
particular Holder).
(ii) As among the Trustees, the Property Trustee shall have
the power, duty and authority to act on behalf of the Trust with
respect to the following matters:
(A) the execution and delivery of the Purchase Agreement
and the Subordinated Loan Agreement;
(B) the establishment of the Payment Account;
(C) the Loan under the Subordinated Loan Agreement and
the Subordinated Note;
(D) the collection of interest, principal and any other
payments made in respect of the Subordinated Note in the
Payment Account;
(E) the distribution through the Paying Agent of amounts
owed to the Holders in respect of the Trust Securities;
11
(F) the exercise of all of the rights of a holder of the
Subordinated Note;
(G) the sending of notices of default and other
information regarding the Trust Securities and the
Subordinated Note to the Holders in accordance with this Trust
Agreement;
(H) the distribution of the Trust Property in accordance
with the terms of this Trust Agreement;
(I) to the extent provided in this Trust Agreement, 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) after an Event of Default (other than under
paragraph (b), (c), (d) or (e) of the definition of such term
if such Event of Default is by or with respect to the Property
Trustee), the taking of any action incidental or convenient to
the foregoing as the Property Trustee may from time to time
determine is necessary or advisable to give effect to the
terms of this Trust Agreement and to protect and conserve the
Trust Property for the benefit of the Holders (without
consideration of the effect of any such action on any
particular Holder); and
(K) the performance of any of the duties, liabilities,
powers or the authority of the Administrators set forth
herein.
In the event of a conflict between the action of the
Administrators and the action of the Property Trustee, the
action of the Property Trustee shall prevail.
(b) So long as this Trust Agreement remains in effect, the
Trust (or the Trustees or Administrators acting on behalf of the
Trust) shall not undertake any business, activities or transaction
except as expressly provided herein or contemplated hereby. In
particular, neither the Trustees nor the Administrators shall (i)
acquire any investments or engage in any activities not authorized
by this Trust Agreement (ii) issue any securities other than the
Trust Securities whose issuance is provided for in this Trust
Agreement; (iii) sell, assign, transfer, exchange, mortgage, pledge,
set-off or otherwise dispose of any of the Trust Property or
interests therein, including to Holders, except as expressly
provided herein, (iv) take any action that would cause the Trust to
be classified as an association taxable as a corporation for United
States federal income tax purposes, (v) incur any indebtedness for
borrowed money or issue any other debt or (vi) take or consent to
any action that would result in the placement of a Lien on any of
the Trust Property. The Property Trustee 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 Holders
in the capacity as Holders.
(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 (and any actions taken by the Depositor in furtherance
of the following prior to the date of this Trust Agreement are
hereby ratified and confirmed in all respects):
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(i) the preparation by the Trust of a private placement
memorandum, including any amendment or supplement thereto, in
relation to the Preferred Securities and the taking of any
action necessary to obtain an exemption from the Securities
Act;
(ii) the determination of the States in which to take
appropriate action to qualify or register for sale all, or
part, of the Preferred Securities and the determination of any
and all such acts, other than actions which must be taken by
or on behalf of the Trust, and the advice to the Trustees of
actions they must take on behalf of the Trust, and the
preparation for execution and filing of 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;
(iii) the negotiation of the terms of, and the execution
and delivery of, the Purchase Agreement providing for the sale
of the Preferred Securities; and
(iv) the taking of any other actions necessary or
desirable to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrators and the Property Trustee 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 to be classified as an
association taxable as a corporation for United States federal
income tax purposes, and so that the Subordinated Note will be
treated as indebtedness of the Depositor for United States federal
income tax purposes. In this connection, the Administrators, the
Property Trustee and the Holder of the Common Securities are
authorized to take any action, not inconsistent with applicable law,
the Certificate of Trust or this Trust Agreement, that each of any
Administrator, Property Trustee and the Holder of the Common
Securities determines in its discretion to be necessary or desirable
for such purposes, as long as such action does not adversely affect
the interests of the Holders of the Preferred Securities or vary the
terms of the Preferred Securities or the Subordinated Note.
Section 2.8 Assets of Trust. The assets of the Trust shall consist of 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 Holders in accordance with this Trust Agreement.
Section 2.10 Classification Matters. (a) It is the intention of all
parties to this Trust Agreement and each owner of a Trust Security by acquiring
a Trust Security that this Trust be treated as a "grantor trust," within the
meaning of Sections 671 through 679 of the Internal Revenue Code of 1986 (the
"Code") and Treas. Reg. Section 301.7701-4(c) and all terms and provisions
hereof shall be construed to further that intent.
(b) Notwithstanding (a), each party to this Trust Agreement and each owner
of a Trust Security by acquiring a Trust Security agree that if the Trust is
determined not to be a "grantor trust," the Trust shall be treated as and
classified as a partnership for all federal income tax purposes and that each
owner of a Trust Security intends and expects, in that instance, to be
13
treated as a partner for such purposes. To the extent necessary, the owner of
the Common Securities shall be the "Tax Matters Partner" of the Trust within the
meaning of Section 6231 of the Code. In its capacity as Tax Matters Partner and
at the expense of the Trust, it shall represent the Trust to the extent
permitted by law in connection with any inquiry, examination or audit of the
Trust affairs by tax authorities.
(c) The Trustee shall, at the direction of the owner of the Common
Securities, (i) maintain (or cause to be maintained) the books of the Trust on a
fiscal year basis ending December 31 (or such other period as may be required by
applicable law), with the first year being the year ending December 31, 1998,
and on the accrual method of accounting, (ii) deliver (or cause to be delivered)
to each owner of each Trust Security the information required by the Code and
applicable Treasury Regulations, (iii) file (or cause to be filed) such tax
returns relating to the Trust as may from time to time be required or
appropriate under any applicable federal statute or rule or regulation
thereunder and (iv) cause such tax returns to be signed in the manner required
by law.
(d) The Trustee may satisfy its obligations with respect to Section
2.10(c) by retaining, at the expense of the Trust, a nationally recognized firm
of independent public accountants selected by the Depositor, which shall perform
the obligations of the Trustee thereunder.
(e) Each owner of a Trust Security, by its acceptance of a Trust Security,
agrees to provide to the owner of the Common Securities within 45 days after its
acceptance of such Trust Security, the following information: (i) the name,
address, taxable year and taxpayer identification number of such owner and any
beneficial owners for whom it holds a Trust Security and (ii) whether such owner
is (A) a person that is not a United States person, (B) a foreign government, an
international organization or any wholly-owned agency or instrumentality of
either of the foregoing or (C) a tax-exempt entity.
(f) Neither any party to this Trust Agreement nor any owner of a Trust
Security by acceptance of its Trust Security shall take any act or permit any
act to be taken that is inconsistent with the statements of interest and
agreements contained in this Section 2.10.
ARTICLE III
PAYMENT ACCOUNT
Section 3.1 Payment Account. (a) On or prior to the Closing Date, the
Property Trustee shall establish the Payment Account. The Property Trustee and
any agent of the Property Trustee shall have exclusive control and sole right of
withdrawal with respect to the Payment Account for the purpose of making
deposits in and withdrawals from the Payment Account in accordance with this
Trust Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in the Payment
Account for the exclusive benefit of the Holders 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 Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments (including any
14
Make-Whole Loan Amount (as such term is defined in the Subordinated Loan
Agreement) and any interest at the Default Rate (as defined in the Subordinated
Loan Agreement) on past due or deferred payments of principal Make-Whole Loan
Amount or proceeds in respect of, the Subordinated Note.
(c) Amounts held in the Payment Account shall not be invested by the
Property Trustee pending distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 4.1 Distributions. (a) The Trust Securities represent undivided
beneficial interests in the Trust Property, and Distributions will be made on
the Trust Securities as provided herein on the dates that payments of interest
are made on the Subordinated Note. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative, and
will accumulate whether or not there are funds of the Trust available for
the payment of Distributions. Distributions shall accrue from the Closing
Date, and shall be payable quarterly in arrears on February 20, May 20,
August 20 and November 20 of each year, commencing on November 20, 1998.
If any date on which a Distribution otherwise would be payable on the
Trust Securities is not a Business Day, then the payment of such
Distribution shall 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), or, if such Business Day falls in the next calendar year, on the
immediately preceding Business Day in each case, with the same force and
effect as if made on such date (each date on which Distributions are
payable in accordance with this Section 4.1(a), a "Distribution Date" ).
(ii) Distributions on the Trust Securities shall accrue and
accumulate until paid at 7.20% per annum of the Liquidation Preference in
effect during each distribution period of the Trust Securities (the
"Scheduled Distribution Rate"). From and after an Event of Default under
clause (a) or (b) of Section 8.01 of the Subordinated Loan Agreement or a
deferral of interest under Section 3.02 of the Subordinated Loan
Agreement, Distributions will accrue at 9.20% per annum (the "Past Due
Distribution Rate") with respect to that portion of the Liquidation
Preference and Distributions represented by the corresponding overdue or
deferred amounts of principal and interest under the Subordinated Note. In
addition, in the event of a deferral of the payment of interest on the
Loan pursuant to the provisions of Section 3.02 of the Subordinated Loan
Agreement, Distributions will accrue and accumulate until paid at 9.20%
per annum of the Liquidation Preference in effect during such deferral
period and thereafter until paid. The Distribution payable for any full
period shall be computed on the basis of a 360-day year of twelve 30-day
months. The Distributions for any partial period shall be computed on the
basis of the number of days elapsed in a 360-day year of twelve 30-day
months.
(iii) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such
Distributions.
15
(b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date for such
Distribution Date, which shall be the date five days prior to such Distribution
Date.
Section 4.2. Redemption. (a) Scheduled Redemptions. The Trust shall redeem
the Preferred Securities in three scheduled installments each of which, when
paid to the Holders, shall reduce the Liquidation Preference of each share of
Preferred Securities by the Redemption Amount then paid (the "Scheduled
Redemptions"). The Scheduled Redemptions shall be made on the dates and in the
amounts set forth below with respect to each share of Preferred Securities;
provided that, upon any partial Unscheduled Redemption of the Preferred
Securities pursuant to Section 4.2(b), the Scheduled Redemptions becoming due
under this Section 4.2(a) on or after the date of such Unscheduled Redemption
shall be reduced in the same proportion as the Liquidation Preference of the
Preferred Securities is reduced as a result of such Unscheduled Redemption:
AGGREGATE
SCHEDULED REDEMPTION DATE REDEMPTION AMOUNT
August 20, 2009 $5,000,000
August 20, 2010 $5,000,000
August 20, 2011 $5,000,000
The Trust will not redeem the Common Securities pursuant to the provisions of
this Section 4.2(a) prior to the last Scheduled Redemption Date. The Trust shall
redeem the Common Securities in full on the last Scheduled Redemption Date only
after the Preferred Securities are redeemed in full as provided in this Section
4.2. The payment of each Redemption Amount shall be made together with
accumulated and unpaid Distributions payable on such date.
(b) Unscheduled Redemptions. The Loan may be prepaid in whole or in part
on dates and subject to the terms and conditions specified in the Subordinated
Loan Agreement. Subject to the provisions of the final paragraph of Section
4.2(d) and to Section 4.3, in the event of a prepayment of the Loan (including
any prepayments made as a result of acceleration of the Loan), the Trust shall
redeem the Trust Securities in an amount corresponding to the Like Amount of the
prepayment on the Loan (an "Unscheduled Redemption"), and any such Unscheduled
Redemption shall be made on the date of the prepayment of the Loan together with
accumulated and unpaid Distributions payable on such date to the Trust
Securities plus the Make-Whole Loan Amount. Each Unscheduled Redemption shall
reduce the Liquidation Preference of each Trust Security by the Redemption
Amount paid to the Holder thereof.
(c) Redemption Procedures. Notice of any Unscheduled Redemption (which
notice will be irrevocable) will be given by the Trust by mail to each record
Holder of Trust Securities not less than 30 days and not more than 60 days prior
to the date fixed for such Unscheduled Redemption which notice shall specify
such date (the "Unscheduled Redemption Date"), the applicable Redemption Amount,
accumulated and unpaid Distributions and Make-Whole Loan Amount, each as payable
to said Holder on said Unscheduled Redemption Date and shall provide a
reasonably detailed computation of such amounts. In addition, the Trust shall,
at least two Business Days prior to any Unscheduled Redemption Date, provide
each Holder with written
16
notice of the Make-Whole Loan Amount payable in connection with such Redemption
of such Holder's Preferred Securities including a reasonably detailed
computation thereof. If the Trust gives a notice of redemption, then the
applicable Redemption Amount in such notice will become due and payable on such
Unscheduled Redemption Date and by 12:00 noon, New York City time on the date
fixed for redemption, the Trust will redeem the Trust Securities at the
Redemption Amount. In the event that payment of the Redemption Amount is
improperly withheld or refused and not paid by either the Trust or the Depositor
pursuant to the Guarantee Agreement, Distributions on the Trust Securities
called for redemption will continue to accumulate at the Past Due Distribution
Rate until the date that the Redemption Amount (adjusted for additional
Distributions accrued until the date of actual payment) is actually paid, and
the Holders of such Preferred Securities may, until such payment, exercise all
of their rights as Holders of the Preferred Securities.
(d) Other Redemption Matters. In the event of any partial redemption of
the Preferred Securities (whether pursuant to Section 4.2(a) or (b)), the amount
to be so applied to the redemption of the Preferred Securities will be allocated
among all outstanding Preferred Securities, as nearly as practicable in
proportion to the respective Liquidation Preference thereof with adjustments to
equalize for any prior redemption not in such proportion).
The Trust will redeem Trust Securities on any Scheduled Redemption Date or
Unscheduled Redemption Date only to the extent it has funds then on hand and
available therefor in the Payment Account.
The Depositor will promptly cancel all Preferred Securities acquired by it
or any Affiliate (over which the Company exercises control) pursuant to any
payment, prepayment or purchase of the Preferred Securities pursuant to any
provision of this Agreement, or otherwise, and no Preferred Securities may be
issued in substitution or exchange for any such Preferred Securities.
No Common Securities shall be redeemed or purchased by the Trust until all
Preferred Securities shall have been redeemed or purchased by the Trust in full
in accordance with clause (a) or (b) of this Section 4.2, and no amounts
received following an acceleration of the Subordinated Note shall be distributed
to the Holder of the Common Securities until all amounts owing on the Preferred
Securities, including the Liquidation Preference, all accrued Distributions and
the Make-Whole Loan Amount (if any) are paid in full.
Section 4.3. Distributions to and Subordination of Common Securities.
(a) The Trust shall not make any Distribution to, or Scheduled or Unscheduled
Redemption of, Common Securities on any date other than a date on which it is
making a Distribution to, or Scheduled or Unscheduled Redemption of, Preferred
Securities. On any date for payment of Distributions to or for any Scheduled or
Unscheduled Redemption of Preferred Securities, the Trust shall make the payment
of the Distribution and Redemption Amount to the Holders of Preferred Securities
prior to making any payment in respect of the Common Securities. After payment
in full of all Distributions, the aggregate Liquidation Preference and the
Make-Whole Loan Amount (if any) has been made in respect of the Preferred
Securities, any balance remaining in the Payment Account may be distributed by
the Trust to the Depositor as the Holder of Common Securities either by way of
Distribution or redemption of Common Securities as the Trust shall declare. If,
at any time, a Default, Event of Default or Suspension Event shall have occurred
and be
17
continuing, no payment of any kind shall be made in respect of the Common
Securities, 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 amounts with respect to the Preferred Securities has been made or
provided for including, without limitation, all accumulated and unpaid
Distributions on all outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, and in the case of payment of the
Redemption Amount the full amount of such Redemption Amount on all outstanding
Preferred Securities together with all accrued Distributions and the Make-Whole
Loan Amount (if any). At all times and for all distributions and payments on
Trust Securities, all funds available to the Property Trustee shall first be
applied to the payment in full of all Distributions on, or the Redemption Amount
of, Preferred Securities before any payment on the Common Securities, and then
shall be applied to Distributions or other payments on the Common Securities.
(b) If an Event of Default resulting from any Subordinated Note Event of
Default shall occur and be continuing, the Holder of Common Securities will be
deemed to have waived any right to act with respect to any such Event of Default
under this Trust Agreement until the effects of all such Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated. Until any such Event of Default under this Trust Agreement with
respect to the Preferred Securities has been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the Holders of
the Preferred Securities and not the Holder of the Common Securities, and only
the Holders of the Preferred Securities will have the right to direct the
Property Trustee to act on their behalf.
