-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EDDywIkkNI1KtaXbPeQE7/RluEgWv8GwnnSsN4HNbKbqy1ntOoOEpFQ//Jf+QX98 DAVkYgN2k2CTYcA31dNRSQ== 0000950123-97-005540.txt : 19970703 0000950123-97-005540.hdr.sgml : 19970703 ACCESSION NUMBER: 0000950123-97-005540 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19970701 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DI GIORGIO CORP CENTRAL INDEX KEY: 0000028871 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & GENERAL LINE [5141] IRS NUMBER: 940431833 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-30557 FILM NUMBER: 97634970 BUSINESS ADDRESS: STREET 1: 380 MIDDLESEX AVE CITY: CARTERET STATE: NJ ZIP: 07008 BUSINESS PHONE: 9085415555 MAIL ADDRESS: STREET 1: 380 MIDDLESEX AVENUE CITY: CARTERET STATE: NJ ZIP: 07008 S-4 1 DI GIORGIO CORPORATION 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 1, 1997 REGISTRATION NO. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ DI GIORGIO CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 5141 94-0431833 (I.R.S. EMPLOYER IDENTIFICATION (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL NO.) INCORPORATION OR ORGANIZATION) CLASSIFICATION NO.)
380 MIDDLESEX AVENUE CARTERET, NEW JERSEY 07008 (732) 541-5555 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ RICHARD B. NEFF CHIEF FINANCIAL OFFICER DI GIORGIO CORPORATION 380 MIDDLESEX AVENUE CARTERET, NEW JERSEY 07008 (732) 541-5555 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ COPIES TO: N. JEFFREY KLAUDER, ESQ. MORGAN, LEWIS & BOCKIUS LLP 2000 ONE LOGAN SQUARE PHILADELPHIA, PA 19103 (215) 963-5000 ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effectiveness of this Registration Statement. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] ------------------------ CALCULATION OF REGISTRATION FEE
======================================================================================================= PROPOSED PROPOSED MAXIMUM AMOUNT MAXIMUM AGGREGATE AMOUNT OF TITLE OF CLASS OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION TO BE REGISTERED REGISTERED PER NOTE PRICE(1) FEE(1) - ------------------------------------------------------------------------------------------------------- 10% Series B Senior Notes due 2007............................. $155,000,000 100% $155,000,000 $46,969.70 =======================================================================================================
(1) Calculated in accordance with Rule 457(f)(2). THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. ================================================================================ 2 DI GIORGIO CORPORATION CROSS-REFERENCE SHEET
LOCATION IN PROXY ITEM NUMBER IN FORM S-4 STATEMENT/PROSPECTUS - ------------------------------------------------------- -------------------------------------- 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus................. Facing Page of the Registration Statement; Outside Front Cover of Prospectus 2. Inside Front and Outside Back Cover Pages of Prospectus..................................... Inside Front Cover Page of Prospectus; Available Information; Table of Contents 3. Risk Factors, Ratio of Earnings to Fixed Charges and Other Information.......................... Outside Front Cover Page of Prospectus; Summary; Selected Consolidated Financial Data 4. Terms of the Transaction......................... Outside Front Cover Page of Prospectus; Summary; The Exchange Offer; Description of New Notes 5. Pro Forma Financial Information.................. Summary; Selected Consolidated Financial Data 6. Material Contracts with the Company Being Acquired....................................... * 7. Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters................................... * 8. Interests of Named Experts and Counsel........... Legal Matters; Experts 9. Disclosure of Commission Position on Indemnification for Securities Act Liabilities.................................... * 10. Information with Respect to S-3 Registrants...... * 11. Incorporation of Certain Information by Reference...................................... * 12. Information with Respect to S-2 or S-3 Registrants.................................... * 13. Incorporation of Certain Information by Reference...................................... * 14. Information with Respect to Registrants Other Than S-3 or S-2 Registrants.................... Summary; Summary Consolidated and Pro Forma Financial Data; Selected Consolidated Financial Data; Management's Discussion and Analysis of Financial Condition and Results of Operations; Business 15. Information with Respect to S-3 Companies........ * 16. Information with Respect to Companies Other Than S-2 or S-3 Companies........................... * 17. Information with Respect to Companies Other Than S-3 or S-2 Companies........................... * 18. Information if Proxies, Consents or Authorizations are to be Solicited............. * 19. Information if Proxies, Consents or Authorizations are not to be Solicited or in an Exchange Offer................................. Management; The Exchange Offer
- --------------- * Omitted because the item is inapplicable or the answer thereto is negative. 3 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JULY 1, 1997 DI GIORGIO CORPORATION OFFER TO EXCHANGE ALL OUTSTANDING 10% SERIES A SENIOR NOTES DUE 2007 ($155,000,000 PRINCIPAL AMOUNT OUTSTANDING) FOR 10% SERIES B SENIOR NOTES DUE 2007 The Exchange Offer (as defined) and withdrawal rights will expire at 5:00 p.m., New York City time, on , 1997 (as such date may be extended, the "Expiration Date"). Di Giorgio Corporation, a Delaware corporation (the "Company"), hereby offers, upon the terms and subject to the conditions set forth in this Prospectus, as it may be amended and supplemented from time to time (the "Prospectus"), and the accompanying Letter of Transmittal (the "Letter of Transmittal," and together with the Prospectus, the "Exchange Offer"), to exchange $1,000 in principal amount of its 10% Series B Senior Notes due 2007 (the "New Notes") for each $1,000 in principal amount of its outstanding 10% Series A Senior Notes due 2007 (the "Old Notes") (the Old Notes and the New Notes are collectively referred to herein as the "Notes") held by Eligible Holders (as defined), of which an aggregate principal amount of $155 million is outstanding. See "The Exchange Offer." For purposes of this Exchange Offer, "Eligible Holder" shall mean the registered owner of any Registrable Securities (as defined) as reflected on the records of The Bank of New York, a New York banking corporation, as registrar for the Old Notes (in such capacity, the "Registrar"), or any person whose Registrable Securities are held of record by the Depositary (as defined), as of the Record Date (as defined). For purposes of the Exchange Offer, "Registrable Securities" means each Old Note until the earliest to occur of (i) the date on which such Old Note has been exchanged for a New Note in the Exchange Offer, (ii) the date on which a registration statement of the Company which covers the Old Note has been declared effective under the Securities Act of 1933, as amended (the "Securities Act"), and the Notes are disposed of in accordance with such registration statement, (iii) the date on which such Old Note is sold to the public pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the Securities Act, or (iv) the date on which the Old Note ceases to be outstanding. The Company will accept for exchange any and all Old Notes that are validly tendered prior to 5:00 p.m., New York City time, on the Expiration Date. Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is not conditioned upon any minimum principal amount of the Old Notes being tendered for exchange. However, the Exchange Offer is subject to certain customary conditions, which may be waived by the Company, and to the terms and provisions of the Registration Rights Agreement dated as of June 20, 1997 (the "Registration Rights Agreement") among the Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation (the "Initial Purchasers"). The Old Notes may be tendered only in multiples of $1,000. See "The Exchange Offer." (continued on next page) ------------------------ SEE "RISK FACTORS" ON PAGES 17 THROUGH 20 FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED BY ELIGIBLE HOLDERS IN EVALUATING THE EXCHANGE OFFER. ------------------------ THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ The date of this Prospectus is , 1997 4 An aggregate of $155 million principal amount of Old Notes were sold by the Company to the Initial Purchasers on June 20, 1997 (the "Closing Date") without registration under the Securities Act, in reliance upon exemptions therefrom, pursuant to a Purchase Agreement, dated June 13, 1997 (the "Purchase Agreement") among the Company and the Initial Purchasers. The Initial Purchasers subsequently resold the Old Notes in reliance on Rule 144A under the Securities Act ("Rule 144A"), Regulation S and certain other exemptions under the Securities Act. The Company and the Initial Purchasers also entered into the Registration Rights Agreement, pursuant to which the Company granted certain registration rights for the benefit of the holders of the Old Notes. The Exchange Offer is intended to satisfy certain of the Company's obligations under the Registration Rights Agreement with respect to the Old Notes. See "The Exchange Offer -- Purpose and Effect." The Old Notes were, and the New Notes will be, issued under the Indenture, dated as of June 20, 1997 (the "Indenture"), between the Company and The Bank of New York, a New York banking corporation, as trustee (in such capacity, the "Trustee"). The form and terms of the New Notes will be identical in all material respects to the form and terms of the Old Notes, except that (i) the New Notes have been registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof, (ii) holders of New Notes will not be entitled to any increase in the interest rate ("Additional Interest") thereon pursuant to the Registration Rights Agreement upon the occurrence of a Registration Default (as defined), and (iii) holders of New Notes will not be, and upon consummation of the Exchange Offer Eligible Holders of Old Notes will no longer be, entitled to certain rights under the Registration Rights Agreement intended for the holders of Registrable Securities; provided, however, that an Eligible Holder of Old Notes who is not permitted to participate in the Exchange Offer based upon written advice of counsel to that effect or who does not receive fully tradeable New Notes pursuant to the Exchange Offer, subject to reasonable verification by the Company, shall have the right to require the Company to file a shelf registration statement pursuant to Rule 415 under the Securities Act (a "Shelf Registration Statement") solely for the benefit of such Eligible Holder of Old Notes and will be entitled to Additional Interest following the occurrence of a Registration Default. The Exchange Offer shall be deemed consummated upon the occurrence of the delivery by the Company to the Registrar under the Indenture of New Notes in the same aggregate principal amount as the aggregate principal amount of Old Notes that were tendered by holders thereof pursuant to the Exchange Offer. See "The Exchange Offer -- Termination of Certain Rights" and " -- Procedures for Tendering Old Notes" and "Description of New Notes." Interest on the New Notes is payable semiannually, in arrears, on June 15 and December 15 of each year (each, an "Interest Payment Date") commencing on December 15, 1997. Eligible Holders whose Old Notes are accepted for exchange will have the right to receive interest accrued thereon from the date of their original issuance or the last Interest Payment Date, as applicable to, but not including, the date of issuance of the New Notes, such interest to be payable with the first interest payment on the New Notes. Interest on the Old Notes accepted for exchange will cease to accrue on the day prior to the issuance of the New Notes. The New Notes will mature on June 15, 2007. See "Description of New Notes -- General." The New Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after June 15, 2002, at the redemption prices set forth herein, together with accrued and unpaid interest, if any, to the redemption date. In addition, on or prior to June 15, 2000, the Company may redeem up to 35% of the originally issued New Notes, at a price of 110% of the principal amount thereof, together with accrued and unpaid interest, if any, to the redemption date, with the net proceeds of one or more Public Equity Offerings (as defined), provided that at least $100.75 million in principal amount of New Notes is outstanding immediately after giving effect to such redemption. Upon the occurrence of a Change of Control (as defined), each holder of New Notes, subject to the limitations described herein, will have the right to require the Company to purchase all or a portion of such holder's New Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase. The Company is making the Exchange Offer in reliance on the position of the staff of the Division of Corporation Finance of the Securities and Exchange Commission (the "Commission") as set forth in certain interpretive letters addressed to third parties in other transactions. However, the Company has not sought its own interpretive letter and there can be no assurance that the staff of the Division of Corporation Finance of 2 5 the Commission would make a similar determination with respect to the Exchange Offer as it has in such interpretive letters to third parties. Based on these interpretations by the staff of the Division of Corporation Finance of the Commission, and subject to the two immediately following sentences, the Company believes that New Notes issued pursuant to the Exchange Offer to an Eligible Holder in exchange for Old Notes may be offered for resale, resold and otherwise transferred by an Eligible Holder (other than (i) a broker-dealer who purchased Old Notes directly from the Company for resale pursuant to Rule 144A or any other available exemption under the Securities Act or (ii) a person that is an affiliate of the Company within the meaning of Rule 405 under the Securities Act), without further compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Eligible Holder is acquiring the New Notes in the ordinary course of business and is not participating, and has no arrangement or understanding with any person to participate, in the distribution of the New Notes. Eligible Holders wishing to accept the Exchange Offer must represent to the Company, as required by the Registration Rights Agreement, that such conditions have been met. Any Eligible Holder of Old Notes who is an "affiliate" of the Company or who intends to participate in the Exchange Offer for the purpose of distributing New Notes, or any broker-dealer who purchased Old Notes from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act, (a) will not be able to rely on the interpretations of the staff of the Division of Corporation Finance of the Commission set forth in the above-mentioned interpretive letters, (b) will not be permitted or entitled to tender such Old Notes in the Exchange Offer and (c) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or other transfer of such Old Notes unless such sale is made pursuant to an exemption from such requirement. See "The Exchange Offer -- Resales of the New Notes." Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it acquired the Old Notes for its own account as a result of market-making activities or other trading activities and must agree that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Based on the position taken by the staff of the Division of Corporation Finance of the Commission in the interpretive letters referred to above, the Company believes that broker-dealers who acquired Old Notes for their own accounts, as a result of market-making or other trading activities ("Participating Broker-Dealers") may fulfill their prospectus delivery requirements with respect to the New Notes received upon exchange of such Old Notes (other than Old Notes which represent an unsold allotment from the original sale of the Old Notes) with a prospectus meeting the requirements of the Securities Act, which may be the prospectus prepared for an exchange offer so long as it contains a description of the plan of distribution with respect to the resale of such New Notes. Accordingly, this Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such Participating Broker-Dealer for its own account as a result of market-making or other trading activities. Subject to certain provisions set forth in the Registration Rights Agreement, the Company has agreed that this Prospectus, may be used by a Participating Broker-Dealer in connection with resales of such New Notes. See "Plan of Distribution." However, a Participating Broker-Dealer who intends to use this Prospectus in connection with the resale of New Notes received in exchange for Old Notes pursuant to the Exchange Offer must notify the Company, or cause the Company to be notified, on or prior to the Expiration Date, that it is a Participating Broker-Dealer. Such notice may be given in the space provided for that purpose in the Letter of Transmittal or may be delivered to the Exchange Agent at one of the addresses set forth herein under "The Exchange Offer -- Exchange Agent." Any Participating Broker-Dealer who is an "affiliate" of the Company may not rely on such interpretive letters and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. See "The Exchange Offer -- Resales of the New Notes." In that regard, each Participating Broker-Dealer who surrenders Old Notes pursuant to the Exchange Offer will be deemed to have agreed, by execution of the Letter of Transmittal, that, upon receipt of notice from the Company of the occurrence of any event or the discovery of any fact which makes any statement contained in this Prospectus untrue in any material respect or which causes this Prospectus to omit to state a 3 6 material fact necessary in order to make the statements contained herein, in light of the circumstances under which they were made, not misleading or of the occurrence of certain other events specified in the Registration Rights Agreement, such Participating Broker-Dealer will suspend the sale of New Notes pursuant to this Prospectus until the Company has amended or supplemented this Prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemented Prospectus to such Participating Broker-Dealer or the Company has given notice that the sale of the New Notes may be resumed, as the case may be. There has previously been only a limited secondary market, and no public market, for the old Notes. The Old Notes are eligible for trading in the Private Offering, Resales and Trading through Automatic Linkages ("PORTAL") market. There can be no assurance that an active trading market for the New Notes will develop. If such a trading market develops for the New Notes, future trading prices will depend on many factors, including, among other things, prevailing interest rates, the Company's results of operations and the market for similar securities. Depending on such factors, the New Notes may trade at a discount from their face value. See "Risk Factors -- Absence of Public Market for New Notes." The Company will not receive any proceeds from this offering, but, pursuant to the Registration Rights Agreement, the Company will bear certain registration expenses. No underwriter is being utilized in connection with the Exchange Offer. THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER. AVAILABLE INFORMATION The Company has filed a registration statement on Form S-4 (together with any amendments thereto, the "Registration Statement") with the Securities and Exchange Commission (the "Commission") under the Securities Act with respect to the New Notes. This Prospectus, which constitutes a part of the Registration Statement, omits certain information contained in the Registration Statement and reference is made to the Registration Statement and the exhibits and schedules thereto for further information with respect to the Company and the New Notes offered hereby. This Prospectus contains summaries of the material terms and provisions of certain documents and in each instance reference is made to the copy of such document filed as an exhibit to the Registration Statement. Each such summary is qualified in its entirety by such reference. Currently, the Company files reports and other information with the Commission in accordance with the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Upon the effectiveness of the Registration Statement, the Company will be subject to the reporting requirements of the Exchange Act and the interpretations issued thereunder by the staff of the Commission. The Registration Statement, such reports and other information can be inspected and copied at the offices of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the following regional offices of the Commission: Seven World Trade Center, Suite 1300, New York, New York 10048; and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such material also may be accessed electronically by means of the Commission's home page on the Internet (http://www.sec.gov). 4 7 FORWARD-LOOKING STATEMENTS Certain statements contained in this Prospectus under "Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," in addition to certain statements contained elsewhere in this Prospectus are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are thus subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of such risks, uncertainties and other factors are discussed under the heading "Risk Factors," on pages 17 through 20 of this Prospectus. 5 8 SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements (including the notes thereto) appearing elsewhere in this Prospectus. Unless otherwise indicated, all references in this Prospectus to the "Company" refer to Di Giorgio Corporation, a Delaware corporation, and its subsidiaries. Unless otherwise indicated, industry data contained herein is derived from publicly available industry trade journals, reports and other publicly available sources, which the Company has not independently verified, or from Company estimates which the Company believes to be reasonable but which have not been independently verified. THE COMPANY Di Giorgio Corporation is one of the largest independent wholesale food distributors in the New York metropolitan area, which is one of the largest food retail markets in the United States. Across its grocery, frozen and dairy product categories, the Company supplies approximately 18,000 food and non-food items, predominantly national brand name items, to more than 1,600 customer locations. The Company markets approximately 850 grocery, frozen and dairy items under its well-recognized White Rose(TM) label, which has been established in the New York metropolitan area for over 110 years. The Company serves supermarkets, independent retailers (including members of voluntary cooperatives) and chains principally in the five boroughs of New York City, Long Island, northern New Jersey and, to a lesser extent, the Philadelphia area. For the fifty-two weeks ended March 29, 1997, the Company had total revenue of $1,051.3 million and EBITDA (as defined herein) of $38.0 million. Formed in 1920, the Company was acquired in 1990 by a corporation controlled by Arthur M. Goldberg, the Company's current Chairman, President and Chief Executive Officer (the "1990 Acquisition"). Since the 1990 Acquisition, Mr. Goldberg and his management team have implemented a strategy focused on enhancing productivity, growing through the acquisition of complementary businesses, identifying and developing new revenue opportunities and promoting brand name recognition of the Company's White Rose(TM) label. The success of this strategy has been reflected in a more than doubling of the Company's EBITDA (as defined) since the 1990 Acquisition. The Company's principal executive offices are located at 380 Middlesex Avenue, Carteret, New Jersey 07008. The Company's telephone number is (732) 541-5555. COMPANY STRENGTHS Market Leadership in New York Metropolitan Area. The Company believes that it is a market leader in the distribution of grocery products, frozen foods (including ice cream and frozen bakery goods), and dairy products (excluding milk and eggs) in the New York metropolitan area. The Company believes that the breadth of its product lines, and the density of its New York City area customer locations, afford it a competitive advantage in the New York metropolitan area. Efficient Distribution Network. The Company believes that its development of a highly efficient distribution network affords it additional competitive advantages. This development has consisted of the consolidation of warehouse facilities into newer, larger and more efficient facilities, the application of advanced distribution technology through sophisticated computer systems, and significant improvements in the efficiency of trucking operations. The White Rose(TM) Label. The White Rose(TM) label is a well-recognized regional brand for quality merchandise across approximately 850 grocery, frozen and dairy products, and has been marketed in the New York metropolitan area for over 110 years. Products under the White Rose(TM) brand are formulated to the Company's specifications, often by national brand manufacturers, and are subject to random testing to ensure quality. The White Rose(TM) brand allows independent retail customers to carry a regionally-recognized label across numerous products similar to chain stores while providing consumers with an attractive alternative to national brands. The Company believes that White Rose(TM) labeled products generally produce higher margins for its customers than national brands, and help the Company to attract and retain customers. 6 9 Relationship with Met(TM) and Pioneer(TM) Stores. The Met(TM) and Pioneer(TM) tradenames are owned by the Company; however, the customers using the tradenames are independently owned stores. The Company and the customer stores operate as voluntary cooperatives allowing a customer to take advantage of the benefits of advertising and merchandising on a scale usually available only to large chains, as well as certain other retail support services provided by the Company. In order to use the tradenames, customers must purchase a substantial portion of their grocery, frozen food and dairy inventory requirements from the Company, thereby enhancing the stability of this portion of the Company's customer base. These customers represented approximately one-fifth of net sales for each of the fifty-two week periods ended December 28, 1996 and December 30, 1995. Experienced Management Team. The Company is led by a strong and experienced management team, the members of which have a successful track record in the food marketing and distribution industry. See "Management." The Company believes that its management team's long-standing relationships with some of its principal customers are valuable assets. BUSINESS STRATEGY Enhancing Productivity. The Company has focused on enhancing productivity by (i) instituting productivity-based labor incentives, (ii) obtaining the flexibility to efficiently utilize its workforce, (iii) moving warehousing locations to newer, larger and more efficient facilities and (iv) upgrading its computer systems for inventory control and management. In addition, management has significantly improved trucking efficiency by expanding the role of backhauls, improving routing using modern technology, and upgrading transportation equipment. These improvements have controlled costs and, management believes, have positioned the Company to realize profit margin growth through volume growth. Pursuing Complementary Acquisitions. Management has also pursued complementary strategic acquisitions. In August 1992, the Company acquired substantially all of the business of the Global Frozen Foods Division ("Global") of Sysco Corp. (the "Global Acquisition") and in June 1994, the Company completed the acquisition of substantially all of the assets of the Royal Food Division of Fleming Foods East, Inc., a subsidiary of Fleming Companies, Inc. (the "Royal Acquisition"). Both of these acquisitions increased the Company's market share, gave the Company larger, more efficient warehouses and eliminated a major competitor from the marketplace. In each acquisition, the Company was able to achieve efficiencies of scale and synergies in operations that allowed it to increase the profit margins of the acquired businesses once the integration was completed. Developing New Revenue Opportunities. Management has sought to increase its existing customer revenue base by providing value-added services aimed at solidifying customer relationships and building customer loyalty. For its large retail customers, management has focused on providing consistent and reliable warehousing and distribution services at costs that are attractive to these customers. For its smaller retail customers, in addition to providing consistent, reliable warehousing and distribution services and competitive pricing, the Company has developed numerous product offerings including the sale of sophisticated information systems (i.e., scanning equipment and systems support), programs for more efficient coupon redemption and cost-effective commercial insurance programs. Promoting Brand Name Recognition. Recently the Company redesigned the logo of its 110-year-old White Rose(TM) brand and instituted a widespread advertising campaign which has included promotional sponsorship of New York Yankee baseball games. Management believes that the growing consumer recognition of the White Rose(TM) label not only has led to increased demand for the Company's products within its current operating region, but has created opportunities for the Company's expansion into other contiguous regions, most notably New England. Management believes that the success of its strategies has created a platform for growth opportunities in the future. The Company's information systems, operating flexibility and capacity allow it to effectively service major accounts with supplemental supply on short notice, as it has demonstrated twice within the past year. Management believes that this proven success has created goodwill with prospective customers and has placed the Company in a competitive position to attract new business. Additionally, management continues to weigh 7 10 alternatives aimed at growing volume at its existing distribution centers by exploring the most profitable means of expansion of its core business into the complementary markets of Philadelphia and New England while continuing to develop broader-based consumer recognition of its White Rose(TM) brand. The Company also plans to continue to engage in discussions from time to time with respect to, and may pursue, potential strategic acquisitions. THE REFINANCING On June 20, 1997, the Company completed a refinancing (the "Refinancing") of itself and its former parent, White Rose Foods, Inc. ("White Rose"), intended to extend debt maturities, reduce interest expense and improve financial flexibility. The components of the Refinancing were (i) the offering of the Old Notes (the "Offering"), (ii) the modification of the Company's bank credit facility (the "Bank Credit Facility"), (iii) the receipt of payment for the extinguishment of a note held by the Company from Rose Partners, LP ("Rose Partners"), which owns 98.54% of the Company, (iv) the consummation of the tender offers and consent solicitations commenced by the Company (the "Company Tender Offer") and White Rose (the "White Rose Tender Offer") on May 16, 1997 in respect of the Company's 12% Senior Notes due 2003 (the "12% Notes") and White Rose's 12 3/4% Senior Discount Notes due 1998 (the "12 3/4% Discount Notes"), respectively, (v) the dividend by the Company to White Rose of certain non-cash assets which were unrelated to the Company's primary business and the subsequent dividend of those assets to White Rose's stockholders and (vi) the merger ("Merger") of White Rose with and into the Company with the Company surviving the merger. The Company funded the White Rose Tender Offer through an intercompany loan which was canceled upon the consummation of the Merger. Immediately following the Refinancing, $7.45 million aggregate principal amount of 12% Notes remained outstanding; however, the Indenture pursuant to which the 12% Senior Notes were issued has been substantially amended effective as of June 9, 1997 pursuant to the Company Tender Offer. ISSUANCE OF THE OLD NOTES The Old Notes were sold by the Company to the Initial Purchasers on the Closing Date pursuant to the Purchase Agreement. The Initial Purchasers subsequently resold the Old Notes in reliance on Rule 144A, Regulation S under the Securities Act and other available exemptions under the Securities Act. The Company and the Initial Purchasers also entered into the Registration Rights Agreement. The Exchange Offer is intended to satisfy certain of the Company's obligations under the Registration Rights Agreement with respect to the Old Notes. See "The Exchange Offer." 8 11 THE EXCHANGE OFFER The Exchange Offer........... The Company is offering upon the terms and subject to the conditions set forth herein and in the accompanying Letter of Transmittal, to exchange $1,000 in principal amount of the New Notes for each $1,000 in principal amount of the outstanding Old Notes. As of the date of this Prospectus, $155 million in aggregate principal amount of the Old Notes is outstanding, the maximum amount authorized by the Indenture for all Notes. Upon consummation of the Exchange Offer, holders of Old Notes that were not prohibited from participating in the Exchange Offer and did not tender their Old Notes will not have any registration rights under the Registration Rights Agreement with respect to such nontendered Old Notes and, accordingly, such nontendered Old Notes will continue to be subject to the restrictions on transfer contained in the legend thereon. See "The Exchange Offer -- Terms of the Exchange Offer." Expiration Date.............. 5:00 p.m., New York City time, on , 1997 as the same may be extended. See "The Exchange Offer -- Expiration Date; Extensions; Amendments." Conditions of the Exchange Offer........................ The Exchange Offer is not conditioned upon any minimum principal amount of Old Notes being tendered for exchange. However, the Exchange Offer is subject to certain customary conditions. The Company expressly reserves the right, in its sole and absolute discretion, (i) to delay accepting any Old Notes, (ii) to extend the Exchange Offer, (iii) if any of the conditions set forth under "The Exchange Offer -- Conditions of the Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer, by giving oral or written notice of such delay, extension, or termination to the Exchange Agent, and (iv) to waive any condition or otherwise amend the terms of the Exchange Offer in any manner. If the Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendments by means of a prospectus supplement that will be distributed to the registered holders of the Old Notes. See "The Exchange Offer -- Conditions of the Exchange Offer." Termination of Certain Rights....................... Pursuant to the Registration Rights Agreement and the Old Notes, Eligible Holders of Old Notes have certain rights. Holders of New Notes will not be and, upon consummation of the Exchange Offer, Eligible Holders of Old Notes will no longer be, entitled to (i) the right to receive Additional Interest or (ii) certain other rights under the Registration Rights Agreement intended for the holders of unregistered securities; provided, however, that an Eligible Holder of Old Notes who is not permitted to participate in the Exchange Offer based upon written advice of counsel to the effect that such Holder may not be legally able to participate in the Exchange Offer or does not receive fully tradeable New Notes pursuant to the Exchange Offer, subject to reasonable verification by the Company, shall have the right to require the Company to file a Shelf Registration Statement solely for the benefit of such Eligible Holders of Old Notes and will be entitled to receive Additional Interest following the occurrence of a Registration Default in connection with the filing of such shelf registration statement. See "The Exchange Offer -- Termination of Certain Rights" 9 12 and "-- Procedures for Tendering Old Notes" and "Description of New Notes." Accrued Interest on the Old Notes.................. Eligible Holders whose Old Notes are accepted for exchange will have the right to receive interest accrued thereon from the date of their original issuance or the last Interest Payment Date, as applicable, to, but not including, the date of issuance of the New Notes, such interest to be payable with the first interest payment on the New Notes. Interest on the Old Notes accepted for exchange will cease to accrue on the day prior to the issuance of the New Notes. Procedures for Tendering Old Notes.................. Unless a tender of Old Notes is effected pursuant to the procedures for book-entry transfer as provided herein, each Eligible Holder desiring to accept the Exchange Offer must complete and sign the Letter of Transmittal, have the signature thereon guaranteed if received by the Letter of Transmittal, and mail or deliver the Letter of Transmittal, together with the Old Notes or a Notice of Guaranteed Delivery and any other required documents (such as evidence of authority to act, if the Letter of Transmittal is signed by someone acting in a fiduciary or representative capacity), to the Exchange Agent (as defined) at the address set forth on the back cover page of this Prospectus prior to 5:00 p.m., New York City time, on the Expiration Date. Any Beneficial Owner (as defined) of the Old Notes whose Old Notes are registered in the name of a nominee, such as a broker, dealer, commercial bank or trust company and who wishes to tender Old Notes in the Exchange Offer, should instruct such entity or person to promptly tender on such Beneficial Owner's behalf. Any Old Notes not accepted for exchange for any reason will be returned, without expense to the tendering Eligible Holder thereof, as promptly as practicable after the Expiration Date. See "The Exchange Offer -- Procedures for Tendering Old Notes." Guaranteed Delivery Procedures................... Eligible Holders of Old Notes who wish to tender their Old Notes and (i) whose Old Notes are not immediately available or (ii) who cannot deliver their Old Notes or any other documents required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date or (iii) complete the procedures for delivery by book-entry transfer on a timely basis, may tender their Old Notes according to the guaranteed delivery procedures set forth in the Letter of Transmittal. See "The Exchange Offer -- Guaranteed Delivery Procedures." Acceptance of Old Notes and Delivery of New Notes...... Upon satisfaction or waiver of all conditions of the Exchange Offer, the Company will accept any and all Old Notes that are properly tendered in the Exchange Offer prior to 5:00 p.m. New York City time, on the Expiration Date. The New Notes issued pursuant to the Exchange Offer will be delivered promptly after acceptance of the Old Notes. See "The Exchange Offer -- Acceptance of Old Notes for Exchange; Delivery of New Notes." Withdrawal Rights............ Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange Offer -- Withdrawal Rights." 10 13 The Exchange Agent........... The Bank of New York, a New York banking corporation, is the exchange agent (in such capacity, the "Exchange Agent"). The address and telephone number of the Exchange Agent are set forth in "The Exchange Offer -- The Exchange Agent; Assistance." Fees and Expenses............ All expenses incident to the Company's consummation of the Exchange Offer and compliance with the Registration Rights Agreement will be borne by the Company. The Company will also pay certain transfer taxes, if applicable to the Exchange Offer. See "The Exchange Offer -- Fees and Expenses." Resales of the New Notes..... The Company is making the Exchange Offer in reliance on the position of the staff of the Division of Corporation Finance of the Commission as set forth in certain interpretive letters addressed to third parties in other transactions. However, the Company has not sought its own interpretive letter and there can be no assurance that the staff of the Division of Corporate Finance of the Commission would make a similar determination with respect to the Exchange Offer as it has in such interpretive letters to third parties. Based on these interpretations by the staff of the Division of Corporation Finance of the Commission, and subject to the two immediately following sentences, the Company believes that New Notes issued pursuant to the Exchange Offer to an Eligible Holder in exchange for Old Notes may be offered for resale, resold and otherwise transferred by an Eligible Holder (other than (i) a broker-dealer who purchased Old Notes directly from the Company for resale pursuant to Rule 144A or any other available exemption under the Securities Act or (ii) a person that is an affiliate of the Company within the meaning of Rule 405 under the Securities Act), without further compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Eligible Holder is acquiring the New Notes in the ordinary course of business and is not participating, and has no arrangement or understanding with any person to participate, in the distribution of the New Notes. Eligible Holders wishing to accept the Exchange Offer must represent to the Company, as required by the Registration Rights Agreement, that such conditions have been met. Any Eligible Holder of Old Notes who is an "affiliate" of the Company or who intends to participate in the Exchange Offer for the purpose of distributing New Notes, or any broker-dealer who purchased Old Notes from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act, (a) will not be able to rely on the interpretations of the staff of the Division of Corporation Finance of the Commission set forth in the above-mentioned interpretive letters, (b) will not be permitted or entitled to tender such Old Notes in the Exchange Offer and (c) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or other transfer of such Old Notes unless such sale is made pursuant to an exemption from such requirement. See "The Exchange Offer -- Resales of the New Notes." Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it acquired the Old Notes for its own account as a result of market-making activities or other trading activities and must agree that it will deliver a prospectus meeting the requirements of the Securities Act in 11 14 connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Based on the position taken by the staff of the Division of Corporation Finance of the Commission in the interpretive letters referred to above, the Company believes that broker-dealers who acquired Old Notes for their own accounts, as a result of market-making or other trading activities ("Participating Broker-Dealers") may fulfill their prospectus delivery requirements with respect to the New Notes received upon exchange of such Old Notes (other than Old Notes which represent an unsold allotment from the original sale of the Old Notes) with a prospectus meeting the requirements of the Securities Act, which may be the prospectus prepared for an exchange offer so long as it contains a description of the plan of distribution with respect to the resale of such New Notes. Accordingly, this Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer during the period referred to below in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such Participating Broker-Dealer for its own account as a result of market-making or other trading activities. Subject to certain provisions set forth in the Registration Rights Agreement, the Company has agreed that this Prospectus, may be used by a Participating Broker-Dealer in connection with resales of such New Notes. See "Plan of Distribution." However, a Participating Broker-Dealer who intends to use this Prospectus in connection with the resale of New Notes received in exchange for Old Notes pursuant to the Exchange Offer must notify the Company, or cause the Company to be notified, on or prior to the Expiration Date, that it is a Participating Broker-Dealer. Such notice may be given in the space provided for that purpose in the Letter of Transmittal or may be delivered to the Exchange Agent at one of the addresses set forth herein under "The Exchange Offer -- Exchange Agent." Any Participating Broker-Dealer who is an "affiliate" of the Company may not rely on such interpretive letters and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. See "The Exchange offer -- Resales of the New Notes." Certain Federal Tax Consequences............... For a discussion of certain federal tax consequences of the exchange of the Old Notes, see "Certain Federal Income Tax Considerations." 12 15 DESCRIPTION OF NEW NOTES The form and term of the New Notes will be identical in all material respects to the form and terms of the Old Notes except that (i) the New Notes have been registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof, (ii) holders of New Notes will not be entitled to any Additional Interest otherwise payable under the terms of the Registration Rights Agreement in respect of Old Notes constituting Registrable Securities held by such holders if (A) a registration statement (an "Exchange Registration Statement") concerning the Exchange Offer is not filed with the Commission on or prior to August 19, 1997, (B) the Exchange Registration Statement has not been declared effective on or prior to October 18, 1997, (C) an exchange offer is not consummated on or prior to November 17, 1997 (or if a Shelf Registration Statement is required, 30 days after request therefor), or (D) an Exchange Registration Statement or a Shelf Registration Statement is declared effective but thereafter ceases to be effective or usable within the applicable period as specified (each such event referred to in clauses (A) through (D) above, a "Registration Default") and (iii) holders of New Notes will not be, and upon consummation of the Exchange Offer, Eligible Holders of Old Notes, will no longer be, entitled to certain rights under the Registration Rights Agreement intended for the holders of unregistered securities; provided, however, that an Eligible Holder of Old Notes who is not permitted to participate in the Exchange Offer based upon written advice of counsel to the effect that such Holder may not be legally able to participate in the Exchange Offer or does not receive fully tradeable New Notes pursuant to the Exchange Offer, subject to reasonable verification by the Company, shall have the right to require the Company to file a Shelf Registration Statement solely for the benefit of such Eligible Holder of Old Notes and will be entitled to Additional Interest following the occurrence of a Registration Default. The Exchange Offer shall be deemed consummated upon the occurrence of the delivery by the Company to the Registrar under the Indenture. See "The Exchange Offer -- Termination of Certain Rights" and "-- Procedures for Tendering Old Notes" and "Description of New Notes." Maturity Date................ June 15, 2007. Interest..................... 10% payable semi-annually, calculated on the basis of a 360-day year consisting of twelve 30-day months. Interest Payment Dates....... June 15 and December 15 of each year, commencing December 15, 1997. Optional Redemption.......... The New Notes will be redeemable at the Company's option, in whole or in part, at any time on or after June 15, 2002, at the redemption prices set forth herein, together with accrued and unpaid interest, if any, to the date of redemption. In addition, on or prior to June 15, 2000, the Company may redeem up to 35% of the Old Notes, at a price of 110% of the principal amount thereof, together with accrued and unpaid interest, if any, to the redemption date, with the net proceeds of one or more Public Equity Offerings, provided that at least $100.75 million in principal amount of Notes is outstanding immediately after giving effect to such redemption. See "Description of New Notes -- Optional Redemption." Change of Control............ Upon the occurrence of a Change of Control, each holder of New Notes will, subject to the limitations described herein, have the right to require the Company to repurchase all or a portion of such holder's New Notes at a purchase price equal to 101% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of purchase. See "Description of New Notes -- Purchase of New Notes Upon a Change of Control." Ranking...................... The New Notes will be unsecured senior obligations of the Company, ranking pari passu in right of payment with all other existing and future Senior Indebtedness of the Company. The New Notes will be 13 16 effectively subordinated to secured Indebtedness, including the Company's secured Indebtedness (as defined) under the Bank Credit Facility and certain other Permitted Indebtedness that may be secured by a lien on the assets of the Company. As of March 29, 1997 and after giving effect to the Refinancing, which includes the issuance of the New Notes, the Company would have had $226.5 million of Senior Indebtedness. Although the New Notes, indebtedness incurred under the Bank Credit Facility and certain other Permitted Indebtedness (as defined) will all constitute senior obligations of the Company, the Banks (and any other lender with respect to other Indebtedness secured by assets of the Company) will have a claim ranking prior to that of the holders of the New Notes with respect to the distributions of assets and the proceeds thereof securing the Company's obligations thereunder. Certain Covenants............ The Indenture (as defined herein) pursuant to which the New Notes will be issued will contain certain covenants including, among others, covenants with respect to the following matters: (i) limitations on indebtedness (ii) limitations on restricted payments; (iii) limitations on transactions with affiliates; (iv) limitations on liens; (v) limitations on sale of assets; (vi) limitations on capital stock of subsidiaries; (vii) limitations on dividends and other payment restrictions affecting subsidiaries; and (viii) limitations on unrestricted subsidiaries. See "Description of the New Notes -- Certain Covenants." Absence of a Public Market for the New Notes............ The New Notes will be new securities for which there is currently no established public trading market. Accordingly, there can be no assurances as to the development or the liquidity of any market for the New Notes. The Company intends to make application to have the New Notes designated for trading in the Private Offerings, Resales and Trading through Automatic Linkages (PORTAL) System of the National Association of Securities Dealers, Inc. The Company does not intend to apply for listing of the Notes on any securities exchange or for quotation through the Nasdaq National Market or any other quotation system. For more detailed information regarding the terms of the New Notes and for definitions of capitalized terms not otherwise defined, see "Description of the New Notes." RISK FACTORS See "Risk Factors" on pages 17 through 20 for a discussion of certain factors which should be considered by prospective investors in evaluating an investment in the Notes. 14 17 SUMMARY CONSOLIDATED AND PRO FORMA FINANCIAL DATA (DOLLARS IN THOUSANDS) The consolidated financial data presented below for the fiscal years ended on January 2, 1993, January 1, 1994, December 31, 1994, December 30, 1995 and December 28, 1996 has been derived from the Company's audited consolidated financial statements and has been prepared by adjusting the consolidated financial statements of the Company as if the Merger between White Rose and the Company had taken place as of December 28, 1991. Such financial data has not been adjusted for any other component of the Refinancing. Since the stockholders of the Company, upon the consummation of the Merger are identical to the stockholders of White Rose, the exchange of shares was a transfer of interest among entities under common control, and is being accounted for at historical cost in a manner similar to pooling of interests accounting. The unaudited interim consolidated financial statements of the Company for the thirteen-week periods ended March 30, 1996 and March 29, 1997 and as of March 29, 1997 were derived from the Company's Quarterly Reports on Form 10-Q for and as of such periods. The data presented below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," the Consolidated Financial Statements and the notes thereto and other financial information appearing elsewhere in this Prospectus.