Section 4.4. Payment Procedures. Payments of Distributions (including
interest accrued at the Past Due Distribution Rate on any past due or deferred
Redemption Amount or Distributions, if applicable) and Redemption Amounts in
respect of the Preferred Securities shall be made by wire transfer of
immediately available funds to the address specified for such purpose by any
Holder thereof to the Property Trustee (and, in the absence of such a notice, by
check mailed to the address of the Person entitled thereto as such address shall
appear on the Securities Register on the relevant Distribution Dates). Payments
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 4.5. Tax Returns and Reports. The Administrators shall prepare (or
cause to be prepared), at the Depositor's expense, and file all United States
federal, state and local tax returns and reports required to be filed by or in
respect of the Trust. In this regard, the Administrators shall prepare and file
(or cause to be prepared and filed) the appropriate Internal Revenue Service
form required to be filed in respect of the Trust in each taxable year of the
Trust. The Administrators shall provide the Depositor and the Property Trustee
with a copy of all such returns and reports promptly after such filing or
furnishing. The Trustees shall comply with United States federal withholding and
backup withholding tax laws and information reporting requirements with respect
to any payments to Holders under the Trust Securities.
Section 4.6. Payment of Taxes; Duties of the Trustee. The Property
Trustee shall, at the written request of an Administrator or the Depositor,
promptly cause any taxes, duties or governmental charges of whatsoever nature
(other than withholding taxes) imposed on the Trust
18
by the United States or any other taxing authority to be paid. The Depositor
agrees to pay all such amounts so that the Trust Property will not be used or
diminished by such tax payments.
Section 4.7. Payments under Subordinated Loan Agreement or Guarantee
Agreement or Pursuant to Direct Actions. Any amount payable hereunder to any
Holder of Preferred Securities shall be reduced by the amount of any
corresponding payment such Holder has directly received pursuant to Section 8.01
of the Subordinated Loan Agreement or pursuant to the Guarantee Agreement or
pursuant to Section 5.11 of this Trust Agreement.
Section 4.8. Liability of the Holder of Common Securities. The Holder
of the Common Securities shall be liable for the debts and obligations of the
Trust as set forth in the Expense Agreement.
ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 5.1. Initial Ownership. Upon the creation of the Trust and
the contribution by the Depositor pursuant to Section 2.3 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 $1,000,000
Liquidation Preference and integral multiples thereof, and the Common Securities
Certificates shall be issued in the denomination of $464,000 Liquidation
Preference. The Trust Securities Certificates shall be executed on behalf of the
Trust by manual or facsimile signature of at least one Administrator. 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 benefits of this Trust Agreement, 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 Holder, and shall be entitled to the
rights and subject to the obligations of a Holder hereunder, upon due
registration of such Trust Securities Certificate in such transferee's name
pursuant to Section 5.4.
Section 5.3. Execution and Delivery of Trust Securities Certificates.
At the Closing Date, the Administrators shall cause Trust Securities
Certificates consisting of the Preferred Securities and the Common Securities in
an aggregate Liquidation Preference as provided in Sections 2.4, to be executed
on behalf of the Trust and delivered to or upon the written order of the
Depositor, signed by its chairman of the board, its president, any executive
vice president or any vice president, treasurer or assistant treasurer or
controller without further corporate action by the Depositor, in authorized
denominations.
Section 5.4. Registration of Transfer and Exchange of Preferred
Securities Certificates. (a) The Property Trustee shall keep or cause to be
kept, at the office or agency maintained pursuant to Section 5.8, a register or
registers for the purpose of registering Trust Securities Certificates and
transfers and exchanges of Preferred Securities Certificates (the
19
"Securities Register"), in which the registrar, designated by the Property
Trustee (the "Securities Registrar") with the reasonable consent of the
Administrators subject to such reasonable regulations as it may prescribe, 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. The Bank shall be the
initial Securities Registrar. The provisions of Sections 8.1, 8.3 and 8.6 herein
shall apply to the Bank also in its role as Securities Registrar, for so long as
the Bank shall act as Securities Registrar.
Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.8, the
Administrators or any one of them shall execute and the Property Trustee shall
deliver, in the name of the designated transferee or transferees, one or more
new Preferred Securities Certificates in authorized denominations of a like
aggregate Liquidation Preference dated the date of execution by such
Administrator.
The Securities Registrar shall not be required to register the transfer of
any Preferred Securities that have been called for redemption.
At the option of a Holder, Preferred Securities Certificates may be
exchanged for other Preferred Securities Certificates in authorized
denominations of the same class and of a like aggregate Liquidation Preference
upon surrender of the Preferred Securities Certificates to be exchanged at the
office or agency maintained pursuant to Section 5.8.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in customary form duly executed by the Holder or his
attorney duly authorized in writing. Each Preferred Securities Certificate
surrendered for registration of transfer or exchange shall be cancelled and
subsequently disposed of by the Property Trustee or Securities Registrar in
accordance with such Person's customary practice.
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.
(b) Securities Act Legends. Preferred Securities shall bear a Restricted
Legend. 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, the Administrators, or any
of them, on behalf of the Trust shall execute and make available for delivery a
new Preferred Securities Certificate which does not bear a Restricted Legend, in
exchange for or in lieu of a Preferred Securities Certificate or any portion
thereof which bears such a legend if the Administrators and the Securities
Registrar have received an unrestricted securities certification satisfactory to
the Administrators and the Securities Registrar, and duly executed by the Holder
of such legended Preferred Securities Certificate or his attorney duly
authorized in writing. The Property Trustee shall not be required to ensure or
verify compliance with securities laws, including the Securities Act, Exchange
Act and 1940 Act in connection with transfers and exchanges of Preferred
Securities Certificates.
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Section 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates. If (i) 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 (ii) there shall be delivered to the Securities
Registrar and the Administrators such security or indemnity as may be required
by them to save each of them harmless (provided that if the Holder of such Trust
Securities Certificate is an original Purchaser or an Institutional Investor,
each as defined in the Purchase Agreement, such Holder's own unsecured agreement
of indemnity shall be deemed acceptable) then, in the absence of notice that
such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrators, or any of them, on behalf of the Trust shall
execute and make available for delivery, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust
Securities Certificate of like class, tenor and denomination. In connection with
the issuance of any new Trust Securities Certificate under this Section, the
Administrators or 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 duplicate Trust Securities Certificate issued pursuant
to this Section shall constitute conclusive evidence of an undivided beneficial
interest in the Trust Property, as if originally issued, whether or not the
lost, stolen or destroyed Trust Securities Certificate shall be found at any
time.
Section 5.6. Persons Deemed Holders. The Trustees, the Administrators
or the Securities Registrar shall treat the Person in whose name any Trust
Securities Certificate is 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 Trustees, the Administrators
nor the Securities Registrar shall be bound by any notice to the contrary.
Section 5.7. Access to List of Holders' Names and Addresses. Each Holder
shall be deemed to have agreed not to hold the Depositor, the Property Trustee
or the Administrators 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 Administrators or the
Property Trustee shall maintain an officer or offices or agency or agencies
where Preferred Securities Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Trust Securities Certificates may be served. The Administrators
initially designate Diamond Walnut Growers, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: Chief Financial Officer,
as its principal corporate trust officer for such purposes. The Administrators
or the Property Trustee shall give prompt written notice to the Depositor and to
the Holders of any change in the location of the Securities Registrar or any
such office or agency.
Section 5.9. Appointment of Paying Agent. The Trust appoints the Bank as
Paying Agent. The Paying Agent shall act as the agent of the Depositor and not
as the agent of the Holders. The Paying Agent shall make Distributions to
Holders from the Payment Account and shall report the amounts of such
Distributions to the Property Trustee and Administrators. Any Paying Agent shall
have the revocable power to withdraw funds from the Payment Account for the
purpose of making the Distributions referred to above. The Property Trustee may
revoke
21
such power and remove the Paying Agent in its sole discretion. The Paying Agent
shall initially be the Bank and any co-paying agent chosen by the Bank and
reasonably acceptable to the Administrators. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Administrators and the Property Trustee. In the event that the Bank is no longer
the Paying Agent or a successor Paying Agent shall resign or its authority to
act is revoked, the Administrators shall appoint a successor that is reasonably
acceptable to the Administrators to act as Paying Agent (which shall be a bank
or trust company having a combined capital and surplus of at least
$400,000,000). Such successor Paying Agent or any additional Paying Agent shall
execute and deliver to the Trustees an instrument in which such successor Paying
Agent or 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 Holders in trust for the benefit of
the Holders entitled thereto until such sums shall be paid to such Holders. 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 Sections 8.1, 8.3 and 8.6
shall apply to the Bank also in its role as Paying Agent, for so long as the
Bank shall act as Paying Agent, and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Trust Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
Section 5.10. Ownership of Common Securities by Depositor. At the Closing
Date, the Depositor shall acquire and retain beneficial and record ownership of
the Common Securities. To the fullest extent permitted by law, other than a
transfer in connection with a consolidation or merger of the Depositor into
another Person, or any conveyance, transfer or lease by the Depositor of its
properties and assets substantially as an entirety to any Person, pursuant to
Section 7.03 of the Subordinated Loan Agreement, any attempted transfer of the
Common Securities shall be void. The Administrators shall cause each Common
Securities Certificate issued to the Depositor to contain a legend stating,
"THIS CERTIFICATE IS NOT TRANSFERABLE."
Section 5.11. Rights of Holders. (a) 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 Holders 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 Trust Agreement. Holders of
the Trust Securities shall have no preemptive or similar rights. When issued and
delivered to Holders of Preferred Securities against payment of the purchase
price therefor, the Preferred Securities will be fully paid and nonassessable
undivided beneficial interests in the Trust Property. The Holders, 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.
(b) For so long as any Preferred Securities remain outstanding, if, upon a
Subordinated Note Event of Default which gives the holder of the Subordinated
Note the right to declare the principal of such Subordinated Note to be
immediately due, the Property Trustee fails to declare the principal of the
Subordinated Note to be immediately due, The Holders of at least 50% in then
applicable Liquidation Preference of the Preferred Securities then outstanding
shall
22
have such right by a notice in writing to the Depositor and the Property
Trustee; and upon any such declaration such principal amount of and the accrued
interest and Make-Whole Loan Amount on the Subordinated Note shall become
immediately due, provided that the payment of principal and interest on such
Subordinated Note shall remain subordinated to the extent provided in the
Subordinated Loan Agreement.
At any time after such a declaration of acceleration with respect to the
Subordinated Note has been made and before a judgment or decree for payment of
the money due has been obtained by the Property Trustee, the Holders of at least
66-2/3% in their applicable Liquidation Preference of the Preferred Securities,
by written notice to the Property Trustee and the Depositor, may rescind and
annul such declaration and its consequences if:
(i) the Depositor has paid or deposited with the Property Trustee a
sum sufficient to pay
(A) all overdue installments of interest on the Subordinated
Note and interest thereon at the Default Rate specified in the
Subordinated Loan Agreement; and
(B) the principal of (and Make-Whole Loan Amount, if any, on)
the portion of the Subordinated Note which has become due otherwise
than by such declaration of acceleration and interest thereon at the
Default Rate specified in the Subordinated Loan Agreement; and
(ii) all Defaults and Events of Default with respect to the
Subordinated Note, other than the non-payment of the principal of the
Subordinated Note (and any related Make-Whole Loan Amount) which has
become due solely by such acceleration, have been cured or waived as
provided in Article VIIT of the Subordinated Loan Agreement.
The Holders of at least 66-2/3% in then applicable Liquidation Preference
of the Preferred Securities may, on behalf of the Holders of all the Preferred
Securities, waive any past default under the Subordinated Loan Agreement, except
a default in the payment of principal or interest (unless such default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration and interest thereon has been
deposited with the Property Trustee) or a default in respect of a covenant or
provision which under the Subordinated Loan Agreement cannot be modified or
amended without the consent of all. of the Holders of the Preferred Securities.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
(c) For so long as any Preferred Securities remain outstanding, subject to
the terms of this Trust Agreement and the Subordinated Loan Agreement, upon a
Subordinated Note Event of Default specified in Section 8.01(a), 8.01(b) or
8.01(e) of the Subordinated Loan Agreement, any 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 and
interest and Make-Whole Loan Amount on the Subordinated Note having a principal
amount equal to the Liquidation Preference of the Preferred Securities of such
Holder (a "Direct Action"). Except as set forth in Section 5.11(b) and this
Section 5.11(c) or in the Subordinated Loan Agreement,
23
Holders of Preferred Securities shall have no right to exercise directly any
right or remedy available to holders of, or in respect of, the Subordinated
Note.
Section 5.12. Transfer Limitations. (a) Notwithstanding anything in this
Trust Agreement to the contrary, no ownership interest in any Trust Security
shall be issued, sold, transferred, listed or otherwise exchanged at any time on
an established securities market, including (i) a national securities exchange
registered under the Exchange Act or exempted from registration because of the
limited volume of transactions; (ii) a foreign securities exchange that, under
the law of the jurisdiction where it is organized, satisfies regulatory
requirements that are analogous to the regulatory requirements under the
Exchange Act applicable to exchanges described in clause (i); (iii) a regional
or local exchange; or (iv) an over the counter market, as such terms are defined
for purposes of Section 7704 of the Code.
(b) Notwithstanding anything in this Trust Agreement to the contrary, no
transfer or issuance of any Trust Security or any direct or indirect interest
therein shall be made (i) that would result in there being more than one hundred
(100) beneficial owners of the Trust Securities or (ii) to any beneficial owner
of an interest in a partnership, grantor trust or S corporation (herein referred
to as a "Flow-through entity") which Flow-through entity's ownership, directly
or indirectly through other Flow-through entities, of Trust Securities
constitutes fifteen percent (15%) or more, measured by value, of such
Flow-through entity. The Administrators have agreed to determine at least
annually the number of beneficial owners of the Trust Securities, and promptly
to notify the Trustee of the restriction in this subsection (b) if the number of
beneficial owners exceeds twenty-five.
ARTICLE VI
ACTS OF HOLDERS; VOTING
Section 6.1. Limitations on Voting Rights. (a) Except as provided in
this Section 6.1 and in Sections 5.11(b) and (c) hereof and in Article VIII of
the Subordinated Loan Agreement, 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.
(b) So long as the Subordinated Note is held by the Property Trustee, the
Trustees shall not (i) declare that the principal of the Subordinated Note is
due and payable or otherwise direct the time, method or place of conducting any
proceeding for any remedy available under the Subordinated Loan Agreement with
respect to such Subordinated Note, (ii) waive any past default which is waivable
under the Subordinated Loan Agreement, (iii) exercise any right to rescind or
annul a declaration that the principal of the Subordinated Note is due and
payable or (iv) consent to any amendment, modification or termination of the
Subordinated Loan Agreement or the Subordinated Note without, in each case,
obtaining the prior approval of the Holders of at least 66-213% (50% in the case
of an acceleration of the maturity of the Subordinated Note upon the occurrence
of a Subordinated Note Event of Default) in then applicable Liquidation
Preference of all outstanding Preferred Securities; provided, however, that
where a consent under the Subordinated Loan Agreement would require the consent
of all of the Holders of the outstanding Preferred Securities or, where a
consent under this Trust Agreement would change the amount or time of any
Redemption Amount, Redemption Date, or reduce the
24
rate or method of computing or change the time of payment of Distributions or
the Make-Whole Loan Amount, or change the provisions of Section 5.11(b) or (c)
or of this Section 6.1, no such consent shall be given by the Property Trustee
without the prior written consent of each Holder of Preferred Securities. The
Trustees shall not revoke any action previously authorized or approved by a vote
of the Holders of Preferred Securities, except by a subsequent vote of the
Holders of Preferred Securities. The Property Trustee shall notify all Holders
of Preferred Securities of any notice of default received under the Subordinated
Loan Agreement with respect to the Subordinated Note. In addition to obtaining
the foregoing approvals of Holders of Preferred Securities, prior to taking any
of the foregoing actions, the Trustees shall, at the expense of the Depositor,
obtain an Opinion of Counsel experienced in such matters to the effect that such
action shall not cause the Trust to be classified as an association taxable as a
corporation for United States federal income tax purposes. The Trust at no time
shall. elect to be classified as an association taxable as a corporation for
United States federal income tax purposes.
(c) No amendment to this Trust Agreement shall be effective except with
the approval of the Holders of at least 66-2/3% (100% in the case of an
amendment of the terms of Section 6.1(b)) in then applicable Liquidation
Preference of the outstanding Preferred Securities. Notwithstanding any other
provision of this Trust Agreement, no amendment to this Trust Agreement may be
made if, as a result of such amendment, it would cause the Trust to be
classified as an association taxable as a corporation for United States federal
income tax purposes.