FISCAL YEAR ENDED THIRTEEN WEEKS ENDED ----------------------------------------------------------------------- ---------------------- JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 30, DECEMBER 28, MARCH 30, MARCH 29, 1993 1994 1994 1995 1996 1996 1997 ---------- ---------- ------------ ------------ ------------ --------- --------- INCOME STATEMENT: Total revenue(a)................ $704,448 $774,105 $936,847 $1,023,041 $1,050,206 $264,874 $265,973 Cost of products sold........... 626,359 682,974 835,526 915,536 935,719 236,723 237,180 -------- -------- -------- ---------- ---------- -------- -------- Gross profit(b)................. 78,089 91,131 101,321 107,505 114,487 28,151 28,793 Warehouse expense............... 28,256 32,631 37,503 39,196 40,343 10,423 10,609 Transportation expense.......... 15,784 17,916 21,354 22,759 21,624 5,625 5,422 Selling, general and administration expenses....... 16,874 19,089 20,277 22,357 23,389 5,902 5,524 Facility integration expenses... -- -- 3,986 -- -- -- -- Amortization -- excess of cost over net assets acquired...... 2,615 2,616 2,766 2,892 2,892 723 669 -------- -------- -------- ---------- ---------- -------- -------- Operating income................ 14,560 18,879 15,435 20,301 26,239 5,478 6,569 Interest expense................ 14,409 18,232 20,370 24,887 23,955 6,138 5,709 Amortization -- deferred financing costs............... 3,366 1,600 1,479 1,457 1,138 284 288 Other (income)/expense, net..... (1,806) (1,888) (2,939) (3,842) (3,758) (777) (1,043) -------- -------- -------- ---------- ---------- -------- -------- (Loss)/income from continuing operations before income taxes and extraordinary items....... (1,409) 935 (3,475) (2,201) 4,904 (167) 1,615 Income taxes.................... 34 109 63 105 3,053 -- 886 -------- -------- -------- ---------- ---------- -------- -------- (Loss)/income from continuing operations before extraordinary items........... (1,443) 826 (3,538) (2,306) 1,851 (167) 729 (Loss)/income from discontinued operations.................... (659) (1,178) -- -- -- -- -- Extraordinary (loss)/gain on extinguishment of debt........ -- (3,976) -- 510 219 -- -- -------- -------- -------- ---------- ---------- -------- -------- Net (loss)/income............... $ (2,102) $ (4,328) $ (3,538) $ (1,796) $ 2,070 $ (167) $ 729 ======== ======== ======== ========== ========== ======== ======== Ratio of earnings to fixed charges(c).................... --(d) 1.04x --(d) --(d) 1.18x -- (d) 1.25x OTHER DATA: EBITDA(e)....................... $ 20,902 $ 25,960 $ 27,628 $ 30,425 $ 36,854 $ 8,140 $ 9,297 Capital expenditures............ 1,563 1,501 1,390 1,920 1,004 175 413
(continued on the following page) 15 18
FIFTY-TWO WEEKS ENDED MARCH 29, 1997 --------------------- PRO FORMA FINANCIAL DATA(F): EBITDA(e)................................................................ $38,011 Interest expense......................................................... 22,031 Ratio of EBITDA to interest expense...................................... 1.73x
MARCH 29, 1997 --------------------------- ACTUAL AS ADJUSTED(G) -------- -------------- BALANCE SHEET DATA: Total assets........................................................ $306,544 $301,198 Working capital..................................................... 13,904 23,619 Total debt.......................................................... 217,588 226,467 Total stockholders' equity/(deficit)................................ 4,834 (8,167)
- --------------- (a) Previously, the Company classified as other income reclamation service fees, label income and other customer related services. Commencing in the fiscal year ended December 28, 1996, the Company is classifying these items as other revenue. Prior year amounts have been reclassified accordingly. The change in classification has no effect on previously reported net income. (b) Gross profit excludes warehouse expense shown separately. (c) For purposes of these calculations, earnings before fixed charges consist of earnings from continuing operations before income taxes plus fixed charges. Fixed charges consist of interest expense, amortization of deferred financing fees and the interest component of rent expense. (d) The Company's earnings before fixed charges for the fiscal years ended January 2, 1993, December 31, 1994, December 30, 1995, and the thirteen weeks ended March 30, 1996 were inadequate to cover fixed charges by approximately $1,409, $3,475, $2,201 and $167, respectively. (e) EBITDA is earnings before interest expense, income taxes, depreciation and amortization, non-cash interest income, non-recurring charges such as extraordinary gains or losses and, for fiscal year 1994, facility integration expense. EBITDA is not intended to represent cash flows for the period, nor has it been presented as an alternative to earnings from operations as an indicator of operating performance or as a measure of liquidity and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles ("GAAP"). See "Financial Statements of Di Giorgio Corporation and Subsidiaries." EBITDA is provided solely as supplemental disclosure. (f) Presented as though the Refinancing had occurred at the beginning of the period presented for pro forma financial data adjusted to reflect the elimination of actual interest expense on the tendered 12% Notes and the tendered 12 3/4% Discount Notes and to reflect the pro forma interest expense on the $155,000 Old Notes at 10%. Pro forma financial data is presented for a rolling fifty-two week period ended March 29, 1997. (g) Presented as though the Refinancing had occurred as of the date presented for balance sheet data. See "Capitalization." 16 19 RISK FACTORS Prospective investors should carefully consider, among other matters, the following in connection with a decision to purchase the Notes offered hereby. LEVERAGE; HISTORY OF OPERATING LOSSES; ABILITY TO SERVICE INDEBTEDNESS The Company has a substantial amount of indebtedness. As of March 29, 1997, the Company's consolidated total indebtedness was $217.6 million. If the Refinancing had been completed on March 29, 1997, the Company's consolidated total indebtedness on that date would have been $226.5 million. In addition, the Company realized net losses in four of the five last completed fiscal years, due principally to interest expense relating to indebtedness incurred in connection with the 1990 Acquisition. The Company's consolidated leverage and limited history of net profits may adversely affect the Company's ability to obtain financing on terms satisfactory to the Company in the future. The Company's earnings before fixed charges for the fiscal years ended January 2, 1993, December 31, 1994, December 30, 1995 and the thirteen weeks ended March 30, 1996 were inadequate to cover fixed charges by approximately $1.4 million, $3.5 million, $2.2 million and $0.2 million, respectively. The failure by the Company to cover fixed charges in the future could result in a failure to meet the Company's debt service obligations, restrictions on the Company's activities or other material adverse effects on the Company's financial condition and results of operations. The Company's ability to make scheduled payments of principal of, to pay interest on or to refinance its indebtedness (including the Notes) depends on its future performance and financial results, which, to a certain extent, are subject to general economic, financial, competitive, legislative, regulatory and other factors beyond its control. There can be no assurance that the Company's business will generate sufficient cash flow from operations or that future working capital borrowings will be available in an amount sufficient to enable the Company to service its indebtedness, including the Notes, or make necessary capital expenditures. The degree to which the Company is currently leveraged could have important consequences to the holders of the Notes, including, but not limited to, the following: (i) a substantial portion of the Company's cash flow from operations will be required to be dedicated to debt service and will not be available to the Company for its operations, (ii) the Company's ability to obtain additional financing in the future for acquisitions, capital expenditures, working capital or general corporate purposes could be limited, (iii) the Company's increased vulnerability to higher interest rates because borrowings under the Bank Credit Facility are at variable rates of interest and (iv) the Company's increased vulnerability to adverse general economic and industry conditions. RESTRICTIONS IMPOSED BY INDEBTEDNESS The Bank Credit Facility and the Indenture contain covenants that, among other things and subject to certain exceptions, restrict the ability of the Company to incur additional indebtedness, pay dividends, prepay subordinated indebtedness, dispose of certain assets, enter into sale and leaseback transactions, create liens, make capital expenditures and make certain investments or acquisitions and otherwise restrict corporate activities. In addition, under the Bank Credit Facility, the Company is required to satisfy specified financial covenants, including a cash flow coverage ratio, interest coverage ratio and ratio of total liabilities to tangible net worth. The ability of the Company to comply with such provisions may be affected by events beyond the Company's control. The breach of any of these covenants could result in a default under the Bank Credit Facility. In the event of any such default, depending on the actions taken by the lenders under the Bank Credit Facility, such lenders could elect to declare all amounts borrowed under the Bank Credit Facility, together with accrued interest, to be due and payable. A default under the Bank Credit Facility or the instruments governing the Company's other indebtedness could constitute a cross-default under the Indenture and any instruments governing the Company's other indebtedness, and a default under the Indenture could constitute a cross-default under the Bank Credit Facility and any instruments governing the Company's other indebtedness. 17 20 COMPETITION The wholesale food distribution industry is highly competitive. The Company competes with other food distributors and the warehousing and distributing divisions of retail grocery chains. Some of these competitors have greater financial and other resources than the Company. In addition, consolidation in the industry, heightened competition among the Company's suppliers, new entrants and trends toward vertical integration could create competitive pressures that reduce margins and adversely affect the Company. The Company believes that the key competitive factors within the wholesale food distribution industry are price, service, breadth and availability of products offered, strength of private label brands offered, strength of store trademarks offered, store financing support and cooperative arrangements. There can be no assurance that the Company will be able to continue to compete effectively in its industry. See "Business -- Competition." LOW MARGIN BUSINESS The wholesale food distribution industry in which the Company operates is characterized by low profit margins. As a result, the Company's results of operations are sensitive to, and may be materially adversely impacted by, among other things, competitive pricing pressures, vendor selling programs, increased interest rates and deflation in food prices. There can be no assurance that one or more of such factors will not materially adversely affect the Company's operating results. See "Business -- Competition." RELIANCE ON SIGNIFICANT CUSTOMERS In fiscal year 1996, the Company's largest customers, The Great Atlantic and Pacific Tea Company ("A&P") and Associated Food Stores ("Associated") accounted for approximately 22% and 20%, respectively, of net sales, and the Company's five largest customers accounted for approximately 62% of net sales. Losses of any of these customers or a substantial decrease in the amount of their purchases could be disruptive to the Company's business and have a material adverse effect on the Company's operating results. See "Business -- Markets and Customers." In the fourth quarter of 1996, a customer of the Company terminated its supply agreement that was scheduled to expire in October 1997. Sales to this customer totaled $62.7 million in the fifty-two weeks ended December 28, 1996 and $65.5 million in the comparable prior period. Revenues received from this customer will be substantially lower in 1997 than in prior years. See "Business -- Markets and Customers" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." POTENTIAL CREDIT LOSSES FROM LOANS TO RETAILERS The Company extends loans to many of its retail customers, often in conjunction with the establishment of supply arrangements with such customers. Loans to customers are generally to smaller businesses which are not investment grade, and such loans are highly illiquid. Provisions for doubtful accounts, including losses from receivables and investments in customers, were approximately $1.9 million for the fifty-two weeks ended December 28, 1996, as compared to $2.1 million for fiscal year 1995. At May 24, 1997, the Company's customer financing portfolio had an aggregate balance of approximately $16.1 million. The Company intends to continue, and possibly increase, its commitment to customer loans, and there can be no assurances that credit losses from existing or future investments or commitments will not have a material adverse effect on the Company's results of operations or financial condition. See "Business -- Products." GEOGRAPHIC CONCENTRATION; DEPENDENCE ON REGIONAL ECONOMIC CONDITIONS The Company's business is conducted primarily in the New York City metropolitan area, and accordingly, the Company is highly dependent on the general economic condition of this region. There can be no assurance that this region will not experience economic downturns in future periods that adversely affect the ability of the Company to improve or maintain its financial performance. 18 21 POTENTIAL ENVIRONMENTAL LIABILITIES The Company and certain businesses as to which it is alleged that the Company is a successor have incurred and may in the future incur liability under various federal and state environmental laws, including the Federal Comprehensive Environmental Response, Compensation, and Liability Act, as amended ("CERCLA"). In addition, the Company has been named as a potentially responsible party ("PRP") under CERCLA for cleanup costs at a separate waste disposal site in the United States operated by a third party. See "Business -- Environmental Matters." The Company believes that it has adequately reserved for the potential liability arising from the environmental problems known to it and that any such potential environmental liabilities in excess of such reserve will not have a material adverse effect on the Company's financial condition. However, there can be no assurance that the future identification of contamination at its current or former sites or changes in cleanup requirements would not have a material adverse effect on the Company's financial condition and results of operations. LABOR RELATIONS As of May 16, 1997, approximately 690 employees, representing approximately 67% of the Company's full-time employees, were members of various local unions associated with the International Brotherhood of Teamsters. The collective bargaining agreement with the warehouse employees of the Company's grocery operations expires in the fourth quarter of 1997. While the Company considers its labor relations satisfactory, a prolonged labor dispute could have a material adverse effect on the Company's business, financial condition and results of operations. ADVERSE PUBLICITY; PRODUCT LIABILITY The packaging, marketing and distribution of food products entails an inherent risk of product liability, product recall and resultant adverse publicity. There can be no assurance that such claims will not be asserted against the Company or that the Company will not be obligated to perform such a recall in the future. While the Company as a general practice receives indemnification guarantees from its suppliers whereby the supplier agrees to indemnify the Company from such claims and obligations, there can be no assurance that such indemnification will be sufficient or that such claims or obligations would not create adverse publicity that would have a material adverse effect on the Company's ability to successfully market its products. DEPENDENCE ON KEY PERSONNEL The Company's continued success depends, to a large extent, upon the efforts and abilities of key managerial employees, particularly the Company's executive officers, including Arthur M. Goldberg, Chairman, President and Chief Executive Officer, Richard B. Neff, Executive Vice President and Chief Financial Officer, and Stephen R. Bokser, Executive Vice President and President of the White Rose Division of Di Giorgio. In particular, these individuals have developed long-standing relationships with many of the Company's most significant customers. The loss of the services of any of these or other key executives may have a material adverse effect on the Company's operating results. See "Management." FRAUDULENT CONVEYANCE The Company believes that the indebtedness represented by the Notes has been incurred for proper purposes and in good faith, and that, based on present forecasts, asset valuations and other financial information, the Company is solvent, will have sufficient capital for carrying on its business and will be able to pay its debts as they mature. Notwithstanding this belief, however, under federal or state fraudulent transfer laws, if a court of competent jurisdiction in a suit by an unpaid creditor or a representative of creditors (such as a trustee in bankruptcy or a debtor-in-possession) were to find that the Company did not receive fair consideration (or reasonably equivalent value) for incurring the Notes or any debt being refinanced thereby and at the time of the incurrence of such indebtedness, the Company was insolvent, was rendered insolvent by reason of such incurrence, was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital, intended to incur, or believed that it would incur, debts beyond its ability to pay 19 22 such debts as they matured, or that the Company intended to hinder, delay or defraud its creditors, then such court could, among other things, (a) void all or a portion of the Company's obligations to the holders of the Notes, the effect of which would be that the holders of the Notes may not be repaid in full, (b) recover all or a portion of the payments made to holders of the Notes, and/or (c) subordinate the Company's obligations to the holders of the Notes to other existing and future indebtedness of the Company to a greater extent than would otherwise be the case, the effect of which would be to entitle such other creditors to be paid in full before any payment could be made on the Notes. The measure of insolvency for purposes of the foregoing will vary depending upon the law of the relevant jurisdiction. Generally, however, a company would be considered insolvent for purposes of the foregoing if the sum of the Company's debts is greater than all of the Company's property at a fair valuation, or if the present fair saleable value of the Company's assets is less than the amount that will be required to pay its probable liability on its existing debts as they become absolute and mature. There can be no assurances as to what standards a court would apply to determine whether the Company was solvent at the relevant time, or whether, whatever standard was applied, the Notes would not be voided on another of the grounds set forth above. ABSENCE OF PUBLIC MARKET FOR NEW NOTES The New Notes are new securities for which there currently is no market. Although the Initial Purchasers have informed the Company that they currently intend to make a market in the New Notes, they are not obligated to do so and any such market making may be discontinued at any time without notice. Accordingly there can be no assurance as to the development or liquidity of any market for the New Notes. The New Notes are expected to be eligible for trading in the PORTAL market. The Company does not intend to apply for listing of the New Notes on any securities exchange or for quotation through the Nasdaq National Market or any other quotation system. CERTAIN MARKET CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES To the extent that Old Notes are tendered and accepted for exchange pursuant to the Exchange Offer, the trading market for Old Notes that remain outstanding may be significantly more limited, which might adversely affect the liquidity of the Old Notes not tendered for exchange. The extent of the market therefor and the availability of price quotations would depend upon a number of factors, including the number of holders of Old Notes remaining at such time and the interest in maintaining a market in such Old Notes on the part of securities firms. An issue of securities with a smaller outstanding market value available for trading (the "float") may command a lower price than would a comparable issue of securities with a greater float. Therefore, the market price for Old Notes that are not exchanged in the Exchange Offer may be affected adversely to the extent that the amount of Old Notes exchanged pursuant to the Exchange Offer reduces the float. The reduced float also may make the trading price of the Old Notes that are not exchanged more volatile. CERTAIN CONSEQUENCES OF FAILURE TO VALIDLY TENDER Issuance of the New Notes in exchange for the Old Notes pursuant to the Exchange Offer will be made following the prior satisfaction, or waiver, of the conditions set forth in "The Exchange Offer -- Certain Conditions of the Exchange Offer" and only after timely receipt by the Exchange Agent of such Old Notes, a properly completed and duly executed Letter of Transmittal and all other required documents. Therefore, holders of Old Notes desiring to tender such Old Notes in exchange for New Notes should allow sufficient time to ensure timely delivery of all required documentation. Beneficial holders of Old Notes should also take into account the fact that the delivery of documents to The Depository Trust Company ("DTC") in accordance with DTC's procedures does not constitute delivery to the Exchange Agent. Neither the Exchange Agent, the Company nor any other person is under any duty to give notification of defects or irregularities with respect to the tenders of Old Notes for exchange. Old Notes that may be tendered in the Exchange Offer but which are not validly tendered will, following consummation of the Exchange Offer, remain outstanding and will continue to be subject to the same transfer restrictions currently applicable to such Old Notes. 20 23 THE EXCHANGE OFFER PURPOSE AND EFFECT The Old Notes were sold by the Company to the Initial Purchasers on June 20, 1997, pursuant to the Purchase Agreement. The Initial Purchasers subsequently resold the Old Notes in reliance on Rule 144A and Regulation S under the Securities Act. The Company and the Initial Purchasers also entered into the Registration Rights Agreement, pursuant to which the Company agreed, with respect to the Old Notes and subject to the Company's determination that the Exchange Offer is permitted under applicable law, to use its best efforts (i) to file, on or prior to August 19, 1997, an Exchange Offer Registration Statement with the Commission under the Securities Act concerning the Exchange Offer, (ii) to cause the Exchange Offer Registration Statement to be declared effective by the Commission on or prior to October 18, 1997, (iii) to keep the Exchange Offer Registration Statement effective until the closing of the Exchange Offer and (iv) to cause the Exchange Offer to be consummated on or prior to November 17, 1997. This Exchange Offer is intended to satisfy the Company's exchange offer obligations under the Registration Rights Agreement. The Exchange Offer is not being made to, nor will the Company accept tenders for exchange from, Eligible Holders of Old Notes in any jurisdiction in which the Exchange Offer or the acceptance thereof would not be in compliance with the Securities or blue sky laws of such jurisdiction. TERMS OF THE EXCHANGE OFFER The Company hereby offers, upon the terms and subject to the conditions set forth herein and in the accompanying Letter of Transmittal, to exchange $1,000 in principal amount of the New Notes for each $1,000 in principal amount of the outstanding Old Notes. The Company will accept for exchange any and all Old Notes that are validly tendered on or prior to 5:00 p.m., New York City time, on the Expiration Date. Tenders of the Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is not conditioned upon any minimum principal amount of Old Notes being tendered for exchange. However, the Exchange Offer is subject to certain customary conditions which may be waived by the Company, and to the terms and provisions of the Registration Rights Agreement. See "Conditions of the Exchange Offer." Old Notes may be tendered only in multiples of $1,000. Subject to the foregoing, Eligible Holders may tender less than the aggregate principal amount represented by the Old Notes held by them, provided that they appropriately indicate this fact on the Letter Of Transmittal accompanying the tendered Old Notes (or so indicate pursuant to the procedures for book-entry transfer). As of the date of this Prospectus, $155 million in aggregate principal amount of the Old Notes were outstanding, the maximum amount authorized by the Indenture for all Notes. Solely for reasons of administration (and for no other purpose), the Company has fixed the close of business on , 1997, as the record date (the "Record Date") for purposes of determining the persons to whom this Prospectus and the Letter of Transmittal will be mailed initially. Only an Eligible Holder of the Old Notes (or such Eligible Holder's legal representative or attorney-in-fact) may participate in the Exchange Offer. There will be no fixed record date for determining Eligible Holders of the Old Notes entitled to participate in the Exchange Offer. The Company believes that, as of the date of this Prospectus, no such Eligible Holder is an affiliate (as defined in Rule 405 under the Securities Act) of the Company. The Company shall be deemed to have accepted validly tendered Old Notes when, as and if the Company has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering Eligible Holders of Old Notes and for the purposes of receiving the New Notes from the Company. If any tendered Old Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, certificates for any such unaccepted Old Notes will be 21 24 returned, without expense, to the tendering Eligible Holder thereof as promptly as practicable after the Expiration Date. NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE COMPANY MAKES ANY RECOMMENDATION TO HOLDERS OF OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES TO TENDER, AFTER READING CAREFULLY THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISORS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS. EXPIRATION DATE; EXTENSIONS; AMENDMENTS The Expiration Date shall be , 1997 at 5:00 p.m., New York City time, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the Expiration Date shall be the latest date and time to which the Exchange Offer is extended. In order to extend the Exchange Offer, the Company will notify the Exchange Agent of any extension by oral or written notice and will make a public announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. The Company expressly reserves the right, in its sole and absolute discretion, (i) to delay accepting any Old Notes, (ii) to extend the Exchange Offer, (iii) if any of the conditions set forth below under "Conditions of the Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer, by giving oral or written notice of such delay, extension, or termination to the Exchange Agent, and (iv) to waive any condition or otherwise amend the terms of the Exchange Offer in any manner. If the Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendments by means of a prospectus supplement that will be distributed to the registered holders of the Old Notes. Any such delay in acceptance, extension, termination or amendment will be followed promptly by oral or written notice thereof to the Exchange Agent and by making a public announcement thereof, and such announcement in the case of an extension will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which the Company may choose to make any public announcement and subject to applicable law, the Company shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. CONDITIONS OF THE EXCHANGE OFFER Notwithstanding any other provisions of the Exchange Offer, or any extension of the Exchange Offer, the Company will not be required to accept for exchange, or to exchange, any Old Notes for any New Notes, and, as described below, may terminate the Exchange Offer (whether or not any Old Notes have theretofore been accepted for exchange) or may waive any conditions to or amend the Exchange Offer, if any of the following conditions have occurred or exists or have not been satisfied: (i) the Exchange Offer, or the making of any exchange by a holder, violates any applicable law or any applicable interpretation of the staff of the Commission; (ii) the due tendering of Registrable Securities in accordance with the Exchange Offer; and (iii) each Eligible Holder of Registrable Securities exchanged in the Exchange Offer shall have made certain customary representations, including representations that such Eligible Holder is not an affiliate of the Company within the meaning of Rule 405 under the Securities Act, that all New Notes to 22 25 be received by it shall be acquired in the ordinary course of its business and that at the time of the consummation of the Exchange Offer, such Eligible Holder shall have no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the New Notes and any such representation as may be reasonably necessary under applicable Commission rules, regulations or interpretations to render the use of the Registration Statement available. If the Company determines in its sole and absolute discretion that any of the foregoing events or conditions has occurred or exists or has not been satisfied, the Company may, subject to applicable law, terminate the Exchange Offer (whether or not any Old Notes have theretofore been accepted for exchange) or may waive any such condition or otherwise amend the terms of the Exchange Offer in any respect. If such waiver or amendment constitutes a material change to the Exchange Offer, the Company will promptly disclose such waiver or amendment by means of a prospectus supplement that will be distributed to the registered holders of the Old Notes, and the Company will extend the Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act. The Company expects that the foregoing conditions will be satisfied. The foregoing conditions are for the sole benefit of the Company and may be waived by the Company in whole or in part at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of such rights and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Company concerning the events described above will be final and binding upon all parties. TERMINATION OF CERTAIN RIGHTS The Registration Rights Agreement provides that, in the event a Registration Default, the interest rate borne by the Notes (except in the case of clause (iii), in which case only the Notes have not been exchanged in the Exchange Offer) shall be increased by one-quarter (0.25%) of one percent per annum upon the occurrence of any Registration Default, which rate (as increased as aforesaid) will increase by an additional one quarter (0.25%) of one percent each 90-day period that such additional interest continues to accrue under any such circumstance, with an aggregate maximum increase in the interest rate equal to one percent (1%) per annum. Following the cure of all Registration Defaults the accrual of Additional Interest will cease and the interest rate will revert to the original rate. ACCRUED INTEREST ON THE OLD NOTES Eligible Holders whose Old Notes are accepted for exchange will have the right to receive interest accrued thereon from the date of their original issuance or the last Interest Payment Date, as applicable, to, but not including, the date of issuance of the New Notes, such interest to be payable with the first interest payment on the New Notes. Interest on the Old Notes accepted for exchange, which interest accrued at the rate of 10% per annum, will cease to accrue on the day prior to the issuance of the New Notes. PROCEDURES FOR TENDERING OLD NOTES The tender of an Eligible Holder's Old Notes as set forth below and the acceptance thereof by the Company will constitute a binding agreement between the tendering Eligible Holder and the Company upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal. Except as set forth below, an Eligible Holder who wishes to tender Old Notes for exchange pursuant to the Exchange Offer must transmit such Old Notes, together with a properly completed and duly executed Letter of Transmittal, including all other documents required by such Letter of Transmittal, to the Exchange Agent at the address set forth on the back cover page of this Prospectus prior to 5:00 p.m., New York City time on the Expiration Date. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE ELIGIBLE HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE ELIGIBLE 23 26 HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. Any financial institution that is a participant in DTC's Book-Entry Transfer Facility system may make book-entry delivery of the Old Notes by causing DTC to transfer such Old Notes into the Exchange Agent's account in accordance with DTC's procedures for such transfer. However, although delivery of the Old Notes may be effected through book-entry transfer into the Exchange Agent's accountant DTC, the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other required documents, must in any case, be delivered to and received by the Exchange Agent at its address set forth under "-- The Exchange Agent; Assistance" on or prior to the Expiration Date, or the guaranteed delivery procedure set forth below must be complied with. Each signature on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the Old Notes surrendered for exchange pursuant hereto are tendered (i) by a registered holder of the Old Notes who has not completed either the box entitled "Special Exchange Instructions" or the box entitled "Special Delivery Instructions" in the Letter of Transmittal, or (ii) for the account of an Eligible Institution (as defined). In the event that a signature on a Letter of Transmittal or a notice of withdrawal, as the case may be, is required to be guaranteed, such signature must be guaranteed by a participant in a recognized Medallion Signature Program (a "Medallion Signature Guarantor"). If the Letter of Transmittal is signed by a person other than the registered holder of the Old Notes, the Old Notes surrendered for exchange must be endorsed by the registered holder, with the signature thereon guaranteed by a Medallion Signature Guarantor. The term "registered holder" as used herein with respect to the Old Notes means any person in whose name the Old Notes are registered on the books of the Registrar. The term "Eligible Institution" as used herein means a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or any other "eligible guarantor institution" as such term is defined in Rule 14Ad-15 under the Exchange Act. All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of Old Notes tendered for exchange will be determined by the Company in its sole discretion, which determination shall be final and binding. The Company reserves the absolute right to reject any and all Old Notes not properly tendered and to reject any Old Notes the Company's acceptance of which might, in the judgment of the Company or its counsel, be unlawful. The Company also reserves the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to particular Old Notes either before or after the Expiration Date (including the right to waive the ineligibility of any holder who seeks to tender Old Notes in the Exchange Offer). The interpretation of the terms and Conditions of the Exchange Offer (including the Letter of Transmittal and the instructions thereto) by the Company shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes for exchange must be cured within such period of time as the Company shall determine. The Company will use reasonable efforts to give notification of defects or irregularities with respect to tenders of Old Notes for exchange but shall not incur any liability for failure to give such notification. Tenders of the Old Notes will not be deemed to have been made until such irregularities have been cured or waived. If any Letter of Transmittal, endorsement, bond power, power of attorney or any other document required by the Letter of Transmittal is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company, in its sole discretion, of such person's authority to so act must be submitted. Any beneficial owner of the Old Notes (a "Beneficial Owner") whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender Notes in the Exchange Offer should contact such registered holder promptly and instruct such registered holder to tender on such Beneficial Owner's behalf. If such Beneficial Owner wishes to tender directly, such Beneficial Owner must, prior to completing and executing the Letter of Transmittal and tendering Old Notes, make 24 27 appropriate arrangements to register ownership of the Old Notes in such Beneficial Owner's name. Beneficial Owners should be aware that the transfer of registered ownership may take considerable time. By tendering, each registered holder will represent to the Company that, among other things (i) the New Notes to be acquired in connection with the Exchange Offer by the Eligible Holder and each Beneficial Owner of the Old Notes are being acquired by the Eligible Holder and each Beneficial Owner in the ordinary course of business of the Eligible Holder and each Beneficial Owner, (ii) the Eligible Holder and each Beneficial Owner are not Participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in the distribution of the New Notes, (iii) the Eligible Holder and each Beneficial Owner acknowledge and agree that any person participating in the Exchange Offer for the purpose of distributing the New Notes must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes acquired by such person and cannot rely on the position of the Staff of the Commission set forth in no-action letters that are discussed herein under "Resales of New Notes," (iv) that if the Eligible Holder is a broker-dealer that acquired Old Notes as a result of market-making or other trading activities, it will deliver a prospectus in connection with any resale of New Notes acquired in the Exchange Offer, (v) the Eligible Holder and each Beneficial Owner understand that a secondary resale transaction described in clause (iii) above should be covered by an effective registration statement containing the selling security holder information required by Item 507 of Regulation SK of the Commission, and (vi) neither the Eligible Holder nor any Beneficial Owner is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company except as otherwise disclosed to the Company in writing. In connection with a book-entry transfer, each participant will confirm that it makes the representations and warranties contained in the Letter of Transmittal. GUARANTEED DELIVERY PROCEDURES Eligible Holders who wish to tender their Old Notes and (i) whose Old Notes are not immediately available or (ii) who cannot deliver their Old Notes or any other documents required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date (or complete the procedure for book-entry transfer on a timely basis), may tender their Old Notes according to the guaranteed delivery procedures set forth in the Letter of Transmittal. Pursuant to such procedures: (i) such tender must be made by or through an Eligible Institution and a Notice of Guaranteed Delivery (as defined in the Letter of Transmittal) must be signed by such Eligible Holder, (ii) on or prior to the Expiration Date, the Exchange Agent must have received from the Eligible Holder and the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Eligible Holder, the certificate number or numbers of the tendered Old Notes, and the principal amount of tendered Old Notes, stating that the tender is being made thereby and guaranteeing that, within four (4) business days after the date of delivery of the Notice of Guaranteed Delivery, the tendered Old Notes, a duly executed Letter of Transmittal and any other required documents will be deposited by the Eligible Institution with the Exchange Agent, and (iii) such properly completed and executed documents required by the Letter of Transmittal and the tendered Old Notes in proper form for transfer (or confirmation of a book-entry transfer of such Old Notes into the Exchange Agent's account at DTC) must be received by the Exchange Agent within four (4) business days after the Expiration Date. Any Eligible Holder who wishes to tender Old Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery and Letter of Transmittal relating to such Old Notes prior to 5:00 p.m., New York City time, on the Expiration Date. ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES Upon satisfaction or waiver of all the conditions to the Exchange Offer, the Company will accept any and all Old Notes that are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The New Notes issued pursuant to the Exchange Offer will be delivered promptly after acceptance of the Old Notes. For purposes of the Exchange Offer, the Company shall be deemed to have accepted validly tendered Old Notes, when, as, and if the Company has given oral or written notice thereof to the Exchange Agent. 25 28 In all cases, issuances of New Notes for Old Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of such Old Notes, a properly completed and duly executed Letter of Transmittal and all other required documents (or of confirmation of a book-entry transfer of such Old Notes into the Exchange Agent's account at DTC); provided, however, that the Company reserves the absolute right to waive any defects or irregularities in the tender or conditions of the Exchange Offer. If any tendered Old Notes are not accepted for any reason, such unaccepted Old Notes will be returned without expense to the tendering Eligible Holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. WITHDRAWAL RIGHTS Tenders of the Old Notes may be withdrawn by delivery of a written or facsimile transmission notice to the Exchange Agent, at its address set forth on the back cover page of this Prospectus, at any time prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn (including the certificate number or numbers and principal amount of such Old Notes, as applicable), (iii) be signed by the Eligible Holder in the same manner as the original signature on the Letter of Transmittal by which such Old Notes were tendered (including any required signature guarantees) or be accompanied by a bond power in the name of the person withdrawing the tender, in satisfactory form as determined by the Company in its sole discretion, duly executed by the registered holder, with the signature thereon guaranteed by a Medallion Signature Guarantor together with the other documents required upon transfer by the Indenture, and (iv) specify the name in which such Old Notes are to be re-registered, if different from the Depositor, pursuant to such documents of transfer. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, in its sole discretion. The Old Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Old Notes which have been tendered for exchange but which are withdrawn will be returned to the Eligible Holder thereof without cost to such Eligible Holder as soon as practicable after withdrawal. Properly withdrawn Old Notes may be retendered by following one of the procedures described under "-- Procedures for Tendering Old Notes" at any time on or prior to the Expiration Date. THE EXCHANGE AGENT; ASSISTANCE The Bank of New York, a New York banking corporation, is the Exchange Agent. All tendered Old Notes, executed Letters of Transmittal and other related documents should be directed to the Exchange Agent. Questions and requests for assistance and requests for additional copies of the Prospectus, the Letter of Transmittal and other related documents should be addressed to the Exchange Agent as follows: By Hand, Registered or Certified Mail or Overnight Courier: The Bank of New York 101 Barclay Street, 21st Floor West New York, NY 10286 By Facsimile: (212) 815-6339 Attention: Henry Lopez Confirm by Telephone (212) 815-2742 FEES AND EXPENSES All expenses incident to the Company's consummation of the Exchange Offer and compliance with the Registration Rights Agreement will be borne by the Company, including without limitation, and if applicable: (i) all Commission, stock exchange or National Association of Securities Dealers, Inc. (the "NASD") registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws and compliance with the rules of the NASD (including reasonable fees and 26 29 disbursements of counsel for any underwriters or Holders in connection with blue sky qualification of any the Exchange Securities or Registrable Securities and any filings with the NASD), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sale agreements and other documents relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing, if any, of any of the Registrable Securities on any securities exchange or exchanges, (v) all rating agency fees, (vi) the fees and disbursements of counsel for the Company and of the independent public accountants of the Company, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, (vii) the fees and expenses of the Trustee, and any escrow agent or custodian, (viii) the reasonable fees and disbursements of special counsel representing the Holders of Registrable Securities and (ix) any fees and disbursements of the underwriters customarily required to be paid by issuers or sellers of securities and the reasonable fees and expenses of any special experts retained by the Company in connection with any Registration Statement, but excluding underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. The Company has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to brokers, dealers or others soliciting acceptance of the Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith. The Company will pay all transfer taxes, if any, applicable to the exchange of Old Notes pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any reason other than the exchange of Old Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. ACCOUNTING TREATMENT The New Notes will be recorded at the same carrying value as the Old Notes, as reflected in the Company's accounting records on the date of the exchange. Accordingly, no gain or loss will be recognized by the Company for accounting purposes. The expenses of the Exchange Offer will be amortized over the term of the New Notes. RESALES OF THE NEW NOTES Upon consummation of the Exchange Offer, Holders of Old Notes that were not prohibited from participating in the Exchange Offer and did not tender their Old Notes will not have any registration rights under the Registration Rights Agreement with respect to such nontendered Old Notes and, accordingly, such Old Notes will continue to be subject to the restrictions on transfer contained in the legend thereon. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act and applicable state securities laws, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The company does not intend to register the Old Notes under the Securities Act. The Company is making the Exchange Offer in reliance on the position of the staff of the Division of Corporation Finance of the Securities and Exchange Commission (the "Commission") as set forth in certain interpretive letters addressed to third parties in other transactions. However, the Company has not sought its own interpretive letter and there can be no assurance that the staff of the Division of Corporation Finance of the Commission would make a similar determination with respect to the Exchange Offer as it has in such interpretive letters to third parties. Based on these interpretations by the staff of the Division of Corporation Finance, and subject to the two immediately following sentences, the Company believes that New Notes issued pursuant to the Exchange Offer to an Eligible Holder in exchange for Old Notes may be offered for resale, resold and otherwise transferred by an Eligible Holder (other than (i) a broker-dealer who purchased 27 30 Old Notes directly from the Company for resale pursuant to Rule 144A or any other available exemption under the Securities Act or (ii) a person that is an affiliate of the Company within the meaning of Rule 405 under the Securities Act), without further compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Eligible Holder is acquiring the New Notes in the ordinary course of business and is not participating, and has no arrangement or understanding with any person to participate, in the distribution of the New Notes. Eligible Holders wishing to accept the Exchange Offer must represent to the Company, as required by the Registration Rights Agreement, that such conditions have been met. Any Eligible Holder of Old Notes who is an "affiliate" of the Company or who intends to participate in the Exchange Offer for the purpose of distributing New Notes, or any broker-dealer who purchased Old Notes from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act, (a) will not be able to rely on the interpretations of the staff of the Division of Corporation Finance of the Commission set forth in the above-mentioned interpretive letters, (b) will not be permitted or entitled to tender such Old Notes in the Exchange Offer and (c) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or other transfer of such Old Notes unless such sale is made pursuant to an exemption from such requirement. Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it acquired the Old Notes for its own account as a result of market-making activities or other trading activities and must agree that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Based on the position taken by the staff of the Division of Corporation Finance of the Commission in the interpretive letters referred to above, the Company believes that broker-dealers who acquired Old Notes for their own accounts, as a result of market-making or other trading activities ("Participating Broker-Dealers") may fulfill their prospectus delivery requirements with respect to the New Notes received upon exchange of such Old Notes (other than Old Notes which represent an unsold allotment from the original sale of the Old Notes) with a prospectus meeting the requirements of the Securities Act, which may be the prospectus prepared for an exchange offer so long as it contains a description of the plan of distribution with respect to the resale of such New Notes. Accordingly, this Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer during the period referred to below in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such Participating Broker-Dealer for its own account as a result of market-making or other trading activities. Subject to certain provisions set forth in the Registration Rights Agreement, the Company has agreed that this Prospectus, may be used by a Participating Broker-Dealer in connection with resales of such New Notes. See "Plan of Distribution." However, a Participating Broker-Dealer who intends to use this Prospectus in connection with the resale of New Notes received in exchange for Old Notes pursuant to the Exchange Offer must notify the Company, or cause the Company to be notified, on or prior to the Expiration Date, that it is a Participating Broker-Dealer. Such notice may be given in the space provided for that purpose in the Letter of Transmittal or may be delivered to the Exchange Agent at one of the addresses set forth herein under "-- The Exchange Agent; Assistance." Any Participating Broker-Dealer who is an "affiliate" of the Company may not rely on such interpretive letters and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. See "The Exchange Offer -- Resales of New Notes." In that regard, each Participating Broker-Dealer who surrenders Old Notes pursuant to the Exchange Offer will be deemed to have agreed, by execution of the Letter of Transmittal, that, upon receipt of notice from the Company of the occurrence of any event or the discovery of any fact which makes any statement contained in this Prospectus untrue in any material respect or which causes this Prospectus to omit to state a material fact necessary in order to make the statements contained herein, in light of the circumstances under which they were made, not misleading or of the occurrence of certain other events specified in the Registration Rights Agreement, such Participating Broker-Dealer will suspend the sale of New Notes pursuant to this Prospectus until the Company has amended or supplemented this Prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemented Prospectus to such Participating Broker-Dealer or the Company has given notice that the sale of the New Notes may be resumed, as the case may be. 28 31 MISCELLANEOUS Participation in the Exchange Offer is voluntary and holders should carefully consider whether to accept. Holders of the Old Notes are urged to consult their financial and tax advisors in making their own decisions on what action to take. Upon consummation of the Exchange Offer, holders of the Old Notes that were not prohibited from participating in the Exchange Offer and did not tender their Old Notes will not have any registration rights under the Registration Rights Agreement with respect to such nontendered Old Notes and, accordingly, such Old Notes will continue to be subject to the restrictions on transfer contained in the legend thereon. However, in the event the Company fails to consummate the Exchange offer or a holder of Old Notes notifies the Company in accordance with the Registration Rights Agreement that it will be unable to participate in the Exchange Offer due to circumstances delineated in the Registration Rights Agreement, then the holder of the Old Notes will have certain rights to have such Old Notes registered under the Securities Act pursuant to the Registration Rights Agreement and subject to conditions contained therein. THE REFINANCING On June 20, 1997, the Company completed a refinancing (the "Refinancing") of itself and its former parent, White Rose, intended to extend debt maturities, reduce interest expense and improve financial flexibility. The components of the Refinancing were (i) the Offering, (ii) the modification of the Bank Credit Facility, (iii) the receipt of payment for the extinguishment of a note held by the Company from Rose Partners, which owns 98.54% of the Company, (iv) the consummation of the Company Tender Offer and the White Rose Tender Offer on May 16, 1997 in respect of the Senior Notes and White Rose's 12 3/4% Senior Discount Notes due 1998, respectively, (v) the dividend by the Company to White Rose of certain non-cash assets which are unrelated to the Company's primary business and the subsequent dividend of those assets to White Rose's stockholders and (vi) the Merger of White Rose with and into the Company with the Company surviving the merger. The Company funded the White Rose Tender Offer through an intercompany loan which was canceled upon the consummation of the Merger. Immediately following the Refinancing, $7.45 million aggregate principal amount of Senior Notes remained outstanding; however, the Indenture pursuant to which the Senior Notes were issued has been substantially amended effective as of June 9, 1997 pursuant to the Company Tender Offer. 29 32 CAPITALIZATION The following table sets forth the consolidated capitalization of the Company as of March 29, 1997 and as adjusted to give effect to the Offering and consummation of the Refinancing. See "The Refinancing." The information set forth below should be read in conjunction with the Company's Consolidated Financial Statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained elsewhere in this Prospectus.
MARCH 29, 1997 ---------------------------- ACTUAL(1) AS ADJUSTED(2) --------- -------------- (IN THOUSANDS) Long-term debt and capital leases (including current portions): Bank Credit Facility(3).......................................... $ 28,352 $ 19,861 12% Notes........................................................ 92,890 7,450 12 3/4% Discount Notes........................................... 52,190 -- Notes offered hereby............................................. -- 155,000 Other notes payable.............................................. 10,835 10,835 Capital leases payable........................................... 33,321 33,321 -------- -------- Total debt............................................... 217,588 226,467 Stockholders' equity: Class A Common Stock, par value $.01 per share, 1,000 shares authorized, 101.62 issued and outstanding..................... Class B Common Stock, par value $.01 per share, 1,000 shares authorized, 100 shares issued and outstanding................. Additional paid-in capital....................................... 17,225 13,051 Accumulated deficit.............................................. (12,391) (21,218) -------- -------- Total stockholders' equity/(deficit)..................... 4,834 (8,167) -------- -------- Total capitalization..................................... $ 222,422 $218,300 ======== ========
- --------------- (1) Actual capitalization represents the capitalization of the Company assuming the merger with White Rose took place as of March 29, 1997. (2) As Adjusted capitalization represents the capitalization of the Company giving effect to the Refinancing. Adjusted to reflect the issuance of the Old Notes of $155,000 and the receipt of $8.9 million as repayment of the Rose Partners Note, which was used (i) to fund the purchase of $85,440 of 12% Notes leaving $7.5 million outstanding, (ii) to fund the purchase of $52,190 of 12 3/4% Discount Notes leaving $0 outstanding, (iii) to pay premiums of $10,829 net of estimated tax benefit of $4,331 related to such purchases, (iv) to pay accrued interest and the fees and expenses of the Refinancing, with the remaining $8,491 reducing the Bank Credit Facility, (v) to distribute the non-core assets to the stockholders of $4,174 and (vi) to reflect the write off of deferred fees of $3,883 net of a tax benefit of $1,554. (3) The Bank Credit Facility is a $90 million three-year revolving credit facility secured by accounts receivable and inventory. Borrowings under the Bank Credit Facility are subject to a borrowing base. See "Description of the Bank Credit Facility." Amounts outstanding under the Bank Credit Facility are treated for accounting purposes as short-term debt. However, because of the longer term of the facilities under which this debt is issued (three years with respect to this facility), the Company considers debt under this facility to be part of its total capitalization and, accordingly, has included them in the table. 30 33 SELECTED CONSOLIDATED FINANCIAL DATA The consolidated financial data presented below as of and for the fiscal years ended on January 2, 1993, January 1, 1994, December 31, 1994, December 30, 1995 and December 28, 1996 has been derived from the Company's audited consolidated financial statements and has been prepared by adjusting the consolidated financial statements of the Company as if the Merger between White Rose and the Company, with the Company as the survivor, had taken place as of December 28, 1991. Such financial data has not been adjusted for any other component of the Refinancing except as expressly described. Since the stockholders of the Company, upon consummation of the Merger are identical to the stockholders of White Rose, the exchange of shares was a transfer of interest among entities under common control, and is being accounted for at historical cost in a manner similar to pooling of interests accounting. The unaudited interim consolidated financial statements of the Company as of and for the thirteen-week periods ended March 30, 1996 and March 29, 1997 were derived from the Company's Quarterly Reports on Form 10-Q for and as of such periods. The data presented below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," the Consolidated Financial Statements and the notes thereto and other financial information appearing elsewhere in this Prospectus.