Section 6.2. Acts of Holders. Any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted by this
Trust Agreement to be given, made 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
otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to the Property Trustee. Such
instrument or instruments (and the action embodied therein and instrument 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 Trust Agreement and (subject to Section 8.1) conclusive in favor
of the Trustees, if made in the manner provided in this Section.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Trust Security shall bind every future Holder of
the same Trust Security and the Holder of every Trust Security issued upon the
registration of transfer thereof or in exchange therefor or in Iieu thereof in
respect of anything done, omitted or suffered toobe done by the Trustees or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Trust Security.
Section 6.3. Inspection of Records. Upon reasonable notice to the
Administrators and the Property Trustee, the records of the Trust shall be open
to inspection by Holders during normal business hours for any purpose reasonably
related to such Holder's interest as a Holder.
25
ARTICLE VII
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 Holders that:
(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 Property Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) the Delaware Trustee is a banking, corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(d) the Delaware Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(e) this Trust Agreement has been duly authorized, executed and delivered
by the Property Trustee and the Delaware Trustee and (assuming due
authorization, execution and delivery hereof by the Depositor) constitutes the
valid and legally binding agreement of each of the Property Trustee and the
Delaware Trustee enforceable against each of them 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;
(f) the execution, delivery and performance of this Trust Agreement has
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 the Charter or By-laws
of the Property Trustee or the Delaware Trustee, (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 to which the Property
Trustee or the Delaware Trustee is a party or by which it is bound, or (iii)
violate any law, governmental rule or regulation of the United States or the
State of Delaware, as the case may be, governing the banking, trust or general
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;
(g) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee (as
appropriate in context) contemplated herein requires the consent or approval of,
the giving of notice to, the registration with or the taking of
26
any other action with respect to any governmental authority or agency under any
existing federal law governing the banking, trust or general powers of the
Property Trustee or the Delaware Trustee, as the case may be, under the laws of
the United States or the State of Delaware; and
(h) 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 Trust Agreement.
Section 7.2. Representations and Warranties of Depositor. The
Depositor hereby represents and warrants for the benefit of the Holders that the
Trust Securities Certificates issued hereunder on behalf of the Trust have been
duly authorized and will have been, duly and validly executed, issued and
delivered by the Administrators pursuant to the terms and provisions of, and in
accordance with the requirements of, this Trust Agreement and the Holders will
be, as of each such date, entitled to the benefits of this Trust Agreement.
ARTICLE VIII
THE TRUSTEES; THE ADMINISTRATORS
Section 8.1. Certain Duties and Responsibilities. (a) The duties and
responsibilities of the Trustees and Administrators shall be as provided by this
Trust Agreement. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees or-the Administrators to expend or risk
their own funds or otherwise to 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- it. Whether or not therein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of, or affording protection to the Trustees or the Administrators,
shall be subject to the provisions of this Section 8.1.
(b) No provision in this Trust Agreement shall be construed to release an
Administrator from liability for his own negligent action, his own negligent
failure to act, or his own willful misconduct. To the extent that, at law or in
equity, an Administrator has duties (including fiduciary duties, if any) to the
Trust or to the Holders, and liabilities relating thereto, such Administrator
shall not be liable to the Trust or to any Holder for such Administrator's good
faith reliance on the provisions of this Trust Agreement. The provisions of this
Trust Agreement, to the extent that they restrict the duties and liabilities of
the Administrators otherwise existing at law or in equity, are agreed by the
Depositor and the Holders to replace such other duties and liabilities of the
Administrators.
(c) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only 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
27
hereof. Each Holder, 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.I(c) does not limit the liability of the Trustees
expressly set forth elsewhere in this Trust Agreement.
(d) No provision of this Trust Agreement 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) 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;
(ii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than 66-2/3% of the aggregate
Liquidation Preference of the Trust Securities (or such lesser percentage
of the aggregate Liquidation Preference of the Trust Securities specified
herein for the taking of any such action) 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 Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Subordinated Note and the
Payment Account shall be to deal with such property in a similar manner as
the Property Trustee deals with similar property for its own account,
subject to the protections and limitations on liability afforded to the
Property Trustee under this Trust Agreement;
(iv) the Property Trustee shall not be liable for any interest on_
any money received by it except as it may otherwise agree 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 Payment Account
maintained by the Property Trustee pursuant to Section 3.1 and except to
the extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrators or the Depositor with their respective
duties under this Trust Agreement, nor shall the Property Trustee be
liable for the default or misconduct of the Administrators or the
Depositor.
Section 8.2. Certain Notices. Within five Business Days after the
occurrence of any Default or Event of Default actually known to the Property
Trustee, the Property Trustee shall transmit, in the manner and to the extent
provided in Section 10.8, notice of such Default or Event of Default to the
Holders, the Administrators and the Depositor.
Section 8.3. Certain Rights of Property Trustee. Subject to the
provisions of Section 8.1:
28
(a) the Property Trustee may rely and shall be protected in acting
or refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation 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 in good faith to be genuine and to have been signed or
presented by the proper party or parties;
(b) any direction or act of the Depositor or the Administrators
contemplated by this Trust Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(c) whenever in the administration of this Trust Agreement, 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 as to such factual matters (other than the
interpretation of this Agreement) which, upon receipt of such request,
shall be promptly delivered by the Depositor or the Administrators;
(d) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including. any financing or
continuation statement or any filing under tax or securities laws, other
than as provided in Section 4.5 and Section 4.6) or any rerecording,
refiling or reregistration thereof;
(e) the Property Trustee may consult with counsel as to legal
matters (which counsel may be counsel to the Depositor or any of its
Affiliates, and may include any of its employees) and the advice of such
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; the Property
Trustee shall have the right at any time to seek instructions concerning
the administration of this Trust Agreement from any court of competent
jurisdiction;
(f) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Trust Agreement at the
request or direction of any of the Holders pursuant to this Trust
Agreement, unless such Holders shall have offered to the Property Trustee
reasonably security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction;
(g) the Property Trustee shall not be bound, provided it is acting
in good faith, to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond, debenture, note or other
evidence of indebtedness or other paper or document, unless requested in
writing to do so by one or more Holders, but the Property Trustee may make
such further inquiry or investigation into such facts or matters as it may
see fit
(h) 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 or attorneys,
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provided that the Property Trustee shall be responsible for its own
negligence or recklessness with respect to selection of any agent or
attorney appointed by it hereunder;
(i) whenever in the administration of this Trust Agreement 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 Preference 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 acting in accordance with such instructions;
(j) except as otherwise expressly provided by this Trust Agreement,
the Property Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Trust Agreement unless
directed to do so by any Holder or Holders pursuant to the provisions
hereof;
(k) when the Property Trustee incurs expenses or renders serviceso
in connection with a Bankruptcy Event, such expenses (including the fees
and expenses of its counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy law
or law relating to creditors' rights generally; and
(l) the Property Trustee shall not be charged with knowledge of an
Event of Default unless a Responsible Officer of the Property Trustee
obtains actual knowledge of such event or the Property Trustee receives
written notice of such event from any Holder or the Depositor.
No provision of this Trust Agreement shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
Section 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates shall be
taken as the statements of the Trust, 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 Subordinated
Note.
Section 8.5. May Hold Securities. 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 Sections 8.8 and 8.13,
may otherwise deal with the Trust with the same rights it would have if it were
not a Trustee or such other agent.
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Section 8.6. Compensation; Indemnity Fees. The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable compensation
for all services rendered by them hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any provision
of this Trust Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its negligence
or bad faith; and
(c) to 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, (iv) any officer, director, shareholder,
employee, representative or agent of any Trustee or the Bank and (v) any
employee or agent of the Trust or its affiliates (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 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 Trust Agreement,
except that no Indemnified Person shall be entitled to be indemnified
pursuant to this Section 8.6 in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of this
Trust Agreement.
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.
The Depositor and any Trustee (in the case of the Property Trustee,
subject to Section 8.8) may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of Trust
Securities shall have no rights by virtue of this Trust Agreement in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. Neither the Depositor nor any Trustee shall
be obligated to present any particular investment or other opportunity to the
Trust even if such opportunity is of a character that, if presented to the
Trust, could be taken by the Trust, and each of the Depositor and any Trustee
shall have the right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Trustee may engage or be interested in any financial or other
transaction with the Depositor or any Affiliate of the Depositor, or may act as
depository for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Depositor or its Affiliates.
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Section 8.7. Corporate Property Trustee Required; Eligibility of
Trustees and Administrators. (a) There shall at all times be a Property Trustee
hereunder with respect to the Trust Securities. The Property Trustee shall be a
Person that is a national or state chartered bank and has a combined capital and
surplus of at least $400,000,000. 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, 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, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. At the time of appointment, any Property
Trustee (other than the original Property Trustee) must have unsecured
securities rated in one of the three highest rating categories by a nationally
recognized statistical rating organization.
(b) There shall at all times be one or more Administrators hereunder with
respect to the Trust Securities. Each Administrator 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. Co-Trustees and Separate Trustee. Unless an Event of
Default shall have occurred and be continuing, at any time or times, the
Property Trustee shall have the power to appoint, and upon the written request
of the Property Trustee, the Depositor and the Administrators shall for such
purpose join in the execution, delivery, and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons approved by the
Property Trustee either to act as co-trustee, jointly with the Property Trustee,
of all or any part of such Trust Property, or to the extent required by law to
act as separate trustee of any such property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity afore-said, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. Any
co-trustee or separate trustee appointed pursuant to this Section shall either
be (i) a natural person who is at least 21 years of age and a resident of the
United States or (ii) a legal entity with its principal place of business in the
United States that shall act through one or more persons authorized to bind such
entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
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(a) The Trust Securities shall be executed and delivered and all
rights, powers, duties, and obligations hereunder in respect of the.
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustees specified hereunder
shall be exercised solely by such Trustees and not by such co-trustee or
separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by
such appointment shall be conferred or imposed upon and exercised or
performed by the Property Trustee or by the Property Trustee and such
co-trustee or separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to the
extent that under any law of any jurisdiction in which any particular act
is to be performed, the Property Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers,
duties and obligations shall be exercised and performed by such co-trustee
or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, may accept the resignation of or remove any co-trustee or
separate trustee appointed under this Section. Upon the written request of
the Property Trustee, the Depositor shall join with the Property Trustee
in the execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation or removal.
A successor to any co-trustee or separate trustee so resigned or removed
may be appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee or any
other trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any act of
a co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate
trustee.
Section 8.9. Resignation and Removal; Appointment of Successor. No
resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee (meeting
all of the requirements of Section 8.10 in the case of a successor Property
Trustee) in accordance with the applicable requirements of Section 8.10.
Subject to the immediately preceding paragraph, the Relevant Trustee may
resign at any time by giving written notice thereof to the Holders. If the
instrument of acceptance by the successor Trustee required by Section 8.10 has
not have been delivered to the Relevant Trustee within 60 days after the giving
of such notice of resignation, the Relevant Trustee may petition, at the expense
of the Depositor, any court of competent jurisdiction for the appointment of a
successor Trustee.
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The Property Trustee or the Delaware Trustee, or both of them, may be
removed by Act of the Holders of a majority in Liquidation Preference of the
Preferred Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Trust).
If any Trustee shall resign, be removed or become incapable of acting as
Trustee, or if a vacancy shall occur in the office of any Trustee for any cause,
the Holders of the Preferred Securities, by Act of the Holders of a majority in
Liquidation Preference of the Preferred Securities then outstanding delivered to
the retiring Relevant Trustee, shall promptly appoint a successor Trustee or
Trustees, and such successor Trustee shall comply with the applicable
requirements of Section 8.10. If no successor Trustee shall have been so
appointed by the Holders of the Preferred Securities and accepted appointment in
the manner required by Section 8.10, any Holder who has been a Holder of Trust
Securities for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all Holders
in the manner provided in Section 10.8 and shall give notice to the Depositor.
Each notice of the appointment of a successor Trustee shall include the name of
such successor Trustee and the address of its Corporate Trust Office if it is
the Property Trustee.
Section 8.10. Acceptance of Appointment by Successor. In case of the
appointment hereunder of a successor Trustee, the retiring Relevant Trustee and
each successor Trustee with respect to the Trust Securities shall execute and
deliver an amendment hereto wherein each successor Trustee shall accept such
appointment and which (i) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Trustee all
the rights, powers, trusts and duties of the retiring Relevant Trustee with
respect to the Trust Securities and the Trust and (ii) shall add to or change
any of the provisions of this Trust Agreement as shall be necessary to provide
for or facilitate the administration of the Trust by more than one Trustee, it
being understood that nothing herein or in such amendment shall constitute such
Trustees co-trustees. Upon the execution and delivery of such amendment, the
resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor 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 Trustee such retiring Relevant Trustee shall duly assign, transfer and
deliver to such successor Trustee all Trust Property, all proceeds thereof and
money held by such retiring Relevant Trustee hereunder with respect to the Trust
Securities and the Trust.
Upon request of any such successor Trustee, the Trust shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
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Section 8.11. Merger, Conversion, Consolidation or Succession to
Business. Any Person into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Trustee
shall be a party, or any Person succeeding to all or substantially all the
corporate trust business of such Trustee, shall be the successor of such Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
Section 8.12. Preferential Collection of Claims Against Depositor or
Trust. In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Trust Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Trust Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Property Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Property Trustee, its agents and counsel) and of the Holders allowed in
such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amount due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or compensation affecting the Trust
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 8.13. Reports by Property Trustee. (a) Not later than March 31
of each year commencing with March 31, 1999, the Property Trustee shall transmit
to all Holders in accordance with Section 10.8, and to the Depositor, a brief
report dated as of the immediately preceding December 31 with respect to:
35
(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 Trust Agreement 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 the Property Trustee has not complied
in any material respect 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) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with the Depositor.
Section 8.14. Number of Trustees. (a) The number of Trustees shall be
two, the Property Trustee and the Delaware Trustee, which may be the same
Person.
(b) if a Trustee ceases to hold office for any reason a vacancy shall
occur vacancy shall be filled with a Trustee appointed in accordance with
Section 8.9.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust.
Section 8.15. Delegation of Power. (a) Any Administrator 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).
(b) The Administrators 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 Administrators or otherwise as the Administrators may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of this Trust Agreement, as set forth herein.
Section 8.16. Appointment of Administrators. (a) The Administrators
shall be appointed by the Common Security Holder and may be removed by the
Common Security Holder at any time. Each Administrator shall sign an agreement
agreeing to comply with the terms of this Trust Agreement. If at any time there
is no Administrator, the Property Trustee or any Security Holder who has been a
Security Holder of Trust Securities for at least six months may petition any
court of competent jurisdiction for the appointment of one or more
Administrators.
(b) Whenever a vacancy in the number of Administrators occurs, until such
vacancy is filled by the appointment of an Administrator in accordance with this
Section 8.16, the Administrators in office, regardless of their number (and
notwithstanding any other provision of
36
this Agreement), shall have all the powers granted to the Administrators and
shall discharge all the duties imposed upon the Administrators by this Trust
Agreement.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrator or a Delaware Trustee who is a natural
person dies or becomes; in the opinion of the holder of Common Securities,
incompetent or incapacitated, the vacancy created by such death, incompetence or
incapacity may be filled by (a) in the case of an Administrator, the act of the
remaining Administrator and (b) in the case of the Delaware Trustee, the
Property Trustee following the procedures regarding expenses and charges set
forth above (with the successor in each case being a Person who satisfies the
eligibility requirement for Administrators or Delaware Trustee, as the case may
be, set forth in Section 8.7).
ARTICLE IX
TERMINATION AND MERGER
Section 9.1. Termination Upon Expiration Date. Unless earlier
terminated, the Trust shall automatically terminate on August 19, 2011 (the
"Expiration Date"), following the distribution of the Trust Property.
Section 9.2. Early Termination. The Trust shall, subject to the
provisions of Section 9.3, terminate prior to the Expiration Date upon the
occurrence of any of the following events (each an "Early Termination Event"):
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Holder of the Common Securities;
(b) the written direction to the Property Trustee from the Holder of
the Common Securities at any time to terminate the Trust and, after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law, distribute note certificates (the "Exchange Notes")
representing a Like Amount of the Subordinated Note to Holders in exchange
for the Preferred Securities; provided, however, that the Property Trustee
and the Holders shall have first received an Opinion of Counsel to the
effect that such distribution will not be a taxable event to the Holders
of Preferred Securities; and provided, further, that, in any such event,
the Depositor will issue to each Holder of Preferred Securities a
Subordinated Note in its own name in the principal amount of its
fractional interest in the Subordinated Note and the Depositor agrees that
the Subordinated Loan Agreement shall be amended, on or prior to the
Liquidation Date, pursuant to Section 9.05 of the Subordinated Loan
Agreement to include provisions regarding transfer and exchange of the
Subordinated Note, voting and enforcement of rights and such other related
matters as would customarily be provided if the Subordinated Loan
Agreement were an agreement between the Depositor and the then Holders of
Preferred Securities as lenders, all on terms and provisions and pursuant
to documentation reasonably satisfactory to at least 55-2/3% in
Liquidation Preference of the outstanding Preferred Securities;
37
(c) the redemption of all of the Preferred Securities in connection
with the repayment in full of the Subordinated Note pursuant to the terms
of the Subordinated Loan Agreement; and
(d) the entry of an order for dissolution of the Trust by a court of
competent jurisdiction.
Section 9.3. Termination. The respective obligations and responsibilities
of the Trustees and the Trust shall terminate upon the latest to occur of the
following:
(a) the distribution by the Property Trustee to Holders upon the
liquidation of the Trust, 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 any expenses owed by the Trust; and
(c) the discharge of all administrative duties of the
Administrators, including the performance of any tax reporting obligations
with respect to the Trust or the Holders.
Section 9.4. Liquidation. (a) If an Early Termination Event specified in
clause (a), (b) or (d) of Section 9.2 occurs or upon the Expiration Date, the
Trust shall be liquidated by the Trustees as expeditiously as the Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by Section 3808(e) of the Delaware Business
Trust Act and any other applicable law, to each Holder a Like Amount of the
Subordinated Note. Notice of liquidation shall be given by the Property Trustee
by a recognized overnight delivery service (charges prepaid) sent not later than
thirty (30) days or mere than sixty (60) days prior to the Liquidation Date to
each Holder of Trust Securities at such Holder's address appearing 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 a Like Amount of the Subordinated Note; and
(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for Exchange
Notes.
(b) The Property Trustee shall establish a record date for such
distribution (which shall be not more than forty-five (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 Exchange Notes in exchange
for the outstanding Trust Securities Certificates.
(c) After the Liquidation Date, (i) the Trust Securities will no longer be
deemed to be outstanding, (ii) Exchange Notes will be issued to Holders of Trust
Securities
38
Certificates, upon surrender of such certificates to the exchange agent for
exchange, (iii) any Trust Securities Certificates not so surrendered for
exchange will be deemed to represent a Like Amount of the Subordinated Note,
accruing interest at the rate provided for in the Subordinated Note from the
last Distribution Date on which Distribution was made on such Trust Securities
Certificates until such certificates are so surrendered (and until such
certificates are so surrendered, no payments of interest or principal will be
made to Holders of Trust Securities Certificates with respect to such
Subordinated Note) and (iv) all rights of Holders holding Trust Securities will
cease, except the right of such Holders to receive Exchange Notes upon surrender
of Trust Securities Certificates.
Section 9.5. No 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 Person.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. Limitation of Rights of Holders. The death or incapacity, or
the dissolution, liquidation, termination, or the bankruptcy of any Person
having an interest, beneficial or otherwise, in Trust Securities shall not
operate to terminate this Trust Agreement, nor entitle the legal
representatives, successors or heirs of such Person or any Holder 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) Except as provided in Section 10.2(c) and
Article VI hereof, no amendment to this Trust Agreement shall be effective
except with (i) the approval of the Holders of at least 66-2/3% in Liquidation
Preference of the outstanding Preferred Securities and (ii) receipt by the
Trustees of an Opinion of Counsel to the effect that such amendment or the
exercise of any power granted to the Trustees in accordance with such amendment
will not cause the Trust to be an association taxable as a corporation for
United States federal income tax purposes or adversely affect the Trust's
exemption from status of an investment company under the 1940 Act.
(b) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Holder, this Trust Agreement may
not be amended to (i) change the amount or timing of any Distribution or the
payment of any Redemption Amount or otherwise adversely affect the amount of any
Distribution or Redemption Amount required to be made as of a specified date or
(ii) restrict the right of a Holder to institute suit for the enforcement of any
such payment on or after such date. Notwithstanding any other provision herein,
without the unanimous consent of the Holders, this paragraph (b) of this Section
10.2 may not be amended.
(c) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to be classified as an association taxable as a
corporation for United States federal income tax purposes or to fail or cease to
qualify for the exemption from status of an investment company under the 1940
Act.
39
(d) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation or liability on the Depositor.
(e) If any amendment to this Trust Agreement is made, the Administrators
or the Property Trustee shall promptly provide to the Depositor and to each
Holder of Preferred Securities a copy of such amendment.
(f) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
Section 10.3. Separability. If any provision in this Trust Agreement 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 TRUST AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF EACH OF THE HOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO
THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
Section 10.5. Payments Due on Non-Business Day. If the date fixed for any
payment on any Trust Security shall be a day that is not a Business Day, then
such payment need not be made on such date but may be made on the next
succeeding day that is a Business Day (except as otherwise provided in Sections
4.1(a)), 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 Trust Agreement shall be binding upon and
shall inure to the benefit of any successor to the Depositor, the Trust or to
any Trustee, including any successor by operation of law. Except in connection
with a consolidation, merger or sale involving the Depositor that is permitted
under Section 7.03 of the Subordinated Loan Agreement and pursuant to which the
assignee agrees in writing to perform the Depositor's obligations hereunder, the
Depositor shall not assign its obligations hereunder (any purported assignment
is contravention of this Section 10.6 being null and void).
Section 10.7. Headings. The Article and Section headings are for
convenience only and shall not affect the construction of this Trust Agreement.
Section 10.8. Reports, Notices and Demands. Any report, notice, demand or
other communication which by any provision of this Trust Agreement is required
or permitted to be given or served to or upon any Holder or the Depositor may be
given or served in writing by a recognized overnight delivery service (charges
prepaid), hand delivery or facsimile transmission (if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service, charges prepaid), in each case, addressed, (a) in the case of a Holder
of Preferred Securities, to such Holder as such Holder's name and address may
appear on the
40
Securities Register, and (b) in the case of the Holder of the Common Securities
or the Depositor, to Diamond Walnut Growers, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Chief Financial
Officer, facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇. Such notice, demand or other
communication to or upon a Holder shall be deemed to have been sufficiently
given or made, for all purposes, upon actual receipt by the Holder or Depositor.
Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Trust, the Property Trustee, the Delaware Trustee or the Administrators shall be
given in writing addressed (until another address provided by the Trust in
accordance with the provisions of this Section 10.8) as follows: (a) with
respect to the Property Trustee to Wilmington Trust Company, ▇▇▇▇▇▇ Square
North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
Corporate Trust Administration; (b) with respect to the Delaware Trustee, to
Wilmington Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Administration; and
(c) with respect to the Administrators, to them at the address above for notices
to the Depositor, marked "Attention Administrators of DW Capital Trust I." 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 Administrators,
Trustees and the Depositor agree for the benefit of the Holders that, until at
least one year and one day after the Trust has been terminated in accordance
with Article IX, they 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 Holders, 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 estopped and precluded therefrom and such
other defenses, if any, as counsel for the Trustee or the Trust may assert. The
provision of this Section 10.9 shall survive the termination of this Trust
Agreement.
Section 10.10. Acceptance of Terms of Trust Agreement, Guarantee Agreement
and Subordinated Loan Agreement. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY
OR ANY INTEREST THEREIN BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER,
WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL
INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THE TRUST
AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE
GUARANTEE AGREEMENT AND THE SUBORDINATED LOAN AGREEMENT, AND SHALL CONSTITUTE
THE AGREEMENT OF THE TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS
BETWEEN THE TRUST AND SUCH HOLDER AND SUCH OTHERS.
41
Section 10.11. Counterparts. The Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.
42
IN WITNESS WHEREOF, the undersigned have executed this Trust Agreement as
of the date first above written.
DIAMOND WALNUT GROWERS, INC., as Depositor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President and Chief Financial
Officer
WILMINGTON TRUST COMPANY, as Property
Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
__________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Vice President
WILMINGTON TRUST COMPANY, as Delaware Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
__________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇,
as Administrator
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
as Administrator
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
_____________________________________________
43
CERTIFICATE OF TRUST
OF
DW CAPITAL TRUST 1
THIS CERTIFICATE OF TRUST of
DW CAPITAL TRUST I
(the "Trust"), dated as of August 18, 1998, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (DEL. CODE. ▇▇▇., tit. 12,
Sections 3801 et seq.)
1. NAME. The name of the business trust formed hereby is DW Capital
Trust I.
2. DELAWARE TRUSTEE. The name and business address of a trustee of
the Trust in the State of Delaware is Wilmington Trust Company, ▇▇▇▇▇▇
Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. The business trust and this Certificate of Trust
shall become effective as of 9:00 A.M. (Eastern Daylight Time) on August
19, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust as of the day and year first written
above.
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
__________________________________________
Its Vice President
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
EXHIBIT A
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number One Common Security
A-1
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
DW CAPITAL TRUST I
COMMON SECURITIES
DW Capital Trust I, a business trust created under the laws of the State
of Delaware (the "Trust"), hereby certifies that Diamond Walnut Growers, Inc.,
an incorporated non-stock cooperative marketing association organized under the
Food and Agricultural Code of the State of California (the "Holder"), is the
registered owner of one share of common securities of the Trust, representing an
undivided beneficial interest in the assets of the Trust and designated the
Common Security (Liquidation Preference $464,000 per Common Security) (the
"Common Security"). Except as provided in Section 5.10 of the Trust Agreement
(as defined below), the Common Security is not transferable and any attempted
transfer hereof shall be null and void. The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Common Security
are set forth in, and this certificate and the Common Security represented
hereby is issued and shall in all respect be subject to the terms and provisions
of, the Trust Agreement of the Trust dated as of August 19, 1998, as the same
may be amended from time to time (the "Trust Agreement"), including the
designation of the terms of the Common Security as set forth therein. The Trust
will furnish a copy of the Trust Agreement to the Holder without charge upon
written request to the Trust as its principal place of business or registered
office.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY
OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE
SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE SUBORDINATED
LOAN AGREEMENT, AND SHALL CONSTITUTE THE AGREEMENT OF .THE TRUST, SUCH HOLDER
AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THE TRUST AGREEMENT SHALL BE
BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH HOLDER AND SUCH
OTHERS.
By receipt and acceptance of this certificate, the Holder agrees to be
bound by the Trust Agreement and is entitled to the benefits thereunder.
EXHIBIT B
(to Trust Agreement)
IN WITNESS WHEREOF, the undersigned Administrator of the Trust has
executed this certificate as of the __ day of August, 1998.
DW CAPITAL TRUST I
By:__________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Administrator
2
Certificate Number Number of Preferred Securities
P- 15
PRIVATE PLACEMENT NO.____________
Certificate Evidencing Preferred Securities
of
DW Capital Trust I
7.20% Cumulative Recourse Offered Preferred Securities
(Liquidation Preference $1,000,000 per Preferred Security)
DW Capital Trust I, a business trust created under the laws of the State
of Delaware (the "Trust"), hereby certifies that ______________ (the "Holder")
is the registered owner of the number of shares set forth above of preferred
securities of the Trust representing an undivided beneficial interest in the
assets of the Trust and designated the DW Capital Trust I 7.20% Cumulative
Recourse Offered Preferred Securities (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 Trust
Agreement (as defined below). The designations, rights, privileges,
restrictions, preference and other terms and provisions of the Preferred
Securities are set forth in, and this certificate and the Preferred Securities
represented hereby as issued and shall in all respects be subject to the terms
and provisions of, the Trust Agreement of the Trust, dated as of August ___,
1998, as the same may be amended from time to time (the "Trust Agreement"),
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 Diamond Walnut Growers, Inc., an incorporated non-stock
cooperative marketing association organized under the Food and Agricultural Code
of the State of California, dated as of August ___, 1998 (the "Guarantee
Agreement"), to the extent provided therein. The Trust will furnish a copy of
the Trust Agreement and the Guarantee Agreement to the Holder without charge
upon written request to the Trust as its principal place of business or
registered office.
By receipt and acceptance of this certificate, the Holder agrees to be
bound by the Trust Agreement and is entitled to the benefits thereunder.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY
OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE
SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AGREEMENT AND THE
SUBORDINATED LOAN AGREEMENT, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST,
SUCH HOLDER AND SUCH OTHERS
EXHIBIT C
(to Trust Agreement)
THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING,
OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH HOLDER AND SUCH OTHERS.
IN WITNESS WHEREOF, the undersigned Administrator of the Trust has
executed this certificate as of the ____ day of August, 1998.
DW CAPITAL TRUST I
By:__________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Administrator
2
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Securities 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 Securities Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side
of this Preferred Security Certcate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SUCH ACT AND LAWS.
EXHIBIT D
(to Trust Agreement)
================================================================================
GUARANTEE AGREEMENT
by
DIAMOND WALNUT GROWERS, INC.
----------------------------------
DW CAPITAL TRUST I
----------------------------------
Dated as of August 20, 1998
================================================================================
TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE I DEFINITIONS............................................................ 1
ARTICLE II GUARANTEE.............................................................. 2
Section 2.1. Guarantee..................................................... 2
Section 2.2. Waiver of Notice and Demand................................... 2
Section 2.3. Obligations Not Affected...................................... 2
Section 2.4. Rights of Holders............................................. 3
Section 2.5. Guarantee of Payment.......................................... 3
Section 2.6. Subrogation................................................... 4
Section 2.7 Independent Obligations....................................... 4
Section 2.8. Rights upon Dissolution of Guarantor.......................... 4
ARTICLE III COVENANTS AND SUBORDINATION............................................ 4
Section 3.1. Subordination................................................. 4
Section 3.2. Pari Passu Guarantees......................................... 4
Section 3.3. Subordinated Loan Agreement Covenants......................... 5
ARTICLE IV TERMINATION............................................................ 5
Section 4.1. Termination................................................... 5
ARTICLE V MISCELLANEOUS.......................................................... 5
Section 5.1. Successors and Assigns........................................ 5
Section 5.2. Amendments.................................................... 5
Section 5.3. Notices....................................................... 5
Section 5.4. Benefit....................................................... 6
Section 5.5. Governing Law................................................. 6
i
GUARANTEE AGREEMENT dated as of August 20, 1998 is executed and delivered
by DIAMOND WALNUT GROWERS, INC., an incorporated non-stock cooperative marketing
association organized under the Food and Agricultural Code of the State of
California (the "Guarantor") having its principal office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ for the benefit of the
Holders (as defined in the Trust Agreement) from time to time of the Preferred
Securities (as defined below) of DW CAPITAL TRUST I, a Delaware business trust
(the "Issuer").
WITNESSETH:
WHEREAS, pursuant to a Trust Agreement dated as of August 19, 1998 (the
"Trust Agreement") among the Guarantor as Depositor, the Property Trustee, the
Delaware Trustee and the Administrators named therein, the Issuer is issuing
$15,000,000 aggregate Liquidation Preference (as defined in the Trust Agreement)
of its 7.20% Cumulative Recourse Offered Preferred Securities (the "Preferred
Securities") representing preferred undivided beneficial interests in the assets
of the Issuer and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined in the Trust Agreement), will be used to purchase
the Subordinated Note (as defined herein) of the Guarantor, which will be
deposited with Wilmington Trust Company, as Property Trustee under the Trust
Agreement, as trust assets; and
WHEREAS, to induce the Holders to purchase the Preferred Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to guarantee the payment and performance by the Issuer of the
Guaranteed Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the purchase by each Holder of the
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:
ARTICLE I
DEFINITIONS
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings:
"Guaranteed Payments" means the following payments or distributions
due and payable by the Issuer with respect to the Preferred Securities if
and to the extent such payments are not fully and timely made by or on
behalf of the Issuer: (i) any accumulated and unpaid Distributions (as
defined in the Trust Agreement) required to be paid on the Preferred
Securities, to the extent the Issuer shall have funds on hand available
therefor at such time, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price") and the Make-Whole Loan Amount (as defined in the
Trust Agreement), if any, with respect to any Preferred Securities
1
required to be redeemed or called for redemption by the Issuer, to the
extent the Issuer shall have funds on hand available therefor at such
time, and (iii) upon a voluntary or involuntary termination, winding up or
liquidation of the Issuer, the Iesuer of (a) the aggregate of the then
applicable Liquidation Preference per Preferred Security plus accumulated
and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent that the Issuer shall have funds available therefor
at such time and (b) the amount of assets of the Issuer remaining
available for distribution to Holders of the Preferred Securities in
liquidation of the Issuer (in either case, the "Liquidation
Distribution").
"Majority in Liquidation Preference of the Preferred Securities" means the
Holders of more than 66-2/3% of the Liquidation Preference of all Preferred -
Securities.