FISCAL YEAR ENDED THIRTEEN WEEKS ENDED --------------------------------------------------------------------- --------------------- JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 30, DECEMBER 28, MARCH 30, MARCH 29, 1993 1994 1994 1995 1996 1996 1997 ---------- ---------- ------------- ------------ ------------ --------- --------- (DOLLARS IN THOUSANDS) INCOME STATEMENT: Total revenue(a).................. $704,448 $774,105 $ 936,847 $1,023,041 $1,050,206 $264,874 $265,973 Cost of products sold............. 626,359 682,974 835,526 915,536 935,719 236,723 237,180 -------- -------- -------- ---------- ---------- -------- -------- Gross profit(b)................... 78,089 91,131 101,321 107,505 114,487 28,151 28,793 Warehouse expense................. 28,256 32,631 37,503 39,196 40,343 10,423 10,609 Transportation expense............ 15,784 17,916 21,354 22,759 21,624 5,625 5,422 Selling, general and administration expenses......... 16,874 19,089 20,277 22,357 23,389 5,902 5,524 Facility integration expenses..... -- -- 3,986 -- -- -- -- Amortization--excess of cost over net assets acquired............. 2,615 2,616 2,766 2,892 2,892 723 669 -------- -------- -------- ---------- ---------- -------- -------- Operating income.................. 14,560 18,879 15,435 20,301 26,239 5,478 6,569 Interest expense.................. 14,409 18,232 20,370 24,887 23,955 6,138 5,709 Amortization--deferred financing costs........................... 3,366 1,600 1,479 1,457 1,138 284 288 Other (income)/expense, net....... (1,806) (1,888) (2,939) (3,842) (3,758) (777) (1,043) -------- -------- -------- ---------- ---------- -------- -------- (Loss)/income from continuing operations before income taxes and extraordinary items......... (1,409) 935 (3,475) (2,201) 4,904 (167) 1,615 Income taxes...................... 34 109 63 105 3,053 -- 886 -------- -------- -------- ---------- ---------- -------- -------- (Loss)/income from continuing operations before extraordinary items........................... (1,443) 826 (3,538) (2,306) 1,851 (167) 729 (Loss) from discontinued operations...................... (659) (1,178) -- -- -- -- -- Extraordinary (loss)/gain on extinguishment of debt.......... -- (3,976) -- 510 219 -- -- -------- -------- -------- ---------- ---------- -------- -------- Net (loss)/income................. $ (2,102) $ (4,328) $ (3,538) $ (1,796) $ 2,070 $ (167) $ 729 ======== ======== ======== ========== ========== ======== ======== Ratio of Earnings to Fixed Charges(c)...................... --(d) 1.04x --(d) --(d) 1.18x -- (d) 1.25x OTHER DATA: EBITDA(e)......................... $ 20,902 $ 25,960 $ 27,628 $ 30,425 $ 36,854 $ 8,140 $ 9,297 Capital expenditures.............. 1,563 1,501 1,390 1,920 1,004 175 413 Ratio of EBITDA to interest expense......................... 1.45x 1.42x 1.36x 1.22x 1.54x 1.33x 1.63x
(continued on the following page) 31 34
AS OF AS OF --------------------------------------------------------------------- --------------------- JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 30, DECEMBER 28, MARCH 30, MARCH 29, 1993 1994 1994 1995 1996 1996 1997 ---------- ---------- ------------- ------------ ------------ --------- --------- (IN THOUSANDS) BALANCE SHEET DATA(F): Total assets...................... $281,478 $274,988 $ 304,147 $ 318,430 $ 301,069 $313,533 $306,544 Working capital................... 2,437 6,012 2,746 7,344 12,342 8,255 13,904 Total debt........................ 155,251 184,421 197,339 223,543 215,308 229,437 217,588 Total stockholders' equity........ 33,157 8,588(g) 5,050 2,035 4,105 1,767 4,834
- --------------- (a) Previously, the Company classified as other income reclamation service fees, label income and other customer related services. Commencing in the fiscal year ended December 28, 1996, the Company is classifying these items as other revenue. Prior year amounts have been reclassified accordingly. The change in classification has no effect on previously reported net income. (b) Gross profit excludes warehouse expense shown separately. (c) For purposes of these calculations, earnings before fixed charges consist of earnings from continuing operations before income taxes plus fixed charges. Fixed charges consist of interest expense, amortization of deferred financing fees and the interest component of rent expense. (d) The Company's earnings before fixed charges for the fiscal years ended January 2, 1993, December 31, 1994, December 30, 1995, and the thirteen weeks ended March 30, 1996 were inadequate to cover fixed charges by approximately $1,409, $3,475, $2,201 and $167, respectively. (e) EBITDA is earnings before interest expense, income taxes, depreciation and amortization, non-cash interest income, non-recurring charges such as extraordinary gains or losses and, for fiscal year 1994, facility integration expense. EBITDA is not intended to represent cash flows for the period, nor has it been presented as an alternative to earnings from operations as an indicator of operating performance or as a measure of liquidity and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. See the Company's Historical Consolidated Statement of Cash Flows in the Company's Consolidated Financial Statements contained elsewhere in this Prospectus. EBITDA is provided solely as supplemental disclosure. (f) The balance sheet data includes the balance sheet data of the discontinued operations. (g) On December 31, 1993 White Rose distributed all of the outstanding shares of the Las Plumas Lumber Corporation ("Las Plumas") as a return of capital to its principal stockholder, Rose Partners. The Company remains liable for various liabilities of Las Plumas including liabilities relating to environmental and workers' compensation matters incurred prior to the date of divestiture. The net book value of this distribution was approximately $21.7 million, based on the book value of net assets transferred including goodwill. 32 35 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Consolidated Financial Statements of the Company, including the notes thereto, included elsewhere in this Prospectus. GENERAL On June 20, 1997, the Company consummated the Refinancing. The following discussion assumes that the Merger between White Rose and the Company had taken place as of December 28, 1991. Since the stockholders of the Company are identical to the stockholders of White Rose, the exchange of shares was a transfer of interest among entities under common control, and is being accounted for at historical cost in a manner similar to pooling of interests accounting. Accordingly, the discussion presented herein reflect the assets and liabilities and related results of operations for the combined entity for all periods. RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain operating data as a percentage of net sales:
THIRTEEN FIFTY-TWO WEEKS ENDED WEEKS ENDED ---------------------------------------------- ----------------------- DECEMBER 31, DECEMBER 30, DECEMBER 28, MARCH 30, MARCH 29, 1994 1995 1996 1996 1997 ------------ ------------ ------------ --------- --------- Net sales...................... 100.0% 100.0% 100.0% 100.0% 100.0% Gross profit................... 10.9 10.6 11.0 10.7 10.9 Warehouse expense.............. 4.0 3.8 3.9 4.0 4.0 Transportation expense......... 2.3 2.2 2.1 2.1 2.1 Selling, general and administrative expenses...... 2.2 2.2 2.2 2.2 2.1 Amortization -- excess of cost over net assets acquired..... 0.3 0.3 0.3 0.3 0.3 Operating income............... 1.7 2.0 2.5 2.1 2.5
Thirteen weeks ended March 29, 1997 and March 30, 1996 Net sales for the thirteen weeks ended March 29, 1997 were $264.4 million as compared to $263.9 million for the thirteen weeks ended March 30, 1996 as a $14.2 million decrease in sales to a customer which terminated its contract for dairy division products in the fourth quarter of 1996 was offset by a temporary supplemental third party supply arrangement and increased sales to existing customers. Other revenue, consisting of recurring customer related services, increased 57.5% to $1.6 million for the thirteen weeks ended March 29, 1997 as compared to $1.0 million in the prior period primarily due to providing a produce distribution service for a particular customer which began in the first quarter of 1997. Revenue from this service is accounted for as other revenue because the Company receives a handling fee per case and does not own this particular inventory. In addition, the Company is in the process of dedicating its auxiliary warehouse in Kearny, New Jersey to this produce distribution service, which is expected to be fully operational in the second quarter of 1997. Gross margin (excluding warehouse expense) increased to 10.9% of net sales or $28.8 million for the thirteen weeks ended March 29, 1997 as compared to 10.7% of net sales or $28.2 million for the prior period as a result of a more favorable mix of product sold. Although the Company has taken steps and will continue to take steps to maintain and improve its margins, there can be no assurance the decrease in promotional activities, that management believes is an industry wide trend, will not continue. 33 36 Warehouse expense remained relatively constant at 4.0% of net sales or $10.6 million for the thirteen weeks ended March 29, 1997 as compared to 4.0% of net sales or $10.4 million for the prior period, as operating efficiencies in the grocery and frozen divisions were offset by costs in the dairy division related to the produce distribution business. Transportation expense remained constant at 2.1% of net sales or $5.4 million for the thirteen weeks ended March 29, 1997 as compared to 2.1% of net sales or $5.6 million for the prior period. Selling, general and administrative expense decreased to 2.1% of net sales or $5.5 million for the thirteen weeks ended March 29, 1997 as compared to 2.2% of net sales or $5.9 million for the prior period primarily due to a reduction in the provision for doubtful accounts as a result of a significant decline in credit exposure to a former customer. Other income, net of other expenses, increased to $1.0 million for the thirteen weeks ended March 29, 1997 as compared to $777,000 for the prior period primarily due to increased interest income. Interest expense decreased to $5.7 million for the thirteen weeks ended March 29, 1997 from $6.1 million for the prior period. The comparative decrease in the 1996 period represents a decline in the average outstanding level of the Company's funded debt offset by increased accretion of the 12 3/4% Discount Notes. The Company recorded an income tax provision of $886,000 resulting in an effective income tax rate of 55% for the thirteen weeks ended March 29, 1997 as compared to an effective tax rate of 0% for the prior period. The Company's estimated effective tax rate is higher than its statutory tax rate primarily because of the nondeductibility of certain of the Company's amortization of the excess of cost over net assets acquired; however, due to net operating loss carryforwards for tax purposes, the Company does not expect to pay federal income tax for the current year with the exception of an alternative minimum tax. The Company recorded net income for the thirteen weeks ended March 29, 1997 of $729,000 as compared to a loss of $167,000 for the prior period. Fifty-two weeks ended December 28, 1996 and December 30, 1995 Net sales for the fifty-two weeks ended December 28, 1996 increased 2.6% to $1,045.2 million as compared to $1,018.2 million in the fifty-two weeks ended December 30, 1995. The increased sales primarily reflect higher same customer sales, a temporary supplemental third party supply agreement, and higher selling prices stemming from increased cost of product sold. Other revenue, consisting of reclamation service fees, storage income, label income and other customer related services, increased 4.6% to $5.0 million in the fifty-two weeks ended December 28, 1996 as compared to $4.8 million in the prior period. Gross margin (excluding warehouse expense) increased to 11.0% of net sales or $114.5 million in the fifty-two weeks ended December 28, 1996 from 10.6% of net sales or $107.5 million in the prior period as a result of a more favorable mix of product sold. Although the Company has taken steps and will continue to take steps to maintain and improve its margins, there can be no assurance the decrease in promotional activities that management believes is an industry wide trend will not continue. Warehouse expense remained relatively constant at 3.9% of net sales or $40.3 million in the fifty-two weeks ended December 28, 1996 as compared to 3.8% of net sales or $39.2 million in the prior period, as cost improvements in the grocery and frozen divisions were offset by higher temporary costs in the dairy division related to a change in its receiving and warehousing systems. Transportation expense decreased to 2.1% of net sales or $21.6 million in the fifty-two weeks ended December 28, 1996 from 2.2% of net sales or $22.8 million in the prior period as a result of better utilization of the Company's transportation fleet. This was accomplished by reducing the number of deliveries through both the use of larger trailers acquired in a long-term lease and more structured delivery schedules. These savings were partly offset by higher wages. 34 37 Selling, general and administrative expense remained relatively flat at 2.2% of net sales or $23.4 million during the fifty-two weeks ended December 28, 1996 as compared to 2.2% of net sales or $22.4 million in the prior year as a reduction in the provision for doubtful accounts was offset by less non-cash pension asset income. Other income, net of other expenses, remained constant at $3.8 million during the fifty-two weeks ended December 28, 1996 as compared to the prior period. Other income in 1996 included a cancellation fee of $376,000 from a customer who prematurely terminated a supply agreement while other income in 1995 included a settlement of a lawsuit for approximately $500,000. Interest expense decreased to $24.0 million in the fifty-two weeks ended December 28, 1996 from $24.9 million in the prior period. The comparative decrease in the 1996 period represents a decline in the average outstanding level of the Company's funded debt partially offset by the inclusion of the Carteret facility capital lease for the full period and additional accretion of interest on the 12 3/4% Discount Notes. The Company recorded an income tax provision of $3.1 million resulting in an effective income tax rate of 62%. The Company's estimated effective tax rate is higher than its statutory tax rate primarily because of the nondeductibility of certain of the Company's amortization of the excess of cost over net assets acquired; however, due to net operating loss carryforwards for tax purposes, the Company does not expect to pay federal income tax for the current year with the exception of a nominal amount of alternative minimum tax. The Company recorded net income for the fifty-two weeks ended December 28, 1996 of $2.1 million, which included a $219,000 gain on the extinguishment of debt net of tax, as compared to a loss of $1.8 million in the prior period, which included a $510,000 gain on the extinguishment of debt net of tax. Fifty-two weeks ended December 30, 1995 and December 31, 1994 Net sales for the fifty-two weeks ended December 30, 1995 increased $85.8 million or 9.2% to $1,018.2 million from $932.4 million during the fifty-two weeks ended December 31, 1994. The increased sales were the result of the Royal Acquisition which was phased in during the period April 1994 through June 1994. Other revenue, consisting of reclamation service fees, storage income, label income, and other customer related services, increased 8.1% to $4.8 million in the fifty-two weeks ended December 30, 1995 as compared to $4.5 million in the prior period. Gross margin (excluding warehouse expense) decreased to 10.6% of net sales or $107.5 million in the fifty-two weeks ended December 30, 1995 from 10.9% of net sales or $101.3 million in the prior period, reflecting, in part, a shift in both customer and product mix in the Company's dairy division as a result of the Royal Acquisition. The grocery division experienced a decrease in gross margin as compared to the prior year's comparable period resulting from, among other things, fewer promotional opportunities extended by manufacturers. Management believes that this decrease in promotional activities is an industry-wide trend and may continue, although it appears that the negative pressure on the Company's gross margins peaked in the first quarter of 1995 and gross margin showed an improvement in each of the last three calendar quarters. The Company has taken steps and expects to continue to take steps to maintain and improve its margins, however, there can be no assurances that these steps will continue to be successful. Warehouse expense decreased to 3.8% of net sales or $39.2 million in the fifty-two weeks ended December 30, 1995 from 4.0% of net sales or $37.5 million in the prior period as a result of higher dairy division sales (stemming from the Royal Acquisition) in relation to lower fixed dairy division warehouse costs due to the consolidation of the two dairy warehouses into one which took place in July and August of 1994. This improvement was partially offset by a temporary first fiscal quarter increase in grocery division warehouse expense as a percentage of sales due to the transition between the Company's old grocery division distribution facility in Elizabeth, NJ and a new facility in Carteret, NJ. In subsequent quarters the Company achieved better productivity in its new grocery facility as a result of the more efficient layout compared to its old Elizabeth, NJ facility. 35 38 Transportation expense decreased to 2.2% of net sales or $22.8 million in the fifty-two weeks ended December 30, 1995 from 2.3% of net sales or $21.4 million in the prior period primarily as a result of the Company's upgrading its trailer fleet to increase the capacity per load as well as increased backhaul revenue offset by higher fixed costs as a result of the Royal Acquisition and slightly higher, but anticipated, variable costs, such as tolls, as a result of the Grocery division move to Carteret, NJ in February 1995. Selling, general and administrative expense remained flat at 2.2% of net sales or $22.4>million during the fifty-two weeks ended December 30, 1995 as compared to 2.2% of net sales or $20.3 million in the prior period. Other income, net of other expenses, increased $903,000 to $3.8 million in the fifty-two weeks ended December 30, 1995 from $2.9 million in the prior period primarily reflecting the settlement of a claim in the first fiscal quarter of 1995, increased recurring other income items relating to increased sales as a result of the Royal Acquisition and other non-core business activities of the Company. Interest expense increased to $24.9 million in the fifty-two weeks ended December 30, 1995 from $20.4 million in the prior period. The Company's financing of the Royal Acquisition, the interest portion of the Carteret facility capital lease, increased borrowings based on the relative levels of receivables, inventory, and accounts payable, higher interest rates and additional accretion of interest on the 12 3/4% Discount Notes were the principal reasons for the increase. The Company had a net loss of $1.8 million for the fifty-two weeks ended December 30, 1995 which included an extraordinary gain, net of tax, on the extinguishment of debt in the amount of $510,000 as compared to a net loss of $3.5 million in the prior period which included a one time facility integration expense of approximately $4.0 million in the prior period. LIQUIDITY AND CAPITAL RESOURCES Cash flow from operations and amounts available under the Company's Bank Credit Facility are the Company's principal sources of liquidity. The Company's Bank Credit Facility will mature on June 30, 2000 and bears interest at a rate per annum equal to (at the Company's option): (i) the Euro Dollar Offering Rate plus 2.25% or (ii) Bankers Trust Company's prime rate plus 0.75%. Borrowings under the Company's revolving bank credit facility were $28.4 million at March 29, 1997 at an average interest rate as of that date of 7.94%. Additional borrowing capacity of $38.3 million was available at that time under the Company's borrowing base formula. The Company believes that these sources will be adequate to meet its anticipated debt service requirements, working capital needs, and capital expenditures during fiscal 1997. During the thirteen weeks ended March 29, 1997, cash flow used for operating activities was $338,000, consisting primarily of cash generated from net income, non-cash expenses and increases in accounts payable and accrued expenses of $2.5 million offset by an increase in net receivable levels (including the long-term portion) of $5.6 million and an increase in inventory levels of $2.4 million. During the fifty-two weeks ended December 28, 1996, cash flow provided by operating activities was $16.1 million, consisting primarily of cash generated from net income, the adding back of non-cash expenses and declines of $7.5 million in net receivable levels and $2.8 million in inventory levels, offset by a $8.9 million decrease in accounts payable. During the fifty-two weeks ended December 30, 1995, cash flow provided by operating activities was $8.8 million. Cash flow used in investing activities during the thirteen weeks ended March 29, 1997 was approximately $413,000, all of which was used for capital expenditures. Net cash provided by financing activities was approximately $736,000, consisting of net borrowings under the bank credit facility of $1.6 million offset by note payments and capital lease payments of $897,000. Cash flow used in investing activities during the fifty-two weeks ended December 28, 1996 was approximately $1.0 million, all of which was used for capital expenditures. Net cash used in financing activities was approximately $13.8 million, primarily used to retire long-term debt and reduce the Company's bank credit facility. Cash flow used in investing activities during the fifty-two weeks ended December 30, 1995 was approximately $857,000, of which $1.9 million was for capital 36 39 expenditures offset by $1.1 million of proceeds from a contingent reimbursement relating to the Royal Acquisition. Net cash used in financing activities was approximately $9.3 million. Earnings before interest expense, income taxes, depreciation and amortization, non-cash interest income, non-recurring charges such as extraordinary gains or losses and, for fiscal year 1994, facility integration expense ("EBITDA"), was $9.3 million during the thirteen weeks ended March 29, 1997 as compared to $8.1 million in the comparable prior year period. EBITDA was $36.9 million during the fifty-two weeks ended December 28, 1996 as compared to $30.4 million in the comparable prior year period. The consolidated indebtedness of the Company decreased $11.8 million to $217.6 million at March 29, 1997 as compared to $229.4 million at March 30, 1996. The decrease consisted of a $4.8 million reduction in the Company's 12% Notes, a $9.3 million reduction in the working capital facility, a $2.3 million reduction in capital leases, and a $1.5 million decrease in notes payable, offset by a $6.1 million accretion of the 12 3/4% Discount Notes. Stockholder's equity increased $2.9 million to $4.8 million at March 29, 1997 from $1.9 million at March 30, 1996. The consolidated indebtedness of the Company decreased $8.2 million to $215.3 million on December 28, 1996 compared to $223.5 million at December 30, 1995. The decrease consisted of a $4.8 million reduction in the Company's 12% Notes, a $5.6 million reduction in the working capital facility, a $2.2 million reduction in capital leases, and $1.5 million in notes payments offset by a $5.9 million accretion of the 12 3/4% Discount Notes. Stockholder's equity increased $2.1 million to $4.1 million on December 28, 1996 from $2.0 million on December 30, 1995. The Company raised an aggregate of $155.0 million through the issuance of the Old Notes and received $8.9 million as repayment of the Rose Partners Note which was used (i) to fund the purchase of $85.4 million of the 12% Notes leaving $7.5 million outstanding, (ii) to fund the purchase of $53.7 million of the 12 3/4% Discount Notes leaving $0 outstanding, (iii) to pay premiums of $10.8 million related to such purchases, (iv) to pay accrued interest and the fees and expenses of the Refinancing, with the remaining $4.9 million reducing the Bank Credit Facility. The Refinancing, if it had occurred on such date, would have increased the Company's consolidated indebtedness as of March 29, 1997 from $217.6 million to $226.5 million. The Refinancing, if it had occurred on the day before such thirteen week period, would have reduced the Company's consolidated interest expense for the thirteen weeks ended March 29, 1997 to $5.3 million from $5.7 million. In addition, the Indenture provides that the Company may repurchase, and retire into treasury (i) up to $5 million of its outstanding Common Stock if the Company converts the capital lease relating to its Carteret, New Jersey distribution facility into an operating lease, and (ii) additional Common stock out of the proceeds of its sale of its Farmingdale facility (as defined) or the Farmingdale Option (as defined). See "Description of the Notes." The Company spent approximately $1.0 million on capital expenditures during the fifty-two weeks ended December 28, 1996 and does not expect to spend in excess of $2.5 million during 1997. The Company expended approximately $349,000 in fiscal 1996 and does not expect to expend more than $1.0 million in fiscal 1997 in connection with the environmental remediation of certain presently owned or divested properties. The Company intends to finance such remediation through internally generated cash flow or borrowings. Should the Company become liable as a result of any material adverse determination of any legal or governmental proceeding beyond the expected expenditures, it could have an adverse effect on the Company's liquidity position. Under the terms of the Company's revolving bank credit facility, the Company is required to meet certain financial tests, including minimum interest coverage ratios and minimum net worth. As of March 29, 1997, the Company was in compliance with its covenants. The indentures governing the Company's 12% Notes and 12 3/4% Discount Notes, as well as the agreement governing the Bank Credit Facility impose, and the Indenture governing the Notes will impose, various restrictions upon the Company, including, among other things, limitations on the occurrence of additional debt and the making of certain payments and investments. From time to time when the Company considers market conditions attractive, the Company has purchased a portion of its 12% Notes and may in the future purchase and retire a portion of the Notes offered 37 40 hereby. In addition, the Company continuously reviews its capital structure, including its funded debt and capital leases, to determine if it can better finance its operations. In the fourth quarter of 1996, a customer of the Company terminated its supply agreement that was scheduled to expire in October 1997. Sales to this customer totaled $62.7 million in the fifty-two weeks ended December 28, 1996 and $65.5 million in the comparable prior period. Accordingly, revenues received from this customer will be substantially lower in 1997 than in prior years. In 1996, the Company entered the produce distribution business for one specific customer which lasted until June of 1997. The Company continues to study the feasibility of offering produce to all of its customers. In addition, in December 1996, the Company entered into a temporary supplemental supply arrangement with a customer from another geographic region which lasted approximately six weeks. In May 1997, the Company acquired tangible property formerly the subject of a lease at its frozen facility from an affiliate of the Company for approximately $2.0 million. 38 41 BUSINESS Di Giorgio Corporation is one of the largest independent wholesale food distributors in the New York metropolitan area, which is one of the largest food retail markets in the United States. Across its grocery, frozen and dairy product categories, the Company supplies approximately 18,000 food and non-food items, predominantly national brand name items, to more than 1,600 customer locations. The Company markets approximately 850 grocery, frozen and dairy items under its well-recognized White Rose(TM) label, which has been established in the New York metropolitan area for over 110 years. The Company serves supermarkets, independent retailers (including members of voluntary cooperatives) and chains principally in the five boroughs of New York City, Long Island, northern New Jersey and, to a lesser extent, the Philadelphia area. For the fifty-two weeks ended March 29, 1997, the Company had total revenue of $1,051.3 million and EBITDA of $38.0 million. COMPANY STRENGTHS Market Leadership in New York Metropolitan Area. The Company believes that it is a market leader in the distribution of grocery products, frozen foods (including ice cream and frozen bakery goods), and dairy products (excluding milk and eggs) in the New York metropolitan area. The Company believes that the breadth of its product lines, and the density of its New York City area customer locations, afford it a competitive advantage in the New York metropolitan area. Efficient Distribution Network. The Company believes that its development of a highly efficient distribution network affords it additional competitive advantages. This development has consisted of the consolidation of warehouse facilities into newer, larger and more efficient facilities, the application of advanced distribution technology through sophisticated computer systems, and significant improvements in the efficiency of trucking operations. The White Rose(TM) Label. The White Rose(TM) label is a well-recognized regional brand for quality merchandise across approximately 850 grocery, frozen and dairy products, and has been marketed in the New York metropolitan area for over 110 years. Products under the White Rose(TM) brand are formulated to the Company's specifications, often by national brand manufacturers, and are subject to random testing to ensure quality. The White Rose(TM) brand allows independent retail customers to carry a regionally-recognized label across numerous products similar to chain stores while providing consumers with an attractive alternative to national brands. The Company believes that White Rose(TM) labeled products generally produce higher margins for its customers than national brands, and help the Company to attract and retain customers Relationship with Met(TM) and Pioneer(TM) Stores. The Met(TM) and Pioneer(TM) tradenames are owned by the Company, however, the customers using the tradenames are independently owned stores. The Company and the customer stores operate as voluntary cooperatives allowing a customer to take advantage of the benefits of advertising and merchandising on a scale usually available only to large chains, as well as certain other retail support services provided by the Company. In order to use the tradenames, customers must purchase a substantial portion of their grocery, frozen food and dairy inventory requirements from the Company, thereby enhancing the stability of this portion of the Company's customer base. These customers represented approximately one-fifth of net sales for each of the fifty-two week periods ended December 28, 1996 and December 30, 1995. Experienced Management Team. The Company is led by a strong and experienced management team, the members of which have a successful track record in the food marketing and distribution industry. See "Management." The Company believes that its management team's long-standing relationships with some of its principal customers are valuable assets. BUSINESS STRATEGY Enhancing Productivity. The Company has focused on enhancing productivity by (i) instituting productivity-based labor incentives, (ii) obtaining the flexibility to efficiently utilize its workforce, (iii) moving warehousing locations to newer, larger and more efficient facilities and (iv) upgrading its 39 42 computer systems for inventory control and management. In addition, management has significantly improved trucking efficiency by expanding the role of backhauls, improving routing using modern technology, and upgrading transportation equipment. These improvements have controlled costs and, management believes, have positioned the Company to realize profit margin growth through volume growth. Pursuing Complementary Acquisitions. Management has also pursued complementary strategic acquisitions. In August 1992, the Company acquired substantially all of the business of the Global Frozen Foods Division ("Global") of Sysco Corp. (the "Global Acquisition") and in June 1994, the Company completed the acquisition of substantially all of the assets of the Royal Food Division of Fleming Foods East, Inc., a subsidiary of Fleming Companies, Inc. (the "Royal Acquisition"). Both of these acquisitions increased the Company's market share, gave the Company larger, more efficient warehouses and eliminated a major competitor from the marketplace. In each acquisition, the Company was able to achieve efficiencies of scale and synergies in operations that allowed it to increase the profit margins of the acquired businesses once the integration was completed. Developing New Revenue Opportunities. Management has sought to increase its existing customer revenue base by providing value-added services aimed at solidifying customer relationships and building customer loyalty. For its large retail customers, management has focused on providing consistent and reliable warehousing and distribution services at costs that are attractive to these customers. For its smaller retail customers, in addition to providing consistent, reliable warehouse and distribution services and competitive pricing, the Company has developed numerous product offerings including the sale of sophisticated information systems (i.e., scanning equipment and systems support), programs for more efficient coupon redemption and cost-effective commercial insurance programs. Promoting Brand Name Recognition. Recently the Company redesigned the logo of its 110-year-old White Rose(TM) brand and instituted a widespread advertising campaign which has included promotional sponsorship of New York Yankee baseball games. Management believes that the growing consumer recognition of the White Rose(TM) label not only has led to increased demand for the Company's products within its current operating region, but has created opportunities for the Company's expansion into other contiguous regions, most notably New England. Management believes that the success of its strategies has created a platform for growth opportunities in the future. The Company's information systems, operating flexibility and capacity allow it to effectively service major accounts with supplemental supply on short notice, as it has demonstrated twice within the past year. Management believes that this proven success has created goodwill with prospective customers and has placed the Company in a competitive position to attract new business. Additionally, management continues to weigh alternatives aimed at growing volume at its existing distribution centers by exploring the most profitable means of expansion of its core business into the complementary markets of Philadelphia and New England while continuing to develop broader-based consumer recognition of its White Rose(TM) brand. The Company also plans to continue to engage in discussions from time to time with respect to, and may pursue, potential strategic acquisitions. PRODUCTS Management believes that the distribution of multiple product categories gives the Company an advantage over its competitors by affording customers the ability to purchase grocery, frozen and dairy products from a single supplier. In addition, the Company is able to merchandise its well-recognized White Rose(TM) label consistently across all three categories of products. While some customers purchase items from all three product lines, others purchase items from only one or two product lines. Products are sold at prices which reflect the manufacturer's stated price plus a profit margin. Prices are adjusted to reflect changes in vendor pricing. Certain of the Company's customers require varying levels of retail support services in order to compete effectively in the marketplace. The Company provides a broad spectrum of such services, including advertising, promotional and merchandising assistance; retail operations counseling; computerized ordering services; and store layout and equipment planning. The Company has a staff of customer representatives who 40 43 visit stores on a regular basis to advise store management regarding their operations. Most of the Company's customers utilize computerized order entry, which allows them to place and confirm orders 24 hours a day, 7 days a week. The Company's largest customers generally provide their own retail support. The Company periodically provides financial assistance to independent retailers by selectively providing (i) financing for the purchase of new grocery store locations; (ii) financing for the purchase of inventories and store fixtures, equipment and leasehold improvements; (iii) extended payment terms for initial inventories and (iv) extended payment terms for existing receivable balances. The primary purpose of such assistance is to provide a means of continued growth for the Company through development of new customer store locations and the enlargement and remodeling of existing stores. Stores receiving financing purchase grocery, frozen and dairy inventory requirements from the Company. Financial assistance is usually in the form of a secured, interest-bearing loan, generally repayable over a period of one to three years. As of May 24, 1997, the Company's customer financing portfolio had an aggregate balance of approximately $16.1 million, consisting of approximately 80 loans ranging from $3,000 to $700,000. To further serve the needs of its customers, the Company has recently expanded its customer support services. Under the Company's insurance program, the Company offers customers the ability to purchase liability, property and crime insurance through a master policy purchased by the Company. The Company's coupon redemption program facilitates the redemption of vendor coupons. Finally, through its technologies division, the Company distributes and supports supermarket scanning equipment which is compatible with the Company's information systems. MARKETS AND CUSTOMERS The Company's principal markets encompass the five boroughs of New York City, Long Island, northern New Jersey and, to a lesser extent, the Philadelphia area. The Company also has customers in upstate New York, Connecticut, Pennsylvania and Delaware, and is pursuing expansion into markets adjacent to the New York City metropolitan area. The Company's customers include single and multiple store owners consisting of chains and independent retailers which generally do not maintain their own internal distribution operations for one or more of the Company's product lines. Some of the Company's customers are independent food retailers or members of voluntary cooperatives which seek to achieve the operating efficiencies enjoyed by supermarket chains through common purchasing and advertising. Unlike larger retail chains which predominate in suburban areas, the independent retailers served by the Company tend to be located in urban areas. The Company's customers include food markets operating under some of the following trade names: the SuperFresh, Waldbaums, Food Emporium and A&P Metro operations of A&P, Associated Food Stores, Gristedes and Sloans Supermarkets, King Kullen, Kings Super Markets, Quick Chek, Big R Supermarkets, Scaturros, and Western Beef, as well as the Met(TM), Pioneer(TM) and Super Food cooperatives. During the fifty-two weeks ended December 28, 1996, the Company's largest customers, A&P and Associated, accounted for approximately 22% and 20%, respectively, of net sales, and the Company's five largest customers accounted for approximately 62% of net sales. In the fourth quarter of 1996, the Company's fifth largest customer, The Grand Union Company, accounting for approximately 6% of net sales during the fifty-two weeks ended December 28, 1996, terminated its supply agreement with the Company that was scheduled to expire in October 1997 and significantly decreased its purchases from the Company starting in November, 1996. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Company or certain of its principal executive officers have long-standing relationships with most of the principal customers of the Company. The loss of certain of these principal customers or a substantial decrease in the amount of their purchases could be disruptive to the Company's business. WAREHOUSING AND DISTRIBUTION The Company presently supplies its customers from three warehouse and distribution centers. All of these facilities are equipped with modern equipment for receiving, storing and shipping large quantities of merchandise. Management believes that the efficiency of its warehouse and distribution centers enables the 41 44 Company to compete effectively. A newly installed warehouse and inventory management system directs all aspects of the material handling process from receiving through shipping, thus minimizing cost while maintaining the highest service level possible. The Company normally has in-stock approximately 95% of its grocery product line, approximately 97% of its dairy product line and approximately 96% of its frozen food product line. Immediate product availability, efficient warehousing techniques and flexible delivery schedules generally make it possible for the Company to ship to customers within 24 to 48 hours of receipt of their orders. The Company's trucking system consists of 114 tractors (all of which are leased), 277 trailers (of which 250 are leased) and 13 trucks (all of which are leased). On approximately 35% of its deliveries, the Company is able to arrange "backhauls" of products from manufacturers' or other suppliers' distribution facilities located in the markets served by the Company, thereby enabling the Company to reduce its procurement costs. The Company regularly uses independent owner/operators to make deliveries on an "as needed" basis to supplement the use of its own employees and equipment. The Company makes on average approximately 845 deliveries per day each weekday to its customers through a combination of its own transportation fleet and that of third parties. Over the past year the Company has upgraded its trailer fleet through the replacement of older, smaller trailers with new, larger trailers, thereby increasing the capacity per load in an effort to reduce transportation cost as well as increase backhaul revenue. The new larger trailers have reduced the number of trailers utilized by the Company. Due to the different storage and distribution requirements of each of the Company's product lines, the Company handles each product line in a separate facility. All of the Company's warehouse and distribution facilities are fully integrated through the Company's computer, accounting, and management information systems to ensure operating efficiency and coordinated quality customer service. PURCHASING The Company purchases products for resale to its customers from approximately 1,400 suppliers in the United States and abroad. Brand name products are purchased directly from the manufacturer, through the manufacturer's representatives or through food brokers by buyers in each of the Company's operating divisions. White Rose(TM) label and customers' private label products are purchased from producers, manufacturers or packers who are licensed by the Company, in the case of the White Rose(TM) label, or by the owners of the respective private labels. The Company purchases products in large volume and resells them in the smaller quantities required by its customers. Management believes that the Company has the purchasing power to obtain competitive volume discounts from its suppliers. Substantially all categories of products distributed by the Company are available from a variety of manufacturers and suppliers, and the Company is not dependent on any single source of supply for any specific category, however, market conditions dictate that certain nationally prominent brands, available from single suppliers, be available for distribution. Order size and frequency are determined by management based upon historical sales experience, sales projections and computer forecasting. A sophisticated procurement system provides the buying department with extensive data to measure the movement and profitability of each inventory item, forecast seasonal trends, and recommend the terms of purchases. This system, which operates in concert with the warehouse management system, features full electronic data interchange capabilities and accounting interfaces. The Company from time to time buys increased quantities of inventory items when the manufacturer is selling the item at a discount pursuant to a special promotion, an industry practice known as "forward buying." These special promotions are offered by various manufacturers at their sole discretion. The Company earns income from additional margins realized in connection with these promotional purchasing opportunities. COMPETITION The wholesale food distribution industry is highly competitive. The Company is one of the largest independent wholesale food distributors to supermarkets in the New York City metropolitan area and is the only independent distributor that supplies three primary supermarket product categories: grocery, frozen and dairy. The Company's principal competitors are C & S Wholesale Grocers, Inc., Krasdale Foods, Inc., and 42 45 General Trading Co. ("General Trading") with respect to grocery distribution, General Trading with respect to dairy distribution, and Nassau Suffolk Frozen Food Company, Inc. with respect to frozen food distribution. Many of the Company's smaller competitors generally do not provide retail support services and financing services to independent retailers in the Company's market. The Company also competes with cooperatives such as Key Food Stores Co-operative Inc. and Twin County Grocers Inc., which provide distribution and support services to their affiliated independent retailers doing business under trade names licensed to them by the cooperatives. Unlike these competitors, the Company does not require payment of capital contributions to the Company by retailers desiring to use the Met(TM) or Pioneer(TM) names. Management believes that the principal competitive factors in the Company's business include price, service, breadth and availability of products offered, strength of private label brand offered, strength of store trademarks offered, store financing support and cooperative arrangements. Management believes that the Company competes effectively by offering a full product line, including its well-recognized, regional White Rose(TM) label, a high level of service stemming from its well-positioned and efficient distribution networks, the retail support and financing services associated with its Met(TM) and Pioneer(TM) voluntary cooperative trademarks, flexible delivery schedules, competitive prices, competitive levels of customer service including newly introduced insurance, coupon-redemption and scanner distribution and support services, and computerized order entry. PROPERTIES The Company's three principal warehouse and distribution facilities are set forth below along with its former dairy facility. In addition, the Company owns or leases various properties principally related to its divested operations, which properties are leased to third parties or held for resale or sublease.
LOCATION USE SQUARE FOOTAGE LEASE EXPIRATION - -------------------------------- ------------------------- -------------- ----------------------- Carteret, New Jersey............ Groceries and other Non- 645,000 2015 (plus two 5-year Perishables renewal options) Garden City, New York........... Frozen 325,000 2004 (plus one 7-year renewal option) Woodbridge, New Jersey.......... Dairy 200,000 2001 (plus four 5-year renewal options) Kearny, New Jersey.............. Auxiliary 98,000 1999
The aggregate operating lease rent paid in connection with the Company's facilities was approximately $800,000 in fiscal 1996. In addition, the Company paid $5.2 million in connection with capital leases during fiscal 1996. Currently, the Carteret grocery division distribution facility operates at approximately 70% of capacity and the dairy division distribution facility operates at 80% of capacity (both on a three shift basis), while the frozen foods division distribution facility operates at approximately 50% of capacity (on a two shift basis). Depending on the product mix of new business introduced, each warehouse has greater capacity to grow than stated above. The frozen foods division distribution facility has the flexibility of further increasing capacity because the Company uses some of the space leased by it for public storage. The Company continues to have a leasehold interest in its former grocery distribution facility in Farmingdale, New York under an agreement with the fee owner of the facility. The Company and the fee owner share the economic benefits of the resulting income stream, financings related thereto or ultimate sale of the property, with 80% to the Company and 20% to the fee owner. The Company also has an option to purchase the property from the fee owner commencing in 1998 for an amount equal to 20% of the net fair market value of the property. In August 1993, the Company entered into an agreement to sublease the entire premises to a third party subtenant for an initial term of five years with certain renewal and purchase options. The subtenant has exercised its purchase option, which option provides for both an automatic five year 43 46 extension of the sublease until August 2003 and a reduction in the subtenant's monthly rent if the Company is unable to deliver title to the property to the subtenant by August 1998. Although there can be no assurances, the Company expects the sale to be completed by the end of fiscal 1998. EMPLOYEES As of May 16, 1997, the Company employed approximately 1,027 persons, of whom approximately 690 were covered by collective bargaining agreements with various International Brotherhood of Teamsters locals. The Company is a party to certain collective bargaining agreements with its warehouse and trucking employees at its dairy operation (expiring November 2000), its grocery operation (warehouse expiring October 1997 and trucking expiring May 2000) and its frozen operation (expiring January 2000). Management believes that the Company's present relations with its work force are satisfactory. LEGAL PROCEEDINGS The Company is involved in claims, litigation and administrative proceedings of various types in various jurisdictions. In addition, the Company has agreed to indemnify various transferees of its divested operations with regard to certain known and potential liabilities which may arise out of such operations. The Company also has incurred and may in the future incur liability arising under environmental laws and regulations in connection with these divested properties and properties presently owned or acquired. Although management believes that it has established adequate reserves for known contingencies, there can be no assurances that the costs of environmental remediation or an unfavorable outcome in any litigation or governmental proceeding will not have an adverse effect on the Company. ENVIRONMENTAL MATTERS The Company has incurred and may in the future incur environmental liability to clean up potential contamination at a number of properties under certain federal and state laws, including the Federal Comprehensive Environmental Response, Compensation, and Liability Act, as amended ("CERCLA"). Under such laws, liability for the cleanup of property contaminated by hazardous substances may be imposed on both the present owner and operator of a property and any person who owned or operated the property at the time hazardous substances were disposed thereon. Persons who arranged for the disposal of hazardous substances found on a disposal site may also be liable for cleanup costs. In certain cases, the Company has agreed to indemnify the purchaser of its former properties for liabilities arising thereon or has agreed to remain liable for certain potential liabilities that were not assumed by the transferee. The Company has recorded an estimate of its total potential environmental liability arising from specifically identified environmental problems (including those discussed below) in the amount of approximately $2.0 million as of December 28, 1996. The Company believes such reserves are adequate and that known environmental liabilities will not have a material adverse effect on the Company's financial condition. However, there can be no assurance that the identification of contamination at its current or former sites or changes in cleanup requirements would not result in significant costs to the Company. The Company is responsible for the cleanup and/or monitoring of various sites previously owned or operated by the Company, the most significant of which are located in St. Genevieve, Missouri and Three Rivers, Michigan. In addition, the Company has been identified as a potentially responsible party ("PRP") under CERCLA for cleanup costs at the Seaboard waste disposal site in North Carolina. The Company is a member of the de minimis group, comprised of parties who allegedly contributed less than 1% of the total waste at the site. Two other sites with respect to which the Company had previously been named a PRP have been settled with nominal contributions from the Company. The Company is not a party to any material litigation, other than routine litigation incidental to the business of the Company, which is individually or in the aggregate material to the business of the Company. Management does not believe that the outcome of any of its current litigation, either individually or in the aggregate, will have a material adverse effect on the Company. 44 47 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth certain information concerning the executive officers and directors of the Company.
NAME AGE POSITION -------------------------------------- --- -------------------------------------- Arthur M. Goldberg(2)(3).............. 55 Chairman of Board of Directors, President and Chief Executive Officer Richard B. Neff(3).................... 48 Executive Vice President, Chief Financial Officer and Director Stephen R. Bokser..................... 54 Executive Vice President, President of White Rose Foods Division of the Company and Director Jerold E. Glassman(3)................. 61 Director Emil W. Solimine(2)................... 52 Director Charles C. Carella(1)(2).............. 63 Director Jane S. Fumo(1)....................... 43 Director Joseph R. DeSimone.................... 57 Senior Vice President of Distribution Robert A. Zorn........................ 42 Senior Vice President and Treasurer Lawrence S. Grossman.................. 35 Vice President and Corporate Controller
- --------------- (1) Member of the Audit Committee (2) Member of the Compensation Committee (3) Member of the Executive Committee Directors are elected for one year terms and hold office until their successors are elected and qualified. The executive officers are appointed by and serve at the discretion of the Board of Directors. MR. GOLDBERG has been Chairman of the Board, President and Chief Executive Officer of the Company since 1990. Mr. Goldberg is also a Director and Executive Vice President and President -- Gaming Operations, Hilton Hotels Corporation, since December 1996. Prior thereto he was President, Chairman and Chief Executive Officer and a director of Bally Entertainment Corporation from October 1990 to December 1996. He is also Managing Partner, Arveron Investments, LP, since 1986. Mr. Goldberg is also a director of Bally Total Fitness Holding Corporation, Bally's Grand, Inc., First Union Corporation and ContinueCare Corp. Mr. Goldberg, in his capacity as the sole general partner of Rose Partners, L.P., controls the voting and investment of 98.5% of the outstanding common stock of the Company. MR. NEFF has been Executive Vice President, Chief Financial Officer and Director of the Company since 1990. He is also a Director and Chairman of the Board of Ryan Beck & Co., an investment banking concern. MR. BOKSER has been Executive Vice President of the Company since February 1990 and a Director of the Company since 1990. In addition, Mr. Bokser has served as President of the White Rose Foods Division of the Company since prior to 1991. Mr. Bokser has also served as a director of Western Beef, Inc. since 1993. MR. GLASSMAN has been a Director of the Company since 1990. Since prior to 1990, Mr. Glassman has been a Partner of Grotta, Glassman & Hoffman, a law firm which has offices in Roseland, New Jersey. MR. SOLIMINE has been a Director of the Company since 1990. He also is the Chief Executive Officer of the Emar Group, Inc., an insurance concern, since prior to 1991. Mr. Solimine has served as a director of Strober Organization, Inc., a building material distributor, since prior to 1991. MR. CARELLA became a Director of the Company in 1995. Since prior to 1991, Mr. Carella has been a Partner of Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, a law firm which has offices in Roseland, New Jersey. Since 1991, he has served as Chairman for the Board of Trustees of the University of Medicine 45 48 and Dentistry of New Jersey and since 1983 has served on the Board of Administration of Archdiocese of Newark. MRS. FUMO became a Director of the Company in 1996. Mrs. Fumo has been a shareholder for the past six years of Drucker & Scaccetti, P.C., a firm specializing in accounting and business advisory services. She is also a Director for Nutrition Management Services Company and Pennsylvania Savings Bank. MR. DESIMONE has been Senior Vice President of Distribution of the Company since January 1995. Since 1990 he was Vice President of Warehousing and Distribution. MR. ZORN has been Senior Vice President and Treasurer of the Company since 1992. He served as a Vice President of Bankers Trust Company, New York, New York prior to 1991. MR. GROSSMAN has been employed by the Company since 1990. He has served as Vice President of the Company since January 1994 and Corporate Controller since February 1992. Mr. Grossman is a certified public accountant. The Board of Directors of the Company consists of seven members. Each director is elected to hold office until the next annual meeting of stockholders and until his respective successor is elected and qualified. Officers serve at the discretion of the Board of Directors. The directors receive a quarterly retainer fee of $4,000 plus fees of $1,000 per day for attendance at Board of Directors and Committee meetings. EXECUTIVE COMPENSATION The following table sets forth compensation paid or accrued to the Chief Executive Officer and each of the four other most highly compensated executive officers of the Company whose cash compensation, including bonuses and deferred compensation, exceeded $100,000 for the fiscal year ended December 28, 1996.