"Subordinated Loan Agreement" means the Subordinated Loan Agreement dated
August 20, 1998 between the Guarantor and the Issuer.
"Subordinated Note" means the Subordinated Note dated August 20, 1998
issued by the Guarantor pursuant to the Subordinated Loan Agreement, or any
instrument issued in replacement thereof.
Capitalized and other defined terms used but not otherwise defined herein shall
have the meanings assigned to such terms in the Trust Agreement as in effect on
the date hereof.
ARTICLE II
GUARANTEE
Section 2.1 Guarantee. The Guarantor irrevocably, absolutely and
unconditionally agrees to pay the Guaranteed Payments in full to the Holders of
the Preferred Securities (without duplication of amounts theretofore paid by or
on behalf of the Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guaranteed Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders of the Preferred Securities
or by causing the Issuer to pay such amounts to such Holders.
Section 2.2 Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of this 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 Issuer 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 2.3 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 Issuer of any express or implied
agreement, covenant, term or
2
condition relating to the Preferred Securities (or any document relating
thereto) to be performed or observed by the Issuer, subject to any
applicable statutes of limitations;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders of the Preferred Securities to enforce, assert or exercise any
right, privilege, power or remedy conferred on such Holders, subject to
any applicable statutes of limitations, pursuant to the terms of the
Preferred Securities (or any document relating thereto), or any action on
the part of the Holders of the Preferred Securities 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
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities (o any document relating thereto);
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred;
(g) any lack or limitation of the status, power, incapacity or
disability of the Issuer or any trustee or agent thereof; or
(h) any other circumstances whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor,
subject to any applicable statutes of limitations, it being the intent of
this Section 2.3 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 of the Preferred Securities to give
notice to, or obtain the consent of, the Guarantor with respect to the happening
of any of the foregoing.
Section 2.4 Rights of Holders. The Guarantor expressly acknowledges that
any Holder of the Preferred Securities 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 Issuer or any other
Person.
Section 2.5 Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not be
discharged except by payment of the Guaranteed Payments in full (without
duplication of amounts theretofore paid by the Issuer).
3
Section 2.6 Subrogation. The Guarantor shall. be subrogated to all (if
any) rights of the Holders of the Preferred Securities against the Issuer in
respect of any amounts paid to such Holders by the Guarantor under this
Guarantee Agreement; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Guarantee Agreement, unless and until the Guaranteed Payments have been
indefeasibly paid in full. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders of the Preferred Securities and to pay over such amount to
such Holders, as their interests may appear.
Section 2.7 Independent Obligations. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guaranteed Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 2.3 hereof.
Section 2.8 Rights upon Dissolution of Guarantor. In the event of any
Bankruptcy Event (as defined in the Trust Agreement) of the Guarantor, each
Holder of a Preferred Security shall be entitled to obtain payment under this
Guarantee, subject to the provisions of Article III, in respect of an amount
equal to. the full Liquidation Preference of such Preferred Security (to the
extent not previously paid by the Issuer) plus any Make-Whole Amount with
respect thereto, irrespective of the existence of any similar such case,
proceeding, dissolution, liquidation or other winding up or event in respect of
the Issuer or the existence of sufficient legally available funds and cash of
the Issuer to pay such Liquidation Preference and Make-Whole Amount. The
consolidation of the Guarantor with, or the merger of the Guarantor into,
another Person or the liquidation or dissolution of the Guarantor following
conveyance or transfer of its properties and assets substantially as an entirety
to another Person upon the terms and conditions set forth in Section 7.03 of the
Subordinated Loan Agreement shall not be deemed a Bankruptcy Event of the
Guarantor for the purposes of this Section if the person formed by such
consolidation or into which the Guarantor is merged or that acquired by
conveyance or transfer such properties and assets substantially as an entirety,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions set forth in such Section 7.03.
ARTICLE III
COVENANTS AND SUBORDINATION
Section 3.1 Subordination. The rights of the Holders of the Preferred
Securities hereunder shall be subordinated to all Senior Indebtedness (as
defined in the Subordinated Loan Agreement) in the same manner and on the same
terms, and shall rank pari passu with the rights of the Trust, as set forth in
Article V of the Subordinated Loan Agreement.
Section 3.2 Pari Passu Guarantees. The obligations of the Guarantor under
this Guarantee Agreement shall rank pari passu with the obligations of the
Guarantor under any similar guarantee agreements issued by the Guarantor on
behalf of the holders of preferred securities similar to the Preferred
4
Securities and issued by any Affiliate (as defined in the Subordinated Loan
Agreement).
Section 3.3 Subordinated Loan Agreement Covenants. The Guarantor agrees
that the covenants made in Article VII of the Subordinated Loan Agreement have
been made for the benefit of the Holders of the Preferred Securities and such
covenants shall be incorporated herein as if fully stated herein.
ARTICLE IV
TERMINATION
Section 4.1 Termination. This Guarantee Agreement shall terminate and be
of no further force and effect upon (i) the date on which full payment has been
made of all amounts payable to all Holders of the Preferred Securities (whether
upon redemption, liquidation, exchange or otherwise) and no Preferred Securities
remain outstanding or (ii) termination of the Trust as provided in Section 9.3
of the Trust Agreement. 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 of the Preferred Securities must restore, return or repay
payment of any sums paid with respect to Preferred Securities or this Guarantee
Agreement.
ARTICLE V
MISCELLANEOUS
Section 5.1 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 VII of the Subordinated Loan Agreement and pursuant to
which the successor or assignee agrees in writing to perform the Guarantor's
obligations hereunder, the Guarantor shall not assign its obligations hereunder.
Section 5.2 Amendments. This Guarantee Agreement may only be amended, or
performance hereunder by the Guarantor waived, with the prior approval of the
Holders of not less than a Majority in Liquidation Preference of the Preferred
Securities.
Section 5.3 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 (if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service, charges prepaid) or sent by a recognized overnight delivery service
(charges prepaid) as follows:
(a) if given to the Guarantor, to the address set forth below or
such other address, facsimile number or to the attention of such other
Person as the Guarantor may give notice to the Holders of the Preferred
Securities:
5
Diamond Walnut Growers, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
(b) if given to the Issuer, at the Issuer's address set forth below
or such other address as the Issuer may give notice to the Holders of the
Preferred Securities:
DW Capital Trust I
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Administrators of DW Capital Trust I
with a copy to:
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
(c) if given to any Holder of the Preferred Securities, at the
address set forth on the Securities Register.
All notices hereunder shall be deemed to have been given when received in
person, telecopied (if the sender on the same day sends a confirming copy of
such notice by a recognized overnight delivery service, charges prepaid), or
sent by a recognized overnight delivery service (charges prepaid), except that
if a notice or other document is refused delivery or cannot be delivered because
of a changed address of which no notice was given, such notice or other document
shall be deemed to have been delivered on the date of such refusal or inability
to deliver.
Section 5.4 Benefit. This Guarantee Agreement is solely for the benefit of
the Holders and is not separately transferable from the Preferred Securities.
Section 5.5 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.
6
In Witness Whereof, the undersigned has executed this Guarantee Agreement
as of the date first above written.
DIAMOND WALNUT GROWERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
______________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President and Chief Financial
Officer
7
================================================================================
SUBORDINATED LOAN AGREEMENT
between
DIAMOND WALNUT GROWERS, INC.
and
DW CAPITAL TRUST I
Dated as of August 20, 1998
================================================================================
1
TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE I DEFINITIONS.................................................................. 1
ARTICLE II THE LOAN..................................................................... 6
Section 2.01. The Loan................................................................ 6
Section 2.02. Mandatory Repayment..................................................... 6
Section 2.03. Voluntary Repayment..................................................... 6
Section 2.04. Agreed Tax Treatment.................................................... 7
ARTICLE III INTEREST..................................................................... 7
Section 3.01. Interest on the Loan.................................................... 7
Section 3.02. Deferral of Interest Payment............................................ 7
ARTICLE IV PAYMENTS..................................................................... 8
Section 4.01. Method and Date of Payment.............................................. 8
Section 4.02. Set-Off................................................................. 8
ARTICLE V SUBORDINATION................................................................ 8
Section 5.01. Subordination........................................................... 8
ARTICLE VI REPRESENTATIONS AND WARRANTIES............................................... 10
Section 6.01. Representations and Warranties.......................................... 10
ARTICLE VII COVENANTS.................................................................... 12
Section 7.01. Existence............................................................... 12
Section 7.02. Nature of Business...................................................... 12
Section 7.03. Consolidation, Merger and Sale of Assets................................ 12
Section 7.04. Insurance............................................................... 13
Section 7.05. Taxes, Claims for Labor and Materials, Compliance with Laws............. 14
Section 7.06. Regulatory Compliance................................................... 14
Section 7.07. Repurchase of Preferred Securities...................................... 14
Section 7.08. Transactions with Affiliates............................................ 14
Section 7.09. Termination of Pension Plans............................................ 15
Section 7.10. Ownership of the Trust.................................................. 15
Section 7.11. Financial and Business Information...................................... 15
Section 7.12. Limitations on Distributions............................................ 17
Section 7.13. Limitation on Debt...................................................... 17
Section 7.14. Cooperative Existence; No Amendment..................................... 17
Section 7.15. Limitation on Liens..................................................... 17
Section 7.16. Limitation on Member Notes.............................................. 18
i
ARTICLE VIII EVENTS OF DEFAULT....................................................... 18
Section 8.01. Events of Default............................................... 18
Section 8.02. Acceleration.................................................... 20
Section 8.03. Other Remedies.................................................. 20
Section 8.04. No Waivers or Election of Remedies, etc......................... 21
ARTICLE IX MISCELLANEOUS........................................................... 21
Section 9.01. Notices......................................................... 21
Section 9.02. Binding Effect.................................................. 21
Section 9.03. Governing Law................................................... 21
Section 9.04. Counterparts.................................................... 21
Section 9.05. Amendments...................................................... 22
ii
SUBORDINATED LOAN AGREEMENT dated as of August 20, 1998 between Diamond
Walnut Growers, Inc., an incorporated non-stock cooperative marketing
association organized under the Food and Agricultural Code of the State of
California (the "Company"), and DW Capital Trust I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust") in accordance with
the Trust Agreement dated as of August 19, 1998 among the Company, Wilmington
Trust Company, as Property Trustee, Wilmington Trust Company, as Delaware
Trustee, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, not in their individual
capacities but solely as Administrators of the Trust (the "Trust Agreement").
WHEREAS, the sole purpose for which the Trust was formed is to issue
preferred and common securities pursuant to the Trust Agreement (respectively,
"Preferred Securities" and "Common Securities") and to lend the net proceeds
thereof to the Company (the Company guaranteeing, in connection therewith, the
payment obligations of the Trust with respect to such Preferred Securities to
the extent set forth in the Guarantee Agreement referred to herein); and
WHEREAS, the Trust has on the date hereof issued Common Securities and
Preferred Securities and the Company has requested the Trust to make a loan to
the Company in the aggregate principal amount of $15,464,000, representing the
proceeds received by the Trust from the issuance of such securities;
NOW, THEREFORE, the Trust agrees to lend and the Company agrees to borrow
such amount on the terms and conditions set forth herein:
ARTICLE I
DEFINITIONS
As used in this Agreement, the terms set forth below shall have the
following meanings. Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Trust Agreement.
"Affiliate" shall have the meaning set forth in the Trust Agreement.
"Bankruptcy Event" shall have the meaning set forth in the Trust
Agreement.
"Business Day" shall have the meaning set forth in the Trust Agreement.
"Capital Retains" means amounts due to Members as retained equity capital
or undistributed allocated net savings, or which otherwise represent similar
retained payments.
"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a balance sheet of the lessee
in accordance with U.S. GAAP.
"Capitalized Rentals" shall mean as of the date of any determination the
amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which the Company or any Subsidiary is a lessee would
be reflected as a liability on a consolidated balance sheet of the Company.
1
"Company Bankruptcy Event" shall mean any Bankruptcy Event with respect to
the Company.
"Debt" of any person shall mean (i) all indebtedness with respect to
borrowed money of such Person and all indebtedness of such Person evidenced by
notes, bonds, debentures or similar evidences of indebtedness, (ii) the
aggregate amount of Capitalized Rentals of such Person, (iii) all indebtedness
secured by a Lien on any assets of such Person, whether or not the same would be
classified as a liability on a balance sheet, (iv) all obligations of such
Person representing the deferred purchase price of property, except accounts
payable of such Person which are not past due, (v) Swaps of such Person and (vi)
all Guaranties of such Person in respect of any obligations or liabilities of
others.
"Default" shall mean any event, act or condition that, with the giving of
notice or the passage of time, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.01(b).
"ERISA" shall have the meaning set forth in the Purchase Agreement.
"ERISA Affiliate" shall have the meaning set forth in the Purchase
Agreement.
"Event of Default" shall have the meaning set forth in Section 8.01.
"Expense Agreement" shall have the meaning set forth in the Trust
Agreement.
"Governmental Authority" means
(a) the government of (i) the. United States of America and any
state thereof or other political subdivision thereof, or (ii) any
jurisdiction in which the Company or any of its Affiliates conducts all or
any part of its business, or which asserts jurisdiction over any
properties of the Company or any of its Affiliates, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guarantee or Guaranties" by any Person means all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt, dividend or other obligation, of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without limitation,
all obligations incurred through an agreement, contingent or otherwise, by such
Person: (i) to purchase such Debt or obligation or any property or assets
constituting security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of such Debt or obligation, (y) to maintain fixed charge
coverage, working capital or other income or balance sheet condition or
otherwise to advance or make available funds for the purchase or payment of such
Debt or obligation, or (iii) to lease property or to purchase other property or
services primarily for the purpose of assuring the owner of such Debt or
obligation of the ability of the primary obligor to make payment of the Debt or
obligation, or (iv) otherwise to assure the owner of the Debt or obligation of
the primary obligor against loss in respect thereof.
2
For the purposes of all computations made under this Agreement, a Guaranty in
respect of any Debt for borrowed money shall be deemed to be Debt equal to the
principal amount of such Debt for borrowed money which has been guaranteed, and
a Guaranty in respect of any other obligation or liability or any dividend shall
be deemed to be Debt equal to the maximum aggregate amount of such obligation,
liability or dividend.
"Guarantee Agreement" shall have the meaning set forth in the Trust
Agreement.
"Holders" shall have the meaning set forth in the Trust Agreement.
"Institutional Investor" shall have the meaning set forth in the Purchase
Agreement.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements), and any agreement to give any such Lien.
"Loan" shall have the meaning set forth in Section 2.01.
"Make-Whole Loan Amount" shall have the meaning set forth in 2.03.
"Mandatory Repayment Amount" shall be an amount equal to the amount set
forth in Section 2.02 under the heading Mandatory Repayment Amount for the
applicable Mandatory Repayment Date (as may be reduced pursuant to the
provisions of said Section).
"Mandatory Repayment Date" shall be the applicable date set forth in
Section 2.02 under the heading Mandatory Repayment Date.
"Material" when capitalized, shall mean material in relation to the
business, operations, affairs, financial condition, assets, properties or
prospects of the Company and the Subsidiaries taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, affairs, financial condition, assets, or properties of the
Company and the Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement, the Guarantee Agreement, the
Expense Agreement, the Subordinated Note, the Purchase Agreement or the Trust
Agreement, or (c) the validity or enforceability of this Agreement, the
Guarantee Agreement, the Expense Agreement, the Subordinated Note, the Trust
Agreement, the Purchase Agreement or the Preferred Securities.
"Member Notes" means unsecured and non-subordinated indebtedness for money
borrowed by the Company from Members and employees of the Company evidenced by
short-term promissory notes bearing interest at market rates issued to Members
and to employees of the Company, as applicable, in compliance with the
provisions of Section 7.16.
3
"Member Payments" means all payments due from the Company to its Members,
whether payments of Capital Retains, semi-monthly advance payments, product
payments, payments on indebtedness or otherwise, but shall not include dividends
and distributions payable solely in equity interests in the Company and shall
not include payments with respect to Member Notes.
"Members" means members of the Company.
"Multiemployer Plan" shall have the meaning set forth in the Purchase
Agreement.
"Past Due Amount" shall mean in relation to the Loan that portion of the
interest, principal or Make-Whole Loan Amount which is due for payment and which
is not, whether by reason of default or otherwise (including interest which
remains unpaid as a consequence of a deferral under Section 3.02), paid on the
due date. Interest on the Past Due Amount shall accrue from the scheduled due
date until paid in full at the Default Rate. Interest on the Past Due Amount
shall accrue as interest on a separate loan rather than being added to the
outstanding principal, and interest on such amount will accrue and be payable at
the Default Rate, while interest on the principal of the Loan which does not
constitute a Past Due Amount will accrue at the Scheduled Rate.