ANNUAL COMPENSATION --------------------- OTHER ANNUAL ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) COMPENSATION - ---------------------------------- ----- -------- -------- ------------------- ------------ Arthur M. Goldberg................ 1996 $400,000 -- -- -- Chairman of the Board, 1995 400,000 -- -- -- President and Chief 1994 400,000 -- -- -- Executive Officer Richard B. Neff................... 1996 260,900 $145,000 -- $2,250(2) Executive Vice President 1995 240,000 130,000 -- 2,250(2) and Chief Financial Officer 1994 240,000 100,000 -- 2,250(2) Stephen R. Bokser................. 1996 288,600 145,000 -- 2,250(2) Executive Vice President 1995 272,255 130,000 -- 2,250(2) and President of White 1994 272,255 100,000 -- 2,250(2) Rose Division Robert A. Zorn.................... 1996 200,600 20,000 -- 2,250(2) Senior Vice President and 1995 191,000 12,500 -- 2,175(2) Treasurer 1994 181,563 10,000 -- 2,250(2) Joseph R. DeSimone................ 1996 155,300 20,000 -- 2,250(2) Senior Vice President of 1995 147,900 18,000 -- 1,800(2) Warehousing and Distribution 1994 142,200 12,500 1,999(2)
- --------------- (1) Certain incidental personal benefits to executive officers of the Company may result from expenses incurred by the Company in the interest of attracting and retaining qualified personnel. These incidental personal benefits made available to executive officers during fiscal years 1994, 1995 and 1996 are not described herein because the incremental cost to the Company of such benefits is below the Securities and Exchange Commission disclosure threshold. (2) Represents contributions made by the Company pursuant to the Company's Retirement Savings Plan. See "Executive Compensation -- Retirement Savings Plan." 46 49 EMPLOYMENT AGREEMENTS The Company is a party to an agreement with Mr. Neff which will remain in effect until six months after notice of termination is given by either party. Currently, Mr. Neff is entitled to receive an annual salary of $267,000, and annual bonuses at the sole discretion of the Company. Mr. Neff may also receive additional incentive compensation upon the occurrence of (i) the termination of Mr. Neff's employment with the Company; (ii) the sale of substantially all of the Company's assets or 51% or more of the Company's voting stock, or the merger or consolidation of the Company which results in a change of control of 51% or more of voting stock; or (iii) a registered public offering of voting common stock made by the Company. This additional incentive compensation is computed by taking 2.5% of the positive difference (if any) between the Company's net fair market value and a certain specified base amount. In the event that Mr. Neff shall be entitled to additional compensation pursuant to (iii), such amounts shall not be paid in cash but rather there will be a credit of a Bonus Unit (as defined therein) which is redeemable for a period of sixty months at the option of Mr. Neff and which will automatically be redeemed by the Company at the end of such sixty month period. At the option of the Company, the payment of the redemption price may be made either in cash or in shares of stock of the Company, as appropriate. Under the terms of the agreement, if the employment of Mr. Neff is terminated for any reason other than for cause or disability, Mr. Neff is entitled to receive compensation and benefits for twelve months. The Company is a party to an agreement with Mr. Bokser which will terminate on February 1, 1998. Currently, Mr. Bokser is entitled to receive an annual salary of $301,000 pursuant to the agreement, as well as additional compensation (the "Additional Compensation") upon the occurrence of a distribution of any assets to Rose Partners in respect of Rose Partners' ownership of the Company's stock or the realization by Rose Partners of any amount (the "Proceeds") upon the sale, transfer or encumbrance of any of Rose Partners' ownership interests in the Company ("Recognition Event"). Additional Compensation is computed by multiplying the number of years Mr. Bokser is employed by the Company (which number may not exceed four) and 1% of the Proceeds above a certain threshold amount. If Mr. Bokser's employment is terminated for "cause" or if he voluntarily resigns, he will not be entitled to Additional Compensation under the Agreement. In the event of Mr. Bokser's death, disability or termination by the Company other than for cause and the occurrence of a Recognition Event, Mr. Bokser will continue to be entitled to receive Additional Compensation. On each anniversary of Mr. Bokser's death, disability or termination other than for cause, the percentage of the Proceeds that Mr. Bokser will receive upon the occurrence of a Recognition Event will be reduced by one percentage point (but not below zero). In the event of death or disability Mr. Bokser or his estate will be entitled to continue to receive compensation and employee benefits for one year following such event. If Mr. Bokser's employment is terminated by the Company other than for cause, Mr. Bokser will be entitled to continue to participate in the Company's employee benefit plans (or to receive substantially equivalent benefits as provided thereunder) for the remainder of the term of the Agreement. The Company is a party to an agreement with Mr. Zorn which will remain in effect until six months after notice of termination is given by either party to terminate. Currently, Mr. Zorn is entitled to receive an annual salary of $210,600, as adjusted by annual cost of living adjustments, if any, and annual bonuses at the sole discretion of the Company. Mr. Zorn may also receive additional incentive compensation upon the occurrence of (i) the termination of Mr. Zorn's employment with the Company; (ii) the sale of substantially all of the Company's or 51% or more of the Company's voting stock, or the merger or consolidation of the Company which results in a change of control of 51% or more of voting stock; or (iii) a registered public offering of voting Common Stock made by the Company. This additional incentive compensation is computed by taking 1% of the positive difference (if any) between the Company's net fair market value and a certain specified base amount. In the event that Mr. Zorn shall be entitled to additional compensation pursuant to (iii), such amounts shall not be paid in cash but rather there will be a credit of a Bonus Unit (as defined therein) which is redeemable for a period of sixty months at the option of Mr. Zorn and which will be automatically redeemed by the Company at the end of such sixty month period. At the option of the Company, the payment of the redemption price may be made either in cash or in shares of stock of the Company. Under the terms of the agreement, if the employment of Mr. Zorn is terminated for any reason other than for cause or disability, 47 50 Mr. Zorn is entitled to receive compensation and benefits for six months, provided that he uses his best efforts to secure other executive employment. The consummation of the Offering will not trigger the payment of additional incentive compensation for Messrs. Neff, Bokser or Zorn. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During the fiscal year ended December 28, 1996, the Compensation Committee consisted of Arthur M. Goldberg, Emil W. Solimine and Charles C. Carella. Mr. Goldberg currently serves as Chairman of the Board of Directors, President and Chief Executive Officer of the Company. Mr. Solimine and Mr. Carella currently serve as Directors of the Company. CERTAIN TRANSACTIONS On August 3, 1992, White Rose Frozen Food ("Frozen Food") and WRGFF Associates, L.P. ("WRGFF"), a New Jersey limited partnership controlled by Mr. Goldberg, acquired in two simultaneous transactions substantially all of the operating properties and assets of Global from Sysco. To facilitate the Global Acquisition, WRGFF purchased and subsequently leased certain assets of Global to the Company. In fiscal 1996, the Company paid approximately $1.4 million to WRGFF in connection with the lease of such assets. In May 1997, the Company acquired tangible property formerly the subject of a lease at its frozen facility from an affiliate of the Company for approximately $2.0 million. Mr. Bokser is a director of Western Beef, Inc. During the fifty-two week periods ended December 28, 1996, December 30, 1995 and December 31, 1994, the Company sold various food products to Western Beef, Inc. in the amounts of $27.5 million, $22.6 million and $21.2 million, respectively. The Company employs Grotta, Glassman & Hoffman, a law firm in which Jerold E. Glassman, a director of the Company, is a partner, for legal services on an on-going basis. The Company paid approximately $111,000 to the firm for fiscal 1996. The Company employs Emar Group, Inc. ("Emar Group"), a risk management and insurance brokerage company controlled by Emil W. Solimine, a director of the Company, for risk management and insurance brokerage services. The Company paid Emar Group approximately $150,000 for fiscal 1996 for such services. In fiscal 1996, the Company recorded income of $245,000 from Bally Entertainment Corporation, a company in which Mr. Goldberg served as Chairman and Chief Executive Officer, in connection with the sharing of its office facilities and sundry other expenses. The Company currently has a similar arrangement with Hilton Hotels, Inc. 48 51 Las Plumas, an entity owned by the shareholders of the Company, was indebted to the Company in the amount of approximately $3.5 million at December 28, 1996. See Note 16 of the notes to the Company's consolidated financial statements appearing elsewhere herein. The Company believes that the transactions set forth above are on terms no less favorable than those which could reasonably have been obtained from unaffiliated parties. In connection with the Refinancing, Rose Partners repaid the Rose Partners Note in the amount of approximately $8.9 million and received a dividend of certain non-cash assets (including the indebtedness of Las Plumas to the Company) with a book value of approximately $4.2 million from White Rose. Management believes that the market value of such assets approximates their book value. In addition, the Indenture provides that the Company may repurchase, and retire into treasury, (i) up to $5 million of its outstanding Common Stock if the Company converts the capital lease relating to its Carteret, New Jersey distribution facility into an operating lease, and (ii) additional Common Stock out of the proceeds of its sale of its Farmingdale Facility (as defined) or the Farmingdale Option (as defined). DESCRIPTION OF THE BANK CREDIT FACILITY In connection with the Refinancing, the Company has amended its Bank Credit Facility with BT Commercial Corporation ("BTCC") and certain banks and financial institutions as lenders (collectively, the "Lenders") providing for a three year extension of its $90 million revolving credit facility, and will make certain amendments to the Bank Credit Facility to permit the Refinancing upon consummation of the Offering. The Bank Credit Facility matures on June 30, 2000 and bears interest at a rate per annum equal to (at the Company's option): (i) the Euro Dollar Offering Rate plus 2.25% or (ii) Bankers Trust Company's prime rate plus 0.75%. The Bank Credit Facility has a $15 million sublimit for letters of credit and is available (subject to borrowing base availability) for working capital and general corporate purposes. The obligations of the Company under the Bank Credit Facility are secured by a perfected first priority security interest in the accounts receivable and inventory of the Company. Revolving credit loans under the Bank Credit Facility are subject to maintenance by the Company of a borrowing base, which equals the sum of 80% of eligible accounts receivable and 60% of eligible inventory. Upon the consummation of the Refinancing, the allowable advance against eligible inventory will increase to 70% and subsequently decline to 60% at the rate of 1% each quarter commencing on October 1, 1997. The Company is required to pay the Lenders under the Bank Credit Facility, on a quarterly basis, a commitment fee equal to 0.375% per annum on the undrawn portion of the revolving credit facility. The Bank Credit Facility contains a number of covenants that, among other things, restrict the ability of the Company to dispose of assets, incur additional indebtedness, prepay other indebtedness or amend certain other debt instruments, pay dividends or make distributions (other than those made pursuant to the Refinancing), create liens on assets, enter into sale and leaseback transactions, make investments, loans or advances, make acquisitions, engage in mergers or consolidations, issue capital stock, make capital expenditures or engage in certain transactions with affiliates and otherwise restrict certain corporate activities. In addition, the Company is required to comply with specified financial ratios and tests. The Bank Credit Facility contains customary events of default, including defaults relating to payments, breach of representations and warranties, covenants, cross-defaults and cross-acceleration to certain other indebtedness, certain events of bankruptcy and insolvency, actual or asserted invalidity of security and change of control. DESCRIPTION OF NEW NOTES The New Notes will be issued pursuant to the Indenture dated as of June 20, 1997 (the "Indenture") between the Company and The Bank of New York, as trustee (the "Trustee"). Except as otherwise indicated 49 52 below, the following summary applies to both the Old Notes and the New Notes. As used herein, the term "Notes" shall mean the Old Notes and the New Notes, unless otherwise indicated. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Notes are subject to all such terms, and holders of the Notes are referred to the Indenture and the Trust Indenture Act for a statement thereof. The form and terms of the New Notes are substantially identical to the form and terms of the Old Notes, except that the New Notes (i) will be registered under the Securities Act of 1933, as amended, (ii) will not provide for payment of penalty interest as Liquidated Damages, which terminate upon consummation of the Exchange Offer, and (iii) will not bear any legends restricting transfer thereof. The New Notes will be issued solely in exchange for an equal principal amount of Old Notes. As of the date hereof, $155 million aggregate principal amount of Old Notes is outstanding. See "The Exchange Offer." The following summary of certain provisions of the Indenture does not purport to be complete and is subject to the provisions of the Indenture and the Notes, including the definitions therein of certain terms used below. A copy of the Indenture has been filed with the Commission as an exhibit to the Registration Statement of which this Prospectus is a part. Capitalized terms used in this section and not otherwise defined below have the respective meanings assigned to them in the Indenture. Definitions relating to certain terms are set forth under "-- Certain Definitions" and throughout this description. Capitalized terms used herein without definition have the meanings ascribed to them in the Indenture. Wherever particular provisions of the Indenture are referred to in this summary, such provisions are incorporated by reference as a part of the statements made and such statements are qualified in their entirety by such reference. GENERAL The New Notes will be senior unsecured obligations of the Company, limited in aggregate principal amount to $155 million, and will rank pari passu in right of payment with all present and future senior Indebtedness of the Company and senior to all future Subordinated Indebtedness of the Company. The New Notes will mature on June 15, 2007, will be limited to $155 million aggregate principal amount, and will be unsecured senior obligations of the Company. Each Note will bear interest at the rate set forth on the cover page hereof from June 20, 1997 or from the most recent interest payment date to which interest has been paid, payable semiannually on June 15 and December 15 in each year, commencing December 15, 1997, to the Person in whose name the Note (or any predecessor Note) is registered at the close of business on the June 1 or December 1 next preceding such interest payment date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal of, premium, if any, and interest on the New Notes will be payable, and the Notes will be exchangeable and transferable, at the office or agency of the Company in The City of New York maintained for such purposes (which initially will be the corporate trust office of the Trustee); provided, however, that payment of interest may be made at the option of the Company by check mailed to the Person entitled thereto as shown on the security register. The Notes will be issued only in fully registered form without coupons, in denominations of $1,000 and any integral multiple thereof. No service charge will be made for any registration of transfer, exchange or redemption of Notes, except in certain circumstances for any tax or other governmental charge that may be imposed in connection therewith. Settlement for the New Notes will be made in same day funds. All payments of principal and interest will be made by the Company in same day funds. The New Notes will trade in the Same Day Funds Settlement System of The Depository Trust Company (the "Depositary" or "DTC") until maturity, and secondary market trading activity for the New Notes will therefore settle in same day funds. 50 53 When issued, the New Notes will be a new issue of securities with no established trading market. No assurance can be given as to the liquidity of the trading market for the New Notes. See "Risk Factors -- Absence of Public Market for New Notes." The New Notes will not be entitled to the benefits of any sinking fund. OPTIONAL REDEMPTION The New Notes will be subject to redemption at any time on or after June 15, 2002, at the option of the Company, in whole or in part, on not less than 30 nor more than 60 days' prior notice in amounts of $1,000 or any integral multiple thereof at the following redemption prices (expressed as percentages of the principal amount), if redeemed during the 12-month period beginning on June 15 of the years indicated below:
REDEMPTION YEAR PRICE ---------------------------------------------------------- ---------- 2002...................................................... 105.00% 2003...................................................... 103.33% 2004...................................................... 101.67%
and thereafter at 100% of the principal amount, in each case, together with accrued and unpaid interest, if any, to the redemption date (subject to the rights of holders of record on the relevant record dates to receive interest due on an interest payment date). In addition, at any time on or prior to June 15, 2000, the Company may, at its option, use the net proceeds of one or more Public Equity Offerings to redeem up to an aggregate of 35% of the aggregate principal amount of New Notes originally issued under the Indenture at a redemption price equal to 110% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to the redemption date; provided that at least $100.75 million aggregate principal amount of New Notes remains outstanding immediately after the occurrence of any such redemption. In order to effect the foregoing redemption, the Company must mail a notice of redemption no later than 60 days after the related closing of the Public Equity Offering and must consummate such redemption within 90 days of the closing of the Public Equity Offering. If less than all of the New Notes are to be redeemed, the Trustee shall select the New Notes or portions thereof to be redeemed pro rata, by lot or by any other method the Trustee shall deem fair and reasonable. PURCHASE OF NEW NOTES UPON A CHANGE OF CONTROL If a Change of Control shall occur at any time, then each holder of New Notes shall have the right to require that the Company purchase such holder's New Notes in whole or in part in integral multiples of $1,000, at a purchase price (the "Change of Control Purchase Price") in cash in an amount equal to 101% of the principal amount of such New Notes, plus accrued and unpaid interest, if any, to the date of purchase (the "Change of Control Purchase Date"), pursuant to the offer described below (a "Change of Control Offer") and in accordance with the other procedures set forth in the Indenture. Within 30 days of any Change of Control, the Company shall notify the Trustee thereof and give written notice of such Change of Control to each holder of New Notes, by first-class mail, postage prepaid, at his or her address appearing in the security register, stating, among other things, that a Change of Control has occurred and the date of such event, the circumstances and relevant facts regarding such Change of Control (including, if applicable, information with respect to pro forma historical income, cash flow and capitalization after giving effect to such Change of Control); the purchase price and the purchase date which shall be fixed by the Company on a business day no earlier than 30 days nor later than 60 days from the date such notice is first mailed to the holders of the New Notes, or such later date as is necessary to comply with requirements under the Exchange Act; that any Note not tendered will continue to accrue interest; that, unless the Company defaults in the payment of the Change of Control Purchase Price, any New Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date; and certain other procedures that a holder of New Notes must follow to accept a Change of Control Offer or to withdraw such acceptance. 51 54 If a Change of Control Offer is made, there can be no assurance that the Company will have available funds sufficient to pay the Change of Control Purchase Price for all of the New Notes that might be tendered by holders of the New Notes seeking to accept the Change of Control Offer. See "-- Ranking." The failure of the Company to make or consummate the Change of Control Offer or pay the Change of Control Purchase Price when due will give the Trustee and the holders of the New Notes the rights described under "-- Events of Default." The term "all or substantially all" as used in the definition of "Change of Control" has not been interpreted under New York law (which is the governing law of the Indenture) to represent a specific quantitative test. As a consequence, in the event the holders of the New Notes elected to exercise their rights under the Indenture with respect to a Change of Control involving (or asserted to involve) the transfer or lease of all or substantially all of the Company's assets (as described in clause (iii) of such definition) and the Company elected to contest such election, there could be no assurance as to how a court interpreting New York law would interpret such term. The existence of a holder's right to require the Company to repurchase such holder's New Notes upon a Change of Control may deter a third party from acquiring the Company in a transaction which constitutes a Change of Control. In addition to the obligations of the Company under the Indenture with respect to the New Notes in the event of a "Change of Control," the Bank Credit Facility also contains an event of default upon a "Change of Control" as defined therein which obligates the Company to repay amounts outstanding under the Bank Credit Facility upon an acceleration of the indebtedness issued thereunder. See "Description of the Bank Credit Facility." The Company will comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any other applicable securities laws or regulations in connection with a Change of Control Offer. RANKING The New Notes will be unsecured senior obligations of the Company, ranking pari passu in right of payment with all other existing and future Senior Indebtedness of the Company. The New Notes will be effectively subordinated to secured Indebtedness of the Company, including the Company's secured Indebtedness under the Bank Credit Facility and certain other Permitted Indebtedness that may be secured by a lien on the assets of the Company. As of March 29, 1997 and after giving effect to the Refinancing, which includes the issuance of the New Notes, the Company would have had $226.5 million of Senior Indebtedness. Although the New Notes, indebtedness incurred under the Bank Credit Facility and certain other Permitted Indebtedness will all constitute senior obligations of the Company, the Banks (and any other lender with respect to other Indebtedness secured by assets of the Company) will have a claim ranking prior to that of the holders of the New Notes with respect to the distribution of assets and the proceeds thereof securing the Company's obligations thereunder. CERTAIN COVENANTS The Indenture contains, among others, the following covenants: Limitation on Indebtedness. The Company will not create, issue, incur, assume, guarantee or otherwise in any manner become directly or indirectly liable for the payment of or otherwise suffer to exist (collectively, "incur"), any Indebtedness (including any Acquired Indebtedness), other than Permitted Indebtedness, unless such Indebtedness is incurred by the Company and the Company's Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters for which financial results are available immediately preceding the date of incurrence of such Indebtedness (the "Incurrence Date"), taken as one period (and after giving pro forma effect to (i) the incurrence of such Indebtedness and (if applicable) the application of the net proceeds therefrom, including to refinance other Indebtedness, as if such Indebtedness was incurred, and the application of such proceeds occurred, at the beginning of such four-quarter period; (ii) the incurrence, 52 55 repayment or retirement of any other Indebtedness by the Company since the first day of such four-quarter period as if such Indebtedness was incurred, repaid or retired at the beginning of such four-quarter period (except that, in making such computation, the amount of Indebtedness under any revolving credit facility shall be computed based upon the average daily balance of such Indebtedness during such four-quarter period); (iii) in the case of Acquired Indebtedness, the related acquisition; and (iv) any acquisition or disposition by the Company and its Subsidiaries of any company or any business or any assets out of the ordinary course of business, or any related repayment of Indebtedness, in each case since the first day of such four-quarter period, assuming such acquisition or disposition and any such related payments had been consummated on the first day of such four-quarter period), would be at least 1.8:1 if the Incurrence Date is on or before December 31, 1998, or at least 2.0:1 if the Incurrence Date is after December 31, 1998. The Company will not permit any of its Subsidiaries to incur any Indebtedness (other than Permitted Subsidiary Indebtedness). Limitation on Restricted Payments. (a) The Company will not, and will not permit any Subsidiary to, directly or indirectly: (i) declare or pay any dividend on, or make any distribution to holders of, any shares of the Company's Capital Stock (other than dividends or distributions payable solely in shares of its Qualified Capital Stock or in options, warrants or other rights to acquire shares of such Qualified Capital Stock); (ii) purchase, redeem or otherwise acquire or retire for value, directly or indirectly, the Company's Capital Stock or any Capital Stock of any Affiliate of the Company (other than (A) Capital Stock of any Wholly Owned Subsidiary of the Company, (B) the Capital Stock of White Rose upon the merger of White Rose into the Company on the Issue Date or options, warrants or other rights to acquire such Capital Stock or (C) the Shareholder Stock Repurchases); (iii) prior to any scheduled principal payment, sinking fund payment or maturity of any Subordinated Indebtedness, make any principal payment on, or repurchase, redeem, defease, retire or otherwise acquire for value, such Subordinated Indebtedness (other than any such Indebtedness owed to the Company or a Wholly Owned Subsidiary); (iv) declare or pay any dividend or distribution on any Capital Stock of any Subsidiary to any Person (other than to the Company or any of its Wholly Owned Subsidiaries) or purchase, redeem or otherwise acquire or retire for value any Capital Stock of any Subsidiary held by any person (other than the Company or any of its Wholly Owned Subsidiaries); (v) incur, create, or assume, any guarantee of Indebtedness of any Affiliate of the Company (other than a Wholly Owned Subsidiary of the Company); or (vi) make any Investment in any Person (other than Permitted Investments) (any of the foregoing actions described in clauses (i) through (vi), other than any such action that is a Permitted Payment (as defined below), collectively, a "Restricted Payment") (the amount of any such Restricted Payment, if other than cash, being determined by the board of directors of the Company, whose determination shall be conclusive and evidenced by a board resolution); unless (1) immediately before and immediately after giving effect to such proposed Restricted Payment on a pro forma basis, no Default or Event of Default shall have occurred and be continuing and such Restricted Payment shall not be an event which is, or after notice or lapse of time or both, would be, an "event of default" under the terms of any Indebtedness of the Company or its Subsidiaries; (2) immediately before and immediately after giving effect to such Restricted Payment on a pro forma basis, the Company could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness or Permitted Subsidiary Indebtedness) under the provisions described under "-- Limitation on Indebtedness"; and (3) after giving effect to the proposed Restricted Payment, the aggregate amount of all such Restricted Payments declared or made after the date of the Indenture plus the Permitted Payments made under clause (b)(vi), do not exceed $3.0 million plus the sum of: (A) 50% of the aggregate Consolidated Net Income of the Company accrued on a cumulative basis during the period beginning on the first day of the fiscal quarter beginning after the date of the Indenture and ending on the last day of the Company's last fiscal quarter ending prior to the date of the Restricted 53 56 Payment (or, if such aggregate cumulative Consolidated Net Income shall be a loss, minus 100% of such loss); plus (B) the aggregate Net Cash Proceeds received after the date of the Indenture by the Company either (x) as capital contributions in the form of common equity to the Company or (y) from the issuance or sale (other than to any of its Subsidiaries) of Qualified Capital Stock of the Company or any options, warrants or rights to purchase such Qualified Capital Stock of the Company (except, in each case, to the extent such proceeds are used to purchase, redeem or otherwise retire Capital Stock or Subordinated Indebtedness as set forth in clause (ii) or (iii) of paragraph (b) below), in each case, other than Net Cash Proceeds received from the issuance or sale of Qualified Capital Stock or options, warrants or rights to purchase Qualified Capital Stock in, or otherwise received in connection with, the Refinancing; plus (C) the aggregate Net Cash Proceeds received after the date of the Indenture by the Company (other than from any of its Subsidiaries) upon the exercise of any options, warrants or rights to purchase Qualified Capital Stock of the Company; plus (D) the aggregate Net Cash Proceeds received after the date of the Indenture by the Company from the conversion or exchange, if any, of debt securities or Redeemable Capital Stock of the Company or its Subsidiaries into or for Qualified Capital Stock of the Company plus, to the extent such debt securities or Redeemable Capital Stock were issued after the date of the Indenture, the aggregate of Net Cash Proceeds from their original issuance; plus (E) in the case of the disposition or repayment of any Investment constituting a Restricted Payment made after the date of the Indenture, an amount equal to the lesser of the return of capital with respect to such Investment and the initial amount of such Investment, in either case, less the cost of the disposition of such Investment. (b) Notwithstanding the foregoing, and in the case of clauses (ii) through (vii) below, so long as there is no Default or Event of Default continuing, the foregoing provisions shall not prohibit the following actions (each of clauses (i) through (vii) being referred to as a "Permitted Payment"): (i) the payment of (1) the White Rose Dividend and (2) any other dividend within 60 days after the date of declaration thereof if at the date of declaration thereof such other dividend (A) would be permitted by the provisions of paragraph (a) of this Section and (B) shall be deemed to have been paid on such date of declaration for purposes of the calculation required by paragraph (a) of this Section; (ii) the repurchase, redemption, or other acquisition or retirement for value of any shares of any class of Capital Stock of the Company in exchange for (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares or scrip), or out of the Net Cash Proceeds of a substantially concurrent issue and sale for cash (other than to a Subsidiary) of, other shares of Qualified Capital Stock of the Company; provided that the Net Cash Proceeds from the issuance of such shares of Qualified Capital Stock are, to the extent so used, excluded from clause (3)(B) of paragraph (a) of this Section; (iii) the repurchase, redemption, defeasance, retirement or acquisition for value or payment of principal of any Subordinated Indebtedness or Redeemable Capital Stock in exchange for, or in an amount not in excess of the Net Cash Proceeds of, a substantially concurrent issuance and sale for cash (other than to any Subsidiary) of any Qualified Capital Stock of the Company, provided that the Net Cash Proceeds from the issuance of such shares of Qualified Capital Stock are, to the extent so used, excluded from clause (3)(B) of paragraph (a) of this Section; (iv) the repurchase, redemption, defeasance, retirement, refinancing, acquisition for value or payment of principal of any Subordinated Indebtedness (other than Redeemable Capital Stock) (a "refinancing") through the substantially concurrent issuance of new Subordinated Indebtedness of the Company, provided that any such new Subordinated Indebtedness (1) shall be in a principal amount that does not exceed the principal amount so refinanced (or, if such Subordinated Indebtedness provides for 54 57 an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, then such lesser amount as of the date of determination), plus the lesser of (I) the stated amount of any premium or other payment required to be paid in connection with such a refinancing pursuant to the terms of the Indebtedness being refinanced or (II) the amount of premium or other payment actually paid at such time to refinance the Indebtedness, plus, in either case, the amount of expenses of the Company incurred in connection with such refinancing; (2) has an Average Life to Stated Maturity greater than the remaining Average Life to Stated Maturity of the New Notes; (3) has a Stated Maturity for its final scheduled principal payment later than the Stated Maturity for the final scheduled principal payment of the New Notes; and (4) is expressly subordinated in right of payment to the New Notes at least to the same extent as the Subordinated Indebtedness to be refinanced; (v) the repurchase, redemption, defeasance, retirement, refinancing, acquisition for value or payment of any Redeemable Capital Stock through the substantially concurrent issuance of new Redeemable Capital Stock of the Company, provided that any such new Redeemable Capital Stock (1) shall have an aggregate liquidation preference that does not exceed the aggregate liquidation preference of the amount so refinanced; (2) has an Average Life to Stated Maturity greater than the remaining Average Life to Stated Maturity of the New Notes; and (3) has a Stated Maturity later than the Stated Maturity for the final scheduled principal payment of the New Notes; (vi) the repurchase of shares of, or options to purchase shares of, common stock of the Company or any of its Subsidiaries from employees, former employees, directors or former directors of the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the board of directors of the Company under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such common stock; and (vii) the repurchase, redemption, defeasance, retirement or acquisition for value of the 12 3/4% Discount Notes and the 12% Notes on or prior to their scheduled maturity. Limitation on Transactions with Affiliates. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into any transaction or series of related transactions (including, without limitation, the sale, purchase, exchange or lease of assets, property or services) with or for the benefit of any Affiliate of the Company (other than the Company or a Subsidiary) unless such transaction or series of related transactions is entered into in good faith and (a) such transaction or series of related transactions is on terms that are no less favorable to the Company or such Subsidiary, as the case may be, than those that would be available in a comparable transaction in arm's-length dealings with an unrelated third party, (b) with respect to any transaction or series of related transactions involving aggregate value in excess of $1 million, the Company delivers an officers' certificate to the Trustee certifying that such transaction or series of related transactions complies with clause (a) above, and (c) with respect to any transaction or series of related transactions involving aggregate value in excess of $5 million, either (A) such transaction or series of related transactions has been approved by a majority of the Disinterested Directors of the Company, or in the event there is only one Disinterested Director, by such Disinterested Director, or (B) the Company delivers to the Trustee a written opinion of an investment banking firm of national standing or other recognized independent expert with experience appraising the terms and conditions of the type of transaction or series of related transactions for which an opinion is required stating that the transactions or series of related transactions are fair to the Company or such Subsidiary from a financial point of view; provided, however, that clauses (a) through (c) above shall not apply to (i) any transaction with an employee or director of the Company or any of its Subsidiaries entered into in the ordinary course of business (including compensation and employee benefit arrangements with any officer, director or employee of the Company or any Subsidiary, including under any stock option or stock incentive plans), (ii) any transactions of payments pursuant to the Tax Sharing Agreement or the Las Plumas Management Agreement, (iii) the merger of White Rose into the Company on the Issue Date and (iv) Restricted Payments made in accordance with "-- Limitation on Restricted Payments" or Permitted Payments. 55 58 Limitation on Liens. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or incur any Lien of any kind upon any of its property or assets (including any intercompany notes, but excluding any inventory held on consignment), now owned or acquired after the date of the Indenture, or any income or profits therefrom, except if the New Notes are directly secured equally and ratably with (or prior to in the case of Liens with respect to Subordinated Indebtedness) the obligation or liability secured by such Lien, excluding, however, from the operation of the foregoing any of the following: (a) Any Lien existing as of the date of the Indenture, as set forth on a schedule to the Indenture. (b) Any Lien arising by reason of (1) any judgment, decree or order of any court, so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (2) taxes not yet delinquent or which are being contested in good faith; (3) good faith deposits in connection with tenders, leases, contracts (other than contracts for the payment of money); (4) zoning restrictions, easements, licenses, reservations, title defects, rights of others for rights of way, utilities, sewers, electric lines, telephone or telegraph lines, and other similar purposes, provisions, covenants, conditions, waivers, restrictions on the use of property or minor irregularities of title (and with respect to leasehold interest, mortgages, obligations, liens and other encumbrances incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without consent of the Lessee), none of which materially impairs the use of any parcel of property material to the operation of the business of the Company or any Subsidiary or the value of such property for the purpose of such business; (5) deposits to secure public or statutory obligations, or in lieu of surety or appeal bonds; or (6) operation of law in favor of landlords, mechanics, materialmen, warehousemen, carriers, laborers, employees or suppliers, incurred in the ordinary course of business for sums which are not yet delinquent or are being contested in good faith or negotiations or by appropriate proceedings which suspend the collection thereof. (c) Any Lien on property of the Company or any Subsidiary securing Indebtedness incurred by the Company under subclause (i) of the definition of Permitted Indebtedness. (d) Any Lien securing Acquired Indebtedness created prior to (and not created in connection with, or in contemplation of) the incurrence of such Indebtedness by the Company or any Subsidiary. (e) Any Lien to secure the performance of bids, trade contracts, leases (including without limitation, statutory and common law landlord's liens), statutory obligations, surety and appeal bonds, letters of credit and other obligations of a like nature and incurred in the ordinary course of business of the Company and any Subsidiary. (f) Any Lien securing Indebtedness permitted to be incurred pursuant to clauses (vi) and (ix) of the definition of "Permitted Indebtedness" and which is not prohibited to be incurred under the "Limitation on Indebtedness" covenant. (g) Any Lien on trucks owned or leased by the Company, or incurred by the Company in connection with the purchase or lease thereof. (h) Any Lien securing Indebtedness incurred to effect a defeasance of the New Notes pursuant to the defeasance provisions of the Indenture. (i) Any Lien securing Indebtedness permitted to be incurred under Interest Rate Agreements or otherwise incurred to hedge interest rate risk. (j) Any extension, renewal, refinancing or replacement, in whole or in part, of any lien described in the foregoing clauses (a) through (i) so long as no additional collateral is granted as security thereby. Limitation on Sale of Assets. (a) The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, consummate an Asset Sale unless (i) at least 75% of the consideration from such Asset Sale is received in cash or Cash Equivalents and (ii) the Company or such Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the shares or assets subject to such 56 59 Asset Sale (as determined by the board of directors of the Company and evidenced in a board resolution). For the purposes of this covenant, "Cash Equivalents" means (x) the assumption of Indebtedness of the Company or any Subsidiary and the release of the Company or such Subsidiary from all liability on such Indebtedness in connection with such Asset Sale, (y) Temporary Cash Investments, and (z) securities received by the Company or any Subsidiary from the transferee that are promptly converted by the Company or such Subsidiary into cash. (b) If all or a portion of the Net Cash Proceeds of any Asset Sale are not required to be applied to repay permanently any Senior Indebtedness then outstanding as required by the terms thereof, or the Company determines not to apply such Net Cash Proceeds to the permanent prepayment of such Senior Indebtedness, or if no such Senior Indebtedness is then outstanding, then the Company or a Subsidiary may, within 360 days of the Asset Sale, invest the Net Cash Proceeds in properties and other assets that (as determined by the board of directors of the Company) replace the properties and assets that were the subject of the Asset Sale or in properties and assets that will be used in the businesses of the Company or its Subsidiaries existing on the date of the Indenture or in businesses reasonably related thereto. The amount of such Net Cash Proceeds not applied to repay Senior Indebtedness or used or invested within 360 days of the Asset Sale as set forth in this paragraph constitutes "Excess Proceeds." (c) When the aggregate amount of Excess Proceeds exceeds $10 million, the Company will apply the Excess Proceeds to the repayment of the New Notes and any other Pari Passu Indebtedness outstanding with provisions requiring the Company to make an offer to purchase or to purchase or redeem such Indebtedness with the proceeds from any Asset Sale as follows: (A) the Company will make an offer to purchase (an "Offer") from all holders of the New Notes in accordance with the procedures set forth in the Indenture in the maximum principal amount (expressed as a multiple of $1,000) of New Notes that may be purchased out of an amount (the "Note Amount") equal to the product of such Excess Proceeds multiplied by a fraction, the numerator of which is the outstanding principal amount of the New Notes, and the denominator of which is the sum of the outstanding principal amount of the New Notes and such Pari Passu Indebtedness (subject to proration in the event such amount is less than the aggregate Offered Price (as defined herein) of all New Notes tendered) and (B) to the extent required by such Pari Passu Indebtedness to permanently reduce the principal amount of such Pari Passu Indebtedness, the Company will make an offer to purchase or otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari Passu Offer") in an amount (the "Pari Passu Debt Amount") equal to the excess of the Excess Proceeds over the Note Amount; provided that in no event will the Company be required to make a Pari Passu Offer in a Pari Passu Debt Amount exceeding the principal amount of such Pari Passu Indebtedness plus the amount of any premium required to be paid to repurchase such Pari Passu Indebtedness. The offer price for the New Notes will be payable in cash in an amount equal to 100% of the principal amount of the New Notes plus accrued and unpaid interest, if any, to the date (the "Offer Date") such Offer is consummated (the "Offered Price"), in accordance with the procedures set forth in the Indenture. To the extent that the aggregate Offered Price of the New Notes tendered pursuant to the Offer is less than the Note Amount relating thereto or the aggregate amount of Pari Passu Indebtedness that is purchased in a Pari Passu Offer is less than the Pari Passu Debt Amount, the Company will use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of New Notes and Pari Passu Indebtedness surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the New Notes to be purchased on a pro rata basis. Upon the completion of the purchase of all the New Notes tendered pursuant to an Offer and the completion of a Pari Passu Offer, the amount of Excess Proceeds, if any, shall be reset at zero. (d) Whenever the Excess Proceeds received by the Company exceed $5 million, such Excess Proceeds shall, prior to the purchase of the New Notes or any Pari Passu Indebtedness described in paragraph (c) above, be set aside by the Company in a separate account pending (i) deposit with the depository or a paying agent of the amount required to purchase the New Notes of Pari Passu Indebtedness tendered in an Offer of a Pari Passu Offer, (ii) delivery by the Company of the Offered Price to the holders of the New Notes or Pari Passu Indebtedness tendered in an Offer or a Pari Passu Offer and (iii) application, as set forth above, of Excess Proceeds in the business of the Company and its Subsidiaries. Such Excess Proceeds may be invested in Temporary Cash Investments, provided that the maturity date of any such investment made after the 57 60 amount of the Excess Proceeds exceeds $5.0 million shall not be later than the Offer Date. The Company shall be entitled to any interest or dividends accrued, earned or paid on such Temporary Cash Investments, provided that the Company shall not withdraw such interest from the separate account if an Event of Default has occurred or is continuing. (e) The Indenture will provide that, if the Company becomes obligated to make an Offer pursuant to clause (c) above, the New Notes and the Pari Passu Indebtedness shall be purchased by the Company, at the option of the holders thereof, in whole or in part in integral multiples of $1,000, on a date that is not earlier than 30 days and not later than 60 days from the date the notice of such Offer is given to holders, or such later date as may be necessary for the Company to comply with the requirements under the Exchange Act. (f) The Indenture will provide that the Company will comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any other applicable securities laws or regulations in connection with an Offer. Limitation on Capital Stock of Subsidiaries. The Company will not permit (a) any Subsidiary of the Company to issue any Capital Stock, except for (i) Capital Stock issued to the Company or a Wholly Owned Subsidiary, and (ii) Capital Stock issued by a Person prior to the time (A) such Person becomes a Subsidiary, (B) such Person merges with or into a Subsidiary or (C) a Subsidiary merges with or into such Person; provided that such Capital Stock was not issued or incurred by such Person in anticipation of the type of transaction contemplated by subclause (A), (B) or (C), or (b) any Person (other than the Company or a Wholly Owned Subsidiary) to acquire Capital Stock of any Subsidiary from the Company or any Subsidiary, except, in the case of clause (a) or (b), upon the acquisition of all the outstanding Capital Stock of such Subsidiary in accordance with the terms of the Indenture. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or suffer to exist any consensual encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends or make any other distribution on its Capital Stock, (ii) pay any Indebtedness owed to the Company or any other Subsidiary, (iii) make any Investment in the Company or any other Subsidiary or (iv) transfer any of its properties or assets to the Company or any other Subsidiary, except for: (a) any encumbrance or restriction pursuant to any agreement in effect on the date of the Indenture and listed on a schedule to the Indenture; (b) any encumbrance or restriction, with respect to a Subsidiary that is not a Subsidiary of the Company on the date of the Indenture, in existence at the time such Person becomes a Subsidiary of the Company and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary; (c) customary non-assignment or subletting provisions of any lease, license or other contract; (d) any restriction entered into in the ordinary course of business contained in any lease of any Subsidiary or any security agreement or mortgage securing Indebtedness of any Subsidiary to the extent such restriction restricts the transfer of property subject to such security agreement, mortgage or lease; and (e) any encumbrance or restriction existing under any agreement that extends, renews, refinances or replaces the agreements containing the encumbrances or restrictions in the foregoing clauses (a), (b), (c) or (d), or in this clause (e); provided in each case that the terms and conditions of any such encumbrances or restrictions are no more restrictive in any material respect than those under or pursuant to the agreement evidencing the Indebtedness so extended, renewed, refinanced or replaced. Limitations on Unrestricted Subsidiaries. Except for Investments made pursuant to clause (viii) or (ix) of the definition of Permitted Investments, the Company will not make, and will not permit its Subsidiaries to make, an Investment in Unrestricted Subsidiaries if, at the time thereof, the aggregate amount of such Investments would exceed the amount of Restricted Payments then permitted to be made pursuant to the provisions described under "-- Limitation on Restricted Payments." Except for Investments made pursuant to clause (viii) or (ix) of the definition of Permitted Investments, any Investment in Unrestricted Subsidiaries permitted to be made pursuant to this covenant (i) must be permitted to be made pursuant to the provision described under "-- Limitation on Restricted Payments" and will be treated as a Restricted Payment in calculating the amount of Restricted Payments made by the Company and (ii) may be made in cash or property. 58 61 Provision of Financial Statements. After the earlier to occur of the consummation of the Exchange Offer and the 150th calendar day following the date of original issue of the New Notes, whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, the Company will, to the extent permitted under the Exchange Act, file with the Commission the annual reports, quarterly reports and other documents which the Company would have been required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if the Company were so subject, such documents to be filed with the Commission on or prior to the date (a "Required Filing Date") by which the Company would have been required so to file such documents if the Company were so subject. The Company will also in any event (x) within 15 days of each Required Filing Date occurring after the issuance of the New Notes (i) transmit by mail to all holders, as their names and addresses appear in the security register, without cost to such holders and (ii) file with the Trustee, copies of the annual reports, quarterly reports and other documents which the Company would have been required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if the Company were subject to either of such Sections and (y) if filing such documents by the Company with the Commission is not permitted under the Exchange Act, promptly upon written request and payment of the reasonable cost of duplication and delivery, supply copies of such documents to any prospective holder at the Company's cost. The Indenture also provides that, so long as any of the New Notes remain outstanding, the Company will make available to any prospective purchaser of New Notes or beneficial owner of New Notes in connection with any sale thereof the information required by Rule 144A(d)(4) under the Securities Act, until such time as the Company has either exchanged the New Notes for securities identical in all material respects which have been registered under the Securities Act or until such time as the holders thereof have disposed of such New Notes pursuant to an effective registration statement under the Securities Act. CONSOLIDATION, MERGER, SALE OF ASSETS The Company will not, in a single transaction or through a series of related transactions, consolidate with or merge with or into any other Person or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to any Person or group of affiliated Persons, or permit any of its Subsidiaries to enter into any such transaction or series of related transactions if such transaction or series of related transactions, in the aggregate, would result in a sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Company and its Subsidiaries on a Consolidated basis to any other Person or group of affiliated Persons, unless at the time and after giving effect thereto (i) either (a) the Company will be the continuing corporation or (b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, conveyance, transfer, lease or disposition all or substantially all of the properties and assets of the Company and its Subsidiaries on a Consolidated basis (the "Surviving Entity") will be a corporation duly organized and validly existing under the laws of the United States of America, any state thereof or the District of Columbia and such Person expressly assumes, by a supplemental indenture, in a form satisfactory to the Trustee, all the obligations of the Company under the New Notes and the Indenture, as the case may be, and the New Notes and the Indenture will remain in full force and effect as so supplemented; (ii) immediately before and immediately after giving effect to such transaction on a pro forma basis (and treating any Indebtedness not previously an obligation of the Company or any of its Subsidiaries which becomes the obligation of the Company or any of its Subsidiaries as a result of such transaction as having been incurred at the time of such transaction), no Default or Event of Default will have occurred and be continuing; (iii) immediately before and immediately after giving effect to such transaction on a pro forma basis (on the assumption that the transaction occurred on the first day of the four-quarter period for which financial results are available ending immediately prior to the consummation of such transaction with the appropriate adjustments with respect to the transaction being included in such pro forma calculation), the Company (or the Surviving Entity if the Company is not the continuing obligor under the Indenture) could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness or Permitted Subsidiary Indebtedness) under the provisions of "-- Certain Covenants -- Limitation on Indebtedness"; and (iv) at the time of the transaction the Company or the Surviving Entity will have delivered, or caused to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an officers' certificate and an opinion of counsel, each to the 59 62 effect that such consolidation, merger, transfer, sale, assignment, conveyance, transfer, lease or other transaction and the supplemental indenture in respect thereof comply with the Indenture and that all conditions precedent therein provided for relating to such transaction have been complied with; provided, however, that the foregoing prohibition shall not prohibit (a) the merger of White Rose into the Company on the Issue Date, and (b) any merger between or among Subsidiaries of the Company. In the event of any transaction (other than a lease) described in and complying with the conditions listed in the immediately preceding paragraph in which the Company is not the continuing corporation, the successor Person formed or remaining shall succeed to, and be substituted for, and may exercise every right and power of, the Company, and the Company would be discharged from all obligations and covenants under the Indenture and the New Notes, as the case may be. EVENTS OF DEFAULT An Event of Default will occur under the Indenture if: (i) there shall be a default in the payment of any interest on any Note when it becomes due and payable, and such default shall continue for a period of 30 days; (ii) there shall be a default in the payment of the principal of (or premium, if any, on) any Note at its Maturity (upon acceleration, optional or mandatory redemption, required repurchase or otherwise); (iii) there shall be a default in the performance, or breach, of any covenant or agreement of the Company under the Indenture (other than a default in the performance, or breach, of a covenant or agreement which is specifically dealt with in clause (i), (ii) or (iv)) and such default or breach shall continue for a period of 30 days after written notice has been given, by certified mail, (x) to the Company by the Trustee or (y) to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the outstanding New Notes; (iv) (a) there shall be a default in the performance or breach of the provisions described in "-- Consolidation, Merger, Sale of Assets"; (b) the Company shall have failed to make or consummate an Offer required in accordance with the provisions of "-- Certain Covenants -- Limitation on Sale of Assets"; or (c) the Company shall have failed to make or consummate a Change of Control Offer required in accordance with the provisions of "-- Purchase of New Notes Upon a Change of Control"; (v) one or more defaults shall have occurred under any of the agreements, indentures or instruments under which the Company or any Subsidiary then has outstanding Indebtedness in excess of $6.5 million, individually or in the aggregate, and either (a) such default results from the failure to pay such Indebtedness at its stated final maturity or (b) such default or defaults have resulted in the acceleration of the maturity of such Indebtedness; (vi) one or more judgments, orders or decrees for the payment of money in excess of $6.5 million, either individually or in the aggregate, shall be rendered against the Company or any Subsidiary or any of their respective properties (except with respect to the Farmingdale Facility) and shall not be discharged and either (a) any creditor shall have commenced an enforcement proceeding upon such judgment, order or decree or (b) there shall have been a period of 60 consecutive days during which a stay of enforcement of such judgment, order or decree, by reason of an appeal or otherwise, shall not be in effect, provided that the amount of such money judgment, order or decree shall be calculated net of any insurance coverage that the Company has determined in good faith is available in whole or in part with respect to such money judgment, order or decree; (vii) there shall have been the entry by a court of competent jurisdiction of (a) a decree or order for relief in respect of the Company or any Significant Subsidiary in an involuntary case or proceeding under any applicable Bankruptcy Law or (b) a decree or order adjudging the Company or any Significant Subsidiary bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Significant Subsidiary under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the 60 63 Company or any Significant Subsidiary or of any substantial part of their respective properties, or ordering the winding up or liquidation of their respective affairs, and any such decree or order for relief shall continue to be in effect, or any such other decree or order shall be unstayed and in effect, for a period of 60 consecutive days; or (viii) (a) the Company or any Significant Subsidiary commences a voluntary case or proceeding under any applicable Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or insolvent, (b) the Company or any Significant Subsidiary consents to the entry of a decree or order for relief in respect of the Company or such Significant Subsidiary in an involuntary case or proceeding under any applicable Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or proceeding against it, (c) the Company or any Significant Subsidiary files a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, (d) the Company or any Significant Subsidiary (I) consents to the filing of such petition or the appointment of, or taking possession by, a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or such Significant Subsidiary or of any substantial part of their respective properties, (II) makes an assignment for the benefit of creditors or (III) admits in writing its inability to pay its debts generally as they become due or (e) the Company or any Significant Subsidiary takes any corporate action in furtherance of any such actions in this paragraph (viii). If an Event of Default (other than as specified in clauses (vii) and (viii) of the prior paragraph with respect to the Company) shall occur and be continuing with respect to the Indenture, the Trustee or the holders of not less than 25% in aggregate principal amount of the New Notes then outstanding may, and the Trustee at the request of such holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all New Notes to be due and payable, by a notice in writing to the Company (and to the Trustee if given by the holders of the New Notes) and upon any such declaration, such principal, premium, if any, and interest shall become due and payable immediately. If an Event of Default specified in clause (vii) or (viii) of the prior paragraph occurs with respect to the Company and is continuing, then all the New Notes shall ipso facto become and be due and payable immediately in an amount equal to the principal amount of the New Notes, together with accrued and unpaid interest, if any, to the date the New Notes become due and payable, without any declaration or other act on the part of the Trustee or any holder. Thereupon, the Trustee may, at its discretion, proceed to protect and enforce the rights of the holders of New Notes by appropriate judicial proceedings. After a declaration of acceleration, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the holders of a majority in aggregate principal amount of New Notes outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (a) the Company has paid or deposited with the Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, (ii) all overdue interest on all New Notes then outstanding, (iii) the principal of and premium, if any, on any New Notes then outstanding which have become due otherwise than by such declaration of acceleration and interest thereon at a rate borne by the New Notes and (iv) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the New Notes; and (b) all Events of Default, other than the non-payment of principal of the New Notes which have become due solely by such declaration of acceleration, have been cured or waived as provided in the Indenture. No such rescission shall affect any subsequent default or impair any right consequent thereon. The holders of not less than a majority in aggregate principal amount of the New Notes outstanding may on behalf of the holders of all outstanding New Notes waive any past default under the Indenture and its consequences, except a default in the payment of the principal of, premium, if any, or interest on any Note or in respect of a covenant or provision which under the Indenture cannot be modified or amended without the consent of the holder of each Note affected by such modification or amendment. The Company is also required to notify the Trustee within ten business days of the occurrence of any Default. The Company is required to deliver to the Trustee, on or before a date not more than 120 days after 61 64 the end of each fiscal year, a written statement as to compliance with the Indenture, including whether or not any Default has occurred. The Trustee is under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any of the holders of the New Notes unless such holders offer to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred thereby. The Trust Indenture Act contains limitations on the rights of the Trustee, should it become a creditor of the Company to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Trustee is permitted to engage in other transactions, provided that if it acquires any conflicting interest it must eliminate such conflict upon the occurrence of an Event of Default or else resign. DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE The Company may, at its option and at any time, elect to have the obligations of the Company and any other obligor upon the New Notes discharged with respect to the outstanding New Notes ("defeasance"). Such defeasance means that the Company and any other obligor under the Indenture shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding New Notes, except for (i) the rights of holders of such outstanding New Notes to receive payments in respect of the principal of, premium, if any, and interest on such New Notes when such payments are due, (ii) the Company's obligations with respect to the New Notes concerning issuing temporary New Notes, registration of New Notes, mutilated, destroyed, lost or stolen New Notes, and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee and (iv) the defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("covenant defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or an Event of Default with respect to the New Notes. In the event covenant defeasance occurs, certain events (not including non-payment, bankruptcy and insolvency events) described under "-- Events of Default" will no longer constitute an Event of Default with respect to the New Notes. In order to exercise either defeasance or covenant defeasance, (i) the Company must irrevocably deposit or cause to be deposited with the Trustee, in trust, for the benefit of the holders of the New Notes cash in United States dollars, U.S. Government Obligations (as defined in the Indenture), or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants or a nationally recognized investment banking firm, to pay and discharge the principal of, premium, if any, and interest on the outstanding New Notes on the Stated Maturity (or on any date after June 15, 2002, (such date being referred to as the "Defeasance Redemption Date"), if at or prior to electing either defeasance or covenant defeasance, the Company has delivered to the Trustee an irrevocable notice to redeem all of the outstanding New Notes on the Defeasance Redemption Date); (ii) in the case of defeasance, the Company shall have delivered to the Trustee an opinion of independent counsel in the United States stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of independent counsel in the United States shall confirm that, the holders of the outstanding New Notes will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred; (iii) in the case of covenant defeasance, the Company shall have delivered to the Trustee an opinion of independent counsel in the United States to the effect that the holders of the outstanding New Notes will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (iv) no Default or Event of Default (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to such deposit) shall have occurred and be continuing on the date of such deposit or insofar as clauses (vii) or (viii) under the first paragraph under "-- Events of Default" are concerned, at any time during the 62 65 period ending on the 91st day after the date of deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period); (v) such defeasance or covenant defeasance shall not cause the Trustee for the New Notes to have a conflicting interest as defined in the Indenture and for purposes of the Trust Indenture Act with respect to any securities of the Company; (vi) such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a Default under, (A) the Indenture or (B) any other agreement or instrument to which the Company or any Significant Subsidiary is a party or by which the Company or any Significant Subsidiary is bound, if such breach, violation, or default thereof would have a material adverse effect on the Company and its Subsidiaries taken as a whole; (vii) such defeasance or covenant defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act of 1940, as amended, unless such trust shall be registered under such Act or exempt from registration thereunder; (viii) the Company will have delivered to the Trustee an opinion of independent counsel in the United States to the effect that after the 91st day following the deposit, the trust funds will not be subject to avoidance under Section 547 of the United States Bankruptcy Code (or any successor provision thereto) and related judicial decisions; (ix) the Company shall have delivered to the Trustee an officers' certificate stating that the deposit was not made by the Company with the intent of preferring the holders of the New Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; (x) no event or condition shall exist that would prevent the Company from making payments of the principal of, premium, if any, and interest on the New Notes on the date of such deposit or at any time ending on the 91st day after the date of such deposit; and (xi) the Company will have delivered to the Trustee an officers' certificate and an opinion of independent counsel, each stating that all conditions precedent provided for relating to either the defeasance or the covenant defeasance, as the case may be, have been complied with. SATISFACTION AND DISCHARGE The Indenture will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the New Notes as expressly provided for in the Indenture) as to all outstanding New Notes under the Indenture when (a) either (i) all such New Notes theretofore authenticated and delivered (except lost, stolen or destroyed New Notes which have been replaced or paid or New Notes whose payment has been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided for in the Indenture) have been delivered to the Trustee for cancellation or (ii) all New Notes not theretofore delivered to the Trustee for cancellation (x) have become due and payable, (y) will become due and payable at their Stated Maturity within one year, or (z) are to be called for redemption within one year under arrangements satisfactory to the applicable Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company; and the Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount in United States dollars sufficient to pay and discharge the entire indebtedness on the New Notes not theretofore delivered to the Trustee for cancellation, including principal of, premium, if any, and accrued interest on, such New Notes at such Maturity, Stated Maturity or redemption date; (b) the Company has paid or caused to be paid all other sums payable under the Indenture by the Company; and (c) the Company has delivered to the Trustee an officers' certificate and an opinion of independent counsel each stating that (i) all conditions precedent under the Indenture relating to the satisfaction and discharge of such Indenture have been complied with and (ii) such satisfaction and discharge will not result in a breach or violation of, or constitute a default under, the Indenture or any other material agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound. MODIFICATIONS AND AMENDMENTS Modifications and amendments of the Indenture may be made by the Company and the Trustee with the consent of the holders of at least a majority of aggregate principal amount of the New Notes then outstanding; provided, however, that no such modification or amendment may, without the consent of the holder of each outstanding Note affected thereby: (i) change the Stated Maturity of the principal of, or any installment of interest on, or change to an earlier date any redemption date of, or waive a default in the payment of the principal or interest on, any such Note or reduce the principal amount thereof or the rate of interest thereon or 63 66 any premium payable upon the redemption thereof, or change the coin or currency in which the principal of any such Note or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment after the Stated Maturity thereof (or, in the case of redemption, on or after the redemption date); (ii) amend, change or modify the obligation of the Company to make and consummate an Offer with respect to any Asset Sale or Asset Sales in accordance with "-- Certain Covenants -- Limitation on Sale of Assets" or the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with "-- Purchase of New Notes Upon a Change of Control," including, in each case, amending, changing or modifying any definitions relating thereto; (iii) reduce the percentage in principal amount of such outstanding New Notes, the consent of whose holders is required for any such supplemental indenture, or the consent of whose holders is required for any waiver or compliance with certain provisions of the Indenture; (iv) modify any of the provisions relating to supplemental indentures requiring the consent of holders or relating to the waiver of past defaults or relating to the waiver of certain covenants, except to increase the percentage of such outstanding New Notes required for any such actions or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the holder of each such Note affected thereby; (v) except as otherwise permitted under "-- Consolidation, Merger, Sale of Assets," consent to the assignment or transfer by the Company of any of its rights and obligations under the Indenture; or (vi) amend or modify any of the provisions of the Indenture in any manner which subordinates the securities in right of payment to the other Indebtedness of the Company. Notwithstanding the foregoing, without the consent of any holders of the New Notes, the Company and the Trustee may modify or amend the Indenture: (a) to evidence the succession of another Person to the Company or any other obligor upon the New Notes, and the assumption by any such successor of the covenants of the Company or such obligor in the Indenture and in the New Notes in accordance with "-- Consolidation, Merger, Sale of Assets"; (b) to add to the covenants of the Company or any other obligor upon the New Notes for the benefit of the holders of the New Notes, or to surrender any right or power conferred upon the Company or any other obligor upon the New Notes, as applicable, in the Indenture or in the New Notes; (c) to cure any ambiguity, or to correct or supplement any provision in the Indenture or in any supplementary indenture or the New Notes which may be defective or inconsistent with any other provision in the Indenture or the New Notes or make any other provisions with respect to matters or questions arising under the Indenture or the New Notes; provided that, in each case, such provisions shall not adversely affect the interest of the holders of the New Notes; (d) to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act; (e) to evidence and provide the acceptance of the appointment of a successor trustee under the Indenture; or (f) to mortgage, pledge, hypothecate or grant a security interest in favor of the Trustee for the benefit of the holders of the New Notes as additional security for the payment and performance of the Company's obligations under the Indenture, in any property, or assets, including any of which are required to be mortgaged, pledged or hypothecated, or in which a security interest is required to be granted to the Trustee pursuant to the Indenture or otherwise. The holders of a majority in aggregate principal amount of the New Notes outstanding may waive compliance with certain restrictive covenants and provisions of the Indenture. GOVERNING LAW The Indenture and the New Notes will be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the conflicts of law principles thereof. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as Trustee with such conflict or resign as Trustee. 64 67 The holders of a majority in principal amount of the then outstanding New Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default occurs (which has not been cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of New Notes unless such holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. CERTAIN DEFINITIONS "Acquired Indebtedness" means Indebtedness of a Person (i) existing at the time such Person becomes a Subsidiary or merges with or into the Company or any Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case, other than Indebtedness incurred in connection with, or in contemplation of, such Person becoming a Subsidiary or such acquisition, as the case may be. Acquired Indebtedness shall be deemed to be incurred on the date of the related acquisition of assets from any Person or the date the acquired Person becomes a Subsidiary, as the case may be. "Adjusted Consolidated Interest Expense" of any Person means, without duplication, for any period, as applied to any Person, the sum of (a) the interest expense of such Person and its Consolidated Subsidiaries (exclusive of deferred financing fees and any premiums or penalties paid in connection with redeeming or retiring any Indebtedness prior to its stated maturity) for such period, on a Consolidated basis, including without limitation, (i) amortization of debt discount, (ii) the net cost under interest rate contracts (including amortization of discounts), (iii) the interest portion of any deferred payment obligation and (iv) accrued interest, plus (b) (i) the interest component of the Capital Lease Obligations paid, accrued and/or scheduled to be paid, or accrued by such Person during such period, and (ii) all capitalized interest of such Person and its Consolidated Subsidiaries, in each case as determined in accordance with GAAP consistently applied. "Affiliate" means, with respect to any specified Person: (i) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; (ii) any other Person that owns, directly or indirectly, 5% or more of such specified Person's Capital Stock or any officer or director of any such specified Person or other Person or, with respect to any natural Person, any person having a relationship with such Person by blood, marriage or adoption not more remote than first cousin; or (iii) any other Person 5% or more of the Voting Stock of which is beneficially owned or held directly or indirectly by such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Asset Sale" means any sale, issuance, conveyance, transfer, lease or other disposition (including, without limitation, by way of merger, consolidation or sale and leaseback transaction) (collectively, a "transfer"), directly or indirectly, in one or a series of related transactions, of: (i) any Capital Stock of any Subsidiary; (ii) all or substantially all of the properties and assets of any division or line of business of the Company or its Subsidiaries; or (iii) any other properties or assets of the Company or any Subsidiary, other than in the ordinary course of business. For the purposes of this definition, the term "Asset Sale" shall not include any transfer of properties and assets (A) that is governed by the provisions described under "-- Consolidation, Merger, Sale of Assets," (B) that is by any Subsidiary to the Company or any Wholly Owned Subsidiary in accordance with the terms of the Indenture, (C) that is of obsolete equipment or other obsolete assets in the ordinary course of business, (D) that is of the Farmingdale Facility, the Farmingdale Lease or the Farmingdale Option or all of the outstanding Capital Stock of the Farmingdale Subsidiary or owned by the Company or any Subsidiary, (E) that constitutes the making of a Permitted Investment (other than pursuant to clause (v) of the definition of "Permitted Investment"), or (F) the Fair Market Value of which in the aggregate does not exceed $500,000 in any transaction or series of related transactions. 65 68 "Average Life to Stated Maturity" means, as of the date of determination with respect to any Indebtedness, the quotient obtained by dividing (i) the sum of the products of (a) the number of years from the date of determination to the date or dates of each successive scheduled principal payment of such Indebtedness multiplied by (b) the amount of each such principal payment; by (ii) the sum of all such principal payments. "Bank Credit Facility" means the amended and restated Credit Agreement, dated as of February 10, 1993, among the Company, various financial institutions, BT Commercial Corporation, as agent, and Bankers Trust Company, as Issuing Bank, as such agreement, in whole or in part, may be amended, renewed, extended, substituted, refinanced, restructured, replaced, supplemented or otherwise modified from time to time (including, without limitation, any successive renewals, extensions, substitutions, refinancings, restructurings, replacements, supplementations or other modifications of the foregoing). "Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as amended, or any similar United States federal or state law relating to bankruptcy, insolvency, receivership, winding up, liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law. "Banks" means the lenders under the Bank Credit Facility. "Capital Lease Obligation" of any Person means any obligation of such Person and its Subsidiaries on a Consolidated basis under any capital lease of real or personal property which, in accordance with GAAP, has been recorded as a capitalized lease obligation. "Capital Stock" of any Person means any and all shares, interests, participations or other equivalents (however designated) of such Person's capital stock or other equity interests whether now outstanding or issued after the date of the Indenture. "Change of Control" means the occurrence of any of the following events: (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have beneficial ownership of all shares that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than a majority of the total outstanding Voting Stock of the Company (provided however that, for so long as the Permitted Holders retain the right to elect at least 50% of the entire board of directors of the Company, the shares beneficially held by a group shall not include any shares beneficially owned by a Permitted Holder who is a member of such group); (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of the Company (together with any new directors whose election to such board or whose nomination for election by the stockholders of the Company was approved by the Permitted Holders or by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved), cease for any reason to constitute a majority of such board of directors then in office; (iii) the Company consolidates with or merges with or into any Person or conveys, transfers or leases all or substantially all of its assets to any Person, or any corporation consolidates with or merges into or with the Company in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is changed into or exchanged for cash, securities or other property, other than any such transaction where the outstanding Voting Stock of the Company is not changed or exchanged at all (except to the extent necessary to reflect a change in the jurisdiction of incorporation of the Company) or where (A) the outstanding Voting Stock of the Company is changed into or exchanged for (x) Voting Stock of the surviving corporation which is not Redeemable Capital Stock or (y) cash, securities and other property (other than Capital Stock of the surviving corporation) in an amount which could be paid by the Company as a Restricted Payment as described under "-- Certain Covenants -- Limitation on Restricted Payments" (and such amount shall be treated as a Restricted Payment subject to the provisions in the Indenture described under "-- Certain Covenants -- Limitation on Restricted Payments") and (B) no "person" or "group," other than Permitted Holders, owns immediately after such transaction, directly or indirectly, more than a majority of the total outstanding Voting Stock of the surviving corporation; or (iv) the Company is liquidated or dissolved or 66 69 adopts a plan of liquidation or dissolution other than in a transaction which complies with the provisions described under "-- Consolidation, Merger, Sale of Assets." "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of the Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act then the body performing such duties at such time. "Company" means Di Giorgio Corporation, a corporation incorporated under the laws of Delaware, until a successor Person shall have become such pursuant to the applicable provisions of the Indenture, and thereafter "Company" shall mean such successor Person. "Consolidated Fixed Charge Coverage Ratio" of any Person means, for any period, the ratio of EBITDA to the sum of Adjusted Consolidated Interest Expense for such period and cash dividends paid on any Preferred Stock of such Person during such period; provided that (i) in making such computation, the Adjusted Consolidated Interest Expense attributable to interest on any Indebtedness shall be computed on a pro forma basis and (A) where such Indebtedness was outstanding during the period and bore a floating interest rate, interest shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period and (B) where such Indebtedness was not outstanding during the period for which the computation is being made but which bears, at the option of the Company, a fixed or floating rate of interest, shall be computed by applying at the option of the Company, either the fixed or floating rate and (ii) in making such computation, the Adjusted Consolidated Interest Expense of such Person attributable to interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. "Consolidated Income Tax Expense" of any Person means, for any period, the provision for federal, state, local and foreign income taxes of such Person and its Consolidated Subsidiaries for such period as determined in accordance with GAAP. "Consolidated Net Income (Loss)" of any Person means, for any period, the Consolidated net income (or loss) of such Person and its subsidiaries for such period on a Consolidated basis as determined in accordance with GAAP, adjusted, to the extent included in calculating such net income (or loss), by excluding, without duplication, (i) all extraordinary gains or losses (exclusive of all fees and expenses relating thereto), (ii) the portion of net income (or loss) of such Person and its subsidiaries on a Consolidated basis allocable to minority interests in unconsolidated Persons to the extent that cash dividends or distributions have not actually been received by such Person or one of its subsidiaries, (iii) net income (or loss) of any Person combined with such Person or any of its subsidiaries on a "pooling of interests" basis attributable to any period prior to the date of combination, (iv) any gain or loss, net of taxes, realized upon the termination of any employee pension benefit plan, (v) net gains (or losses) (except for all fees and expenses relating thereto) in respect of dispositions of assets other than in the ordinary course of business, (vi) the net income of any Subsidiary to the extent that the declaration of dividends or similar distributions by that Subsidiary of that income is not at the time permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, (vii) any gain arising from the acquisition of any securities, or the extinguishment, under GAAP, of any Indebtedness of such Person or (viii) transaction costs charged in connection with the Refinancing. "Consolidated Non-Cash Charges" of any Person means, for any period, the aggregate depreciation, amortization and other non-cash charges of such Person and its subsidiaries on a Consolidated basis for such period, as determined in accordance with GAAP (excluding any non-cash charge which requires an accrual or reserve for cash charges for any future period). "Consolidation" means, with respect to any Person, the consolidation of the accounts of such Person and each of its subsidiaries if and to the extent the accounts of such Person and each of its subsidiaries would normally be consolidated with those of such Person, all in accordance with GAAP. The term "Consolidated" shall have a similar meaning. 67 70 "Customer Loan" means any advance, loan, guarantee or other extension of credit (other than any advance, loan or other extension of credit to a customer in the ordinary course of business that is recorded as an account receivable on the consolidated balance sheet of the Company and its Subsidiaries) (a "loan") provided to a customer of the Company or any Subsidiary in the ordinary course of business of the Company and its Subsidiaries and having a maturity not in excess of five years from the incurrence thereof, provided that any such loan made after the date of this Indenture is evidenced by a note made payable to the Company or its Subsidiaries and is approved by a credit committee or authorized officer of the Company. "Default" means any event which is, or after notice or passage of any time or both would be, an Event of Default. "Disinterested Director" means, with respect to any transaction or series of related transactions, a member of the board of directors of the Company who does not have any material direct or indirect financial interest in or with respect to such transaction or series of related transactions. "EBITDA" means the sum of Consolidated Net Income, Adjusted Consolidated Interest Expense, Consolidated Income Tax Expense and Consolidated Non-Cash Charges deducted in computing Consolidated Net Income in each case, for such period, of the Company and its Subsidiaries on a Consolidated basis, all determined in accordance with GAAP consistently applied. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute. "Fair Market Value" means, with respect to any asset or property, the sale value that would be obtained in an arm's-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy. Fair Market Value shall be determined by the board of directors of the Company acting in good faith and shall be evidenced by a resolution of the board of directors. "Farmingdale Facility" means the premises located at 150 Price Parkway, Farmingdale, New York that are leased pursuant to the Farmingdale Lease. "Farmingdale Lease" means the lease, dated as of August 1, 1992, between MF Corp., a Wholly Owned Subsidiary of the Company and Gede Realty, Inc., as successor to Marley Properties, Inc., providing for the lease by the Farmingdale Subsidiary of the Farmingdale Facility, as the same may at any time be amended, amended and restated, supplemented or otherwise modified. "Farmingdale Option" means the option to purchase the Farmingdale Facility granted pursuant to the Farmingdale Option Agreement. "Farmingdale Option Agreement" means the option agreement dated March 26, 1993, providing for the grant to the Company of an option to purchase the Farmingdale Facility, as the same may at any time be amended, amended and restated, supplemented or otherwise modified. "Farmingdale Proceeds" means the net cash proceeds received by the Company upon the closing of the sale of the Farmingdale Facility or the Farmingdale Option to a third party that is not an Affiliate of the Company. "Generally Accepted Accounting Principles" or "GAAP" means generally accepted accounting principles in the United States, consistently applied, which are in effect on the date of the Indenture. "Guaranteed Debt" of any Person means, without duplication, all Indebtedness of any other Person referred to in the definition of Indebtedness below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to supply funds to, or in any other manner invest in, the debtor (including any agreement to pay for property or services without requiring that such property be received or such services be rendered), (iv) to maintain working capital or equity capital of the debtor, or otherwise to maintain the net 68 71 worth, solvency or other financial condition of the debtor or (v) otherwise to assure a creditor against loss; provided that the term "guarantee" shall not include endorsements for collection or deposit, in either case in the ordinary course of business. "Indebtedness" means, with respect to any Person, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, excluding any trade payables and other accrued current liabilities arising in the ordinary course of business, but including, without limitation, all obligations, contingent or otherwise, of such Person in connection with any letters of credit issued under letter of credit facilities, acceptance facilities or other similar facilities and in connection with any agreement to purchase, redeem, exchange, convert or otherwise acquire for value any Capital Stock of such Person, or any warrants, rights or options to acquire such Capital Stock, now or hereafter outstanding, (ii) all obligations of such Person evidenced by bonds, New Notes, debentures or other similar instruments, (iii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), but excluding trade payables arising in the ordinary course of business, (iv) all obligations under Interest Rate Agreements of such Person, (v) all Capital Lease Obligations of such Person, (vi) all Indebtedness referred to in clauses (i) through (v) above of other Persons and all dividends of other Persons, the payment of which is secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien, upon or with respect to property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, (vii) all Guaranteed Debt of such Person, (viii) all Redeemable Capital Stock issued by such Person valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid dividends, and (ix) any amendment, supplement, modification, deferral, renewal, extension, refunding or refinancing of any liability which constitutes Indebtedness of the types referred to in clauses (i) through (viii) above. For purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the Fair Market Value of such Redeemable Capital Stock, such Fair Market Value to be determined in good faith by the board of directors of the issuer of such Redeemable Capital Stock. "Interest Rate Agreements" means one or more of the following agreements which shall be entered into by one or more financial institutions: interest rate protection agreements (including, without limitation, interest rate swaps, caps, floors, collars and similar agreements) and/or other types of interest rate hedging agreements from time to time. "Investment" means, with respect to any Person, directly or indirectly, any advance, loan (including guarantees), or other extension of credit or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase, acquisition or ownership (other than ownership obtained without making, or becoming liable, directly or indirectly, contingent or otherwise, for the making of, any advance, loan (or the forgiveness thereof), payment, extension of credit or capital contribution in connection therewith), by such Person of any Capital Stock, bonds, New Notes, debentures or other securities issued or owned by any other Person and all other items that would be classified as investments on a balance sheet prepared in accordance with GAAP. "Issue Date" means the date on which the New Notes are originally issued under the Indenture. "Las Plumas" means Las Plumas Lumber Corporation, a California corporation, or any successors thereto. "Las Plumas Management Agreement" means the management agreement dated as of May 31, 1992 between the Company and Las Plumas as in effect on the date of this Indenture. "Lien" means any mortgage or deed of trust, charge, pledge, lien (statutory or otherwise), privilege, security interest, assignment, deposit, arrangement, easement, hypothecation, claim, preference, priority or 69 72 other encumbrance upon or with respect to any property of any kind (including any conditional sale, capital lease or other title retention agreement, any leases in the nature thereof, and any agreement to give any security interest), real or personal, movable or immovable, now owned or hereafter acquired. "Maturity" means, when used with respect to the New Notes, the date on which the principal of the New Notes becomes due and payable as therein provided or as provided in the Indenture, whether at Stated Maturity, the Offer Date, the Change of Control Purchase Date or the redemption date and whether by declaration of acceleration, Offer in respect of Excess Proceeds, Change of Control Offer in respect of a Change of Control, call for redemption or otherwise. "Net Cash Proceeds" means (a) with respect to any Asset Sale by any Person, the proceeds thereof (without duplication in respect of all Asset Sales) in the form of cash or Temporary Cash Investments including payments in respect of deferred payment obligations when received in the form of, or stock or other assets when disposed of for, cash or Temporary Cash Investments (except to the extent that such obligations are financed or sold with recourse to the Company or any Subsidiary) net of (i) brokerage commissions and other reasonable fees and expenses (including fees and expenses of counsel and investment bankers) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale, (iii) payments made to retire Indebtedness where payment of such Indebtedness is secured by the assets or properties the subject of such Asset Sale, (iv) amounts required to be paid to any Person (other than the Company or any Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale and (v) appropriate amounts to be provided by the Company or any Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an officers' certificate delivered to the Trustee and (b) with respect to any issuance or sale of Capital Stock or options, warrants or rights to purchase Capital Stock, or debt securities or Capital Stock that have been converted into or exchanged for Capital Stock as referred to under "-- Certain Covenants -- Limitation on Restricted Payments," the proceeds of such issuance or sale in the form of cash or Temporary Cash Investments including payments in respect of deferred payment obligations when received in the form of, or stock or other assets when disposed of for, cash or Temporary Cash Investments (except to the extent that such obligations are financed or sold with recourse to the Company or any Subsidiary), net of attorneys' fees, accountants' fees and brokerage, consultation, underwriting and other fees and expenses actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "Pari Passu Indebtedness" means any Indebtedness of the Company that is pari passu in right of payment to the New Notes. "Permitted Holders" means Rose Partners, any of the partners of Rose Partners on the Issue Date, and any of their trusts, estates, executors, heirs, successors or assigns, and each of their respective Affiliates. "Permitted Indebtedness" means: (i) Indebtedness of the Company equal to the greater of, without duplication, (a) Indebtedness under the Bank Credit Facility in an aggregate principal amount at any one time outstanding not to exceed $90 million, minus all principal payments made in respect of any term loans thereunder and minus the amount by which any commitments under any revolving credit facility thereunder are permanently reduced, or (b) Indebtedness in an aggregate amount not to exceed the sum of 75% of the net book value of the consolidated inventory of the Company and its Subsidiaries and 85% of the net book value of the consolidated accounts receivable of the Company and its Subsidiaries, in each case calculated in accordance with GAAP; (ii) Indebtedness of the Company (a) represented by the New Notes or (b) that is incurred, in any amount, and in whole or in part, to (1) redeem all of the New Notes outstanding as described herein, or (2) effect a complete defeasance or a covenant defeasance thereof as described herein; provided, in either case, that any Indebtedness incurred under this subclause (b) is actually applied in accordance with the applicable redemption or defeasance provision of the Indenture; 70 73 (iii) Indebtedness of the Company outstanding on the date of the Indenture and listed on a schedule thereto; (iv) Indebtedness of the Company owing to a Subsidiary; provided that any Indebtedness of the Company owing to a Subsidiary is made pursuant to an intercompany note and is expressly subordinated in right of payment to the payment and performance of the Company's obligations under the New Notes, and, upon an Event of Default, such Indebtedness shall not be due and payable until such Event of Default is cured, waived or rescinded; provided, further, that any disposition, pledge or transfer of any such Indebtedness to a Person (other than a disposition, pledge or transfer to a Subsidiary) shall be deemed to be an incurrence of such Indebtedness by the Company not permitted by this clause (iv); (v) obligations of the Company entered into in the ordinary course of business pursuant to Interest Rate Agreements designed to protect the Company against fluctuations in interest rates in respect of Indebtedness of the Company as long as such obligations do not exceed the aggregate principal amount of such Indebtedness then outstanding; (vi) Indebtedness of the Company represented by Capital Lease Obligations or Purchase Money Obligations or other Indebtedness incurred or assumed in connection with the acquisition, improvement or development of real or personal, movable or immovable, property in each case incurred for the purpose of financing or refinancing all or any part of the purchase price or cost of construction or improvement of property used in the business of the Company and any refinancings of such Indebtedness made in accordance with subclauses (a), (b) and (c) of clause (xi) below, in an aggregate principal amount pursuant to this clause (vi) not to exceed $40 million outstanding at any time; provided that (a) the principal amount of any Indebtedness permitted under this clause (vi) did not in each case at the time of incurrence exceed the cost of the acquired or constructed asset or improvement so financed, and (b) such Indebtedness permitted pursuant to this clause (vi) was incurred directly in connection with the addition of new customers to the Company's business or the addition of incremental new business from existing customers; (vii) Indebtedness of the Company in respect of performance bonds, surety bonds and replevin bonds provided by the Company in the ordinary course of business; (viii) guarantees by the Company of obligations of customers of the primary business of the Company, not to exceed at any given time $7.5 million outstanding in the aggregate; for purposes of this clause (viii), the term "guarantee" means, as applied to any obligation, (a) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation and (b) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of non-performance) of all or any part of such obligation, including, without limiting the foregoing, the payment of amounts drawn down by letters of credit; (ix) Indebtedness in an amount not in excess of $20 million, incurred to finance the relocation of one of the Company's warehouse facilities in existence on the Issue Date; (x) other Indebtedness of the Company that does not exceed $5 million in the aggregate at any one time outstanding; and (xi) any renewals, extensions, substitutions, refundings, refinancings or replacements (collectively, a "refinancing") of any Indebtedness described in clauses (iii) and (iv) of this definition of "Permitted Indebtedness," including any successive refinancings (a) so long as the borrower under such refinancing is the Company or, if not the Company, the same as the borrower of the Indebtedness being refinanced, (b) the aggregate principal amount of Indebtedness represented thereby is not increased by such refinancing by an amount greater than the lesser of (I) the stated amount of any premium or other payment required to be paid in connection with such a refinancing pursuant to the terms of the Indebtedness being refinanced or (II) the amount of premium or other payment actually paid at such time to refinance the Indebtedness, plus, in either case, the amount of expenses of the Company incurred in connection with such refinancing and (c) (A) in the case of any refinancing of Indebtedness that is 71 74 Subordinated Indebtedness, such new Indebtedness is made subordinated to the New Notes at least to the same extent as the Indebtedness being refinanced and (B) in the case of Pari Passu Indebtedness or Subordinated Indebtedness, as the case may be, such refinancing does not reduce the Average Life to Stated Maturity or the Stated Maturity of such Indebtedness. "Permitted Investment" means (i) Investments in any Subsidiary or any Person which, as a result of such Investment, (a) becomes a Subsidiary or (b) is merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or any Subsidiary; (ii) Indebtedness of the Company described under clause (iv) of the definition of "Permitted Indebtedness"; (iii) Investments in any of the New Notes; (iv) Temporary Cash Investments; (v) Investments acquired by the Company or any Subsidiary in connection with an Asset Sale permitted under "-- Certain Covenants -- Limitation on Sale of Assets" to the extent such Investments are non-cash proceeds as permitted under such covenant; (vi) Investments in existence on the date of the Indenture; (vii) Investments consisting of Customer Loans, provided that the aggregate principal amount of such Investments described in this clause (vii) shall not exceed $10 million at any given time outstanding to any single customer and its Affiliates, and shall not exceed $35 million at any given time in the aggregate; provided that such $35 million amount shall be reduced by the amount of any SBIC Capital Contribution; (viii) Investments by the Company in any Unrestricted Subsidiary, provided that the aggregate amount of all such Investments described in this clause (viii) shall not exceed $1 million in the aggregate from and after the Issue Date; (ix) an SBIC Capital Contribution; (x) an intercompany loan from the Company to White Rose in the amount of up to $60.0 million on the Issue Date for the purpose of paying the purchase price payable by White Rose in connection with the White Rose Tender Offer, provided that the amount loaned is so applied; and (xi) any other Investments in the aggregate amount of $5 million at any one time outstanding. In connection with any assets or property contributed or transferred to any Person as an Investment, such property and assets shall be equal to the Fair Market Value (as determined by the board of directors of the Company) at the time of Investment. "Permitted Subsidiary Indebtedness" means: (i) Indebtedness of a Wholly Owned Subsidiary owing to the Company or another Wholly Owned Subsidiary; provided that such Indebtedness is made pursuant to an intercompany note, and, upon an Event of Default, all amounts owing pursuant to such Indebtedness are immediately due and payable; and provided, further, that (a) any disposition, pledge or transfer of any such Indebtedness to a Person (other than the Company or a Wholly Owned Subsidiary) shall be an incurrence of such Indebtedness by the obligor not within the definition of "Permitted Subsidiary Indebtedness" pursuant to this clause (i), and (b) any transaction pursuant to which any Wholly Owned Subsidiary ceases to be a Wholly Owned Subsidiary shall be deemed to be the incurrence of Indebtedness by such Wholly Owned Subsidiary that is not within the definition of "Permitted Subsidiary Indebtedness" pursuant to this clause (i); (ii) Indebtedness of a Wholly Owned Subsidiary represented by Purchase Money Obligations if such Indebtedness would be permitted by clause (vi) of the definition of Permitted Indebtedness if incurred by the Company; and (iii) Acquired Indebtedness of a Subsidiary that would be permitted to be incurred by the Company if such Acquired Indebtedness were being incurred by the Company. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Stock" means, with respect to any Person, any Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over the Capital Stock of any other class in such Person. "Public Equity Offering" means an underwritten public offering of Capital Stock (other than Redeemable Capital Stock) pursuant to a registration statement that has been declared effective by the Commission 72 75 (other than a registration statement on Form S-8 or any successor form or otherwise relating to equity securities issuable under any employee benefit plan of the Company). "Purchase Money Obligation" means any Indebtedness secured by a Lien on assets related to the business of the Company and its Subsidiaries and any additions and accessions thereto, which are purchased at any time after the New Notes are issued; provided that (i) the security agreement or conditional sales or other title retention contract pursuant to which the Lien on such assets is created (collectively a "Purchase Money Security Agreement") shall be entered into within 90 days after the purchase or substantial completion of the construction of such assets and shall at all times be confined solely to the assets so purchased or acquired, any additions and accessions thereto and any proceeds therefrom, (ii) at no time shall the aggregate principal amount of the outstanding Indebtedness secured thereby be increased, except in connection with the purchase of additions and accession thereto and except in respect of fees and other obligations in respect of such Indebtedness and (iii) (A) the aggregate outstanding principal amount of Indebtedness secured thereby (determined on a per asset basis in the case of any additions and accessions) shall not at the time such Purchase Money Security Agreement is entered into exceed 100% of the purchase price to the Company and its Subsidiaries of the assets subject thereto or (B) the Indebtedness secured thereby shall be with recourse solely to the assets so purchased or acquired, any additions and accessions thereto and any proceeds therefrom. "Qualified Capital Stock" of any Person means any and all Capital Stock of such Person other than Redeemable Capital Stock. "Redeemable Capital Stock" means any Capital Stock that, either by its terms or by the terms of any security into which it is convertible or exchangeable or otherwise, is or upon the happening of any event or passage of time would be, required to be redeemed prior to any Stated Maturity of the principal of the New Notes or is redeemable at the option of the holder thereof at any time prior to any such Stated Maturity, or is convertible into or exchangeable for debt securities at any time prior to any such Stated Maturity at the option of the holder thereof. "Refinancing" means (i) the offering and sale of the New Notes pursuant to the Indenture, (ii) the modification of the Bank Credit Facility, (iii) the repayment of the Rose Partners Note, (iv) the consummation of the tender offer by the Company for its 12% New Notes outstanding prior to the Issue Date, and the tender offer by White Rose for its 12 3/4% Discount Notes outstanding prior to the Issue Date, (v) the dividend by the Company to White Rose of certain non-cash assets which are unrelated to the Company's primary business and the subsequent dividend of those assets to White Rose's stockholders and (vi) immediately following consummation of the tender offers and the payment of such dividends, the merger of White Rose with and into the Company with the Company surviving the merger. "Rose Partners" means Rose Partners, L.P., a New York limited partnership, of which Arthur M. Goldberg is the general partner. "SBIC" means a wholly owned Unrestricted Subsidiary that meets the requirements of a Small Business Investment Company, as that term is defined in Rule 602 of the Securities Act, as the same may be amended from time to time. "SBIC Capital Contribution" means a single capital contribution by the Company to an SBIC in an amount not in excess of $5 million, which may consist of cash, property or both. "Securities Act" means the Securities Act of 1933, as amended, or any successor statute. "Senior Indebtedness" means the Indebtedness of the Company other than Subordinated Indebtedness. "Shareholder Stock Repurchases" means (A) the repurchase by the Company and retirement into treasury, for the payment of not greater than $5 million in the aggregate, of the Company's common stock after (but in no event more than 18 months after) the Issue Date, which repurchase may only be made if the Company has first (i) irrevocably converted the $27.5 million Capital Lease Obligation relating to its Carteret, New Jersey distribution facility, existing on the Issue Date, to an operating lease, and (ii) delivered an Officers' Certificate (as defined in the Indenture) to the Trustee to the effect that such conversion has occurred, and (B) the repurchase by the Company and retirement into treasury, for the payment of an amount 73 76 not greater than the Farmingdale Proceeds, of the Company's common stock after (but in no event more than 12 months after) the Issue Date, which repurchase may only be made if the Company has first (i) sold the Farmingdale Facility or the Farmingdale Option, as the Farmingdale Facility or the Farmingdale Option exist on the Issue Date, for cash and (ii) delivered an Officers' Certificate (as defined in the Indenture) to the Trustee to the effect that such sale has occurred. "Significant Subsidiary" means any Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission. "Stated Maturity" means, when used with respect to any Indebtedness or any installment of interest thereon, the dates specified in such Indebtedness as the fixed date on which the principal of such Indebtedness or such installment of interest, as the case may be, is due and payable. "Subordinated Indebtedness" means Indebtedness of the Company which is by its terms expressly subordinated in right of payment to the New Notes. "Subsidiary" means any Person, a majority of the equity ownership or the Voting Stock of which is at the time owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries; provided that any Unrestricted Subsidiary shall not be deemed a Subsidiary under the Indenture. "Tax Sharing Agreement" means the agreement effective as of January 1, 1992, among the Company, White Rose and certain other affiliates of the Company, as in effect on the date of this Indenture. "Temporary Cash Investments" means (i) any evidence of Indebtedness, maturing not more than one year after the date of acquisition, issued by the United States of America, or an instrumentality or agency thereof, and guaranteed fully as to principal, premium, if any, and interest by the United States of America, (ii) any certificate of deposit (or, with respect to non-U.S. banking institutions, similar instruments) maturing not more than one year after the date of acquisition, issued by, or time deposit of, a commercial banking institution that is a member of the Federal Reserve System or a commercial banking institution organized and located in a country recognized by the United States of America, in each case, that has combined capital and surplus and undivided profits of not less than $500 million (or the foreign currency equivalent thereof), whose debt has a rating, at the time as of which any investment therein is made, of "P-1" (or higher) according to Moody's Investors Service, Inc. ("Moody's") or any successor rating agency or "A-1" (or higher) according to Standard & Poor's Rating Group, a division of McGraw-Hill, Inc. ("S&P") or any successor rating agency, (iii) commercial paper, maturing not more than one year after the date of acquisition, issued by a corporation (other than an Affiliate or Subsidiary of the Company) organized and existing under the laws of the United States of America with a rating, at the time as of which any investment therein is made, of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P, (iv) any money market deposit accounts or demand deposit accounts issued or offered by a domestic commercial bank or a commercial banking institution organized and located in a country recognized by the United States of America, in each case having capital and surplus in excess of $500 million (or the foreign currency equivalent thereof); provided that the short-term debt of such commercial bank has a rating, at the time of Investment, of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P and (v) any other Investments, that at any one time do not exceed $100,000 in the aggregate, issued or offered by any domestic commercial bank or any commercial banking institution organized and located in a country recognized by the United States of America. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, or any successor statute. "12% Notes" means the Senior Notes Due 2003 of the Company. "12 3/4% Discount Notes" means the Senior Discount Notes Due 1998 of White Rose. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that exists on the Issue Date and is so designated as an Unrestricted Subsidiary on a schedule attached to the Indenture, (ii) any subsidiary of the Company that at the time of determination shall be an Unrestricted Subsidiary (as designated by the board of directors of the Company, as provided below) and (iii) any subsidiary of an Unrestricted Subsidiary. The 74 77 board of directors of the Company may designate any subsidiary of the Company (including any newly acquired or newly formed subsidiary) to be an Unrestricted Subsidiary if all of the following conditions apply: (a) neither the Company nor any of its Subsidiaries provides credit support for Indebtedness of such Unrestricted Subsidiary (including any undertaking, agreement or instrument evidencing such Indebtedness), (b) such Unrestricted Subsidiary is not liable, directly or indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary Indebtedness, (c) any Investment by the Company (other than Investments described in clause (viii) of the definition "Permitted Investments") in such Unrestricted Subsidiary made as a result of designating such subsidiary an Unrestricted Subsidiary shall not violate the provisions described under "-- Certain Covenants -- Limitation on Unrestricted Subsidiaries" and such Unrestricted Subsidiary is not party to any agreement, contract, arrangement or understanding at such time with the Company or any other subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such other subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company or, in the event such condition is not satisfied, the value of such agreement, contract, arrangement or understanding to such Unrestricted Subsidiary shall be deemed an Investment, and (d) such Unrestricted Subsidiary does not own any Capital Stock in any subsidiary of the Company which is not simultaneously being designated an Unrestricted Subsidiary. Any such designation by the board of directors of the Company shall be evidenced to the Trustee by filing with the Trustee a board resolution giving effect to such designation and an officers' certificate certifying that such designation complies with the foregoing conditions and any Investment by the Company (other than Investments described in clause (viii) and (ix) of the definition of "Permitted Investments") in such Unrestricted Subsidiary shall be deemed a Restricted Payment on the date of designation in an amount equal to the greater of (1) the net book value of such Investment or (2) the Fair Market Value of such Investment as determined in good faith by the Company's board of directors. The board of directors of the Company may designate any Unrestricted Subsidiary as a Subsidiary; provided (i) that if such Unrestricted Subsidiary has any Indebtedness, that immediately after giving effect to such designation, the Company could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness or Permitted Subsidiary Indebtedness) pursuant to the restrictions under "-- Certain Covenants -- Limitation on Indebtedness" and (ii) that all Indebtedness of such Subsidiary shall be deemed to be incurred on the date such Unrestricted Subsidiary becomes a Subsidiary. "Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary means Indebtedness of such Unrestricted Subsidiary (i) as to which neither the Company nor any subsidiary is directly or indirectly liable (by virtue of the Company or any such subsidiary being the primary obligor on, guarantor of, or otherwise liable in any respect to, such Indebtedness) and, (ii) which, upon the occurrence of a default with respect thereto, does not result in, or permit any holder of any Indebtedness of the Company or any subsidiary to declare, a default on such Indebtedness of the Company or any subsidiary or cause the payment thereof to be accelerated or payable prior to its Stated Maturity. "Voting Stock" means Capital Stock of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of a corporation (irrespective of whether or not at the time Capital Stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency). "White Rose" means White Rose Foods, Inc., a Delaware corporation. "White Rose Dividend" means the dividend by the Company of certain non-cash assets with a book value of approximately $4.2 million to White Rose, which White Rose will in turn dividend to its shareholders pursuant to the Refinancing. "White Rose Tender Offer" shall mean the tender offer by White Rose for its 12 3/4% Discount Notes. "Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of which is owned by the Company or another Wholly Owned Subsidiary. 75 78 BOOK-ENTRY DELIVERY AND FORM The Old Notes offered and sold to qualified institutional buyers (as defined under Rule 144A) ("QIBs") were each registered in book-entry form, are represented by a single, global note, in definitive, fully registered form without interest coupons (the "U.S. Global Note") and were deposited with the Trustee as custodian for DTC and registered in the name of Cede & Co. or such other nominee as DTC may designate. The Old Notes (i) originally purchased by or transferred to "accredited investors" (as defined in Rule 501(a)(1),(2),(3) and (7) under the Securities Act) ("Institutional Accredited Investors") who are not QIBs or (ii) held by QIBs who elected to take physical delivery of their certificates instead of holding their interest through the U.S. Global Note (and which are then unable to trade through DTC) (collectively referred to herein as the "Non-Global Purchasers"), were issued in registered form without interest coupons ("Certificated Notes"). Upon the transfer of such Certificated Notes held by a Non-Global Purchaser to a QIB, such Certificated Notes will, unless the transferee requests otherwise or the U.S. Global Note has previously been exchanged in whole for Certificated Notes, be exchanged for an interest in the U.S. Global Note. The Old Notes offered and sold to persons outside the United States who received such Old Notes pursuant to sales in accordance with Regulation S under the Securities Act were each initially represented by a global note certificate in fully registered form without interest coupons (the "Offshore Global Note" and, together with the U.S. Global Note, the "Global Notes"). The Offshore Global Note was deposited with the Trustee as custodian for DTC and registered in the name of Cede and Co. Prior to the expiration of the "40-day restricted period" within the meaning of Rule 903 of Regulation S under the Securities Act, transfers of interest in the Offshore Global Note may only be effected through records maintained by DTC, Cedel Bank, societe anonyme ("Cedel") or Euroclear System ("Euroclear"). Except as set forth below, it is expected that the New Notes will be issued in global form (the "New Global Notes"). The Company expects that pursuant to procedures established by DTC (a) upon the issuance of the New Global Notes, DTC or its custodian will credit on its internal system portions of the New Global Notes which shall be comprised of the corresponding respective principal amount of the New Global Note to the respective accounts of persons who have accounts with such depositary and (b) ownership of the New Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC or its nominee (with respect to interests of Participants (as defined)) and the records of Participants (with respect to interests of persons other than Participants). Such accounts initially will be designated by the Exchange Agent and ownership of beneficial interests in the New Global Notes will be limited to persons who have accounts with DTC ("Participants") or persons who hold interests through Participants. QIBs may hold their interests in the New Global Notes directly through DTC if they are Participants in such system, or indirectly through organizations which are Participants in such system. So long as DTC or its nominee is the registered owner or holder of the New Notes, DTC or such nominee, as the case may be, will be considered the sole record owner or holder of the New Notes represented by the New Global Notes for all purposes under the Indenture and the New Notes. No beneficial owners of an interest in the New Global Notes will be able to transfer that interest except in accordance with the applicable procedures of DTC, Euroclear and Cedel, in addition to those provided for under the Indenture. Payments of the principal of, premium, if any, and interest on the New Global Notes will be made to DTC or its nominee, as the case may be, as the registered owner thereof. Neither the Company, the Trustee, nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the New Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that DTC or its nominee, upon receipt of any payment of principal of, premium, if any, or interest in respect of the New Global Notes will credit Participants' accounts with payments in amounts proportionate to their respective beneficial ownership interests in the principal amount of such New Global Notes, as shown on the records of DTC or its nominee. The Company also expects that payments by Participants to owners of beneficial interests in such New Global Notes held through such participants will be 76 79 governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such Participants. Transfers between Participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in immediately available funds. If a holder requires physical delivery of a Certificated Note for any reason, including to sell New Notes to persons in states which require physical delivery of such New Notes or to pledge such New Notes, such holder must transfer its interest in the New Global Notes, in accordance with the normal procedures of DTC and the procedures set forth in the Indenture. Transfers between participants in Euroclear and Cedel will be effected in the ordinary way in accordance with their respective rules and operating procedures. DTC has advised the Company that DTC will take any action permitted to be taken by a holder of New Notes (including the presentation of New Notes for exchange as described below) only at the direction of one or more Participants to whose account the DTC interests in the New Global Notes are credited and only in respect of such portion of the aggregate principal amount of New Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the Indenture, DTC will exchange the New Global Notes for Certificated Notes. DTC has advised the Company as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between Participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). Although DTC, Euroclear and Cedel are expected to follow the foregoing procedures in order to facilitate transfers of interests in the New Global Notes among Participants of DTC, they are under no obligation to perform such procedures, and such procedures may be discontinued at any time. Neither the Company nor the Trustee will have any responsibility for the performance by DTC, Euroclear or Cedel or the Participants or Indirect Participants of their respective obligations under the rules and procedures governing their operations. Interests in the New Global Notes will be exchangeable or transferable, as the case may be, for Certificated Notes if (i) DTC notifies the Company that it is unwilling or unable to continue as depositary for such New Global Notes, or DTC ceases to be a "Clearing Agency" registered under the Exchange Act, and a successor depositary is not appointed by the Company within 90 days, or (ii) an Event of Default has occurred and is continuing with respect to such New Notes. Upon the occurrence of any of the events described in the preceding sentence, the Company will cause the appropriate Certificated Notes to be delivered. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following discussion summarizes the material federal income tax considerations of the issuance of New Notes and the Exchange Offer. This summary does not discuss all aspects of federal income taxation that may be relevant to particular holders of Notes (the "Holders"), especially in light of a Holder's personal investment circumstances, or to certain types of Holders subject to special treatment under the federal income tax laws (for example, life insurance companies, tax-exempt organizations and foreign corporations and individuals who are not citizens or residents of the United States) and does not discuss any aspects of state, local or foreign taxation. This discussion is limited to those Holders who will hold the Notes as "capital assets" (generally, property held for investment) within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). 77 80 This summary is based upon laws, regulations, rulings and decisions now in effect and upon proposed regulations, all of which are subject to change (possibly with retroactive effect) by legislation, administrative action or judicial decision. Exchange Offer. The exchange of Old Notes for New Notes pursuant to the Exchange Offer should not be treated as a taxable "exchange" because the New Notes should not be considered to differ materially in kind or extent from the Old Notes. Rather, the New Notes received by a Holder of the Old Notes should be treated as a continuation of the Old Notes in the hands of such Holder. As a result, there should be no gain or loss to Holders exchanging the Old Notes for the New Notes pursuant to the Exchange Offer. Interest. A Holder will be required to include in gross income the stated interest on the Old Notes or the New Notes in accordance with the Holder's method of tax accounting. Tax Basis. Generally, a Holder's tax basis in an Old Note will initially be the Holder's purchase price for the Old Note and will be decreased by the amount of any principal payments received. If a Holder exchanges an Old Note for a New Note pursuant to the Exchange Offer, the tax basis of the New Note immediately after such exchange should equal the Holder's tax basis in the Old Note immediately prior to the exchange. Sale or Redemption. The sale, exchange, redemption or other disposition of an Old Note or a New Note (other than pursuant to the Exchange Offer) generally will be a taxable event. A Holder generally will recognize gain or loss equal to the difference between (i) the amount of cash plus the fair market value of any property received upon such sale, exchange, redemption or other taxable disposition of an Old Note or a New Note (other than in respect of accrued interest thereon) and (ii) the Holder's adjusted tax basis in such Old Note or New Note. Such gain or loss will be capital gain or loss and would be long-term capital gain or loss if the Old Notes or New Notes were held by the Holder for the applicable holding period (currently more than one year) at the time of such sale or other disposition. The holding period of each New Note would include the holding period of the Old Notes exchanged therefor. Purchasers of Notes at Other than Original Issuance. The foregoing summary does not discuss special rules which may affect the treatment of purchasers that acquire Notes other than at original issuance, including those provisions of the Code relating to the treatment of "market discount" and "acquisition premium." Any such Purchaser should consult its tax advisor as to the consequences to him of the acquisition, ownership and disposition of Old Notes and the New Notes. Backup Withholding. Unless a Holder or other payee provides his correct taxpayer identification number (employer identification number or social security number) to the Company (as payor) and certifies that such number is correct, under the federal income tax backup withholding rules, generally 31% of (1) the interest paid on the Notes, and (2) proceeds of sale or other disposition of the Notes must be withheld and remitted to the United States Department of the Treasury. Therefore, each Holder should complete and sign the Substitute Form W-9 included so as to provide the information and certification necessary to avoid backup withholding. However, certain exchanging Holders (including, among others, certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt foreign recipient, that exchanging Holder must submit a statement, signed under penalties of perjury, attesting to that individual's exempt foreign status. Withholding is not an additional federal income tax. Rather, the federal income tax liability of a person subject to withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY. EACH HOLDER OF NOTES OR EXCHANGE NOTES SHOULD CONSULT SUCH HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE EXCHANGE OFFER, INCLUDING THE APPLICATION OF AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS. 78 81 PLAN OF DISTRIBUTION Each broker-dealer that receives New Notes for its own account in connection with the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by Participating Broker-Dealers during the period referred to below in connection with resales of New Notes received in exchange for Old Notes if such Old Notes were acquired by such Participating Broker-Dealers for their own accounts as a result of market-making or other trading activities. The Company has agreed that this Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer in connection with resales of such New Notes. However, a Participating Broker-Dealer who intends to use this Prospectus in connection with the resale of New Notes received in exchange for Old Notes pursuant to the Exchange Offer must notify the Company, or cause the Company to be notified, on or prior to the Expiration Date, that it is a Participating Broker-Dealer. Such notice may be given in the space provided for that purpose in the Letter of Transmittal or may be delivered to the Exchange Agent at one of the addresses set forth herein under "The Exchange Offer -- the Exchange Agent; Assistance." See "The Exchange Offer -- Resales of the New Notes." The Company will not receive any cash proceeds from the issuance of the New Notes offered hereby. New Notes received by broker-dealers for their own accounts in connection with the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transaction, through the writing of options on the new Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer that resells new Notes that were received by it for its own account in connection with the Exchange Offer or any broker or dealer that participates in a distribution of such New Notes may be deemed to be an "underwriter" within the meaning of the Securities Act, and any profit on any such resale of New Notes any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. LEGAL MATTERS Certain legal matters with respect to the legality of the issuance of the Notes offered hereby will be passed upon for the Company by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania. EXPERTS The consolidated financial statements of Di Giorgio Corporation and subsidiaries as of December 28, 1996 and December 30, 1995 and for each of the three years in the period ended December 28, 1996 included in this Prospectus and the related financial statement schedule included elsewhere in the Registration Statement have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports appearing herein and elsewhere in the Registration Statement, and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. 79 82 INDEX TO FINANCIAL STATEMENTS DI GIORGIO CORPORATION AND SUBSIDIARIES Independent Auditors' Report......................................................... F-2 Consolidated Balance Sheets as of December 30, 1995 and December 28, 1996............ F-3 Consolidated Statements of Operations for each of the three years in the period ended December 28, 1996.................................................................. F-4 Consolidated Statements of Stockholders' Equity for each of the three years in the period ended December 28, 1996..................................................... F-5 Consolidated Statements of Cash Flows for each of the three years in the period ended December 28, 1996.................................................................. F-6 Notes to Consolidated Financial Statements........................................... F-8 Consolidated Condensed Balance Sheets as of December 28, 1996 and March 29, 1997 (Unaudited)........................................................................ F-21 Consolidated Condensed Statements of Operations for the thirteen weeks ended March 30, 1996 and March 29, 1997 (Unaudited)............................................ F-22 Consolidated Condensed Statements of Stockholders' Equity for the thirteen weeks ended March 29, 1997 (Unaudited)................................................... F-23 Consolidated Condensed Statements of Cash Flows for the thirteen weeks ended March 30, 1996 and March 29, 1997 (Unaudited)............................................ F-24 Notes to Consolidated Condensed Financial Statements (Unaudited)..................... F-25