"PBGC" shall have the meaning set forth in the Purchase Agreement.
"Person" shall have the meaning set forth in the Trust Agreement. "Plan" shall
have the meaning set forth in the Purchase Agreement.
"Person" shall have the meaning set forth in the Trust Agreement.
"Plan" shall have the meaning set forth in the Purchase Agreement.
"Preferred Securities" shall mean the 7.20% Cumulative Recourse Offered
Preferred Securities issued by DW Capital Trust I, the proceeds of which have
provided a portion of the funds for the loan and for which the interest and
principal payments to the Loan will provide the distribution and redemption
thereof.
"Purchase Agreement" shall have the meaning set forth in the Trust
Agreement.
"Rentals" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Company, as lessee or sublessee under a lease of real
or personal property, but shall be exclusive of any amounts required to be paid
by the Company (whether or not designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes and similar charges. Fixed
rents under any so-called "percentage leases" shall be computed solely on the
basis of the minimum rents, if any, required to be paid by the lessee regardless
of sales volume or gross revenues.
"Scheduled Rate" shall have the meaning set forth in Section 3.01.
"Senior Indebtedness" shall have the meaning set forth in Section 5.01.
"Specified Senior Indebtedness" shall mean, (i) the Master Loan Agreement
between CoBank, ACB and the Company, dated January 3, 1996, as supplemented and
amended, and the Credit Agreement between Bank of America National Trust and
Savings Association and the Company, dated February 26, 1998, and (ii) any other
indebtedness of the Company for money borrowed, or guarantees of the Company of
indebtedness for money borrowed by any other
4
person, hereafter created, incurred or assumed, in each case in an outstanding
principal amount of at least $5,000,000 and, with respect to indebtedness
created after the date of execution of this Agreement, which is designated as
Specified Senior Indebtedness for the purposes hereof at the time of the
creation thereof by the Company.
"Subordinated Note" shall have the meaning set forth in Section 2.01.
"Subsidiary" shall mean, for the Company, any corporation, trust or other
entity of which the Company owns more than 50% of the outstanding stock (or
comparable equity interest having ordinary voting power for the election of the
Board of Directors or administrators, as applicable) of such corporation, trust
or similar governing body in the case of a non-corporation (irrespective of
whether or not, at the time, stock or other equity interests of any other class
or classes of such corporation or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned by the Company or by one or more of its other Subsidiaries.
"Subsidiary Bankruptcy Event" shall mean any Bankruptcy Event with respect
to a Subsidiary.
"Suspension Event" shall have the meaning specified in Section 5.01.
"Swaps" shall mean, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Total Capitalization" shall mean, with respect to the Company, as of any
time the same is to be determined, the aggregate of the following: (i) the
Company's Total Debt; (ii) the Subordinated Note; and (iii) Total Members'
Equity.
"Total Debt" shall mean, with respect to the Company, as of any time the
same is to be determined, the aggregate (calculated on a consolidated basis) of
all Debt of the Company and Subsidiaries; provided, however, that the
obligations incurred by the Company and the Trust in connection with the Loan
and the Preferred Securities and any other securities ranking pari passu with
the Subordinated Note or junior (on terms at least as favorable to the
Subordinated Note as the provisions of Article V hereof are in respect of
Specified Senior Indebtedness) to the Subordinated Note and which have an
average life greater than the maturity of the Subordinated Note shall not be
treated as Debt for purposes of this definition of "Total Debt."
"Total Members' Equity" shall mean the Members' equity in the Company and
its Subsidiaries, determined on a consolidated basis in accordance with U.S.
GAAP, consistently applied.
5
"Trust Agreement" shall have the meaning set forth in the preamble hereto.
"Unscheduled Redemption" shall have the meaning set forth in the Trust
Agreement.
"U.S. GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
ARTICLE II
THE LOAN
Section 2.01. The Loan. Subject to the terms and conditions herein, the
Trust agrees to make a subordinated loan to the Company on the date hereof in
the principal amount of $15,464,000 (the "Loan"). The Loan shall be evidenced by
a subordinated promissory note (the "Subordinated Note") of the Company to the
Trust, substantially in the form of Exhibit A hereto.
Section 2.02 Mandatory Repayment. The Loan shall be repaid (together with
any accrued and unpaid interest thereon) in three scheduled installments each of
which, when paid to the Holders, shall reduce the outstanding principal amount
of the Loan by the Mandatory Repayment Amount then paid. Such scheduled
mandatory repayment shall be made on the dates and in the amounts set forth
below with respect to the Subordinated Note; provided that, upon any partial
repayment of the Loan pursuant to Section 2.03, the Mandatory Repayment Amounts
becoming due under this Section 2.02 on or after the date of such prepayment or
acquisition shall be reduced in the same proportion as the aggregate principal
amount of the Loan is reduced as a result of such prepayment.
MANDATORY REPAYMENT DATE MANDATORY REPAYMENT AMOUNT
August 20, 2009 $ 5,000,000
August 20, 2010 $ 5,000,000
August 20, 2011 $ 5,464,000
Section 2.03 Voluntary Repayment. The Company shall have the right at any
time to repay the Loan, in whole or in part (together with any accrued but
unpaid interest, including interest at the Default Rate on any Past Due Amounts,
if any, plus the Make-Whole Loan Amount (as defined below), if any, on the
portion being repaid) at any time on or after the date hereof, in an amount not
less than $1,000,000 in the case of a partial repayment and in amounts in
integral multiples of $1,000,000 in excess thereof. The term "Make-Whole Loan
Amount" means, with respect to any portion of the Loan to be repaid, the
Make-Whole Loan Amount, which the Trust shall be required to pay upon the
corresponding Unscheduled Redemption of Preferred Securities required under the
Trust Agreement to occur concurrently with any repayment of the Loan pursuant to
this Section 2.03. The Company shall give notice in writing to the Trust at such
times and within such period prior to the proposed date of repayment as shall
permit the Trust to call for an Unscheduled Redemption of Trust Securities in
the amount of the proposed repayment in accordance with the terms of the Trust
Agreement. The amount of such
6
repayment specified in such notice will become due and payable on the date
specified in such notice.
Section 2.04 Agreed Tax Treatment. The Subordinated Note issued hereunder
shall provide that the Company and, by its acceptance of such Subordinated Note,
the Trust, and any Person that acquires a beneficial interest in, such
Subordinated Note agree that for United States federal, state and local tax
purposes it is intended that such Subordinated Note constitutes indebtedness.
ARTICLE III
INTEREST
Section 3.01 Interest on the Loan. (a) Scheduled Interest. Except as set
forth below, the Loan shall bear interest at an annual rate of 7.20% (the
"Scheduled Rate") from the date it is made until maturity. Such interest shall
be payable each February 20, May 20, August 20 and November 20, commencing
November 20, 1998. Interest will be computed on the basis of a 360-day year and
twelve 30-day months and, for any interest period that is shorter than a full
calendar quarter, will be calculated on the basis of the number of days elapsed
in a 360-day year of twelve 30-day months. If any date on which interest is
payable on the Loan is not a Business Day, then payment of the interest due on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next calendar year, such payment shall be
made on the immediately preceding Business Day.
(b) Default Interest. After the occurrence and during the continuance of
an Event of Default under Section 8.01 (a) or (b), interest shall accrue and be
payable on the Past Due Amount at an annual rate of 9.20% (the "Default Rate ")
from the date such amount shall be due until such amount shall be paid in full.
(c) Deferral Interest. In the event of a deferral of the payment of
interest as provided in Section 3.02, interest shall accrue on the Loan and on
any Past Due Amount during the deferral period at the Default Rate.
Section 3.02 Deferral of Interest Payment. Notwithstanding the provisions
of Section 3.01, so Iong as no Default or Event of Default has occurred and is
continuing, the Company shall have the right, upon notice in writing to the
Trust not less than ten Business Days prior to the relevant interest payment
date, to elect to defer payment of interest (but not to defer any installment of
principal or Mandatory Repayment Amount) until the next following interest
payment date, upon which date the Company shall pay interest accrued on the Loan
and on the Past Due Amount at the Default Rate, until the principal and interest
due at the end of such deferral period has been paid in full. The Company may
elect to defer interest on the Loan in accordance with this Section 3.02 for not
more than four consecutive interest payment dates; provided that at any interest
payment date on which the Company elects to defer interest on the Loan, the
aggregate number of interest payment dates, prior to and including the current
interest payment date on which the Company has elected to defer interest on the
Loan pursuant to this Section 3.02 is not more than ten interest payment dates
during the term of the Loan.
7
ARTICLE IV
PAYMENTS
Section 4.01 Method and Date of Payment. Each payment by the Company of
principal and interest (including Default Interest, if applicable, and
Make-Whole Loan Amount, if any, on the Loan shall be made to the Trust in United
States Dollars to the Payment Account (as defined in the Trust Agreement) or
such other place or account as may be designated by the Trust.
Section 4.02 Set-Off. Notwithstanding anything to the contrary herein, the
Company shall have the right to set-off any payment it is otherwise required to
make hereunder (a "relevant payment") with and to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
corresponding payment in the same amount under the Guarantee Agreement in
respect of such relevant payment.
ARTICLE V
SUBORDINATION
Section 5.01 Subordination. The Company and the Trust covenant and agree
that the Loan is subordinate and junior in right of payment to all Senior
Indebtedness as provided herein. The term "Senior Indebtedness" shall mean the
principal, interest and other amounts due on (i) indebtedness of the Company for
money borrowed, whether outstanding on the date of execution of this Agreement
or thereafter created, incurred or assumed, including, without limitation, the
Member Notes, (ii) guarantees by the Company of indebtedness for money borrowed
by any other person, whether outstanding on the date of execution of this
Agreement or thereafter created, incurred or assumed, (iii) support undertakings
or keep-well agreements of the Company, which are enforceable by creditors or
lenders to, or holders of securities issued by, the party to which (or for whose
benefit) the Company gave such undertaking or agreement, whether outstanding on
the date of execution of this Agreement or thereafter created, incurred or
assumed; (iv) indebtedness evidenced by notes, debentures, bonds or other
instruments of indebtedness for the payment of which the Company is responsible
or liable, directly or indirectly, by guarantees, support undertakings or
keep-well agreements, whether outstanding on the date of execution of this
Agreement or thereafter created, incurred or assumed, (v) obligations of the
Company under any Capitalized Lease, whether outstanding on the date of
execution of this Agreement or thereafter created, incurred or assumed;
provided, however, that the term Senior Indebtedness shall not include any (x)
indebtedness, guaranties or other obligations of the Company which contain or
have applicable thereto subordination provisions providing for the subordination
of such indebtedness, guaranties or other obligations to Senior Indebtedness of
the Company substantially in the form of Article V and (y) any obligations owing
to the Members of the Company (including Member Payments, but excluding Member
Notes). The Senior Indebtedness shall continue to be Senior Indebtedness and
entitled to the benefits of these subordination provisions irrespective of any
amendment, modification or waiver of any term of the Senior Indebtedness or
extension or renewal of the Senior Indebtedness.
If (i) the Company shall default in the payment of any principal, premium,
if any, or interest on any Specified Senior Indebtedness when the same becomes
due and payable, whether
8
at maturity or at a date fixed for prepayment or declaration or otherwise or
(ii) an event of default occurs with respect to any Specified Senior
Indebtedness permitting the holders thereof to accelerate the maturity thereof
and written notice of such event of default is given to the Company by any such
holder (a "Suspension Event"), then
(a) during any period in which the holders of said Specified Senior
Indebtedness shall have accelerated the payment thereof and shall be
diligently, and in good faith, pursuing the remedies available to them
with respect to such default in payment or event of default, unless and
until such default in payment or event of default shall have been cured or
waived or shall cease to exist, no direct or indirect payment (in cash,
property, securities, by set off or otherwise) shall be made on account of
the Loan or interest thereon or in respect of any repayment, redemption,
retirement, purchase or other acquisition of the Loan; and
(b) during any period not described in clause (a) above, unless and
until the earlier to occur of (x) such default in payment or event of
default being cured or waived or ceasing to exist, or (y) the commencement
of the 150th consecutive day of payment blockage pursuant to the
provisions of this clause (b), no direct or indirect payment (in cash,
property, securities, by set off or otherwise) shall be made on account of
the Loan or interest thereon or in respect of any repayment, redemption,
retirement, purchase or other acquisition of the Loan; provided, however,
that (i) no more than two blockage periods under this clause (b) may occur
during any period of 365 consecutive days and (ii) no facts or
circumstances giving rise to a blockage period under this clause (b) may
be used as a basis for any subsequent blockage period hereunder.
The Company will give prompt written notice to the Trust of any Suspension
Event. In the event that payments on the Loan shall by this provision be
deferred or suspended, then until resumed and cured, the Company shall not make
or permit any Subsidiary to make any Member Payments and shall not make any
other distributions of capital, profits, retained amounts or any other assets to
its Members and shall not redeem, purchase, acquire or make a liquidation or
other payment with respect to any rights or interests of Members as owners or
creditors of the Company or shares of capital stock or their equivalent;
provided, however, that the Company may continue to make payments on Member
Notes.
In the event of (i) any Company Bankruptcy Event, (ii) any proceeding for
the liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving a Company Bankruptcy Event, (iii) any
assignment by the Company for the benefit of creditors, or (iv) any other
marshaling of the assets of the Company, all Senior Indebtedness shall first be
paid in full before any payment or distribution, whether in cash, securities or
other property, shall be made by the Company on account of the Loan. In any such
event, any payment or distribution, whether in cash, securities or other
property (other than securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment, the payment of which is
subordinate, at least to the extent provided in the subordination provisions
hereof with respect to the indebtedness evidenced by the Loan, to the payment of
all Senior Indebtedness at the time outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment), which
would otherwise (but for the subordination provisions hereof) be payable or
deliverable in respect of the Loan (including
9
any such payment or distribution which may be payable or deliverable by reason
of the payment of any other indebtedness of the Company being subordinated to
the payment of the Loan) shall be paid or delivered directly to the holders of
Senior Indebtedness or to their representative, or to the trustee under the
indenture or agreement (if any) pursuant to which Senior Indebtedness may have
been issued, in accordance with the priorities then existing among such holders
until all Senior Indebtedness shall have been paid in full. No present or future
holder of any Senior Indebtedness shall be prejudiced in the right to enforce
subordination of the indebtedness constituting the Loan by any act or failure to
act on the part of the Company. In the event that payments or distributions in
respect of the Loan shall by this provision be deferred or prevented, then until
and unless payment shall be permitted and made so that the Loan (together with
all interest at the Scheduled Rate or the Default Rate accrued thereon and any
Make-Whole Loan Amount due in respect thereof) shall have been repaid in full,
no distributions in cash or kind or securities shall be made to Members in
respect of their capital, retainage, or in respect of any other claims or rights
as owners or creditors of the Company, except for payments on Member Notes.
Senior Indebtedness shall not be deemed to have been paid in full unless
the holders thereof shall have received cash, securities or other property equal
to the amount of such Senior Indebtedness then outstanding. Upon the payment in
full of all Senior Indebtedness, the Trust shall be subrogated to all the rights
of any holders of Senior Indebtedness to receive any further payments or
distributions applicable to the Senior Indebtedness until the Loan shall have
been paid in full, and such payments or distributions received by the Trust, by
reason of such subrogation, of cash, securities or other property which
otherwise would be paid or distributed to the holders of Senior Indebtedness,
shall, as between the Company and its creditors other than the holders of Senior
Indebtedness, on the one hand, and the Trust, on the other, be deemed to be
payment by the Company on account of Senior Indebtedness, and not on account of
the Loan.
Nothing contained in this Article V or elsewhere in this Agreement or in
the Subordinated Note is intended to or shall impair, as between the Company and
its creditors, other than the holders of its Senior Indebtedness, the
obligations of the Company, which are absolute and unconditional, to pay to the
Holders of the Subordinated Note the principal of and interest and Make-Whole
Loan Amount (if any) on the Subordinated Note as and when the Subordinated Note
shall become due and payable in accordance with its terms, or to affect the
relative rights of the Holders of the Subordinated Note and the creditors of the
Company other than the holders of its Senior Indebtedness, nor, except as
otherwise expressly provided in this Article V, shall anything herein or therein
prevent any holder of the Subordinated Note from exercising all remedies
otherwise permitted by applicable law upon the happening of an Event of Default
under this Agreement, subject to the rights, if any, under this Article V of the
holders of Senior Indebtedness.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.01 Representations and Warranties. The Company represents and
warrants to the Trust as follows:
10
(a) Good Standing. The Company is an incorporated non-stock
cooperative marketing association duly organized, validly existing and in
good standing under the Food and Agricultural Code of the State of
California, and is not required to be qualified as a foreign corporation
in any jurisdiction. The Company has all requisite power and authority to
own or hold under lease the properties it purports to own or hold under
lease and to transact its business and to execute and deliver this
Agreement, the Guarantee Agreement, the Trust Agreement, the Expense
Agreement, the Purchase Agreement and the Subordinated Note and to perform
its obligations under the provisions hereof and thereof. The Company does
not currently have any Subsidiaries.
(b) Authorization, etc. (i) This Agreement has been duly authorized
by the Company, and this Agreement constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(ii) The Subordinated Note has been duly authorized by the Company
and, when executed, authenticated, issued and delivered in the manner
provided for herein and sold to and paid for by the Trust, the
Subordinated Note will constitute a valid and binding obligation of the
Company and will be enforceable against the Company in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
hereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(c) Compliance with Laws, other Instruments, etc. (i) The execution,
delivery and performance by the Company of this Agreement, the Purchase
Agreement, the Guarantee Agreement, the Trust Agreement, the Expense
Agreement and the Subordinated Note, will not (a) contravene, result in a
breach of or constitute a default under, or result in the creation of any
Lien in respect of any property of the Company under any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease,
operating agreement, corporate charter, bylaws or other constituent
documents, or any other agreement or instrument to which the Company is
bound or by which the Company or any of its properties may be bound or
affected, (b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or
(c) violate any provision of any statute or other rule or regulation of
any Governmental Authority applicable to the Company.
(ii) The Company is not in violation or breach of or default under
any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, operating agreement, corporate charter or bylaws or any
other agreement or instrument to which it is bound or by which its
properties are bound or affected, which violation, breach or default,
11
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
(d) Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution,
delivery or performance by the Company of this Agreement, the Guarantee
Agreement, the Trust Agreement, the Purchase Agreement, the Expense
Agreement or the Subordinated Note.
(e) Member Payments. Payments of principal and interest, including
interest accruing at the Scheduled Rate or the Default Rate, and including
any Make-Whole Loan Amount, along with other related payments in
connection with the Subordinated Note, are senior in priority to Member
Payments.
ARTICLE VII
COVENANTS
Section 7.01 Existence. (i) The Company will at all times preserve and
keep in full force and effect the existence of the Trust as a statutory Delaware
business trust and qualify and maintain its qualification to do business and
good standing in any jurisdiction where failure to do so would have a Material
Adverse Effect. The Company will at all times preserve and keep in full force
and effect all rights and franchises of the Trust, unless the termination of or
failure to preserve and keep in full force and effect such right or franchise
would not have a Material Adverse Effect (as defined in the Purchase Agreement).
(ii) The Company will preserve and keep in force and effect, and will
cause each Subsidiary to preserve and keep in force and effect, its corporate
existence and all licenses and permits necessary to the proper conduct of its
business, provided that the foregoing shall not prevent any transaction
permitted by Section 7.03.
Section 7.02 Nature of Business. Neither the Company nor any Subsidiary
will engage in any business if, as a result, the general nature of the business,
taken on a consolidated basis, which would then be engaged in by the Company and
the Subsidiaries would be substantially other than the business of marketing,
processing, distributing and selling nuts, related products and businesses
reasonably related to any of the foregoing.
Section 7.03 Consolidation, Merger and Sale of Assets. The Company will
not, and will not permit any Subsidiary to, (i) consolidate with or into or be a
party to a merger with or into any other Person, or (ii) sell, lease or
otherwise dispose of substantially all of the assets of the Company and the
Subsidiaries in a single transaction or series of transactions, provided,
however, that:
(i) any Subsidiary may merge or consolidate with or into the Company
or any Subsidiary, or sell, assign, transfer or lease all or substantially
all of its properties and assets as an entirety or substantially as an
entirety to the Company or any Subsidiary, so long as, in any merger,
consolidation or sale, assignment, transfer or lease involving the
Company, the Company shall be the surviving, continuing or acquiring
entity and, in any
12
merger, or consolidation or sale, assignment, transfer or lease not
involving the Company, the Company shall, after giving effect to such
transaction, own, directly or indirectly, shares of the surviving or
acquiring Subsidiary representing at least the same percentage of control
and economic interest as it owned, immediately preceding such transaction,
with respect to the Subsidiary which did not survive such transaction or
disposed of such properties and assets; and
(ii) The Company may consolidate or merge with any other Person, or
sell, assign, transfer or lease all or substantially all of its properties
and assets as an entirety or substantially as an entirety, to any Person
in one transaction or a series of related transactions, if (i) either (A)
the Company shall be the surviving or continuing entity, or (B) the
surviving, continuing or resulting entity (the "Successor Entity") is a
solvent, incorporated non-stock cooperative marketing association
organized under the laws of the United States of America or any state
thereof which (x) expressly and unconditionally assumes in writing the due
and punctual performance of all obligations of the Company under this
Agreement, the Purchase Agreement, the Subordinated Note and the
Guarantee, and the Company shall deliver to the Holders of the Preferred
Securities an opinion of counsel to the effect that such written
assumption has been duly authorized, executed and delivered by such
surviving, continuing or resulting corporation and constitutes a legal,
valid and binding obligation enforceable against such corporation in
accordance with its terms and such Successor Entity, (y) subordinates all
Member Payments owed by such Successor Entity to the Loan (excluding
Member Note payments, in compliance with Section 7.16), and (z) maintains
a provision in its By-laws or charter analogous to Section 7.05 of the
Company's By-laws which is binding on its Members, and (ii) at the time of
such consolidation, merger, sale, assignment, transfer or lease (each
herein called a "Fundamental Transaction") and after giving effect
thereto, (x) no Default or Event of Default hereunder and no Event of
Default as defined in the Trust Agreement or other default on any
obligation under the Preferred Securities or the Guarantee Agreement shall
have occurred and be continuing and (y) if the Company shall not be the
surviving or continuing entity, Pro Forma Earnings Available for Fixed
Charges for the period of 12 consecutive calendar months immediately
preceding the date of such Fundamental Transaction (the "Measurement
Period") shall exceed Fixed Charges for the Measurement Period by at least
200%. For purposes of the foregoing sentence, "Pro Forma Earnings
Available for Fixed Charges" means the sum of (x) consolidated net income
of the Successor Entity computed on a pro forma basis after giving effect
to the Fundamental Transaction as if it had occurred on the first day of
the Measurement Period and as if any Debt incurred in connection therewith
had been outstanding for the entire Measurement Period and (y) all
interest expense (including the interest component of Capitalized Leases)
and Rentals (other than Capitalized Rentals) deducted from earnings in
determining such consolidated net income (herein collectively called
"Fixed Charges") for the Measurement Period, all computed in accordance
with U.S. GAAP subject to appropriate pro forma adjustments as aforesaid.
Section 7.04 Insurance. The Company will maintain, and will cause each
Subsidiary to maintain, insurance coverage by financially sound and reputable
insurers in such forms and amounts and against such risks as are customary for
corporations of established reputation engaged in the same or a similar business
and owning and operating similar properties; it being
13
understood and agreed that neither the Company nor any Subsidiary maintains
surety bonds or similar misappropriation insurance with respect to employees and
that accounts of customers are insured only when required by law and nothing
herein shall be deemed to require the Company or any Subsidiary to carry any
such insurance.
Section 7.05 Taxes, Claims for Labor and Materials, Compliance with Laws.
The Company will promptly pay and discharge, and will cause each Subsidiary
promptly to pay and discharge, all lawful taxes, assessments and governmental
charges or levies imposed upon the Company or any such Subsidiary, respectively,
or upon or in respect of all or any part of the property or business of the
Company or any such Subsidiary, all trade accounts payable in accordance with
usual and customary business terms, and all claims for work, labor or materials,
which if unpaid might become a lien or charge upon any property of the Company
or such Subsidiary; provided the Company or such Subsidiary shall not be
required to pay any such tax, assessment, charge, levy, account payable or claim
if (i) the validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings which will prevent the forfeiture or
sale of any property of the Company or such Subsidiary or any material
interference with the use thereof by the Company or such Subsidiary, and (ii)
the Company or such Subsidiary shall set aside on its books, reserves reasonably
deemed by it to be adequate with respect thereto. The Company will promptly
comply and will cause each Subsidiary to comply with all laws and ordinances to
which it is subject, including without limitation, and as applicable, the
Occupational Safety and Health Act of 1970, ERISA and all laws, ordinances,
governmental rules and regulations relating to environmental protection in all
applicable jurisdictions, unless the violation of such laws, ordinances, rules
or regulations would not have a Material Adverse Effect.
Section 7.06 Regulatory Compliance. The Company will, and will cause each
of its Subsidiaries to keep and maintain in good standing and in full force and
effect all licenses, registrations of the Company and the Subsidiaries and all
of their respective officers, directors and shareholders to the full extent
required under applicable law and the applicable rules and regulations.
Section 7.07 Repurchase of Preferred Securities. Neither the Company nor
any Subsidiary, or any Affiliate (over which the Company exercises control),
directly or indirectly, will purchase, redeem, prepay or otherwise acquire or
make any offer to purchase, redeem, prepay or otherwise acquire any Preferred
Securities. The Company will promptly cancel all Preferred Securities acquired
by it or any Subsidiaries or any Affiliate (over which the Company exercises
control) and no Preferred Securities may be issued in substitution or exchange
for any such Preferred Securities.
Section 7.08 Transactions with Affiliates. The Company will not, and will
not permit any Subsidiary to, enter into or be a party to, any transaction or
arrangement with any Affiliate (including without limitation the purchase from,
sale to or exchange of property with, or the rendering of any service by or for,
any Affiliate), except in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
obtain in a comparable arm's-length transaction with a Person other than an
Affiliate.
14
Section 7.09 Termination of Pension Plans. The Company will not, and will
not permit any Subsidiary to, withdraw from any Multiemployer Plan or permit any
employee benefit plan maintained by it to be terminated if such withdrawal or
termination could result in withdrawal liability (as described in Part I of
Subtitle E of Title IV of ERISA) or the imposition of a lien on any property of
the Company or any Subsidiary pursuant to Section 4068 of ERISA.
Section 7.10 Ownership of the Trust. The Company agrees that (i) it shall
maintain ownership, directly or indirectly, of 100% of the Common Securities,
provided, however, that any successor of the Company permitted pursuant to
Section 7.03 may succeed to the Company's ownership of the Common Securities,
and (ii) it shall cause the Trust to remain a statutory business trust under the
laws of the State of Delaware.
Section 7.11 Financial and Business Information. The Company shall deliver
to each Holder of Preferred Securities that is an Institutional Investor:
(a) Quarterly Statements of the Company. As soon as available and in
any event within sixty (60) days after the end of each quarterly fiscal
period (except the last) of each fiscal year of the Company, duplicate
copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such quarter, and
(2) consolidated statements of income of the Company and its
Subsidiaries for such quarterly period, and (in the case of the
second and third quarters) for the portion of the fiscal year ending
with such quarter,
in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable
detail and certified as complete and correct by an authorized financial
officer of the Company;
(b) Annual Statements of the Company. As soon as available and in
any event within 120 days after the close of each fiscal year of the
Company, duplicate copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such fiscal year, and
(2) consolidated statements of income and retained earnings
and cash flows of the Company and its Subsidiaries for such fiscal
year,
in each case setting forth in comparative form the consolidated figures
for the preceding fiscal year, all in reasonable detail and accompanied by
an opinion thereon, unqualified as to scope limitations imposed by the
Company, of a firm of independent public accountants of recognized
national standing selected by the Company to the effect that the
consolidated financial statements have been prepared in accordance with
U.S. GAAP consistently applied (except for noted changes in application in
which such accountants concur) and present fairly the financial condition
of the Company and its Subsidiaries and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards and accordingly,
15
includes such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of
the Trust or the Company or any Subsidiary;
(d) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Trust or the Company to securities holders generally and of
each regular or periodic report, and any registration statement or
prospectus filed by the Trust or the Company or any Subsidiary with the
Securities and Exchange Commission or any successor agency, and copies of
any orders in any proceedings to which the Trust or the Company or any of
its Subsidiaries is a party, issued by any Governmental Authority;
(e) Requested Information. With reasonable promptness, such other
data and information as any such Institutional Investor may reasonably
request;
(f) Officers' Certificate. Within the periods provided in paragraphs
(a) and (b) above, a certificate of an authorized financial officer of the
Company stating that such officer has reviewed the provisions of this
Agreement and setting forth: (i) the information and computations (in
sufficient detail) required in order to establish whether the Company was
in compliance with the requirements of Sections 7.06, 7.07, 7.08, 7.09,
7.10, 7.13, 7.15 and 7.16 herein, at the end of the period covered by the
financial statements then being furnished and (ii) whether there existed
as of the date of such financial statements and whether, to the best of
such officer's knowledge, there exists on the date of the certificate or
existed at any time during the period covered by such financial statements
any Default or Event of Default or Suspension Event and, if any such
condition or event existed during such period or then exists on the date
of the certificate, specifying the nature and period of existence thereof
and the action the Company has taken, is taking and proposes to take with
respect thereto;
(g) Accountants' Report on Compliance. Within the period provided in
paragraph (b) above, an accountants' report on compliance from the
accountants who render an opinion with respect to such financial
statements, stating whether in making their audit, such accountants have
become aware of any failure to comply with the terms, covenants,
provisions or conditions of the Subordinated Loan Agreement insofar as any
such terms or provisions pertain to or involve accounting matters and if
any such condition or event came to their attention, specifying the nature
and period of existence thereof (it being understood that the accountants'
audit was not directed primarily toward obtaining knowledge of such
noncompliance);
(h) Notice of Default or Event of Default or Suspension Event.
Immediately upon becoming aware of the existence of any condition or event
which constitutes any Default or Event of Default or Suspension Event, a
written notice specifying the nature and period of existence thereof and
what action the Company is taking or proposes to take with respect
thereto; and
16
(i) Notice of Claimed Default. Immediately upon becoming aware that
the holder or holders of any evidences of indebtedness for borrowed money
of the Company and/or one or more Subsidiaries aggregating $1,000,000 or
more has or have given notice or taken any other action with respect to a
claimed default, a written notice specifying the notice given or action
taken by such holder or holders and the nature of the claimed default, and
what action the Company is taking or proposes to take with respect
thereto.
Section 7.12 Limitations on Distributions. If a Default or Event of
Default or Suspension Event shall occur and be continuing or if a Default or an
Event of Default or Suspension Event would result therefrom or if the Company
has given notice of an election to defer payment of interest pursuant to Section
3.02, then so long as such Default or Event of Default or Suspension Event shall
be continuing or would result therefrom or during such deferral period the
Company shall not make, or permit any Subsidiary to make, any Member Payments
and shall not make, or permit any Subsidiary to make, any other distributions of
capital, profits, retained amounts or any other assets to its Members and shall
not redeem, purchase, acquire or make a liquidation or other payment with
respect to any rights or interests of Members as owners or creditors of the
Company or shares of capital stock or their equivalent; provided, however, that
the Company may make payments on Member Notes.
Section 7.13 Limitation on Debt. The Company will at all times maintain a
ratio of Total Debt to Total Capitalization of no more than 60% during each
month except during September, October and November when the ratio shall not
exceed 75%.
Section 7.14 Cooperative Existence; No Amendment. Subject to Section 7.03,
the Company will at all times preserve and keep in full force and effect its
legal existence as a cooperative marketing association and qualify and maintain
its qualification to do business and good standing in any jurisdiction where the
failure to do so would have a Material Adverse Effect. The Company will at all
times preserve and keep in full force and effect all rights and franchises of
the Company and any Subsidiaries unless, in the good faith judgment of the
Company, the termination of or failure to preserve and keep in full force and
effect such right or franchise would not have a Material Adverse Effect. The
Company will not amend Section 7.05 of its By-laws without the prior written
consent of at least 66-2/3% in Liquidation Preference of the then outstanding
Preferred Securities.
Section 7.15 Limitation on Liens. (a) The Company will not, and will not
permit any Subsidiary to, create or incur or suffer to be incurred or to exist,
any Lien on any capital stock of, or ownership interest in any Subsidiary or
transfer any such capital stock or ownership interest for the purpose of
subjecting the same to the payments of obligations in priority to the payment of
its or their general creditors.