F-1 83 INDEPENDENT AUDITORS' REPORT Board of Directors and Stockholders Di Giorgio Corporation Carteret, New Jersey We have audited the consolidated balance sheets of Di Giorgio Corporation and subsidiaries (the "Company") as of December 30, 1995 and December 28, 1996, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 28, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 30, 1995 and December 28, 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 28, 1996 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Parsippany, New Jersey February 21, 1997 (June 20, 1997 as to Notes 1 and 18) F-2 84 DI GIORGIO CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 30, DECEMBER 28, 1995 1996 ------------ ------------ ASSETS Current assets: Cash and equivalents............................................. $ 447 $ 1,749 Accounts and notes receivable -- net............................. 70,864 61,550 Inventories...................................................... 52,331 49,563 Prepaid expenses................................................. 3,497 3,706 -------- -------- Total current assets..................................... 127,139 116,568 Property, plant and equipment -- net............................... 60,058 56,270 Long-term notes receivable......................................... 14,631 19,276 Deferred financing costs........................................... 5,309 4,172 Other assets....................................................... 12,680 12,216 Excess of cost over net assets acquired............................ 98,613 92,567 -------- -------- Total.............................................................. $318,430 $301,069 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable.................................................... $ 32,303 $ 26,719 Current portion of long-term debt................................ 1,540 1,299 Accounts payable -- trade........................................ 58,414 49,468 Accrued expenses................................................. 25,307 24,362 Current installment -- capital lease liability................... 2,231 2,378 -------- -------- Total current liabilities................................ 119,795 104,226 Long-term debt..................................................... 153,567 153,389 Capital lease liability............................................ 33,902 31,523 Other long-term liabilities........................................ 9,131 7,826 Stockholders' equity: Common stock, Class A, $.01 par value -- authorized, 1,000 shares; issued and outstanding, 101.62 shares................. -- -- Common stock, Class B, $.01 par value -- authorized, 1,000 shares; issued and outstanding, 100 shares.................... -- -- Additional paid-in capital....................................... 17,225 17,225 Accumulated deficit.............................................. (15,190) (13,120) -------- -------- Total stockholders' equity............................... 2,035 4,105 -------- -------- Total.............................................................. $318,430 $301,069 ======== ========
See Notes to Consolidated Financial Statements. F-3 85 DI GIORGIO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
YEAR ENDED ---------------------------------------------- DECEMBER 31, DECEMBER 30, DECEMBER 28, 1994 1995 1996 ------------ ------------ ------------ Revenue: Net sales........................................... $932,386 $1,018,218 $1,045,161 Other revenue....................................... 4,461 4,823 5,045 -------- ---------- ---------- Total revenue............................... 936,847 1,023,041 1,050,206 Cost of products sold................................. 835,526 915,536 935,719 -------- ---------- ---------- Gross profit -- exclusive of warehouse expense shown separately below............ 101,321 107,505 114,487 Operating expenses: Warehouse expense................................... 37,503 39,196 40,343 Transportation expense.............................. 21,354 22,759 21,624 Selling, general and administrative expenses........ 20,277 22,357 23,389 Facility integration expense........................ 3,986 -- -- Amortization -- excess of cost over net assets acquired......................................... 2,766 2,892 2,892 -------- ---------- ---------- Operating income...................................... 15,435 20,301 26,239 Interest expense...................................... 20,370 24,887 23,955 Amortization -- deferred financing costs.............. 1,479 1,457 1,138 Other income -- net................................... (2,939) (3,842) (3,758) -------- ---------- ---------- (Loss) Income before income taxes and extraordinary item................................................ (3,475) (2,201) 4,904 Income taxes.......................................... 63 105 3,053 -------- ---------- ---------- (Loss) Income before extraordinary item............... (3,538) (2,306) 1,851 Extraordinary item: Gain on extinguishment of debt -- net of tax........ -- 510 219 -------- ---------- ---------- Net (loss) income..................................... $ (3,538) $ (1,796) $ 2,070 ======== ========== ==========
See Notes to Consolidated Financial Statements. F-4 86 DI GIORGIO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE DATA)
CLASS A CLASS B COMMON STOCK COMMON STOCK ADDITIONAL --------------- --------------- PAID-IN ACCUMULATED SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL ------ ------ ------ ------ ---------- ----------- ------- Balance, January 1, 1994......... 101.62 $ -- 100.00 $ -- $ 18,444 $ (9,856) $ 8,588 Net loss....................... -- -- -- -- -- (3,538) (3,538) -- -- ------ ------ ------ --------- ------- Balance, December 31, 1994....... 101.62 -- 100.00 -- 18,444 (13,394) 5,050 Net loss....................... -- -- -- -- -- (1,796) (1,796) Dividend to shareholders....... -- -- -- -- (1,219) -- (1,219) -- -- ------ ------ ------ --------- ------- Balance, December 30, 1995....... 101.62 -- 100.00 -- 17,225 (15,190) 2,035 Net income..................... -- -- -- -- -- 2,070 2,070 -- -- ------ ------ ------ --------- ------- Balance, December 28, 1996....... 101.62 $ -- 100.00 $ -- $ 17,225 $ (13,120) $ 4,105 ====== == ====== == ====== ========= =======
See Notes to Consolidated Financial Statements. F-5 87 DI GIORGIO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED ------------------------------------------ DECEMBER 31, DECEMBER 30, DECEMBER 28, 1994 1995 1996 ------------ ------------ ------------ Cash flows from operating activities: Net (loss) income....................................... $ (3,538) $ (1,796) $ 2,070 Adjustments to reconcile net (loss) income to net cash provided by operations: Extraordinary gain on extinguishment of debt -- net of tax............................................. -- (510) (219) Depreciation and amortization........................ 2,812 3,949 4,488 Amortization of deferred financing costs............. 1,479 1,457 1,138 Amortization of excess of cost over net assets acquired........................................... 2,766 2,892 2,892 Other amortization................................... 477 527 527 Provision for doubtful accounts...................... 2,100 2,100 1,850 Increase in prepaid pension cost..................... (960) (720) (461) Non-cash interest expense............................ 5,376 5,775 5,890 Non-cash interest income............................. (788) (846) (981) Loss on sale of property............................. 459 -- -- Income tax benefit offset against excess of cost over net assets acquired................................ -- -- 3,008 Changes in assets and liabilities: (Increase) decrease in: Accounts and notes receivable...................... (11,364) 1,609 7,464 Inventories........................................ (9,071) 1,272 2,768 Prepaid expenses................................... (150) (327) (169) Other assets....................................... 161 595 661 Long-term receivables.............................. (520) 1,560 (3,666) Increase (decrease) in: Accounts payable................................... 21,827 (6,304) (8,946) Accrued expenses and other liabilities............. (1,846) (2,426) (2,250) -------- ------- -------- Net cash provided by operating activities....... 9,220 8,807 16,064 -------- ------- -------- Cash flows from investing activities: Additions to property, plant and equipment.............. (1,390) (1,920) (1,004) Proceeds from sale of property.......................... 730 -- -- Cash paid to acquire business........................... (9,700) -- -- Proceeds from contingent reimbursement.................. 489 1,063 -- -------- ------- -------- Net cash used in investing activities........... (9,871) (857) (1,004) -------- ------- --------
(Continued) See Notes to Consolidated Financial Statements. F-6 88 DI GIORGIO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED ------------------------------------------ DECEMBER 31, DECEMBER 30, DECEMBER 28, 1994 1995 1996 ------------ ------------ ------------ Cash flows from financing activities: Borrowings/repayments from revolving credit facility -- net...................................... $ 291 $ (6,529) $ (5,584) Refinancing............................................. -- 6,600 -- Payments of transaction fees and expenses............... (479) (600) -- Repayments of capital lease obligations................. (1,618) (3,990) (2,232) Repayments of debt...................................... (1,083) (3,529) (5,942) Dividend to shareholders................................ -- (1,219) -- Proceeds from equipment sale............................ 3,500 -- -- -------- ------- -------- Net cash provided by (used in) financing activities.................................... 611 (9,267) (13,758) -------- ------- -------- Net (decrease) increase in cash and cash equivalents...... (40) (1,317) 1,302 Cash and cash equivalents, beginning of year.............. 1,804 1,764 447 -------- ------- -------- Cash and cash equivalents, end of year.................... $ 1,764 $ 447 $ 1,749 ======== ======= ======== Supplemental schedule of non-cash investing activities: Business acquired: Fair value of assets acquired........................ $ 9,298 $ -- $ -- Liabilities assumed or created....................... (3,596) -- -- Net cash paid for business acquired.................. (9,211) -- -- Present value of note payable issued................. (7,021) -- -- -------- ------- -------- Excess of cost over net assets acquired................... $ 10,530 $ -- $ -- ======== ======= ======== Supplemental schedule of non-cash investing activities: Acquisition of warehouse facility and machinery in exchange for capital lease........................... $ -- $ 28,391 $ -- ======== ======= ======== Supplemental disclosures of cash flow information: Cash paid during the period: Interest............................................. $ 15,807 $ 19,635 $ 18,569 ======== ======= ======== Income taxes......................................... $ 37 $ 125 $ 73 ======== ======= ========
See Notes to Consolidated Financial Statements. F-7 89 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 28, 1996 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- On February 9, 1990, DIG Acquisition Corp., a wholly-owned subsidiary of DIG Holding Corp. ("DIG Holding"), acquired 95% of the outstanding stock of Di Giorgio Corporation (the "Company") pursuant to a cash tender offer at $30 per share for the Class A common stock. The remaining 5% of Di Giorgio common stock was obtained via a merger of DIG Acquisition Corp. and Di Giorgio. The acquisition was accounted for as a purchase and the cost of Di Giorgio's stock, together with the related acquisition fees and expenses was allocated to the assets acquired and liabilities assumed based on fair values. As of December 30, 1995 and December 28, 1996, accumulated amortization of excess costs over net assets acquired was approximately $16,003,000 and $18,895,000, respectively. On June 19, 1992, DIG Holding contributed all of the outstanding capital stock of Di Giorgio to a newly formed Delaware corporation, White Rose Foods, Inc. ("White Rose"), in exchange for 91.8 shares of White Rose's common stock. As the stockholders of White Rose were identical to the stockholders of DIG Holding, the exchange of shares was a transaction among entities under common control and has been reflected in an accounting manner similar to a pooling of interest. In February 1993, the Company issued 100 shares of Class B common stock to DIG Holding in exchange for a capital contribution of $25 million. In September 1993, White Rose purchased the 100 shares of Class B common stock from DIG Holding so that, as of September 1993, White Rose owned 100% of the Company. Since this transaction was between companies under common control, the acquisition of the minority interest has been accounted for as if it were a pooling of interest. The purchase price exceeded DIG Holding's historical basis by $2.5 million. On December 27, 1996, White Rose and its parent, DIG Holding, effected a merger with White Rose continuing as the surviving corporation. As the stockholders of White Rose are identical to the stockholders of DIG Holding, the exchange of shares was a transfer of interest among entities under common control, and is being accounted for at historical cost in a manner similar to pooling of interests accounting. On June 20, 1997, the Company and White Rose consummated a merger, with the Company as the survivor. Since the stockholders of the Company are identical to the stockholders of White Rose, the exchange of shares was a transfer of interest among entities under common control, and is being accounted for at historical cost in a manner similar to pooling of interests accounting. Accordingly, the consolidated financial statements presented herein reflect the assets and liabilities and related results of operations for the combined entity for all periods. See Note 18 for information relating to the refinancing actions taken in connection with the merger. DESCRIPTION OF BUSINESS -- The Company is a wholesale food distributor serving both independent retailers and supermarket chains principally in the New York City metropolitan area including Long Island, northern New Jersey and to a lesser extent, the Philadelphia area. The Company distributes three primary supermarket product categories: grocery, frozen and dairy. PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. INVENTORIES -- Inventories, primarily consisting of finished goods, are valued at the lower of cost (weighted average cost method) or market. PROPERTY, PLANT AND EQUIPMENT -- Owned property, plant and equipment is stated at cost. Capitalized leases are stated at the lesser of the present value of future minimum lease payments or the fair value of the leased property. Depreciation and amortization are computed using the straight-line method over the lesser of the estimated life of the asset or the lease. F-8 90 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In the event that facts and circumstances indicate that the cost of long-lived assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset's carrying amount to determine if a write-down to market value or discounted cash flow value is required. EXCESS OF COST OVER NET ASSETS ACQUIRED -- The excess of cost over net assets acquired ("goodwill") is being amortized by the straight-line method over 40 years. Management assesses the recoverability of goodwill by comparing the Company's forecasts of cash flows from future operating results, on an undiscounted basis, to the unamortized balance of goodwill at each quarterly balance sheet date. If the results of such comparison indicate that an impairment may be likely, the Company will recognize a charge to operations at that time based upon the difference of the present value of the expected cash flows from future operating results (utilizing a discount rate equal to the Company's average cost of funds at the time), and the then balance sheet value. The recoverability of goodwill is at risk to the extent the Company is unable to achieve its forecast assumptions regarding cash flows from operating results. Management believes, at this time, that the goodwill carrying value and useful life continues to be appropriate. DEFERRED FINANCING COSTS -- Deferred financing costs are being amortized over the life of the related debt using the interest method. USE OF ESTIMATES -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH EQUIVALENTS -- Cash equivalents are investments with original maturities of three months or less from the date of purchase. FISCAL YEAR -- The Company's fiscal year-end is the Saturday closest to December 31. The financial statements for each of the three years in the period ended December 28, 1996 comprised 52 weeks. RECLASSIFICATIONS -- Previously, the Company classified as other income reclamation service fees, label income and other customer related services. Commencing in the year ended December 28, 1996, the Company is classifying these items as other revenue. Prior year amounts have been reclassified accordingly. The change in classification has no effect on previously reported net income. Certain other reclassifications were made to prior years' financial statements to conform to the current year presentation. 2. ACCOUNTS AND NOTES RECEIVABLE Accounts and notes receivable consists of the following:
DECEMBER 30, DECEMBER 28, 1995 1996 ------------ ------------ (IN THOUSANDS) Accounts receivable........................................ $ 60,231 $ 52,688 Notes receivable........................................... 7,737 7,192 Other receivables.......................................... 6,837 5,981 Less allowance for doubtful accounts....................... (3,941) (4,311) ------- $ 70,864 $ 61,550 =======
F-9 91 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 3. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following:
ESTIMATED USEFUL LIFE DECEMBER 30, DECEMBER 28, IN YEARS 1995 1996 ----------- ------------ ------------ (IN THOUSANDS) Land........................................... -- $ 900 $ 900 Buildings and improvements..................... 10 6,366 6,275 Machinery and equipment........................ 3 - 10 9,662 10,495 Less accumulated depreciation.................. (6,194) (8,024) ------- ------- 10,734 9,646 ------- ------- Capital leases: Building and improvements.................... 45,705 45,705 Equipment.................................... 8,410 8,410 Less accumulated amortization................ (4,791) (7,491) ------- ------- 49,324 46,624 ------- ------- $ 60,058 $ 56,270 ======= =======
4. ACQUISITION ROYAL ACQUISITION -- On June 20, 1994, the Company acquired substantially all of the operating properties, assets and business of the dairy and deli distribution business based in Woodbridge, New Jersey known as Royal Foods ("Royal") from Fleming Foods East, Inc. and its parent corporation, Fleming Companies Inc. The total purchase price was approximately $16.2 million, consisting of an $8 million seller-financed note (present value of $7 million at date of issuance) and $8.2 million in cash (net of $489,000 of contingent reimbursement received during the year ended December 31, 1994 and an additional $1 million received during the year ended December 30, 1995). The acquisition was accounted for as a purchase and the cost was allocated to the assets acquired and liabilities assumed based on fair values. The cost of the acquisition exceeded the total fair value of the net assets acquired. The results of operations are included in the statement of operations from April 25, 1994, the date of the first closing. The Company did not purchase all assets and/or operations of the seller and did not obtain all of the seller's customers. As such it is not possible to present pro forma results estimating combined results of operations as if the purchase acquisition was consummated on January 2, 1994. The Company incurred an approximate $4.0 million charge in the period ended December 31, 1994, which has been paid as of December 28, 1996, for the integration of its two dairy facilities. During fiscal 1994, the Company moved its existing dairy business from its Kearny, New Jersey facility to its Woodbridge, New Jersey facility. As part of this integration, the Company developed an exit plan for its Kearny facility. The charge includes approximately $3.0 million relating to contractual costs, including $2 million of fixed Kearny facility expenses, primarily for the rent and real estate taxes. The charge also included approximately $900,000 of costs paid through October 1, 1994 relating to temporary incremental expenses that were a direct result of the plan to exit Kearny and move to Woodbridge in an orderly and timely fashion. These charges primarily reflect duplicate and incremental labor charges during the physical integration that did not appreciably add to the generating of revenue. Although the Company continues to investigate subleasing the Kearny facility, the facility was placed back into operations in the second quarter of fiscal 1996. The Company currently operates a storage facility at the location. F-10 92 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 5. FARMINGDALE WAREHOUSE FACILITY On July 27, 1993, the Company, through its wholly-owned subsidiary, MF Corp., entered into an agreement for the sublease of Farmingdale the Company's old grocery facility. The initial term of the sublease is five years. The sublessee was also granted an option, which is exercisable under certain circumstances, to purchase the property. The Company and the fee owner will share the economic benefits, if any, of the resulting income stream, and any excess proceeds of financing related thereto with 80% to the Company and 20% to the fee owner. On March 9, 1995, the Company, through MF Corp. and in conjunction with the fee owner, completed a $6.6 million mortgage financing of Farmingdale. The Company realized proceeds in the amount of $3.4 million after deducting a $2.2 million capital lease liability payment and $1 million representing associated fees, escrow deposits and a payment to the fee owner. Included in other income for the three years ended December 28, 1996 is net rental income of approximately $798,000, $954,000 and $1 million, respectively, related to the facility. 6. FINANCING Debt consists of the following:
INTEREST RATE AT DECEMBER 28, DECEMBER 30, DECEMBER 28, 1996 1995 1996 --------------- --------------- --------------- (IN THOUSANDS) Notes payable -- Di Giorgio revolving 8.09% $ 32,303 $ 26,719 credit facility (b)................ ======== ======== Current portion of long-term debt: Mortgage payable (d)............... 9.00% $ 627 $ 685 Fleming note payable (e)........... 6.37% 593 614 Other.............................. 6.75% 320 -- -------- -------- $ 1,540 $ 1,299 ======== ======== Long-term debt: Di Giorgio senior notes (a)........ 12.00% $ 97,655 $ 92,890 Senior discount notes (c).......... 12.75% 44,758 50,646 Mortgage payable (d)............... 9.00% 5,585 4,901 Fleming note payable (e)........... 6.37% 5,569 4,952 -------- -------- $ 153,567 $ 153,389 ======== ========
- --------------- (a) Senior Notes -- The Di Giorgio senior notes were issued in fully registered form under an Indenture dated as of February 10, 1993 between the Company and The Bank of New York, as Trustee. The Di Giorgio senior notes are general unsecured obligations of Di Giorgio initially issued in $100,000,000 principal amount due February 15, 2003, bearing interest at the rate of 12% payable semi-annually and redeemable by Di Giorgio in certain circumstances. The Di Giorgio senior notes may not be redeemed prior to February 15, 1998. After February 15, 1998, the senior notes are redeemable at Di Giorgio's option, in whole or in part, at a premium declining from 4.5% in 1998 to par in 2001 and subsequent years until maturity in 2003. If a change of control occurs, Di Giorgio shall make an offer to repurchase all of the senior notes then outstanding on a date 60 days F-11 93 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) after the date of such change of control at a cash purchase price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest. During the years ended December 30, 1995 and December 28, 1996, Di Giorgio retired $2,345,000 and $4,765,000, respectively, of the senior notes that it purchased on the open market and recorded an extraordinary gain of $510,000 (net of $-0- taxes) and $219,000 (net of taxes of $146,000), respectively. Payments of principal and interest on the Di Giorgio senior notes are subordinate to Di Giorgio's secured obligations, including borrowings under the revolving credit facility, capital lease obligations (see Note 11) and other secured indebtedness of the Company and its subsidiaries. The Di Giorgio Senior Note Indenture limits the ability of the Company and its restricted subsidiaries to create, incur, assume, issue, guarantee or become liable for any indebtedness, pay dividends, redeem capital stock of the Company or a restricted subsidiary, and make certain investments. The Di Giorgio Senior Note Indenture further restricts the Company's and its restricted subsidiaries' ability to sell or issue a restricted subsidiaries' capital stock, create liens, issue subordinated indebtedness, sell assets, and undertake transactions with affiliates. No consolidation, merger or other sale of all or substantially all of its assets in one transaction or series of related transactions is permitted, except in limited instances. See Note 18 for information relating to a refinancing of the Di Giorgio senior notes. (b) Di Giorgio Revolving Credit Facility -- As of December 28, 1996, borrowings under the $90 million credit facility bore interest at the Company's option, at the rate of bank prime plus 1.0% or the adjusted Eurodollar rate plus 2.5%. Prior to September 1995, borrowings bore interest, at Di Giorgio's option, at the rate of bank prime plus 1.5% or the adjusted Eurodollar rate plus 3%. On February 1, 1997, the interest rate was lowered by .25% to prime plus .75% or the adjusted Eurodollar rate plus 2.25% because of the Company's ability to meet certain financial tests. Although the Company's credit facility expires on June 30, 1997, management of the Company believes the facility will either be extended or replaced on either substantially the same terms or better terms. Availability for direct borrowings and letter of credit obligations under the revolving credit facility is limited, in the aggregate to the lesser of i) $90 million or ii) a borrowing base of 80% of eligible amount of receivable and 60% of eligible inventory. As of December 28, 1996, Di Giorgio had an additional $35 million of borrowing base availability. The borrowings under the revolving credit facility are secured by the Company's inventory and accounts receivable as well as certain general intangibles and documents of title. Di Giorgio also pledged as security the Las Plumas Lumber Corp. ("Las Plumas") note (see Note 16). Di Giorgio's $90 million revolving credit facility, among other matters, contains certain restrictive covenants relating to net worth, interest coverage, current ratio and capital expenditures. The facility also prohibits the payment of dividends. Di Giorgio was in compliance with the covenants as of December 28, 1996. (c) Senior Discount Notes -- In November 1993 $63.5 million principal amount at maturity of Series A Senior discount notes due 1998 were issued by White Rose Foods, Inc. The notes were issued net of an original issue discount of $29.2 million. The yield to maturity is 12.75% per annum and the notes do not pay any periodic cash interest. As of December 28, 1996, the notes were recorded at $50,646,000 which included $16,336,000 of accreted interest. The notes are not redeemable by the Company, except upon the occurrence of an equity offering or a change of control (as defined in the Indenture) in each case at the redemption price of 108% of accreted value. The notes are subordinate to all liabilities of the Company's subsidiaries. The Indenture contains covenants that, among other things, limit the ability of the Company, in certain cases (unless otherwise permitted by the Di Giorgio Senior Note Indenture (Note 6(a)) to issue additional debt; and to pay dividends. F-12 94 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In January 1994, White Rose Foods, Inc. exchanged the Series A Senior discount notes with $1,000 principal amount of its Series B Senior discount notes which were registered under the Securities Act of 1933. The form and terms of the Series B Senior discount notes are the same as the form and terms of the Series A Senior discount notes. See Note 18 for information relating to a refinancing of the senior discount notes. (d) Mortgage Payable -- The terms of the eight-year, nonrecourse mortgage payable of Di Giorgio's wholly-owned subsidiary, MF Corp., are payments of $96,691 a month, including interest at 9% through 2004. Beginning in fiscal 1998, the interest rate adjusts to Moody's A Corporate Bond Index Daily Rate minus one-eighth of 1%. The mortgage includes customary prepayment penalties. (e) Fleming Note Payable -- The terms of the note require quarterly principal payments of $200,000 plus interest at a rate equal to the prime rate (as stated in the Wall Street Journal) minus 2%, divided by two. Currently, cash interest is 3.25% and is to be reset every eighteen months. The note matures on June 20, 1999. The note has been discounted at a rate of 6.37% for financial statement purposes. As of December 28, 1996, the remaining principal amount on the note is $6 million. The note is secured by a $1.5 million letter of credit. 7. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts and fair values of the Company's financial instruments are as follows:
DECEMBER 30, 1995 DECEMBER 28, 1996 --------------------- --------------------- CARRYING FAIR CARRYING FAIR VALUE AMOUNT VALUE AMOUNT --------- -------- --------- -------- (IN THOUSANDS) Debt (Note 6): Di Giorgio revolving credit facility.......... $ 32,303 $ 32,303 $ 26,719 $ 26,719 Di Giorgio 12% senior notes................... 97,655 80,077 92,890 99,968 Senior 12.75% discount notes.................. 44,758 34,925 50,646 50,406 Other notes payable........................... 12,694 12,694 11,152 11,152 Accounts and notes receivable -- current (Note 70,864 70,864 61,550 61,550 2)............................................ Notes receivable -- long-term................... 14,631 14,631 19,276 19,276
The fair value of the Di Giorgio 12% senior notes as of December 30, 1995 and December 28, 1996 are based on yields of 16.44% (as of February 29, 1996) and 10.28% (as of December 30, 1996), respectively. The fair value of the 12.75% senior discount notes as of December 30, 1995 and December 28, 1996 are based on the trade prices representing a yield of 23.8% (as of February 29, 1996) and 13.0% (as of December 30, 1996), respectively. Based on the borrowing rate currently available to the Company, the revolving credit facility is considered to be equivalent to its fair value. The fair values of other notes payable were assumed to reasonably approximate their carrying amounts since they have variable interest rates. The book value of the current and long-term accounts and notes receivable is equivalent to fair value which is estimated by management by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. F-13 95 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 8. ACCRUED EXPENSES Accrued expenses consist of the following:
DECEMBER 30, DECEMBER 28, 1995 1996 ------------ ------------ (IN THOUSANDS) Legal............................................... $ 1,127 $ 1,123 Environmental....................................... 1,017 708 Interest............................................ 4,914 4,412 Employee benefits................................... 5,693 5,957 Due to vendors/customers............................ 2,659 3,219 Non-compete agreements.............................. 568 -- Facility integration expenses....................... 609 -- Other............................................... 8,720 8,943 ------- ------- $ 25,307 $ 24,362 ======= =======
9. RETIREMENT a. Pension Plans -- The Company maintains a noncontributory defined benefit pension plan covering substantially all of its non-collective bargaining employees. Pension costs for these plans and related disclosures are determined under the provisions of Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions." The Company makes annual contributions to the plans in accordance with the funding requirements of the Employee Retirement Income Security Act of 1974. Assets of the Company's pension plan are invested in Treasury notes, U.S. Government agency bonds, and temporary investments. Plan Changes -- Effective January 1, 1995, the method for determining market and related value of assets was changed from the market value to a five-year moving market value with asset gains/losses recognized over five years. The pension credit included in operations for the years ended December 31, 1994, December 30, 1995 and December 28, 1996 includes the following components:
YEAR ENDED ---------------------------------------------- DECEMBER 31 DECEMBER 30, DECEMBER 28, 1994 1995 1996 ------------ ------------ ------------ (IN THOUSANDS) Service cost-benefits earned during the $ 393 $ 345 $ 585 period.................................... Interest cost on projected benefit 2,951 3,350 3,350 obligation................................ Return on assets -- actual.................. 1,139 (7,138) (4,302) Net amortization and deferral............... (5,464) 2,746 (117) -------- -------- -------- Net periodic pension credit................. $ (981) $ (697) $ (484) ======== ======== ========
F-14 96 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following sets forth the status of the plan as of the most recent actuarial report:
DECEMBER 30, DECEMBER 28, 1995 1996 ------------ ------------ (IN THOUSANDS) Actuarial present value of benefit obligations: Vested benefit obligation.............................. $ 44,283 $ 45,179 ======= ======= Accumulated benefit obligation......................... $ 45,063 $ 46,187 ======= ======= Projected benefit obligation............................. $ 45,632 $ 46,976 Plan assets at fair value................................ 49,132 50,213 ------- ------- Plan assets in excess of projected benefit obligation.... 3,500 3,237 Unrecognized prior service cost.......................... 180 165 Unrecognized net (gain) loss............................. 4,255 5,017 ------- ------- Prepaid pension cost..................................... $ 7,935 $ 8,419 ======= =======
The prepaid pension cost is included in other assets on the consolidated balance sheets. The following table provides the assumption used in determining the actuarial present value of the projected benefit obligation at December 30, 1995 and December 28, 1996:
DECEMBER 30, DECEMBER 28, 1995 1996 ------------ ------------ Weighted average discount rate........................... 7.50% 7.50% Rate of increase in future compensation levels........... 6.00 6.00 Expected long-term rates of return on plan assets........ 9.00 9.00
The Company also contributes to pension plans under collective bargaining agreements. These contributions generally are based on hours worked. Pension expense included in operations was as follows:
YEAR ENDED (IN THOUSANDS) --------------------------------------------------------------- -------------- December 31, 1994.............................................. $ 605 December 30, 1995.............................................. 836 December 28, 1996.............................................. 1,082
b. Savings Plan -- The Company maintains a defined contribution 401(k) savings plan. Employees of the Company who are not covered by a collective bargaining agreement (unless a bargaining agreement expressly provides for participation) are eligible to participate in the plan after completing one year of employment. Eligible employees may elect to contribute on a tax deferred basis from 1% to 10% of their total compensation (as defined in the savings plan), subject to statutory limitations. A contribution of up to 5% is considered to be a "basic contribution" and the Company makes a matching contribution equal to a designated percentage of a participant's basic contribution (which all may be subject to certain statutory limitations). Company contributions to the plan are summarized below:
YEAR ENDED (IN THOUSANDS) --------------------------------------------------------------- -------------- December 31, 1994.............................................. $111 December 30, 1995.............................................. 144 December 28, 1996.............................................. 171
F-15 97 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 10. OTHER LONG-TERM LIABILITIES Other long-term liabilities consist of the following:
DECEMBER 30, DECEMBER 28, 1995 1996 ------------ ------------ (IN THOUSANDS) Employee benefits.......................................... $4,206 $3,520 Legal...................................................... 1,877 2,633 Environmental.............................................. 1,378 1,337 Other...................................................... 1,670 336 ------ ------ $9,131 $7,826 ====== ======
11. COMMITMENTS AND CONTINGENCIES LEASES -- The Company conducts certain of its operations from leased warehouse facilities and leases transportation and warehouse equipment. In addition to rent, the Company pays property taxes, insurance and certain other expenses relating to leased facilities and equipment. The Company subleases one warehouse facility and certain equipment from WRGFF Associates, L.P. ("WRGFF"), an affiliate of the Company. For each of the years in the three-year period ended December 28, 1996, rental expense under these leases with WRGFF amounted to approximately $1.1 million, $1.2 million and $1.4 million, respectively. The Company entered into a lease agreement to lease a dry warehouse facility which the Company is using for its grocery division as well as for its administrative headquarters. The lease commitment commenced on February 1, 1995. The term of the lease expires in 2015 with two five-year renewal options. Rental payments under the lease are approximately $2.9 million per year (through the expiration date). The Company recorded the lease as a capitalized asset with a related liability, having a net book value as of December 30, 1995 and December 28, 1996 of approximately $26.9 million and $25.5 million, respectively. The following is a schedule of net minimum lease payments required under capital and operating leases in effect as of December 28, 1996:
CAPITAL OPERATING FISCAL YEAR ENDING LEASES LEASES ---------------------------------------------------------------- ------- --------- (IN THOUSANDS) 1997............................................................ $ 4,969 $ 6,135 1998............................................................ 3,856 5,255 1999............................................................ 3,611 4,146 2000............................................................ 3,553 2,632 2001............................................................ 3,441 1,573 Thereafter...................................................... 42,589 1,074 ------- ------- Net minimum lease payments...................................... 62,019 $20,815 ======= Less interest................................................... 28,118 ------- Present value of net minimum lease payments (including current installments of $2,378)....................................... $33,901 =======
F-16 98 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Total rent expense included in operations was as follows:
YEAR ENDED (IN THOUSANDS) --------------------------------------------------------------- December 31, 1994.............................................. $7,121 December 30, 1995.............................................. 6,337 December 28, 1996.............................................. 6,622
LETTERS OF CREDIT -- In the ordinary course of business, Di Giorgio is at times required to issue letters of credit. Di Giorgio was contingently liable for $11,346,000 and $11,979,000 on open letters of credit with a bank as of December 30, 1995 and December 28, 1996, respectively. EMPLOYMENT AGREEMENTS -- Di Giorgio has employment agreements with three key executives expiring February 1997, March 1997 and April 1996, subject to automatic renewals, absent notice. Under the agreements, combined annual salaries of $778,000 are expected to be paid in fiscal 1997. In addition, the executives are entitled to additional compensation upon occurrence of certain events. 12. EQUITY In November 1993 in connection with the senior discount note offering (Note 6(c)), the Company entered into a warrant agreement with a bank. The bank currently owns 1.47% of the outstanding shares of common stock of the Company. The bank holds warrants to purchase approximately 2.6% of the outstanding White Rose Foods, Inc. common stock. A warrant entitles a holder to purchase one share of Di Giorgio Corporation Class B common stock for $.10 per share. The warrants are exercisable on the earlier to occur January 1, 1996, or the date of an initial public offering of the Company or its subsidiaries or the occurrence of other events as defined in the agreement. The warrants expire in February 2003. In May 1995, DIG Holding purchased the Company's senior discount notes with a face value of $3 million on the open market. The purchase price was $960,000 with an accreted value of $1,967,000. DIG Holding distributed the bonds to the shareholders in December of 1995 when the bonds had a fair value of approximately $1.2 million. The accreted value at the time of the dividend was approximately $2,114,000. Interest income of $125,000 and bond amortization of $115,000 was recorded in 1995. 13. OTHER INCOME -- NET Other income consists of the following:
YEAR ENDED ---------------------------------------------- DECEMBER 31, DECEMBER 30, DECEMBER 28, 1994 1995 1996 ------------ ------------ ------------ (IN THOUSANDS) Interest income............................... $1,673 $2,301 $2,390 Net rental income............................. 1,037 954 1,020 Net (loss) gain on disposal of equipment...... (459) -- 63 Non-compete................................... 514 213 -- Other -- net.................................. 174 374 285 ------ ------ ------ $2,939 $3,842 $3,758 ====== ====== ======
14. INCOME TAXES The Company files a consolidated Federal tax return. The consolidated group has adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." F-17 99 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company's deferred tax asset has been reduced by a valuation allowance based on current evidence indicating that it is not more likely than not that the future benefits of these temporary differences will be realized. The tax effects of significant items comprising the Company's deferred tax assets and deferred tax liabilities are as follows:
DECEMBER 30, DECEMBER 28, 1995 1996 ------------ ------------ (IN THOUSANDS) Deferred tax assets: Allowance for doubtful accounts.......................... $ 2,439 $ 1,814 Accrued expenses not deductible until paid............... 5,004 5,494 Net tax operating loss carryforwards..................... 16,658 13,207 -------- -------- Deferred tax asset......................................... 24,101 20,515 -------- -------- Deferred tax liabilities: Difference between book and tax basis of property........ (4,783) (4,038) Pension asset valuation.................................. (3,134) (3,296) -------- -------- Deferred tax liabilities................................... (7,917) (7,334) -------- -------- Net deferred tax assets.................................... 16,184 13,181 Less valuation allowance................................... (16,184) (13,181) -------- -------- $ -- $ -- ======== ========
The valuation allowance relates to net deferred tax assets relating to preacquisition temporary differences and operating loss carryforwards as well as postacquisition temporary differences and loss carryforwards. The elimination of the valuation allowance relating to (i) preacquisition amount is credited to the excess of cost over net assets of business acquired and (ii) postacquisition amount is credited to the income tax provision. There was no Federal provision for the years ended December 31, 1994 and December 30, 1995 as a result of operating losses for financial statement and tax purposes. In the year ended December 31, 1994, the valuation reserve increased by approximately $287,000 as a result of the increase in the net deferred asset. For the year ended December 30, 1995, the tax provision has been reduced by approximately $319,000 for the corresponding elimination of the valuation allowance. For the year ended December 28, 1996, the excess of cost over the net assets of business acquired has been reduced by approximately $2.8 million, because of the utilization of preacquisition amounts. As of December 28, 1996, approximately $38.9 million of net tax operating loss carryforwards (which expire between the years 2006 and 2010) and approximately $30 million of New Jersey state tax operating loss carryforward (which expire between the years 1997 and 2002) are available, of which the tax effect of $14 million will be credited to the excess of cost over net assets of business acquired to the extent the valuation allowance relating to the preacquisition amounts is eliminated and the balance will be credited to the tax provision. As of December 28, 1996, there were no taxes currently payable. The provision for income taxes consist of the following (in thousands):
YEAR ENDED DECEMBER 28, 1996 ------------ Current income tax............................................ $2,329 Deferred income tax........................................... 724 ------ $3,053 ======
F-18 100 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) A reconciliation of the Company's effective tax rate with the statutory Federal tax rate is as follows:
YEARS ENDED ---------------------------------------------- DECEMBER 31, DECEMBER 30, DECEMBER 28, 1994 1995 1996 ------------ ------------ ------------ (IN THOUSANDS) Tax at statutory rate......................... $ (1,206) $ (846) $1,667 State and local taxes -- net of federal benefit..................................... 42 287 497 Permanent differences -- amortization of excess cost over net assets acquired........ 940 983 889 (Reduction) increase in valuation reserve..... 287 (319) -- ------- ----- ------ $ 63 $ 105 $3,053 ======= ===== ======
15. LEGAL PROCEEDINGS AND CONTINGENT LIABILITIES Various suits and claims arising in the course of business are pending against the Company and its subsidiaries. In the opinion of management, dispositions of these matters are appropriately provided for and are not expected to materially affect the Company's financial position, cash flows or results from operations. The Company has been named in various claims and litigation relating to potential environmental problems. In the opinion of management, these claims are either without merit, covered by insurance, adequately provided for, or not expected to result in any material loss to the Company. 16. RELATED PARTY TRANSACTIONS In November 1993 approximately $11 million face value discount note was loaned to Rose Partners, the holder of 98.53% of the common stock of White Rose Foods, Inc. The note was issued at an original discount of approximately $5.3 million. The note evidencing this indebtedness matures April 1999 and is secured by an amount of shares of common stock owned by Rose Partners representing approximately 20% of the class outstanding. The note bears interest at a rate equal to the Series B senior discount notes yield to maturity of 12.75% per annum. As of December 30, 1995 and December 28, 1996, the $7.4 million and $8.4 million note is classified as long-term in the consolidated balance sheets. For the years ended December 31, 1994, December 30, 1995 and December 28, 1996, other income includes approximately $788,000, $846,000 and $981,000, respectively, of interest income related to the note. As of December 30, 1995 and December 28, 1996, Las Plumas, an affiliate of the Company, owed Di Giorgio approximately $3.6 million and $3.5 million, respectively, evidenced by a subordinated note. The note is secured by deeds of trust relating to parcels of property of Las Plumas. The loan matures in June 1998 and bears interest at a fluctuating rate equal to the weighted average of the interest rates paid by Di Giorgio. The entire note receivable is classified as long-term in the consolidated balance sheet as of December 28, 1996. Interest expense includes $319,000 in fiscal 1994 of nonoperating interest income earned on the note, and upon collection of the note the Company is required to utilize the proceeds to repay the borrowings under the revolving credit facility. A director of the Company is a partner in a firm which provides legal services to the Company on an on-going basis. The Company paid approximately $222,000, $98,000 and $111,000, during each of the three years in the period ended December 28, 1996, respectively, to the law firm for legal services. The Company employs the services of a risk management and insurance brokerage firm which is controlled by a director of the Company. Included in the statement of operations are fees paid to the related party of $150,000 for each of the three years in the period ended December 28, 1996. F-19 101 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company recorded income of $184,000, $154,000 and $245,000 for each of the three years in the period ended December 28, 1996, respectively, from an affiliated entity of the President of the Company in connection with the sharing of office facilities and administrative expenses. Included in the consolidated statement of operations for the years ended December 31, 1994 and December 30, 1995 was $119,000 of expenses related to services provided by a consulting and investment banking firm whose general partner is a former officer of the Company. 17. MAJOR CUSTOMERS During the year ended December 31, 1994, sales to two individual customers represented 21.2% and 18.7% of net sales, respectively, and sales to a group of customers represented 13.9%. During the year ended December 30, 1995, sales to two individual customers represented 22.2% and 19.7% of net sales, respectively, and sales to a group of customers represented 13.1%. During the year ended December 28, 1996, sales to two individual customers represented 22.4% and 20.1% of net sales, respectively, and sales to a group of customers represented 12.4%. 18. SUBSEQUENT EVENT In May 1997, the Company amended its bank credit facility to extend the maturity date to June 30, 2000. On June 20, 1997, the Company completed a refinancing (the "Refinancing") of itself and its parent, White Rose, intended to extend debt maturities, reduce interest expense and improve financial flexibility. The components of the Refinancing were (i) the offering of $155 million of the Company's 10% Senior Notes due 2007, (ii) the modification of the Company's bank credit facility, (iii) the receipt of $8.9 million for the extinguishment of a note held by the Company from Rose Partners, LP, which owns 98.54% of the Company, (iv) the repurchase, through tender offers, of $85.4 million of the Company's 12% senior notes due 2003 ($7.5 million remained outstanding) and the repurchase of $53.7 million of White Rose's 12 3/4% senior discount notes due 1998, (no notes remained outstanding) and the payment of premiums of $10.8 million related to such purchases, (v) the dividend by the Company to White Rose of certain non-cash assets of approximately $4.2 million, primarily the Las Plumas note and the subsequent dividend of those assets to White Rose's stockholders and (vi) the merger of White Rose with and into the Company with the Company surviving the merger. F-20 102 DI GIORGIO CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS)
DECEMBER 28, MARCH 29, 1996 1997 ------------- ----------- (UNAUDITED) ASSETS Current Assets: Cash.............................................................. $ 1,749 $ 1,734 Accounts and notes receivable -- net.............................. 61,550 65,466 Inventories....................................................... 49,563 51,994 Prepaid expenses.................................................. 3,706 3,197 -------- -------- Total current assets...................................... 116,568 122,391 -------- -------- Property, Plant & Equipment Cost.............................................................. 71,784 72,197 Accumulated depreciation.......................................... (15,514) (17,093) -------- -------- Net............................................................... 56,270 55,104 -------- -------- Long-term notes receivable.......................................... 19,276 20,857 Other assets........................................................ 12,216 12,411 Deferred financing costs............................................ 4,172 3,883 Excess of costs over net assets acquired............................ 92,567 91,898 -------- -------- $ 301,069 $ 306,544 ======== ======== LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities: Notes payable..................................................... $ 26,719 $ 28,352 Accounts payable.................................................. 49,468 55,134 Accrued expenses.................................................. 24,362 21,367 Current installment long-term obligations......................... 3,677 3,634 -------- -------- Total current liabilities................................. 104,226 108,487 -------- -------- Long-term debt...................................................... 153,389 154,606 Capital lease liability............................................. 31,523 30,996 Other long-term liabilities......................................... 7,826 7,621 Stockholders' Equity: Common stock...................................................... -- -- Additional paid-in-capital........................................ 17,225 17,225 Accumulated deficit............................................... (13,120) (12,391) -------- -------- Total stockholders' equity................................ 4,105 4,834 -------- -------- $ 301,069 $ 306,544 ======== ========
See Notes to Consolidated Condensed Financial Statements. F-21 103 DI GIORGIO CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (IN THOUSANDS) (UNAUDITED)
THIRTEEN WEEKS ENDED ------------------------- MARCH 30, MARCH 29, 1996 1997 --------- --------- REVENUE: Net Sales.......................................................... $ 263,861 $ 264,378 Other revenue...................................................... 1,013 1,595 -------- -------- Total revenue.............................................. 264,874 265,973 Cost of Products Sold................................................ 236,723 237,180 -------- -------- Gross Profit -- exclusive of warehouse expense shown below........... 28,151 28,793 Warehouse expense.................................................. 10,423 10,609 Transportation expense............................................. 5,625 5,422 Selling, general and administrative expense........................ 5,902 5,524 Amortization -- excess of cost over net assets acquired............ 723 669 -------- -------- Operating Income..................................................... 5,478 6,569 Interest expense................................................... 6,138 5,709 Amortization -- deferred financing costs........................... 284 288 Other (income) -- net.............................................. (777) (1,043) -------- -------- (Loss) income before income taxes.................................... (167) 1,615 Income taxes......................................................... 0 886 -------- -------- Net (loss) income.................................................... $ (167) $ 729 ======== ========
See Notes to Consolidated Condensed Financial Statements F-22 104 DI GIORGIO CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
CLASS A COMMON CLASS B STOCK COMMON STOCK ADDITIONAL --------------- --------------- PAID-IN (ACCUMULATED SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT) TOTAL ------ ------ ------ ------ ---------- ------------ ------ Balance at December 28, 1996........................ 101.62 $ -- 100.00 $ -- $ 17,225 $(13,120) $4,105 Net income: thirteen weeks ended March 29, 1997........ -- -- -- -- -- 729 729 ------ ---- ------ ---- ------- --------- ------ Balance at March 29, 1997..... 101.62 $ -- 100.00 $ -- $ 17,225 $(12,391) $4,834 ====== ==== ====== ==== ======= ========= ======
See Notes to Consolidated Condensed Financial Statements F-23 105 DI GIORGIO CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
THIRTEEN WEEKS ENDED ------------------------- MARCH 30, MARCH 29, 1996 1997 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income.................................................... $ (167) $ 729 Adjustments to reconcile net income to net cash used in operating activities Depreciation and amortization...................................... 1,252 1,147 Amortization....................................................... 1,150 1,088 Provision for bad debts............................................ 625 375 Increase in prepaid pension cost................................... (105) (75) Noncash interest expense........................................... 1,397 1,544 Noncash interest income............................................ (233) (259) Changes in assets and liabilities: (Increase) decrease in: Accounts receivable............................................. 4,336 (4,291) Inventory....................................................... (777) (2,431) Prepaid expenses................................................ 191 579 Long-term receivables........................................... (1,027) (1,322) Other assets.................................................... 155 116 Increase (decrease) in: Accounts payable, accrued expenses and other liabilities........ (10,501) 2,462 -------- ------- Net cash used in operating activities................................ (3,704) (338) -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant & equipment............................. (175) (413) -------- ------- Net cash used in investing activities................................ (175) (413) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings under revolving line-of-credit........................ 5,355 1,633 Capital lease payments............................................... (550) (579) Long-term debt payments.............................................. (308) (318) -------- ------- Net cash provided by financing activities............................ 4,497 736 -------- ------- Increase (decrease) in cash.......................................... 618 (15) Cash at beginning of period.......................................... 447 1,749 -------- ------- Cash at end of period................................................ $ 1,065 $ 1,734 ======== ======= Supplemental Disclosure of Cash Flow Information Cash paid during the period: Interest........................................................ $ 7,507 $ 7,043 ======== ======= Income Taxes.................................................... $ 67 $ 72 ======== =======
See Notes to Consolidated Condensed Financial Statements F-24 106 DI GIORGIO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (UNAUDITED) 1. BASIS OF PRESENTATION The consolidated condensed balance sheet as of March 29, 1997, the consolidated condensed statements of operations for the thirteen weeks ended March 30, 1996 and March 29, 1997 and the consolidated condensed statements of cash flows for the thirteen weeks ended March 30, 1996 and March 29, 1997 and related notes are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The accompanying unaudited interim consolidated condensed financial statements and related notes should be read in conjunction with the financial statements and related notes included in the Form 10-K for the fiscal year ended December 28, 1996, filed with the Securities and Exchange Commission. The information furnished reflects, in the opinion of the management of the Company, all adjustments, consisting of normal recurring accruals, which are necessary to present a fair statement of the results for the interim periods presented. Previously, the Company classified as other income reclamation service fees, label income and other customer related services. Commencing in the year ended December 28, 1996, the Company is classifying these items as other revenue. Prior year amounts have been reclassified accordingly. The change in classification has no effect on previously reported net income. The interim figures are not necessarily indicative of the results to be expected for the full fiscal year. 2. REFINANCING In May 1997, the Company amended its bank credit facility to extend the maturity date to June 30, 2000. On June 20, 1997, the Company completed a refinancing (the "Refinancing") of itself and its parent, White Rose, intended to extend debt maturities, reduce interest expense and improve financial flexibility. The components of the Refinancing were (i) the offering of $155 million of the Company's 10% Senior Notes due 2007, (ii) the modification of the Company's bank credit facility, (iii) the receipt of $8.9 million for the extinguishment of a note held by the Company from Rose Partners, LP, which owns 98.54% of the Company, (iv) the repurchase, through tender offers, of $85.4 million of the Company's 12% senior notes due 2003, ($7.5 million remained outstanding) and the repurchase of $53.7 million of White Rose's 12 3/4% senior discount notes due 1998, (no notes remained outstanding) and the payment of premiums of $10.8 million related to such purchases, (v) the dividend by the Company to White Rose of certain non-cash assets of approximately $4.2 million, primarily the Las Plumas note and the subsequent dividend of those assets to White Rose's stockholders and (vi) the merger of White Rose with and into the Company with the Company surviving the merger. As part of the Refinancing, the Company and White Rose consummated a merger, with the Company as the survivor. Since the stockholders of the Company are identical to the stockholders of White Rose, the exchange of shares was a transfer of interest among entities under common control, and is being accounted for at historical cost in a manner similar to pooling of interests accounting. Accordingly, the consolidated financial statements presented herein reflect the assets and liabilities and related results of operations for the combined entity for all periods. F-25 107 =============================================================== ALL TENDERED OLD NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE DIRECTED TO THE EXCHANGE AGENT. QUESTIONS AND REQUESTS FOR ASSISTANCE AND REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS, THE LETTER OF TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE AGENT AS FOLLOWS: By Hand, Registered or Certified Mail or Overnight Courier: The Bank of New York 101 Barclay Street, 21st Floor West New York, NY 10286 By Facsimile: (212) 815-6339 Attention: Henry Lopez Confirm by telephone: (212) 815-2742 (Originals of all documents submitted by facsimile should be sent promptly by hand, overnight courier, or registered or certified mail.) ------------------------ TABLE OF CONTENTS
PAGE ---- Available Information......................... 4 Forward Looking Statements.................... 5 Summary....................................... 6 Risk Factors.................................. 17 The Exchange Offer............................ 21 The Refinancing............................... 29 Capitalization................................ 30 Selected Consolidated Financial Data.......... 31 Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 33 Business...................................... 39 Management.................................... 45 Certain Transactions.......................... 48 Description of the Bank Credit Facility....... 49 Description of New Notes...................... 49 Certain Federal Income Tax Considerations..... 77 Plan of Distribution.......................... 79 Legal Matters................................. 79 Experts....................................... 79 Index to Financial Statements................. F-1
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL, IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE NEW NOTES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER NOR ANY EXCHANGE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS EXCHANGE OFFER), ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THIS EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS. =============================================================== =============================================================== $155,000,000 [WHITEROSE LOGO] DI GIORGIO CORPORATION 10% SENIOR NOTES DUE 2007 -------------------- PROSPECTUS -------------------- , 1997 =============================================================== 108 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the Delaware General Corporation Law ("Section 145") permits indemnification of directors, officers, agents and controlling persons of a corporation under certain conditions and subject to certain limitations. Section 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a director, officer, employee or agent of the corporation or another enterprise if serving at the request of the corporation. Depending on the character of the proceeding, a corporation may indemnify against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if the person indemnified acted in good faith and in a manner he reasonably believed to be in or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In the case of an action by or in the right of the corporation, no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine that, despite the adjudication of liability, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Article EIGHTH of the Company's Amended and Restated Certificate of Incorporation (Exhibit 3.1 hereto) provides for the indemnification of directors, officers and other authorized representatives of the Company to the maximum extent permitted by the Delaware General Corporation Law. Specifically, pursuant to Article EIGHTH of the Company's Amended and Restated Certificate of Incorporation, a director will not be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (A) EXHIBITS The exhibits filed as part of this registration statement are as follows:
EXHIBIT NO. EXHIBIT - --------- ------------------------------------------------------------------------------ 1.1 Purchase Agreement among Di Giorgio Corporation, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation. 3.1* Certificate of Incorporation of the Registrant, as amended. 3.2(2) Bylaws of the Issuer. 4.1 Indenture between Di Giorgio Corporation and The Bank of New York, as Trustee, including the form of Note. 4.2 Registration Rights Agreement among Di Giorgio Corporation, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation. 4.3(3) Indenture, dated February 2, 1993 under which Di Giorgio's Senior Notes due 2003 are issued.