(b) The Company will not, and will not permit any Subsidiary to, create or
incur, or suffer to be incurred or to exist, any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind on any other of its or their
property or assets, whether now owned or hereafter acquired, or upon any income
or profits therefrom, or transfer any such property for the purpose of
subjecting the same to the payment of obligations in priority to the payment of
its or their general creditors, except:
17
(i) Liens for property taxes and assessments or governmental charges
or levies and liens securing claims or demands of mechanics and
materialmen, provided that payment thereof is not at the time required by
Section 7.05;
(ii) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or
in respect of which the Company or a Subsidiary shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in respect
of which a stay of execution pending such appeal or proceeding for review
shall have been secured;
(iii) Liens incidental to the conduct of business or the ownership
of properties and assets (including warehousemen's, attorneys' liens and
statutory landlords' liens) and deposits, pledges or liens to secure the
performance of bids, tenders or trade contracts, or to secure statutory
obligations, surety or appeal bonds or other liens of like general nature
incurred in the ordinary course of business and not in connection with the
borrowing of money, provided in each case, the obligation secured is not
overdue or, if overdue, is being contested in good faith by appropriate
actions or proceedings;
(iv) Minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and
which do not in any event materially impair their use in the operation of
the business or the Company and its Subsidiaries;
(v) Liens securing obligations of a Subsidiary owing to the Company
or another Subsidiary; and
(vi) Liens securing Senior Indebtedness.
Section 7.16. Limitation on Member Notes. The Company will not issue any
Member Notes if, after giving effect thereto, the aggregate principal amount of
all Member Notes then outstanding would exceed $12,000,000 for a period of five
years after this Agreement and $15,000,000 thereafter.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01 Events of Default. An "Event of Default" shall exist if one
or more of the following events shall occur and be continuing:
(a) default in the payment of interest on the Loan for more than
five days after the same has become due; provided, however, that a timely
deferral of any interest payment by the Company pursuant to Section 3.02
shall not constitute a default in the payment of interest;
18
(b) default in the payment of principal on the Loan or any
Make-Whole Loan Amount when due;
(c) the dissolution, winding up or liquidation of the Trust, other
than in the circumstances contemplated by Section 9.2(b) of the Trust
Agreement;
(d) any Company Bankruptcy Event;
(e) the making of any distributions, redemptions, purchases,
acquisitions or payments in violation of the provisions of Section 7.12;
(f) the breach by the Company of any of its covenants contained (i)
in Sections 7.03, 7.04, 7.10, 7.13, 7.14, 7.15 or 7.16 or (ii) any other
covenant or obligation contained herein and, in the case of this clause
(ii), such breach is not remedied within thirty (30) days of the earlier
of (x) the Company having actual knowledge thereof and (y) the Company
receiving written notice thereof from the Trust or any Holder of the
Preferred Securities;
(g) the Company or any Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium
or make-whole amount or interest on any Debt (other than the Subordinated
Note) that is outstanding in an aggregate principal amount of at least
$5,000,000 beyond any period of grace provided with respect thereto, or
(ii) the Company or any Subsidiary is in default in the performance of or
compliance with any term of any evidence of any Debt outstanding in an
aggregate principal amount of at least $5,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Debt has
become, or has been declared, due and payable before its stated maturity
or before its regularly scheduled dates of payment, or (iii) as a
consequence of the occurrence or continuation of any event or condition
(other than the passage of time or the right of the holder of Debt
outstanding in an aggregate principal amount of at least $5,000,000 to
convert such Debt into equity interests or a sale of assets or other
transaction that is permitted if made in connection with a repayment of
Debt, the Company or any Subsidiary has become obligated to purchase or
repay such Debt before its regular maturity or before its regularly
scheduled dates or payment;
(h) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a
Plan may become a subject of any such proceedings, (iii) the aggregate
"amount of unfunded benefit liabilities" (within the meaning of section
4001(a)(18) of ERISA) under all Plans, determined in accordance with Title
IV of ERISA shall exceed $1,000,000, (iv) the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to
19
employee benefit plans, (v) the Company or any ERISA Affiliate withdraws
from any Multiemployer Plan, or (vi) the Company or any Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such event
or events described in clauses (i) through (vi) above, either individually
or together with any other such event or events, would reasonably be
expected to have a Material Adverse Effect;
(i) any Subsidiary Bankruptcy Event; or
(j) any representation or warranty made by the Company herein or in
the Purchase Agreement or by the Company or any of its officers in any
writing furnished in connection with or pursuant to this Agreement or the
Purchase Agreement or the Trust Agreement shall be false or misleading in
any material respect on the date as of which made.
As used in Section 8.01(h), the terms "employee benefit plan" and
"employee welfare benefit plan" shall have the respective meanings assigned to
such terms in Section 3 of ERISA.
Section 8.02 Acceleration. (a) If an Event of Default described in clause
(c) or (d) of Section 8.0I has occurred, the Loan shall automatically become
immediately due and payable.
(b) If an Event of Default described in clause (a), (b), (e), (f), (g),
(h), (i) or (j) of Section 8.01 has occurred and is continuing, the Trust may at
any time at its option declare the Loan to be immediately due and payable.
Upon the Loan becoming due and payable under this Section 8.02, whether
automatically or by declaration, the Loan will forthwith mature and the entire
unpaid principal amount of the Loan, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Loan Amount determined as if the Loan was being
prepaid on the date of the acceleration pursuant to Section 2.03, shall be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived.
Section 8.03 Other Remedies. (a) If any Default or Event of Default has
occurred and is continuing, and irrespective of whether the Loan has become or
has been or may be declared immediately due and payable under Section 8.02, the
Trust may proceed to protect and enforce its rights by an action at law, suit in
equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein, or for an injunction against a violation of any
of the terms hereof, or in aid of the exercise of any power granted hereby or by
law or otherwise.
(b) The Company expressly acknowledges that under the terms of the Trust
Agreement and the Preferred Securities the Holders of the outstanding Preferred
Securities shall have the rights and powers described in the Trust Agreement,
including the right to instruct the Trust to accelerate the principal amount of
the Loan and to enforce the Trust's other rights under this Agreement.
20
Section 8.04 No Waivers or Election of Remedies, etc. No course of dealing
and no delay on the part of the Trust or any Holder of any Preferred Security in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice the Trust or such Holder's rights, powers or remedies,
subject to any applicable statutes of limitations. No right, power or remedy
conferred by this Agreement or by the Trust Agreement upon the Trust or any such
Holder shall be exclusive of any other right, power or remedy referred to herein
or therein or now or hereafter available at law, in equity, by statute or
otherwise.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Notices. Any notice, request or other communication required
or permitted to be given hereunder shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (if the sender on the
same day sends a confirming copy of such notice by a recognized overnight
delivery service, charge prepaid), telex or by a recognized overnight delivery
service (charges prepaid), addressed as follows (and if so given, shall be
deemed given when mailed or upon receipt of an answer-back, if sent by telex):
If to the Company or the Trust: Diamond Walnut Growers, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
If to the Property Trustee: Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Section 9.02 Binding Effect. The Company may not assign its rights or
obligations under this Agreement. The Trust may not assign any of its rights
hereunder. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the Company and the Trust and their respective
successors by any permitted merger or consolidation or otherwise by operation of
law. Any assignment by the Company or the Trust in contravention of this Section
will be void.
SECTION 9.03. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Section 9.04 Counterparts. This Agreement may be executed in counterparts.
Any single counterpart or set of counterparts signed, in either case, by the
parties hereto shall constitute a full and original agreement for all purposes.
21
Section 9.05 Amendments. This Agreement or the Subordinated Note may be
amended or compliance herewith or therewith may be waived by an instrument in
writing signed by both parties; provided, however, that, so long as any of the
Preferred Securities remain outstanding, no such amendment or waiver shall be
made, no termination of this Agreement shall occur, and no Event of Default or
compliance with any covenant under this Agreement may be waived by the Trust,
without the prior approval of the Holders of at least 66-2/3% in Liquidation
Preference of all Preferred Securities then outstanding, in writing or at a duly
constituted meeting of such Holders, unless and until the Loan and all accrued
and unpaid interest thereon shall have been paid in full; provided, further,
that no such amendment or waiver shall extend the maturity or scheduled
redemption dates of the Loan, reduce the principal amount thereof, reduce or
extend the time of payment of interest thereon or reduce any Make-Whole Loan
Amount payable upon the redemption thereof or amend or waive the provisions of
Section 7.10, 8.01 or 8.02, without the prior approval of each of the Holders of
the Preferred Securities then outstanding or (ii) reduce the aforesaid
percentage in liquidation preference of the Preferred Securities, the Holders of
which are required to consent to such amendment, without the prior approval of
each of the Holders of the Preferred Securities then outstanding or (iii) amend
this Agreement in connection with a distribution of the Subordinated Note
pursuant to Section 9.2(b) of the Trust Agreement without the prior approval of
each of the Holders of the Preferred Securities then outstanding.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
DIAMOND WALNUT GROWERS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President and Chief Financial
Officer
WILMINGTON TRUST CO., as Property
Trustee of the DW CAPITAL TRUST I
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
----------------------------------
Title: Vice President
---------------------------------
23
SUBORDINATED PROMISSORY NOTE
U.S. $15,464,000 Dated: August 20, 1998
FOR VALUE RECEIVED, the undersigned, Diamond Walnut Growers, Inc., an
incorporated non-stock cooperative marketing association organized under the
Food and Agricultural Code of the State of California (the "Company"), HEREBY
PROMISES TO PAY to DW Capital Trust I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), or its registered assigns, the
principal sum of Fifteen Million Four Hundred Sixty-Four Thousand United States
Dollars ($15,464,000) in annual installments on the dates which are,
respectively, 11, 12 and 13 years after the date hereof, as specified in the
Subordinated Loan Agreement (as defined below). The loan evidenced hereby (the
"Loan") is subject to certain obligations of mandatory prepayment and certain
rights of voluntary prepayment as specified in the Subordinated Loan Agreement.
In the event of prepayment, a Make-Whole Loan Amount may be payable as provided
in the Subordinated Loan Agreement.
The Company promises to pay interest on the unpaid principal amount of the
Loan from the date hereof until such principal amount is paid in full, at such
interest rates, and payable at such times, as are specified in the Subordinated
Loan Agreement together with, in certain circumstances, interest accruing at the
Default Rate on past due payments of principal and interest or deferred
interest, as provided in the Subordinated Loan Agreement.
This Subordinated Promissory Note is the Subordinated Note referred to in,
and is entitled to the benefits of, the Subordinated Loan Agreement dated as of
August 20, 1998 (said Agreement, as it may be amended or otherwise modified from
time to time, the "Subordinated Loan Agreement"), between the Company and the
Trust. The Loan Agreement, among other things, (i) provides for the Loan to the
Trust in the amount evidenced by this Subordinated Note, (ii) contains
provisions for acceleration of the maturity of the unpaid principal amount of
this Subordinated Note upon certain stated events upon the terms and conditions
therein specified and (iii) contains provisions regarding the subordination of
the Loan to Senior Indebtedness (as defined in the Subordinated Loan Agreement)
of the Company.
Demand, presentment, protest and notice of non-payment and protest are
hereby waived by the Company.
24
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
DIAMOND WALNUT GROWERS, INC.
By ____________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President and Chief Financial
Officer
25
DIAMOND WALNUT GROWERS, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
7.20% Cumulative Recourse Offered Preferred Securities, due August 20, 2011
Amendment to Subordinated Loan Agreement
dated as of August 20, 1998
Dated as of
December 1, 2004
DW CAPITAL TRUST I
WILMINGTON TRUST COMPANY
THE ADMINISTRATORS LISTED ON SCHEDULE 1 HERETO
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Ladies and Gentlemen:
DIAMOND WALNUT GROWERS, INC., a California corporation (the "Company"),
agrees with you as follows:
1. Agreements. Reference is hereby made to the following documents:
(a) Trust Agreement. That certain Trust Agreement dated as of August 19,
1998 (the "Trust Agreement"), among the Company, the Wilmington Trust Company, a
banking corporation organized under the laws of the state of Delaware, as
Property Trustee (the "Property Trustee") and as Delaware Trustee (the "Delaware
Trustee'), and ▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual, and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, an individual,
pursuant to which DW Capital Trust I, a statutory business trust organized under
the Business Trust Act of the State of Delaware (the "Trust") (1) was formed,
(ii) issued Common Securities, all of which are held by the Company, (iii)
issued Preferred Securities, all of which are held by The Prudential Insurance
Company of America (the "Purchaser") pursuant to the Purchase Agreement referred
to in (b) below and (iv) agreed to lend the net proceeds from the issuance of
the Trust Securities to the Company. Certain capitalized terms used in this
Amendment are defined in the Trust Agreement.
(b) Preferred Securities Purchase Agreement. That certain Preferred
Securities Purchase Agreement dated as of August 20, 1998 (the "Purchase
Agreement"), among the Trust, the Company and the Purchaser, pursuant to which
the Trust authorized the issuance and sale of fifteen (15) of its 7.20%
Cumulative Recourse Offered Preferred Securities, due August 20, 2011, all of
which are held by the Purchaser.
(c) Subordinated Loan Agreement. That certain Subordinated Loan Agreement
dated as of August 20, 1998 (the "Loan Agreement"), between the Company and the
Trust pursuant to which the Trust made a subordinated loan to the Company in the
principal amount of $15,464,000, evidenced by a subordinated promissory note of
the Company and the Trust.
26
(d) Guarantee Agreement. That certain Guarantee Agreement dated as of
August 20, 1998 (the "Guarantee Agreement"), by the Company for the benefit of
the Holders from time to time of the Preferred Securities of the Trust.
2. Amendments.
(a) Loan Agreement. The Trust and the Company acknowledge and agree that
Section 7.13 of the Loan Agreement is hereby amended in its entirety to read as
follows:
Limitation on Debt. The Company will maintain a ratio of Total Debt to
Total Capitalization, determined as of the end of each calendar month:
(i) of no more than 75% for each September, October and
November,
(ii) of no more than 70% for each calendar month from and
including December, 2004 to and including July, 2005,
and
(iii) of no more than 60% for every other calendar month.
The Trust and the Company acknowledge and agree that on and after the date
hereof, each reference in the Loan Agreement to "this Agreement" or the like
shall mean the Loan Agreement as amended hereby. The Purchaser as Holder of the
Liquidation Preference of all outstanding Preferred Securities acknowledges and
consents to the above amendment of the Loan Agreement.
(b) The Purchaser, the Company and the Trust acknowledge and agree that
the definition of "Subordinated Loan Agreement" as contained in the Purchase
Agreement is hereby amended in its entirety to read as follows:
"Subordinated Loan Agreement" means the Subordinated Loan Agreement
dated as of the date hereof between the Company and the Trust, as amended
pursuant thereto and to the Trust Agreement.
(c) The Purchaser, the Company and the Trust acknowledge and agree that
the definition of "Subordinated Loan Agreement" as contained in the Guarantee
Agreement is hereby amended in its entirety to read as follows:
"Subordinated Loan Agreement" means the Subordinated Loan Agreement
dated August 20, 1998 between the Guarantor and the Issuer, as amended
pursuant thereto and to the Trust Agreement.
(d) The Company, the Property Trustee, the Delaware Trustee, and each
Administrator, acknowledges and agrees that the definition of "Subordinated Loan
Agreement" as contained in the Trust Agreement is hereby amended in its entirety
to read as follows:
"Subordinated Loan Agreement" means the Subordinated Loan Agreement
dated as of August 20, 1998 between the Depositor and the Trust, as
amended pursuant to the Trust Agreement.
27
The Purchaser as Holder of the Liquidation Preference of all outstanding
Preferred Securities acknowledges and consents to the above amendment of the
Trust Agreement.
3. Scope of Amendments. Except as specifically amended above, (a) the Loan
Agreement, the Purchase Agreement, the Guarantee Agreement and the Trust
Agreement shall each remain in full force and effect and is hereby ratified and
confirmed and (b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Trust or the Holders of the Liquidation
Preference, nor constitute a waiver of any provision of the Loan Agreement, the
Trust Securities or any other document, instrument or agreement constituting
executed in connection therewith.
4. Miscellaneous.
(a) Counterparts. This Amendment may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.
(b) Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York without reference to conflicts
of law rules.
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly your,
DIAMOND WALNUT GROWERS, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: VP - Controller
28
The foregoing is hereby agreed and consented to as of the date thereof.
WILMINGTON TRUST CO.,
as Property Trustee of the DW CAPITAL TRUST I
By /s/ ▇▇▇▇ St. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ St. Amand
Title: Assistant Vice President
WILMINGTON TRUST CO.,
as Delaware Trustee of the DW CAPITAL TRUST I
By /s/ ▇▇▇▇ St. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ St. Amand
Title: Assistant Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
as Administrator
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
as Administrator
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA,
as Purchaser
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name:▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
[Signature page to Amended Subordinated Loan Agreement]
29
SCHEDULE 1
ADMINISTRATORS
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
30