II-1 109
EXHIBIT NO. EXHIBIT - --------- ------------------------------------------------------------------------------ 4.4 Supplemental Indenture, dated June 9, 1997 between Di Giorgio Corporation and the Bank of New York, as Trustee. 4.5(3) Di Giorgio Senior note Certificate Specimen 5.1* Opinion of Morgan, Lewis & Bockius LLP regarding the validity of the Notes. 10.1(3) Credit Agreement dated as of February 10, 1993 among Di Giorgio Corporation, various financial institutions, BT Commercial Corporation, as agent and Bankers Trust Company as Issuing Bank 10.2(5) Sublease Agreement between MF Corp. (sublandlord) and PC Richard & Son Long Island Corporation (subtenant), dated July 27, 1993, relating to facilities located in Farmingdale, New York 10.3(1) Employment Agreement dated May 1, 1992 between Richard B. Neff and the Company, as amended 10.4(1) Employment Agreement dated February 18, 1992 between the Company and Robert A. Zorn 10.5(7) Amended and Restated Employment Agreement dated January 1, 1994 between the Company and Stephen R. Bokser 10.6(3) Di Giorgio Retirement Plan as Amended and Restated effective January 1, 1989 (dated January 26, 1996) 10.7(11) Di Giorgio Retirement Savings Plan as Amended and Restated effective January 1, 1989 10.8(13) Amendment to the Di Giorgio Retirement Savings Plan effective January 1, 1989 (dated November 28, 1995) 10.9(1) Lease between The Four B's (landlord) and White Rose Sairy, a division of Di Giorgio (tenant) dated November 21, 1988, as amended May 11, 1989, relating to facilities located in Kearny, New Jersey 10.10(1) Lease between Marley Properties, Inc. (landlord) and Met Food Corp. (tenant), dated March 11, 1968, and amendment thereto, relating to facilities located in Farmington, New York 10.11(2) Sub-Sublease between WRGFF (sublandlord) and Frozen Food (subtenant), dated August 3, 1992 relating to facilities located in Garden City, New York 10.12(4) Consent and Amendment No. 1 dated as of June 25, 1993 to Credit Agreement dated as of February 10, 1993 10.13(5) Consent and Amendment No. 2 dated as of November 3, 1993 to Credit Agreement dated as of February 10, 1993 10.14(3) Note Pledge Agreement dated as of February 1, 1993, by Di Giorgio Corporation in favor of BT Commercial Corporation, as agent 10.15(3) License and Security Agreement dated as of February 1, 1993, by Di Giorgio Corporation in favor of BT Commercial Corporation, as agent 10.16(3) Promissory Note dated as of February 2, 1993 made by Las Plumas Lumbar Corporation in favor of Di Giorgio 10.18(1) Settlement Agreement dated July 30, 1992, by and between White Rose Foods, Inc. and the Furniture, Flour, Grocery, Teamsters and Chauffeurs Union, Local No. 138 10.19(3) Tax Sharing Agreement effective January 1, 1992 among DIG Holding, Di Giorgio and certain other parties 10.20(6) Amendment to Tax Sharing Agreement effective January 1, 1993 among DIG Holding, Di Giorgio and certain other parties
II-2 110
EXHIBIT NO. EXHIBIT - --------- ------------------------------------------------------------------------------ 10.30(7) Lease between AMAX Realty Development, Inc. and V. Paulius and Associates and the Company dated February 11, 1994 relating to warehouse facility at Carteret, New Jersey 10.31(7) Consent and Amendment No. 3 dated March 30, 1994 to Credit Agreement dated as of February 10, 1993 10.32(8) Consent and Amendment No. 4 dated April 22, 1994 to Credit Agreement dated as of February 10, 1993. 10.33(9) Asset purchase Agreement made as of the 1st day of April 1994 by and among Di Giorgio Corporation, Fleming Foods East Inc. And Fleming Companies, Inc., and First Amendment dated April 7, 1994 and Second Amendment dated April 20, 1994. 10.34(10) Third Amendment dated as of June 20, 1994 to Asset Purchase Agreement of April 1, 1994 between Di Giorgio Corporation, Fleming Foods East, Inc. and Fleming Companies, Inc. 10.35(11) Amendment No. 5 dated November 15, 1994 to Credit Agreement dated as of February 10, 1993. 10.36(11) Waiver and Amendment No. 6 dated as of March 3, 1995 to Credit Agreement dated as of February 10, 1993. 10.37(11) Sublease Agreement dated June 20, 1994 between Fleming Foods East Inc. (landlord) and Di Giorgio Corporation (tenant) relating to facilities located in Woodbridge, New Jersey. 10.38(12) Amendment No. 7 dated September 30, 1995 to Credit Agreement dated as of February 10, 1993 10.39(14) Amendment No. 8, dated as of September 26, 1996 to Credit Agreement dated as of February 10, 1993 10.40 Amendment No. 9, dated as of May 23, 1997 to Credit Agreement dated as February 10, 1993 10.41 Amendment No. 10, dated as of June 11, 1997 to Credit Agreement dated as of February 10, 1993 12.1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges. 21(1) Subsidiaries of the Registrant 23.1* Consent of Morgan, Lewis & Bockius LLP (included in opinion filed as Exhibit 5) 23.2 Consent of Deloitte & Touche LLP 24 Powers of Attorney (included as part of the signature page hereof).
- --------------- * To be filed by amendment (1) Incorporated by reference to the Company's Registration Statement on Form S-1 (File No. 33-53886) filed with the Commission on October 28, 1992. (2) Incorporated by reference to Amendment No. 2 to the Company's Registration Statement on Form S-1 (File No. 33-53886) filed with the Commission on January 11, 1993. (3) Incorporated by reference to Amendment No. 3 to the Company's Registration Statement on Form S-1 (File No. 33-53886) filed with the Commission on February 1, 1993. (4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q (File No. 1-1790) filed with the Commission on August 16, 1993. (5) Incorporated by reference to the Company's Quarterly Report on Form 10-Q (File No. 1-1790) filed with the Commission on November 12, 1993. (6) Incorporated by reference to the Registration Statement on Form S-4 of White Rose Foods, Inc. (File No. 33-72284) filed with the Commission on November 24, 1993. II-3 111 (7) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended January 1, 1994 (File 1-1790). (8) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for quarter ended April 2, 1994 (File 1-1790). (9) Incorporated by reference to the Company's Current Report on Form 8-K dated April 25, 1994 (File 1-1790). (10) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for quarter ended July 2, 1994 (File 1-1790). (11) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 (File 1-1790). (12) Incorporated by reference to the Quarterly Report on Form 10-Q of White Rose Foods, Inc. for the quarter ended September 30, 1995 (File 33-72284). (13) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 30, 1995 (File 1-1790). (14) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 28, 1996 (File 1-1790). (B) FINANCIAL STATEMENTS SCHEDULE Financial Statement Schedule for each of the three years in the period ended December 28, 1996. ITEM 22. UNDERTAKINGS The undersigned registrant hereby undertakes: Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bone fide offering thereof. The undersigned registrant hereby undertakes: II-4 112 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Carteret, New Jersey on July 1, 1997. DI GIORGIO CORPORATION By: /s/ ARTHUR M. GOLDBERG ------------------------------------ Arthur M. Goldberg, Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Each person in so signing also makes, constitutes and appoints Arthur M. Goldberg and Richard B. Neff, and each of them acting alone, his or her true and lawful attorney-in-fact, with full power of substitution, to execute and cause to be filed with the Securities and Exchange Commission pursuant to the requirements of the Securities Act of 1933, as amended, any and all amendments and post-effective amendments to this Registration Statement, with exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his or her substitute or substitutes may do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE - ---------------------------------------- -------------------------------------- -------------- /s/ ARTHUR M. GOLDBERG Chairman, President and Chief July 1, 1997 - ---------------------------------------- Executive Officer (Principal Arthur M. Goldberg Executive Officer) /s/ JEROLD E. GLASSMAN Director July 1, 1997 - ---------------------------------------- Jerold E. Glassman /s/ EMIL W. SOLIMINE Director July 1, 1997 - ---------------------------------------- Emil W. Solimine /s/ CHARLES C. CARELLA Director July 1, 1997 - ---------------------------------------- Charles C. Carella /s/ JANE SCACCETTI FUMO Director July 1, 1997 - ---------------------------------------- Jane Scaccetti Fumo /s/ RICHARD B. NEFF Executive Vice President and Chief July 1, 1997 - ---------------------------------------- Financial Officer (Principal Richard B. Neff Financial and Accounting Officer); Director /s/ STEPHEN R. BOKSER Executive Vice President and Director July 1, 1997 - ---------------------------------------- Stephen R. Bokser
II-5 113 INDEPENDENT AUDITORS' REPORT Board of Directors and Stockholders Di Giorgio Corporation Carteret, New Jersey We have audited the consolidated financial statements of Di Giorgio Corporation and subsidiaries (the "Company") as of December 30, 1995 and December 28, 1996, and for each of the three years in the period ended December 28, 1996, and have issued our report thereon dated February 21, 1997 (June 20, 1997 as to Notes 1 and 18) (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in Item 16(b) of this Registration Statement. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. DELOITTE & TOUCHE LLP Parsippany, New Jersey February 21, 1997 (June 20, 1997 as to Notes 1 and 18) S-1 114 DI GIORGIO CORPORATION AND SUBSIDIARIES SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
COLUMN A COLUMN B COLUMN C ADDITIONS COLUMN D COLUMN E - ---------------------------------------------------------------------------------------------------------- BALANCE BALANCE AT CHARGED TO CHARGED TO AT END BEGINNING COSTS AND OTHER OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - ---------------------------------- ---------- ---------- ---------- ---------- -------- (IN THOUSANDS) Allowance for doubtful accounts for the period ended: December 31, 1994............... $3,985 $2,100 $500(2) $ (2,741)(1) $3,844 December 30, 1995............... 3,844 2,100 -- (2,003)(1) 3,941 December 28, 1996............... 3,941 1,850 63(2) (1,543)(1) 4,311
- --------------- (1) Accounts written off during the year. (2) Transfers from other accounts. S-2 115 EXHIBIT INDEX
SEQUENTIALLY NUMBERED EXHIBIT NO. DESCRIPTION PAGE - ----------- ----------------------------------------------------------------------- ------------ 1.1 Purchase Agreement among Di Giorgio Corporation, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation............................................................ 3.1* Certificate of Incorporation of the Registrant, as amended............. 4.1 Indenture between Di Giorgio Corporation and The Bank of New York, as Trustee, including the form of Note.................................... 4.2 Registration Rights Agreement among Di Giorgio Corporation, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation................................................. 4.4 Supplemental Indenture, dated June 9, 1997 between Di Giorgio Corporation and the Bank of New York, as Trustee....................... 5.1* Opinion of Morgan, Lewis & Bockius LLP regarding the validity of the Notes.................................................................. 10.40 Amendment No. 9, dated as of May 23, 1997 to Credit Agreement dated as February 10, 1993...................................................... 10.41 Amendment No. 10, dated as of June 11, 1997 to Credit Agreement dated as of February 10, 1993................................................ 12.1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges................................................................ 23.1* Consent of Morgan, Lewis & Bockius LLP (included in opinion filed as Exhibit 5)............................................................. 23.2 Consent of Deloitte & Touche LLP....................................... 24 Powers of Attorney (included as part of the signature page hereof).....
- --------------- * To be filed by amendment EX-1.1 2 PURCHASE AGREEMENT 1 EXHIBIT 1.1 EXECUTION COPY PURCHASE AGREEMENT Di Giorgio Corporation 10% Senior Notes Due 2007 June 13, 1997 2 TABLE OF CONTENTS || SECTION 1. Representations and Warranties................................. 3 (a) Representations and Warranties by the Company.................. 3 (i) Similar Offerings..................................... 3 (ii) Offering Memorandum................................... 3 (iii) Incorporated Documents................................ 3 (iv) Independent Accountants............................... 4 (v) Financial Statements.................................. 4 (vi) No Material Adverse Change in Business................ 4 (vii) Good Standing of the Company.......................... 4 (viii) Good Standing of Subsidiaries......................... 5 (ix) Capitalization........................................ 5 (x) Authorization of Agreement............................ 5 (xi) Authorization of Registration Rights Agreement........ 5 (xii) Authorization of the Indenture........................ 6 (xiii) Authorization of the Securities....................... 6 (xiv) Description of the Securities and the Indenture....... 6 (xv) Absence of Defaults and Conflicts..................... 6 (xvi) Absence of Labor Dispute.............................. 7 (xvii) Absence of Proceedings................................ 7 (xviii) Possession of Intellectual Property................... 8 (xix) Absence of Further Requirements....................... 8 (xx) Possession of Licenses and Permits.................... 8 (xxi) Title to Property..................................... 8 (xxii) Environmental Laws.................................... 9 (xxiii) Material Contracts.................................... 9 (xxiv) Tax Returns.......................................... 10 (xxv) Internal Controls.................................... 10 (xxvi) Insurance............................................ 10 (xxvii) Solvency.............................................. 10 (xxviii) Stabilization........................................ 11 (xxix) Suppliers............................................. 11 (xxx) Investment Company Act............................... 11 (xxxi) Rule 144A Eligibility................................. 11 (xxxii) No General Solicitation.............................. 11 (xxxiii) No Registration Required............................. 11 (xxxiv) No Directed Selling Efforts........................... 11 (b) Officer's Certificates........................................ 12 SECTION 2. Sale and Delivery to Initial Purchasers; Closing.............. 12 (a) Securities.................................................... 12 (b) Payment....................................................... 12 3 (c) Qualified Institutional Buyer...................................................... 12 (d) Denominations; Registration........................................................ 13 SECTION 3. Covenants of the Company........................................................... 13 (a) Offering Memorandum................................................................ 13 (b) Notice and Effect of Material Events............................................... 13 (c) Amendment to Offering Memorandum and Supplements................................... 13 (d) Qualification of Securities for Offer and Sale..................................... 14 (e) Rating of Securities............................................................... 14 (f) DTC and PORTAL..................................................................... 14 (g) Use of Proceeds.................................................................... 14 (h) Restriction on Sale of Securities.................................................. 14 SECTION 4. Payment of Expenses................................................................ 14 (a) Expenses........................................................................... 14 (b) Termination of Agreement........................................................... 15 SECTION 5. Conditions of Initial Purchasers' Obligations...................................... 15 (a) Opinion of Counsel for Company..................................................... 15 (b) Opinion of Counsel for Initial Purchasers.......................................... 15 (c) Officers' Certificate.............................................................. 15 (d) Accountant's Comfort Letter........................................................ 16 (e) Bring-down Comfort Letter.......................................................... 16 (f) Maintenance of Rating.............................................................. 16 (g) PORTAL............................................................................. 16 (h) Refinancing........................................................................ 16 (i) Additional Documents............................................................... 17 (j) Termination of Agreement........................................................... 17 SECTION 6. Subsequent Offers and Resales of the Securities.................................... 17 (a) Offer and Sale Procedures.......................................................... 17 (i) Offers and Sales only to Institutional Accredited Investors or Qualified Institutional Buyers...................................................... 17 (ii) No General Solicitation................................................... 18 (iii) Purchases by Non-Bank Fiduciaries......................................... 18 (iv) Subsequent Purchaser Notification......................................... 18 (v) Minimum Principal Amount.................................................. 18 (vi) Restrictions on Transfer.................................................. 18 (vii) Delivery of Offering Memorandum........................................... 19 (b) Covenants of the Company........................................................... 19 (i) Due Diligence............................................................. 19 (ii) Integration............................................................... 19 (iii) Rule 144A Information..................................................... 19
4 (iv) Restriction on Repurchases................................. 19 (c) Resale Pursuant to Rule 903 of Regulation S or Rule 144A............ 20 SECTION 7. Indemnification..................................................... 20 (a) Indemnification of Initial Purchasers............................... 20 (b) Indemnification of Company, Directors and Officers.................. 21 (c) Actions against Parties; Notification............................... 22 (d) Settlement without Consent if Failure to Reimburse.................. 22 SECTION 8. Contribution........................................................ 22 SECTION 9. Representations, Warranties and Agreements to Survive Delivery...... 24 SECTION 10. Termination of Agreement............................................ 24 (a) Termination; General................................................ 24 (b) Liabilities......................................................... 24 SECTION 11. Default by One of the Initial Purchasers............................ 25 SECTION 12. Notices............................................................. 25 SECTION 13. Parties............................................................. 25 SECTION 14. GOVERNING LAW AND TIME.............................................. 26 SECTION 15. Effect of Headings.................................................. 26 SECTION 16. Counterparts........................................................ 26
|| 5 $155,000,000 DI GIORGIO CORPORATION 10% Senior Notes due 2007 PURCHASE AGREEMENT June 13, 1997 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated BT Securities Corporation c/o Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1209 Ladies and Gentlemen: Di Giorgio Corporation, a Delaware corporation (the "Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and BT Securities Corporation (collectively, the "Initial Purchasers," which term shall also include any initial purchaser substituted as hereinafter provided in Section 11 hereof), for whom Merrill Lynch is acting as representative (in such capacity, the "Representative"), with respect to the issue and sale by the Company and the purchase by the Initial Purchasers, acting severally and not jointly, of the respective principal amounts set forth in Schedule A of $155,000,000 aggregate principal amount of the Company's 10% Senior Notes due 2007 (the "Securities"). The Securities are to be issued pursuant to an indenture to be dated as of June 15, 1997 (the "Indenture") between the Company and The Bank of New York, as trustee (the "Trustee"). Securities issued in book-entry form will be issued to Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant to a letter agreement, to be dated as of the Closing Time (as defined in Section 2(b)) (the "DTC Agreement"), among the Company, the Trustee and DTC. 6 The Company understands that the Initial Purchasers propose to make an offering of the Securities on the terms and in the manner set forth herein and agrees that the Initial Purchasers may resell, subject to the conditions set forth herein, all or a portion of the Securities to purchasers ("Subsequent Purchasers") at any time after the date of this Agreement. The Securities are to be offered and sold through the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the "1933 Act"), in reliance upon exemptions therefrom. Pursuant to the terms of the Securities and the Indenture, investors that acquire Securities may only resell or otherwise transfer such Securities if such Securities are hereafter registered under the 1933 Act or if an exemption from the registration requirements of the 1933 Act is available (including, without limitation, the exemption afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation S") of the rules and regulations promulgated under the 1933 Act by the Securities and Exchange Commission (the "Commission")). The holders of Securities will be entitled to the benefits of a Registration Rights Agreement between the Company and the Initial Purchasers (the "Registration Rights Agreement"), pursuant to which the Company will file a registration statement (the "Registration Statement") with the Commission registering the Notes or the Exchange Notes referred to in the Registration Rights Agreement under the 1933 Act. The Company has prepared and delivered to each Initial Purchaser copies of a preliminary offering memorandum dated May 29, 1997 (the "Preliminary Offering Memorandum") and is preparing and will deliver to the Initial Purchasers, on the date hereof or the next succeeding day, copies of a final offering memorandum dated June 13, 1997 (the "Final Offering Memorandum"), for use by the Initial Purchasers in connection with its solicitation of purchases of or offering of, the Securities. "Offering Memorandum" means, with respect to any date or time referred to in this Agreement, the most recent offering memorandum (whether the Preliminary Offering Memorandum or the Final Offering Memorandum, or any amendment or supplement to either such document), including exhibits thereto and any documents incorporated therein by reference, which has been prepared and delivered by the Company to the Initial Purchasers in connection with their solicitation of purchases of, or offering of, the Securities. The Company has obtained the consent of a sufficient number of holders of its 12% Senior Notes Due 2003 (the "Senior Notes") to execute, and has executed, a Supplemental Indenture dated as of June 9, 1997 (the "Supplemental Indenture") effecting certain amendments to the Indenture dated as of February 1, 1993 between the Company and the Bank of New York, as trustee, as more fully described in the Company's Offer to Purchase and Consent Solicitation relating thereto dated May 16, 1997. It is understood and agreed that concurrently with or immediately following the Closing Time referred to in Section 2(b) hereof, the Company will (i) dividend approximately $61,400 in cash and certain non-cash assets which are unrelated to the Company's primary business, (ii) make an intercompany loan to its sole stockholder, White Rose Foods, Inc. ("White Rose"), as set forth in the Final Offering Memorandum, and (iii) merge with White Rose, with the Company surviving the merger. 2 7 All references in this Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" in the Offering Memorandum (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which are incorporated by reference in the Offering Memorandum; and all references in this Agreement to amendments or supplements to the Offering Memorandum shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934, as amended (the "1934 Act") which is incorporated by reference in the Offering Memorandum. SECTION 1. Representations and Warranties. (a) Representations and Warranties by the Company. The Company represents and warrants to each Initial Purchaser as of the date hereof, and as of the Closing Time referred to in Section 2(b) hereof, and agrees with each Initial Purchaser as follows: (i) Similar Offerings. The Company has not, directly or indirectly, solicited any offer to buy or offered to sell, and will not, directly or indirectly, solicit any offer to buy or offer to sell, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Securities in a manner that would require the Securities to be registered under the 1933 Act. (ii) Offering Memorandum. As of the date hereof, the Offering Memorandum does not, and at the Closing Time will not, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that this representation, warranty and agreement shall not apply to statements in or omissions from the Offering Memorandum made in reliance upon and in conformity with information furnished to the Company in writing by any Initial Purchaser through the Representative expressly for use in the Offering Memorandum. (iii) Incorporated Documents. The Offering Memorandum as delivered from time to time shall incorporate by reference the most recent Annual Report of the Company on Form 10-K filed with the Commission and each Quarterly Report of the Company on Form 10-Q and each Current Report of the Company on Form 8-K filed with the Commission since the end of the fiscal year to which such Annual Report relates. The documents incorporated or deemed to be incorporated by reference in the Offering Memorandum at the time they were or hereafter are filed with the Commission complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission promulgated thereunder (the "1934 Act Regulations"), and, when read together with the other information in the Offering Memorandum, at the date of the Offering Memorandum and at the Closing Time, do not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3 8 (iv) Independent Accountants. Deloitte & Touche L.L.P. is an independent certified public accountant with respect to the Company and its subsidiaries within the meaning of Rule 2-01 of Regulation S-X under the 1933 Act. (v) Financial Statements. The financial statements, together with the related schedules and notes, included in the Offering Memorandum (excluding the pro forma financial statements) present fairly the financial position of the Company and its consolidated subsidiaries (and, where applicable, the Consolidated Company (as defined in the Offering Memorandum)) at the dates indicated and the statement of operations, stockholders' equity and cash flows of the Company and its consolidated subsidiaries (and, where applicable, the Consolidated Company) for the periods specified; said financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved. The selected financial data and the summary financial information included in the Offering Memorandum present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Offering Memorandum. The pro forma financial statements of the Company and its subsidiaries and the related notes thereto included in the Offering Memorandum present fairly the information shown therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. (vi) No Material Adverse Change in Business. Since the respective dates as of which information is given in the Offering Memorandum, except as otherwise stated therein, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries (as defined below) considered as one enterprise (a "Material Adverse Effect"), whether or not arising in the ordinary course of business, (B) except as set forth in the Offering Memorandum under the caption "The Refinancing," there have been no transactions entered into by the Company or any of its Subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its Subsidiaries considered as one enterprise, and (C) except for the payment of a dividend of approximately $61,400 in cash and certain non-cash assets as set forth in the Offering Memorandum under the caption "The Refinancing," there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock. (vii) Good Standing of the Company. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum and to enter into and perform its obligations under this Agreement, and the Company is duly qualified as 4 9 a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. (viii) Good Standing of Subsidiaries. Each subsidiary of the Company (each a "Subsidiary" and, collectively, the "Subsidiaries") has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect; except as otherwise disclosed in the Offering Memorandum, all of the issued and outstanding capital stock of each Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through Subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the outstanding shares of capital stock of the Subsidiaries was issued in violation of any preemptive or other rights of any person. The Company has no Subsidiaries that are or would be "significant subsidiaries" of the Company within the meaning of that term as used in Rule 1-02(w) of Regulation S-X promulgated under the 1933 Act. (ix) Capitalization. The authorized, issued and outstanding capital stock of the Company is as set forth in the Offering Memorandum in the column entitled "Actual" under the caption "Capitalization." (x) Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Company, and constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or other laws of general applicability relating to or affecting enforcement of creditors' rights generally, or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). (xi) Authorization of Registration Rights Agreement. The Registration Rights Agreement has been duly authorized by the Company, and when executed and delivered by the Company will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or other laws of general applicability relating to or affecting enforcement of creditors' rights generally, or by 5 10 general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). (xii) Authorization of the Indenture. The Indenture has been duly authorized by the Company, and when executed and delivered by the Company will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or other laws of general applicability relating to or affecting enforcement of creditors' rights generally, or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). (xiii) Authorization of the Securities. The Securities have been duly authorized and when executed and delivered by the Company and authenticated in the manner provided for in the Indenture and delivered against payment of the purchase price therefor as provided in this Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers) reorganization, moratorium or other laws of general applicability relating to or affecting enforcement of creditors' rights generally, or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture. (xiv) Description of the Securities and the Indenture. The Securities and the Indenture will conform in all material respects to the respective statements relating thereto contained in the Offering Memorandum and will be in substantially the respective forms previously delivered to the Initial Purchasers. (xv) Absence of Defaults and Conflicts. Neither the Company nor any of its Subsidiaries is in violation of its charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of its Subsidiaries is subject (collectively, "Agreements and Instruments") except for such defaults that would not result in a Material Adverse Effect; and the execution, delivery and performance of this Agreement, the Indenture and the Securities and any other agreement or instrument entered into or issued or to be entered into or issued by the Company in connection with the transactions contemplated hereby or thereby or in the Offering Memorandum and the consummation of the transactions contemplated herein and in the Offering Memorandum (including the issuance and sale of the Securities, the use of the proceeds from the sale of the Securities as described in the Offering Memorandum under the caption "Use of Proceeds", the modification of the 6 11 Company's Bank Credit Facility and the consummation of all of the other transactions comprising the Refinancing) and compliance by the Company with its obligations hereunder have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or a Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to, the Agreements and Instruments (except for such conflicts, breaches or defaults or liens, charges or encumbrances that, singly or in the aggregate, would not result in a Material Adverse Effect), nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any of its Subsidiaries or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its Subsidiaries or any of their assets or properties, except for such violation that would not result in a Material Adverse Effect. As used herein, a "Repayment Event" means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its Subsidiaries. (xvi) Absence of Labor Dispute. No labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge of the Company, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its, or any Subsidiary's, principal suppliers, manufacturers, customers or contractors, which, in either case, may reasonably be expected to result in a Material Adverse Affect. (xvii) Absence of Proceedings. Except as disclosed in the Offering Memorandum, there is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened, against or affecting the Company or any Subsidiary thereof which might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the properties or assets of the Company or any of its Subsidiaries or the consummation of this Agreement or either of the Tender Offers (as defined in the Offering Memorandum) or other transactions comprising the Refinancing, or the performance by the Company of its obligations hereunder or thereunder. The aggregate of all pending legal or governmental proceedings to which the Company or any Subsidiary thereof is a party or of which any of their respective property or assets is the subject which are not described in the Offering Memorandum, including ordinary routine litigation incidental to the business, could not reasonably be expected to result in a Material Adverse Effect. 7 12 (xviii) Possession of Intellectual Property. The Company and its Subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, "Intellectual Property"), necessary to carry on the business now operated by them, and neither the Company nor any of its Subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its Subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect. (xix) Absence of Further Requirements. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency (other than (A) under the 1933 Act and the rules and regulations thereunder with respect to the Registration Statement to be filed pursuant to the Registration Rights Agreement and the transactions contemplated thereunder, and (B) under the securities or "blue sky" laws of the various states) is necessary or required for the performance by the Company of its obligations hereunder, in connection with the offering, issuance or sale of the Securities hereunder or the consummation of the transactions contemplated by this Agreement or of the Tender Offers. (xx) Possession of Licenses and Permits. The Company and its Subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, "Governmental Licenses") issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them; the Company and its Subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not have a Material Adverse Effect; and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect. (xxi) Title to Property. The Company and its Subsidiaries have good and marketable title to all real property owned by the Company and its Subsidiaries and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (a) are described in the Offering Memorandum or (b) do not, singly or in the 8 13 aggregate, materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or any of its Subsidiaries; and all of the leases and subleases material to the business of the Company and its Subsidiaries, considered as one enterprise, and under which the Company or any of its Subsidiaries holds properties described in the Offering Memorandum, are in full force and effect, and neither the Company nor any of its Subsidiaries has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of its subsidiaries under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such Subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease. (xxii) Environmental Laws. Except as described in the Offering Memorandum and except such matters as would not, singly or in the aggregate, result in a Material Adverse Effect, to the best of the Company's knowledge, (A) neither the Company nor any of its Subsidiaries is in violation of any statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, "Hazardous Materials") or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and its Subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its Subsidiaries and (D) there are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its Subsidiaries relating to Hazardous Materials or the violation of any Environmental Laws. (xxiii) Material Contracts. Except for the contracts listed as Exhibit 10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 1996, and the contracts disclosed in the Offering Memorandum, neither the Company, White Rose Foods, Inc. nor any of their Subsidiaries is party to any contract, agreement or understanding that is material to the business of the Company or its Subsidiaries, considered as one enterprise. 9 14 (xxiv) Tax Returns. All United States federal income tax returns of the Company and its Subsidiaries required by law to be filed have been filed or an extension has been duly received in respect thereof and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except taxes or charges that are being contested in good faith or assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided and except where the nonpayment of which would not have a Material Adverse Effect. The United States federal income tax returns of the Company through the fiscal year ended December 31, 1994 have been settled and no assessment in connection therewith has been made against the Company. The Company and its Subsidiaries have filed all other tax returns that are required to have been filed by them pursuant to applicable foreign, state, local or other law except insofar as the failure to file such returns would not result in a Material Adverse Effect, and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company and its Subsidiaries, except for such taxes or charges that are being contested in good faith or assessments against which appeals have been or will promptly be taken and as to which adequate reserves have been provided and other than those the nonpayment of which would not have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company in respect of any income and corporation tax liability for any years not finally determined are adequate to meet any assessments or reassessments for additional income tax for any years not finally determined, except to the extent of any inadequacy that would not result in a Material Adverse Effect. (xxv) Internal. The Company and its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management's general or specific authorization, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (C) access to assets is permitted only in accordance with management's general or specific authorization and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (xxvi) Insurance. The Company and its Subsidiaries carry or are entitled to the benefits of insurance, with financially sound and reputable insurers, in such amounts and covering such risks as is prudent and customary in the business in which it is engaged. (xxvii) Solvency. The Company is, and immediately after the Closing Time will be, Solvent. As used herein, the term "Solvent" means, with respect to the Company on a particular date, that on such date (A) the fair salable value of the assets of the Company is greater than the stated value of liabilities (including contingent liabilities) of the Company, (B) the Company will be able to pay its stated liabilities, including contingent obligations, as they mature, and (C) the Company will not have an 10 15 unreasonably small amount of capital for the operation of the business in which it is engaged. (xxviii) Stabilization. Neither the Company nor any of its officers, directors or controlling persons has taken, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities. (xxix) Suppliers. Except as disclosed in the Offering Memorandum, no supplier to the Company or any of its Subsidiaries has ceased shipments of merchandise to the Company, other than in the normal and ordinary course of business consistent with past practices, or where such cessation would not result in a Material Adverse Effect. (xxx) Investment Company Act. The Company is not, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Offering Memorandum will not be, an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended (the "1940 Act"). (xxxi) Rule 144A Eligibility. The Securities are eligible for resale pursuant to Rule 144A and will not be, at the Closing Time, of the same class as securities listed on a national securities exchange registered under Section 6 of the 1934 Act, or quoted in a U.S. automated interdealer quotation system. (xxxii) No General Solicitation. None of the Company, its affiliates, as such term is defined in Rule 501(b) under the 1933 Act ("Affiliates"), or any person acting on its or any of their behalf (other than the Initial Purchasers, as to whom the Company makes no representation) has engaged or will engage, in connection with the offering of the Securities, in any form of general solicitation or general advertising within the meaning of Rule 502(c) under the 1933 Act. (xxxiii) No Registration Required. Subject to compliance by the Initial Purchasers with the representations and warranties set forth in Section 2 and the procedures set forth in Section 6 hereof, it is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers and to each Subsequent Purchaser in the manner contemplated by this Agreement and the Offering Memorandum to register the Securities under the 1933 Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the "1939 Act"). (xxxiv) No Directed Selling Efforts. With respect to those Securities sold in reliance on Regulation S, (A) none of the Company, its Affiliates or any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Company makes no representation) has engaged or will engage in any directed selling efforts within the 11 16 meaning of Regulation S and (B) each of the Company and its Affiliates and any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Company makes no representation) has complied and will comply with the offering restrictions requirement of Regulation S. (b) Officer's Certificates. Any certificate signed by any officer of the Company delivered to the Representative or to counsel for the Initial Purchasers shall be deemed a representation and warranty by the Company to each Initial Purchaser as to the matters covered thereby. SECTION 2. Sale and Delivery to Initial Purchasers; Closing. (a) Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to sell to each Initial Purchaser, severally and not jointly, and each Initial Purchaser, severally and not jointly, agrees to purchase from the Company, at the price set forth in Schedule B, the aggregate principal amount of Securities set forth in Schedule A opposite the name of such Initial Purchaser, plus any additional principal amount of Securities which such Initial Purchaser may become obligated to purchase pursuant to the provisions of Section 11 hereof. (b) Payment. Payment of the purchase price for, and delivery of certificates for, the Initial Securities shall be made at the office of Mayer. Brown & Platt, 1675 Broadway, New York, New York 10019, or at such other place as shall be agreed upon by the Representative and the Company, at 10:00 A.M. (Eastern Time) on the fifth business day after the date hereof (unless postponed in accordance with the provisions of Section 11), or such other time not later than ten business days after such date as shall be agreed upon by the Representative and the Company (such time and date of payment and delivery being herein called the "Closing Time"). Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to the Representative for the respective accounts of the Initial Purchasers of certificates for the Securities to be purchased by them. It is understood that each Initial Purchaser has authorized the Representative, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Securities which it has agreed to purchase. Merrill Lynch, individually and not as representative of the Initial Purchasers, may (but shall not be obligated to) make payment of the purchase price for the Securities to be purchased by any Initial Purchaser whose funds have not been received by the Closing Time, but such payment shall not relieve such Initial Purchaser from its obligations hereunder. The certificates representing the Securities shall be registered in the name of Cede & Co. pursuant to the DTC Agreement and shall be made available for examination and packaging by the Initial Purchasers in The City of New York not later than 10:00 A.M. (Eastern Time) on the last business day prior to the Closing Time. (c) Qualified Institutional Buyer. Each Initial Purchaser severally and not jointly represents and warrants to, and agrees with, the Company that it is a "qualified institutional 12 17 buyer" within the meaning of Rule 144A under the 1933 Act (a "Qualified Institutional Buyer") and an "accredited investor" within the meaning of Rule 501(a) under the 1933 Act (an "Accredited Investor"). (d) Denominations; Registration. Certificates for the Securities shall be in such denominations ($1,000 or integral multiples thereof) and registered in such names as the Representative may request in writing at least one full business day before the Closing Time. SECTION 3. Covenants of the Company. The Company covenants with each Initial Purchaser as follows: (a) Offering Memorandum. The Company, as promptly as possible, will furnish to each Initial Purchaser, without charge, such number of copies of the Preliminary Offering Memorandum, the Final Offering Memorandum and any amendments and supplements thereto and documents incorporated by reference therein as such Initial Purchaser may reasonably request. (b) Notice and Effect of Material Events. The Company will immediately notify each Initial Purchaser, and confirm such notice in writing, of (x) any filing made by the Company of information relating to the offering of the Securities with any securities exchange or any other regulatory body in the United States or any other jurisdiction, and (y) prior to the completion of the placement of the Securities by the Initial Purchasers as evidenced by a notice in writing from the Initial Purchasers to the Company, any material changes in or affecting the earnings, business affairs or business prospects of the Company and its Subsidiaries which (i) make any statement in the Offering Memorandum false or misleading or (ii) are not disclosed in the Offering Memorandum. In such event or if during such time any event shall occur as a result of which it is necessary, in the reasonable opinion of the Company, its counsel, the Initial Purchasers or counsel for the Initial Purchasers, to amend or supplement the Final Offering Memorandum in order that the Final Offering Memorandum not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances then existing, the Company will forthwith amend or supplement the Final Offering Memorandum by preparing and furnishing to each Initial Purchaser an amendment or amendments of, or a supplement or supplements to, the Final Offering Memorandum (in form and substance satisfactory in the reasonable opinion of counsel for the Initial Purchasers) so that, as so amended or supplemented, the Final Offering Memorandum will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a Subsequent Purchaser, not misleading. (c) Amendment to Offering Memorandum and Supplements. The Company will advise each Initial Purchaser promptly of any proposal to amend or supplement the Offering Memorandum and will not effect such amendment or supplement without the consent of the Initial Purchasers, provided that the Initial Purchasers shall object by written notice to the Company within three business days after receipt of a copy of any such proposed amendment 13 18 or supplement. Neither the consent of the Initial Purchasers, nor the Initial Purchaser's delivery of any such amendment or supplement, shall constitute a waiver of any of the conditions set forth in Section 5 hereof. (d) Qualification of Securities for Offer and Sale. The Company will use its reasonable best efforts, in cooperation with the Initial Purchasers, to qualify the Securities for offering and sale under the applicable securities laws of such jurisdictions as the Representative may designate and will maintain such qualifications in effect as long as required for the sale of the Securities; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. (e) Rating of Securities. The Company shall take all reasonable action necessary to enable Standard & Poor's Ratings Group ("S&P"), a division of McGraw Hill, Inc. and Moody's Investors Service, Inc. ("Moody's") to provide their respective credit ratings of the Securities. (f) DTC and PORTAL. The Company will cooperate with the Representative and use its best efforts to (i) permit the Securities to be eligible for clearance and settlement through the facilities of DTC and (ii) include quotation of the Securities on the Private Offerings, Resales and Trading through Automatic Linkages (PORTAL) System of The National Association of Securities Dealers, Inc. (g) Use of Proceeds. The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Offering Memorandum under "Use of Proceeds." (h) Restriction on Sale of Securities. During a period of 180 days from the date of the Offering Memorandum, the Company will not, without the prior written consent of Merrill Lynch, directly or indirectly, issue, sell, offer or agree to sell, grant any option for the sale of, or otherwise dispose of, any other debt securities of the Company or securities of the Company that are convertible into, or exchangeable for, the Securities or such other debt securities, other than the Exchange Notes referred to in the Registration Rights Agreement. SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation, printing and any filing of the Offering Memorandum (including financial statements) and of each amendment or supplement thereto, (ii) the preparation, printing and delivery to the Initial Purchasers of this Agreement, any Agreement among Initial Purchasers, the Indenture and such other documents as may be required in connection with the offering, purchase, sale and delivery of the Securities, (iii) the preparation, issuance and delivery of the certificates for the Securities to the Initial Purchasers, 14 19 including any charges of DTC in connection therewith, (iv) the fees and disbursements of the Company's counsel, accountants and other advisors, (v) the qualification of the Securities under securities laws in accordance with the provisions of Section 3(d) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Initial Purchasers in connection therewith and in connection with the preparation of the Blue Sky Survey, any supplement thereto and any Legal Investment Survey, (vi) the reasonable fees and expenses of the Trustee, including the reasonable fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities, (vii) any fees payable in connection with the rating of the Securities, and (viii) any fees payable to the National Association of Securities Dealers, Inc. (the "NASD") in connection with the initial and continued designation of the Securities as PORTAL securities under the PORTAL Market Rules pursuant to NASD Rule 5322. (b) Termination of Agreement. If this Agreement is terminated by the Representative in accordance with the provisions of Section 5(j) or Section 10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of their documented out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Initial Purchasers. The Company shall not in any event be liable to the Initial Purchasers for the loss of anticipated profits from the transactions contemplated by this Agreement. SECTION 5. Conditions of Initial Purchasers' Obligations. The obligations of the several Initial Purchasers hereunder are subject to the accuracy of the representations and warranties of the Company contained in Section 1 hereof or in certificates of any officer of the Company delivered pursuant to the provisions hereof, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions: (a) Opinion of Counsel for Company. At the Closing Time, the Representative shall have received the favorable opinion, dated as of the Closing Time, of Morgan, Lewis & Bockius LLP, counsel for the Company, in form and substance satisfactory to Mayer, Brown & Platt to the effect set forth in Exhibit A hereto and to such further effect as Mayer, Brown & Platt may reasonably request. It is understood that the opinions set forth in paragraph (i) of Exhibit A (as to due incorporation), paragraph (iii) of Exhibit A, and paragraph (v) of Exhibit A may be delivered by Harlan Levine, Esq., on behalf of the Company rather than by Morgan, Lewis & Bockius LLP. (b) Opinion of Counsel for Initial Purchasers. At the Closing Time, the Initial Purchasers shall have received the favorable opinion, dated as of the Closing Time, of Mayer, Brown & Platt, counsel for the Initial Purchasers, with respect to the matters set forth in paragraphs (i), (ii), and (vi) through (x), inclusive, and the last paragraph, of Exhibit A hereto. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and certificates of public officials. (c) Officers' Certificate. At the Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Offering 15 20 Memorandum, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Representative shall have received a certificate of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company, dated as of the Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1(a) hereof are true and correct with the same force and effect as though expressly made at and as of the Closing Time, and (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time. (d) Accountant's Comfort Letter. At the time of the execution of this Agreement, the Representative shall have received from Deloitte & Touche L.L.P. a letter dated such date, in form and substance satisfactory to the Representative, together with signed or reproduced copies of such letter for each of the other Initial Purchaser, containing statements and information of the type ordinarily included in accountants' "comfort letters" to Initial Purchasers with respect to the financial statements and certain financial information contained in the Offering Memorandum. (e) Bring-down Comfort Letter. At the Closing Time, the Representative shall have received from Deloitte & Touche LLP a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (d) of this Section, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time. (f) Maintenance of Rating. At the Closing Time, the Securities shall be rated at least "B3" by Moody's Investor's Service Inc. and "B" by Standard & Poor's Corporation, and the Company shall have delivered to the Representative a letter dated the Closing Time, from each such rating agency, or other evidence satisfactory to the Representative, confirming that the Securities have such ratings; and since the date of this Agreement, there shall not have occurred a downgrading in the rating assigned to the Securities or any of the Company's other debt securities by any nationally recognized securities rating agency, and no such securities rating agency shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Securities or any of the Company's other debt securities. (g) PORTAL. At the Closing Time, (A) the Securities shall have been designated for trading on PORTAL and (B) Securities issued pursuant to Rule 144A in book entry form shall have been accepted for settlement through the facilities of DTC. (h) Refinancing. At the Closing Time, (i) the Company shall have consummated the Company Tender Offer (as defined in the Offering Memorandum), (ii) White Rose shall have consummated the White Rose Tender Offer (as defined in the Offering Memorandum), (iii) the Company shall have duly and validly entered into a supplemental indenture with respect to the 12% Notes (as defined in the Offering Memorandum), pursuant to which the consummation of 16 21 the transactions contemplated by this Agreement and the other transactions constituting the Refinancing shall be permissible, (iv) White Rose shall have duly and validly entered into a supplemental indenture with respect to the 12 3/4% Discount Notes (as defined in the Offering Memorandum), pursuant to which the consummation of the transactions contemplated by this Agreement and the other transactions constituting the Refinancing shall be permissible, and (v) the Company and White Rose shall have consummated all other transactions comprising the Refinancing which, as described in the Offering Memorandum under the caption "Refinancing," are intended to occur at or prior to the Closing Time. (i) Additional Documents. At the Closing Time, counsel for the Initial Purchasers shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Securities as herein contemplated shall be satisfactory in form and substance to the Representative and counsel for the Initial Purchasers. (j) Termination of Agreement. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representative by notice to the Company at any time at or prior to the Closing Time, and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 7 and 8 shall survive any such termination and remain in full force and effect. SECTION 6. Subsequent Offers and Resales of the Securities. (a) Offer and Sale Procedures. Each of the Initial Purchasers and the Company hereby establish and agree to observe the following procedures in connection with the offer and sale of the Securities: (i) Offers and Sales only to Institutional Accredited Investors or Qualified Institutional Buyers. Offers and sales of the Securities will be made only by the Initial Purchasers or Affiliates thereof qualified to do so in the jurisdictions in which such offers or sales are made. Each such offer or sale shall only be made (A) to persons whom the offeror or seller reasonably believes to be qualified institutional buyers (as defined in Rule 144A under the 1933 Act, (B) to a limited number of other institutional accredited investors (as such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D) that the offeror or seller reasonably believes to be and, with respect to sales and deliveries, that are Accredited Investors ("Institutional Accredited Investors"), or (C) to non-U.S. persons outside the United States to whom the offeror or seller reasonably believes offers and sales of the Securities may be made in reliance upon Regulation S under the 1933 Act. 17 22 (ii) No General Solicitation. The Securities will be offered by the Initial Purchasers only by approaching prospective Subsequent Purchasers on an individual basis. No general solicitation or general advertising (within the meaning of Rule 502(c) under the 1933 Act) will be used in the United States in connection with the offering of the Securities. (iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank Subsequent Purchaser of a Security acting as a fiduciary for one or more third parties, in connection with an offer and sale to such purchaser pursuant to clause (a) above, each third party shall, in the judgment of the applicable Initial Purchaser, be an Institutional Accredited Investor or a Qualified Institutional Buyer or a non-U.S. person outside the United States. (iv) Subsequent Purchaser Notification. Each Initial Purchaser will take reasonable steps to inform, and cause each of its U.S. Affiliates to take reasonable steps to inform, persons acquiring Securities from such Initial Purchaser or affiliate, as the case may be, in the United States that the Securities (A) have not been and will not be registered under the 1933 Act, (B) are being sold to them without registration under the 1933 Act in reliance on Rule 144A or in accordance with another exemption from registration under the 1933 Act, as the case may be, and (C) may not be offered, sold or otherwise transferred except (1) to the Company or any of its Subsidiaries, (2) outside the United States in accordance with Rule 904 of Regulation S, or (3) inside the United States in accordance with (x) Rule 144A to a person whom the seller reasonably believes is a Qualified Institutional Buyer that is purchasing such Securities for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the offer, sale or transfer is being made in reliance on Rule 144A or (y) the exemption from registration provided by Rule 144 under the 1933 Act, if available. (v) Minimum Principal Amount. No sale of the Securities to any one Subsequent Purchaser will be for less than U.S. $150,000 principal amount and no Security will be issued in a smaller principal amount. If the Subsequent Purchaser is a non-bank fiduciary acting on behalf of others, each person for whom it is acting must purchase at least U.S. $150,000 principal amount of the Securities. (vi) Restrictions on Transfer. The transfer restrictions and the other provisions set forth in Section 311 of the Indenture, including the legend required thereby, shall apply to the Securities except as otherwise agreed by the Company and the Initial Purchasers. Following the sale of the Securities by the Initial Purchasers to Subsequent Purchasers pursuant to the terms hereof, the Initial Purchasers shall not be liable or responsible to the Company for any losses, damages or liabilities suffered or incurred by the Company, including any losses, damages or liabilities under the 1933 Act, arising from or relating to any resale or transfer of any Security. 18 23 (vii) Delivery of Offering Memorandum. Each Initial Purchaser will deliver to each purchaser of the Securities from such Initial Purchaser, in connection with its original distribution of the Securities, a copy of the Offering Memorandum, as amended and supplemented at the date of such delivery. (b) Covenants of the Company. The Company covenants with each Initial Purchaser as follows: (i) Due Diligence. In connection with the original distribution of the Securities, the Company agrees that, prior to any offer or resale of the Securities by the Initial Purchasers, the Initial Purchasers and counsel for the Initial Purchasers shall have the right to make reasonable inquiries into the business of the Company and its Subsidiaries. The Company also agrees to provide answers to each prospective Subsequent Purchaser of Securities who so requests concerning the Company and its Subsidiaries (to the extent that such information is available or can be acquired and made available to prospective Subsequent Purchasers without unreasonable effort or expense and to the extent the provision thereof is not prohibited by applicable law) and the terms and conditions of the offering of the Securities, as provided in the Offering Memorandum. (ii) Integration. The Company agrees that it will not and will cause its Affiliates not to make any offer or sale of securities of the Company of any class if, as a result of the doctrine of "integration" referred to in Rule 502 under the 1933 Act, such offer or sale would render invalid (for the purpose of (i) the sale of the Securities by the Company to the Initial Purchasers, (ii) the resale of the Securities by the Initial Purchasers to Subsequent Purchasers or (iii) the resale of the Securities by such Subsequent Purchasers to others) the exemption from the registration requirements of the 1933 Act provided by Section 4(2) thereof or by Rule 144A or by Regulation S thereunder or otherwise. (iii) Rule 144A Information. The Company agrees that, in order to render the Securities eligible for resale pursuant to Rule 144A under the 1933 Act, while any of the Securities remain outstanding, it will make available, upon request, to any holder of Securities or prospective purchasers of Securities the information specified in Rule 144A(d)(4), unless the Company furnishes information to the Commission pursuant to Section 13 or 15(d) of the 1934 Act (such information, whether made available to holders or prospective purchasers or furnished to the Commission, is herein referred to as "Additional Information"). (iv) Restriction on Repurchases. Until the expiration of two years after the original issuance of the Securities, the Company will not, and will cause its Affiliates not to, purchase or agree to purchase or otherwise acquire any Securities which are "restricted securities" (as such term is defined under Rule 144(a)(3) under the 1933 Act), whether as beneficial owner or otherwise (except as agent acting as a securities broker 19 24 on behalf of and for the account of customers in the ordinary course of business in unsolicited broker's transactions) unless, immediately upon any such purchase, the Company or any Affiliate shall submit such Securities to the Trustee for cancellation. (c) Resale Pursuant to Rule 903 of Regulation S or Rule 144A. Each Initial Purchaser understands that the Securities have not been and will not be registered under the 1933 Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the 1933 Act or pursuant to an exemption from the registration requirements of the 1933 Act. Each Initial Purchaser represents and agrees that, in connection with sales of securities outside of the United States, except as permitted by Section 6(a) above, it has offered and sold Securities and will offer and sell Securities (i) as part of its distribution at any time and (ii) otherwise until forty days after the later of the date upon which the offering of the Securities commences and the Closing Time, only in accordance with Rule 903 of Regulation S or Rule 144A under the 1933 Act. Accordingly, neither the Initial Purchasers, their affiliates nor any persons acting on their behalf have engaged or will engage in any directed selling efforts with respect to Securities, and the Initial Purchasers, their affiliates and any person acting on their behalf have complied and will comply with the offering restriction requirements of Regulation S. Each Initial Purchaser agrees that, at or prior to confirmation of a sale of Securities outside of the United States (other than a sale of Securities pursuant to Rule 144A), it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it or through it during the restricted period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the United States Securities Act of 1933 (the "Securities Act") and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons (i) as part of their distribution at any time and (ii) otherwise until forty days after the later of the date upon which the offering of the Securities commenced and the date of closing, except in either case in accordance with Regulation S or Rule 144A under the Securities Act. Terms used above have the meaning given to them by Regulation S." Terms used in the above paragraph have the meanings given to them by Regulation S. Each Initial Purchaser severally represents and agrees that it has not entered and will not enter into any contractual arrangements with respect to the distribution of the Securities, except with its affiliates or with the prior written consent of the Company. SECTION 7. Indemnification. (a) Indemnification of Initial Purchasers. The Company agrees to indemnify and hold harmless each Initial Purchaser and each person, if any, who controls any Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: 20 25 (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Memorandum or the Final Offering Memorandum (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 7(d) below) any such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by Merrill Lynch), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Initial Purchaser through Merrill Lynch expressly for use in any Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or supplement thereto) shall not inure to the benefit of any Initial Purchaser (or to the benefit of any person controlling such Initial Purchaser) from whom the person asserting any such losses, liabilities, claims, damages or expenses purchased Securities if such untrue statement or omission or alleged untrue statement or omission made in any Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or supplement thereto) is identified in writing at such time to such Initial Purchaser and is eliminated or remedied in the Offering Memorandum as most recently amended or supplemented (copies of such amendments and supplements having been delivered to such Initial Purchaser in sufficient quantity at least three business days prior to the written confirmation of the sale of such Securities to such person) and it shall be established that a copy of the Offering Memorandum as most recently amended or supplemented had not been furnished to such person at or prior to the written confirmation of the sale of such Securities to such person. (b) Indemnification of Company, Directors and Officers. The Initial Purchasers severally agree to indemnify and hold harmless the Company, its directors, each of its officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and 21 26 expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Offering Memorandum in reliance upon and in conformity with written information furnished to the Company by the Initial Purchasers expressly for use in the Offering Memorandum. (c) Actions against Parties; Notification. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 7(a) above, counsel to the indemnified parties shall be selected by Merrill Lynch, and, in the case of parties indemnified pursuant to Section 7(b) above, counsel to the indemnified parties shall be selected by the Company. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 7 or Section 8 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 7(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. SECTION 8. Contribution. If the indemnification provided for in Section 7 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of 22 27 any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchasers on the other hand from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the Initial Purchasers on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Initial Purchasers on the other hand in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company and the total underwriting discount received by the Initial Purchasers, bear to the aggregate initial offering price to investors of the Securities as set forth on the cover page of the Offering Memorandum. The relative fault of the Company on the one hand and the Initial Purchasers on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 8. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 8, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 23 28 No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person, if any, who controls an Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Initial Purchaser, and each director of the Company, each officer of the Company and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The Initial Purchasers' respective obligations to contribute pursuant to this Section 8 are several in proportion to the principal amount of Securities set forth opposite their respective names in Schedule A hereto and not joint. SECTION 9. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Initial Purchaser or controlling person, or by or on behalf of the Company, and shall survive delivery of the Securities to the Initial Purchasers. SECTION 10. Termination of Agreement. (a) Termination; General. The Representative may terminate this Agreement, by notice to the Company, at any time at or prior to the Closing Time (i) if there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Offering Memorandum, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representative, impracticable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended or limited by the Commission or if trading generally on the American Stock Exchange or The New York Stock Exchange, Inc. or in the NASDAQ National Market System has been suspended or limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the National Association of Securities Dealers, Inc. or any other governmental authority, or (iv) if a banking moratorium has been declared by either United States Federal or New York authorities. (b) Liabilities. If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in 24 29 Section 4 hereof, and provided further that Sections 1, 7 and 8 shall survive such termination and remain in full force and effect. SECTION 11. Default by One of the Initial Purchasers. If one of the Initial Purchasers shall fail at the Closing Time to purchase the Securities which it is obligated to purchase under this Agreement (the "Defaulted Securities"), the Representative shall have the right, but not the obligation, within 24 hours thereafter, to make arrangements for the non-defaulting Initial Purchaser, or any other Initial Purchasers, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representative shall not have completed such arrangements within such 24-hour period, then this Agreement shall terminate without liability on the part of any non-defaulting Initial Purchaser. No action pursuant to this Section shall relieve any defaulting Initial Purchaser from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement, either the Representative or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Offering Memorandum or in any other documents or arrangement. As used herein, the term Initial Purchaser includes any person substituted for an Initial Purchaser under this Section 11. SECTION 12. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Initial Purchasers shall be directed to the Representative at North Tower, World Financial Center, New York, New York 10281-1201, attention of Lex Maultsby; notices to the Company shall be directed to it at 380 Middlesex Avenue, Carteret, N.J. 07008, attention of Chief Financial Officer with a copy to Morgan, Lewis & Bockius, L.L.P., 200 One Logan Square, Philadelphia, PA 19603, Attention: N. Jeffrey Klauder. SECTION 13. Parties. This Agreement shall each inure to the benefit of and be binding upon the Initial Purchasers and the Company and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Initial Purchasers and the Company and their respective successors and the controlling persons and officers and directors referred to in Sections 7 and 8 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Initial Purchasers and the Company and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Initial Purchaser shall be deemed to be a successor by reason merely of such purchase. 25 30 SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. SECTION 15. Effect of Headings. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 16. Counterparts. This Agreement may be executed in one or more counterparts and when a counterpart has been executed by each party, all such counterparts taken together shall constitute one and the same agreement. 26 31 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Initial Purchasers and the Company in accordance with its terms. Very truly yours, DI GIORGIO CORPORATION By: /s/ Richard Neff -------------------------------- Title: Executive Vice President and Chief Financial Officer CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BT SECURITIES CORPORATION By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ Pascal Maeter -------------------------------------------- Authorized Signatory For itself and as Representative of the Initial Purchasers named in Schedule A hereto. 27 32 SCHEDULE A Principal Amount of Name of Initial Purchaser Securities ------------------------- ---------- Merrill Lynch, Pierce, Fenner & Smith Incorporated................................ $124,000,000 BT Securities Corporation............................... 31,000,000 ------------ Total................................................... $155,000,000 ============ Sch A - 1 33 SCHEDULE B DI GIORGIO CORPORATION $155,000,000 Senior Notes due 2007 1. The initial public offering price of the Securities shall be 100% of the principal amount thereof, plus accrued interest, if any, from the date of issuance. 2. The purchase price to be paid by the Initial Purchasers for the Securities shall be 97% of the principal amount thereof. 3. The interest rate on the Securities shall be 10% per annum. 4. The Company may redeem up to 35% of the originally issued Notes, at a price of 110% of the principal amount thereof. 5. The Securities shall mature on June 15, 2007. Sch B - 1 34 Exhibit A FORM OF OPINION OF COMPANY'S COUNSEL TO BE DELIVERED PURSUANT TO SECTION 5(b) (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware. (ii) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum, to enter into and perform its obligations under the Purchase Agreement, and to enter into and perform its obligations constituting the Refinancing. (iii) The Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. (iv) The authorized, issued and outstanding capital stock of the Company is as set forth in the Offering Memorandum in the column entitled "Actual" under the caption "Capitalization" (except for subsequent issuances, if any, pursuant to the Purchase Agreement or pursuant to reservations, agreements, employee benefit plans or the exercise of convertible securities or options referred to in the Offering Memorandum); the shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable; and none of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any securityholder of the Company. (v) Each Subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect; all of the issued and outstanding capital stock of each Subsidiary of the Company has been duly authorized and validly issued, is fully paid and non-assessable and, to the best of our knowledge and information, is owned by the Company, directly or through Subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. A-1 35 (vi) The Purchase Agreement has been duly authorized, executed and delivered by the Company and (assuming the due authorization, execution and delivery thereof by the Initial Purchasers) constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). . (vii) The Registration Rights Agreement has been duly authorized, executed and delivered by the Company and (assuming the due authorization, execution and delivery thereof by the Initial Purchasers) constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). (viii) The Indenture has been duly authorized, executed and delivered by the Company and (assuming the due authorization, execution and delivery thereof by the Trustee) constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). (ix) The Securities are in the form contemplated by the Indenture, have been duly authorized by the Company and, when executed by the Company and authenticated by the Trustee in the manner provided in the Indenture (assuming the due authorization, execution and delivery of the Indenture by the Trustee) and delivered against payment of the purchase price therefor will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium (including, without limitation, all laws relating to fraudulent transfers), or other similar laws relating to or affecting enforcement of creditor's rights generally, or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and will be entitled to the benefits of the Indenture. (x) The Securities and the Indenture conform in all material respects to the descriptions thereof contained in the Offering Memorandum. (xi) The documents incorporated by reference in the Offering Memorandum (other than the financial statements and supporting schedules therein, as to which no opinion need be A-2 36 rendered), when they were filed with the Commission, complied as to form in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder. (xii) There is not pending or, to the best of our knowledge, threatened any action, suit, proceeding, inquiry or investigation, to which the Company or any subsidiary is a party, or to which the property of the Company or any subsidiary thereof is subject, before or brought by any court or governmental agency or body, which might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the properties or assets thereof or the consummation of the transactions contemplated in the Purchase Agreement or the performance by the Company of its obligations thereunder or the transactions contemplated by the Offering Memorandum including those making up the Refinancing; (xiii) The information in the Offering Memorandum under "Description of the Notes," "Certain Federal Income Tax Considerations," "Description of the Bank Credit Facility," and "Exchange Offer; Registration Rights," to the extent that it constitutes matters of law, summaries of legal matters or legal conclusions, has been reviewed by them and is correct in all material respects. (xiv) All descriptions in the Offering Memorandum of contracts and other documents to which the Company or any of its Subsidiaries are a party are accurate in all material respects; to the best of our knowledge, there are no franchises, contracts, indentures, mortgages, loan agreements, notes, leases or other instruments that would be required to be described in the Offering Memorandum that are not described or referred to in the Offering Memorandum other than those described or referred to therein or incorporated by reference thereto, and the descriptions thereof or references thereto are correct in all material respects. (xv) To the best of our knowledge, neither the Company nor any of its Subsidiaries is in violation of its charter or bylaws and no default by the Company or any of its Subsidiaries exists in the due performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument that is described or referred to in the Offering Memorandum or filed or incorporated by reference in the Offering Memorandum. (xvi) No authorization, approval, consent or order of any court or governmental authority or agency other than such as may be required under the applicable securities laws of the various jurisdictions in which the Securities will be offered or sold, as to which we need express no opinion) is required in connection with the due authorization, execution and delivery of the Purchase Agreement or the due execution, delivery or performance of the Indenture by the Company or for the offering, issuance, sale or delivery of the Securities to the Initial Purchasers or the resale by the Initial Purchasers in accordance with the Purchase Agreement. A-3 37 (xvii) Assuming the accuracy of the representations and warranties of the Initial Purchasers set forth in this Agreement, it is not necessary in connection with the offer, sale and delivery of the Notes to the Initial Purchasers and to each Subsequent Purchaser in the manner contemplated by the Purchase Agreement and the Offering Memorandum to register the Notes under the 1933 Act or to qualify the Indenture under the Trust Indenture Act. (xviii) The execution, delivery and performance of the Purchase Agreement, the DTC Agreement, the Indenture and the Securities and the consummation of the transactions contemplated in the Purchase Agreement and in the Offering Memorandum (including the use of the proceeds from the sale of the Securities as described in the Offering Memorandum under the caption "Use of Proceeds" and the other components of the Refinancing) and compliance by the Company with its obligations under the Purchase Agreement, the Indenture and the Securities will not, whether with or without the giving of notice or lapse of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined in Section l(a)(iii) of the Purchase Agreement) under or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any subsidiary thereof pursuant to any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any other agreement or instrument, known to us, to which the Company or any of its Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any subsidiary thereof is subject (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not have a Material Adverse Effect), nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any of its Subsidiaries, or any applicable law, statute, rule, regulation, judgment, order, writ or decree, known to us, of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties, assets or operations. (xix) The Company is not an "investment company" or an entity "controlled" by an investment company," as such terms are defined in the 1940 Act. Nothing has come to our attention that would lead us to believe that the Offering Memorandum (except for financial statements and schedules and other financial data included or incorporated by reference therein as to which we make no statements) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Offering Memorandum or any amendment or supplement thereto (except for financial statements and schedules and other financial or statistical data included or incorporated by reference therein, as to which such counsel need make no statement), at the time the Offering Memorandum was issued, at the time any such amended or supplemented Offering Memorandum was issued or at the Closing Time, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. A-4 EX-4.1 3 INDENTURE 1 EXHIBIT 4.1 Execution Copy DI GIORGIO CORPORATION and THE BANK OF NEW YORK, AS TRUSTEE --------- INDENTURE Dated as of June 20, 1997 $155,000,000 10% Senior Notes due 2007 2 Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of June 20, 1997
Trust Indenture Indenture Act Section Section - --------------- --------- Sections 310 (a)(1) ......................................... 6.9 (a)(2) ......................................... 6.9 (a)(5) ......................................... 6.9 (b) ............................................ 6.7, 6.10 Sections 311 (a) ............................................ 6.13 (b) ............................................ 6.13 Sections 312 (a) ............................................ 7.1 (b) ............................................ 7.2 (c) ............................................ 7.2 Sections 313 (a) ............................................ 7.3 (b) ............................................ 7.3 (c) ............................................ 7.3 (d) ............................................ 7.3 Sections 314 (a)(1) ......................................... 7.4 (a)(2) ......................................... 7.4 (a)(3) ......................................... 7.4 (a)(4) ......................................... 10.20 (c)(1) ......................................... 1.3 (c)(2) ......................................... 1.3 (e) ............................................ 1.3 Sections 315 (a) ............................................ 6.1 (b) ............................................ 6.2 (c) ............................................ 6.1 (d) ............................................ 6.1, 6.3 (e) ............................................ 5.14 Sections 316 (a)(last sentence) ............................. 1.1 ("Outstanding") (a)(1)(A) ...................................... 5.12 (a)(2)(B) ...................................... 5.13 (b) ............................................ 5.8 (c) ............................................ 1.5 Sections 317 (a)(1) ......................................... 5.3 (a)(2) ......................................... 5.4 (b) ............................................ 10.3 Sections 318 (a) ............................................ 1.8
- -------------------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of this Indenture. 3 TABLE OF CONTENTS PAGE Parties................................................................... 1 Recitals.................................................................. 1 ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 1.1. Definitions........................................................ 1 1.2. Other Definitions.................................................. 23 1.3. Compliance Certificates and Opinions............................... 24 1.4. Form of Documents Delivered to Trustee............................. 24 1.5. Acts of Holders.................................................... 25 1.6. Notices, etc., to Trustee and the Company.......................... 26 1.7. Notice to Holders; Waiver.......................................... 26 1.8. Conflict with Trust Indenture Act.................................. 27 1.9. Effect of Headings and Table of Contents........................... 27 1.10. Successors and Assigns............................................. 27 1.11. Separability Clause................................................ 27 1.12. Benefits of Indenture.............................................. 28 1.13. GOVERNING LAW...................................................... 28 1.14. Legal Holidays..................................................... 28 1.15. Schedules.......................................................... 28 1.16. Counterparts....................................................... 28 ARTICLE II SECURITY FORMS 2.1. Forms Generally.................................................... 28 2.2. Form of Face of Security........................................... 30 2.3. Form of Reverse of Securities...................................... 41 ARTICLE III THE SECURITIES 3.1. Title and Terms.................................................... 48 3.2. Denominations...................................................... 49 3.3. Execution, Authentication, Delivery and Dating..................... 49 3.4. Temporary Securities............................................... 51 3.5. Registration, Registration of Transfer and Exchange................ 51 3.6. Book-Entry Provisions for Global Securities........................ 53 -i- 4 3.7. Special Transfer Provisions................................................. 55 3.8. Mutilated, Destroyed, Lost and Stolen Securities............................ 58 3.9. Payment of Interest; Interest Rights Preserved.............................. 59 3.10. CUSIP Numbers............................................................... 60 3.11. Persons Deemed Owners....................................................... 61 3.12. Cancellation................................................................ 61 3.13. Computation of Interest..................................................... 61 ARTICLE IV DEFEASANCE AND COVENANT DEFEASANCE 4.1. Company's Option to Effect Defeasance or Covenant Defeasance................ 61 4.2. Defeasance and Discharge.................................................... 62 4.3. Covenant Defeasance......................................................... 62 4.4. Conditions to Defeasance or Covenant Defeasance............................. 63 4.5. Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions........................................... 65 4.6. Reinstatement............................................................... 65 ARTICLE V REMEDIES 5.1. Events of Default........................................................... 66 5.2. Acceleration of Maturity; Rescission and Annulment.......................... 68 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee............. 69 5.4. Trustee May File Proofs of Claim............................................ 70 5.5. Trustee May Enforce Claims without Possession of Securities................. 70 5.6. Application of Money Collected.............................................. 71 5.7. Limitation on Suits......................................................... 71 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest... 72 5.9. Restoration of Rights and Remedies.......................................... 72 5.10. Rights and Remedies Cumulative.............................................. 72 5.11. Delay or Omission Not Waiver................................................ 72 5.12. Control by Holders.......................................................... 73 5.13. Waiver of Past Defaults..................................................... 73 5.14. Undertaking for Costs....................................................... 73 5.15. Waiver of Stay, Extension or Usury Laws..................................... 74 5.16. Remedies Subject to Applicable Law.......................................... 74
-ii- 5 ARTICLE VI THE TRUSTEE 6.1. Duties of Trustee.............................................................. 74 6.2. Notice of Defaults............................................................. 76 6.3. Certain Rights of Trustee...................................................... 76 6.4. Trustee Not Responsible for Recitals, Dispositions of Securities or Application of Proceeds Thereof......................................................... 77 6.5. Trustee and Agents May Hold Securities; Collections; etc....................... 78 6.6. Money Held in Trust............................................................ 78 6.7. Compensation and Indemnification of Trustee and Its Prior Claim................ 78 6.8. Conflicting Interests.......................................................... 79 6.9. Trustee Eligibility............................................................ 79 6.10. Resignation and Removal; Appointment of Successor Trustee...................... 79 6.11. Acceptance of Appointment by Successor......................................... 81 6.12. Merger, Conversion, Consolidation or Succession to Business.................... 81 6.13. Preferential Collection of Claims Against Company.............................. 82 ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY 7.1. Company to Furnish Trustee Names and Addresses of Holders...................... 82 7.2. Disclosure of Names and Addresses of Holders................................... 83 7.3. Reports by Trustee............................................................. 83 7.4. Reports by Company............................................................. 83 ARTICLE VIII CONSOLIDATION, MERGER, SALE OF ASSETS 8.1. Company May Merge, Consolidate, etc., Only on Certain Terms.................... 84 8.2. Successor Substituted.......................................................... 85 ARTICLE IX SUPPLEMENTAL INDENTURES 9.1. Supplemental Indentures and Agreements without Consent of Holders.............. 86 9.2. Supplemental Indentures and Agreements with Consent of Holders................. 86 9.3. Execution of Supplemental Indentures and Agreements............................ 88 9.4. Effect of Supplemental Indentures.............................................. 88 9.5. Conformity with Trust Indenture Act............................................ 88 9.6. Reference in Securities to Supplemental Indentures............................. 88 9.7. Notice of Supplemental Indentures.............................................. 89
-iii- 6 ARTICLE X COVENANTS 10.1. Payment of Principal, Premium and Interest....................................... 89 10.2. Maintenance of Office or Agency.................................................. 89 10.3. Money for Security Payments to Be Held in Trust.................................. 90 10.4. Corporate Existence.............................................................. 91 10.5. Payment of Taxes and Other Claims................................................ 91 10.6. Maintenance of Properties........................................................ 92 10.7. Insurance........................................................................ 92 10.8. Limitation on Indebtedness....................................................... 92 10.9. Limitation on Restricted Payments................................................ 93 10.10. Limitation on Transactions with Affiliates....................................... 96 10.11. Limitation on Liens.............................................................. 97 10.12. Limitation on Sale of Assets..................................................... 99 10.13. Purchase of Securities upon a Change of Control.................................. 100 10.14. Limitation on Capital Stock of Subsidiaries...................................... 104 10.15. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries.... 104 10.16. Limitations on Unrestricted Subsidiaries......................................... 105 10.17. Provision of Financial Statements................................................ 105 10.18. Statement by Officers as to Default.............................................. 105 10.19. Waiver of Certain Covenants...................................................... 106 ARTICLE XI REDEMPTION OF SECURITIES 11.1. Rights of Redemption............................................................. 106 11.2. Applicability of Article......................................................... 107 11.3. Election to Redeem; Notice to Trustee............................................ 107 11.4. Selection by Trustee of Securities to Be Redeemed................................ 107 11.5. Notice of Redemption............................................................. 107 11.6. Deposit of Redemption Price...................................................... 109 11.7. Securities Payable on Redemption Date............................................ 109 11.8. Securities Redeemed or Purchased in Part......................................... 109 ARTICLE XII SATISFACTION AND DISCHARGE 12.1. Satisfaction and Discharge of Indenture.......................................... 110 12.2. Application of Trust Money....................................................... 111
-iv- 7 INDENTURE, dated as of June 20, 1997, between DI GIORGIO CORPORATION, a Delaware corporation (as more fully defined below, the "Company"), and THE BANK OF NEW YORK, a national banking association, as trustee (the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of 10% Senior Notes due 2007, Series A (the "Series A Securities" or the "Initial Securities"), and an issue of 10% Senior Notes due 2007, Series B (the "Series B Securities" or the "Exchange Securities" and, together with the Series A Securities, the "Securities"), of substantially the tenor and amount hereinafter set forth, and to provide therefor, the Company has duly authorized the execution and delivery of this Indenture and the Securities; Upon the effectiveness of the Exchange Offer Registration Statement or the Shelf Registration Statement (as defined herein), this Indenture will be subject to, and shall be governed by, the provisions of the Trust Indenture Act that are required to be part of and to govern indentures qualified under the Trust Indenture Act; and All acts and things necessary have been done to make (i) the Securities, when duly issued and executed by the Company and authenticated and delivered hereunder, the valid obligations of the Company and (ii) this Indenture a valid agreement of the Company in accordance with the terms of this Indenture. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.1. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (b) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; 8 (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (d) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (e) all references to $, US$, dollars or United States dollars shall refer to the lawful currency of the United States of America; and (f) all references herein to particular Sections or Articles refer to this Indenture unless otherwise so indicated. The following terms shall have the meanings set forth in this Section. "Acquired Indebtedness" means Indebtedness of a Person (i) existing at the time such Person becomes a Subsidiary or merges with or into the Company or any Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case, other than Indebtedness incurred in connection with, or in contemplation of, such Person becoming a Subsidiary or such acquisition, as the case may be. Acquired Indebtedness shall be deemed to be incurred on the date of the related acquisition of assets from any Person or the date the acquired Person becomes a Subsidiary, as the case may be. "Adjusted Consolidated Interest Expense" of any Person means, without duplication, for any period, as applied to any Person, the sum of (a) the interest expense of such Person and its Consolidated Subsidiaries (exclusive of deferred financing fees and any premiums or penalties paid in connection with redeeming or retiring any Indebtedness prior to its stated maturity) for such period, on a Consolidated basis, including without limitation, (i) amortization of debt discount, (ii) the net cost under interest rate contracts (including amortization of discounts), (iii) the interest portion of any deferred payment obligation and (iv) accrued interest, plus (b) (i) the interest component of the Capital Lease Obligations paid, accrued and/or scheduled to be paid, or accrued by such Person during such period, and (ii) all capitalized interest of such Person and its Consolidated Subsidiaries, in each case as determined in accordance with GAAP consistently applied. "Affiliate" means, with respect to any specified Person: (i) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; (ii) any other Person that owns, directly or indirectly, 5% or more of such specified Person's Capital Stock or any executive officer or director of any such specified Person or other Person or, with respect to any natural Person, any person having a relationship with such Person by blood, marriage or adoption not more remote than first cousin; or (iii) any other Person 5% or more of the Voting Stock of which is beneficially owned or held directly or indirectly by such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of -2- 9 such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Asset Sale" means any sale, issuance, conveyance, transfer, lease or other disposition (including, without limitation, by way of merger, consolidation or Sale and Leaseback Transaction) (collectively, a "transfer"), directly or indirectly, in one or a series of related transactions, of (a) any Capital Stock of any Subsidiary; (b) all or substantially all of the properties and assets of any division or line of business of the Company or its Subsidiaries; or (c) any other properties or assets of the Company or any Subsidiary, other than in the ordinary course of business. For the purposes of this definition, the term "Asset Sale" shall not include any transfer of properties and assets (A) that is governed by Article VIII, (B) that is by any Subsidiary to the Company or any Wholly-Owned Subsidiary in accordance with the terms of the Indenture, (C) that is of obsolete equipment or other obsolete assets in the ordinary course of business, (D) that is of the Farmingdale Facility, the Farmingdale Lease or the Farmingdale Option or all of the outstanding Capital Stock of the Farmingdale Subsidiary or owned by the Company or any Subsidiary, (E) that constitutes the making of a Permitted Investment (other than pursuant to clause (v) of the definition of "Permitted Investment"), or (F) the Fair Market Value of which in the aggregate does not exceed $500,000 in any transaction or series of related transactions. "Average Life to Stated Maturity" means, as of the date of determination with respect to any Indebtedness, the quotient obtained by dividing (i) the sum of the products of (a) the number of years from the date of determination to the date or dates of each successive scheduled principal payment of such Indebtedness multiplied by (b) the amount of each such principal payment; by (ii) the sum of all such principal payments. "Bank Credit Facility" means the amended and restated Credit Agreement, dated as of February 10, 1993, among the Company, various financial institutions, BT Commercial Corporation, as agent and Bankers Trust Company, as Issuing Bank, as such agreement, in whole or in part, may be amended, renewed, extended, substituted, refinanced, restructured, replaced, supplemented or otherwise modified from time to time (including, without limitation, any successive renewals, extensions, substitutions, refinancings, restructurings, replacements, supplementations or other modifications of the foregoing). "Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as amended, or any similar United States Federal or State law relating to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law. "Banks" means the lenders under the Bank Credit Facility. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of such board. -3- 10 "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Book-Entry Security" means any Security bearing the legend specified in Section 2.2 evidencing all or part of a series of Securities, authenticated and delivered to the Depositary for such series or its nominee, and registered in the name of such depositary or nominee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the City of New York or the city in which the principal office of the Trustee is located are authorized or obligated by law or executive order to close. "Capital Lease Obligation" of any Person means any obligation of such Person and its Subsidiaries on a Consolidated basis under any capital lease of real or personal property which, in accordance with GAAP, has been recorded as a capitalized lease obligation. "Capital Stock" of any Person means any and all shares, interests, participations or other equivalents (however designated) of such Person's capital stock or other equity interests whether now outstanding or issued after the date of the Indenture. "Cash Equivalents" means (A) any security, maturing not more than one year after the date of acquisition, issued by the United States of America, or an instrumentality or agency thereof and guaranteed fully as to principal, premium, if any, and interest by the United States of America, (B) any certificate of deposit, time deposit, money market account or bankers' acceptance, maturing not more than six months after the date of acquisition, issued by any commercial banking institution that is a member of the Federal Reserve System and that has combined capital and surplus and undivided profits of not less than $500,000,000 or (C) commercial paper, maturing not more than six months after the date of acquisition, issued by any corporation (other than an Affiliate or Subsidiary of the Company) with a rating, at the time as of which any investment therein is made, of "P-1" (or higher) according to Moody's, or "A-1" (or higher) according to S&P, or carrying an equivalent rating by a nationally-recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper generally. "Change of Control" means the occurrence of any of the following events: (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have "beneficial ownership" of all shares that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than a majority of the total outstanding Voting Stock of the Company (provided, however that, for so long as the Permitted Holders retain the right to elect at least 50% of the entire Board of Directors of the Company, the shares beneficially held by a group shall not include any shares -4- 11 beneficially owned by a Permitted Holder who is a member of such group); (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election to such Board or whose nomination for election by the stockholders of the Company was approved by the Permitted Holders or by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of such Board of Directors then in office; (iii) the Company consolidates with, or merges with or into, any Person or conveys, transfers or leases all or substantially all of its assets to any Person, or any corporation consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is changed into or exchanged for cash, securities or other property, other than any such transaction where the outstanding Voting Stock of the Company is not changed or exchanged at all (except to the extent necessary to reflect a change in the jurisdiction of incorporation of the Company) or where (A) the outstanding Voting Stock of the Company is changed into or exchanged for (1) Voting Stock of the surviving corporation which is not Redeemable Capital Stock or (2) cash, securities and other property (other than Capital Stock of the surviving corporation) in an amount which could be paid by the Company as a Restricted Payment as described under Section 10.9 (and such amount shall be treated as a Restricted Payment as described under Section 10.9) and (B) no "person" or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, owns immediately after such transaction, directly or indirectly, more than a majority of the total outstanding Voting Stock of the surviving corporation; or (iv) the Company is liquidated or dissolved or adopts a plan of liquidation or dissolution other than in a transaction which complies with the provisions described under Article VIII. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" means the common stock, par value $.01 per share, of the Company. "Company" means Di Giorgio Corporation, a corporation incorporated under the laws of Delaware, until a successor Person shall have become such pursuant to the applicable provisions of the Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by any one if its Chairman of the Board, its Vice Chairman, its President or a Vice President (regardless of Vice Presidential designation), and by any one of its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Consolidated Fixed Charge Coverage Ratio" of any Person means, for any period, the ratio of EBITDA to the sum of Adjusted Consolidated Interest Expense for such period and cash dividends paid on any Preferred Stock of such Person during such period; provided that (i) in -5- 12 making such computation, the Adjusted Consolidated Interest Expense attributable to interest on any Indebtedness shall be computed on a pro forma basis and (A) where such Indebtedness was outstanding during the period and bore a floating interest rate, interest shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period and (B) where such Indebtedness was not outstanding during the period for which the computation is being made but which bears, at the option of the Company, a fixed or floating rate of interest, shall be computed by applying at the option of the Company, either the fixed or floating rate and (ii) in making such computation, the Adjusted Consolidated Interest Expense of such Person attributable to interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. "Consolidated Income Tax Expense"of any Person means, for any period, the provision for federal, state, local and foreign income taxes of such Person and its Consolidated Subsidiaries for such period as determined in accordance with GAAP. "Consolidated Net Income (Loss)" of any Person means, for any period, the Consolidated net income (or loss) of such Person and its subsidiaries for such period on a Consolidated basis as determined in accordance with GAAP, adjusted, to the extent included in calculating such net income (or loss), by excluding, without duplication, (i) all extraordinary gains or losses (exclusive of all fees and expenses relating thereto), (ii) the portion of net income (or loss) of such Person and its subsidiaries on a Consolidated basis allocable to minority interests in unconsolidated Persons to the extent that cash dividends or distributions have not actually been received by such Person or one of its subsidiaries, (iii) net income (or loss) of any Person combined with such Person or any of its subsidiaries on a "pooling of interests" basis attributable to any period prior to the date of combination, (iv) any gain or loss, net of taxes, realized upon the termination of any employee pension benefit plan, (v) net gains (or losses) (except for all fees and expenses relating thereto) in respect of dispositions of assets other than in the ordinary course of business, (vi) the net income of any Subsidiary to the extent that the declaration of dividends or similar distributions by that Subsidiary of that income is not at the time permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, (vii) any gain arising from the acquisition of any securities, or the extinguishment, under GAAP, of any Indebtedness of such Person or (viii) transaction costs charged in connection with the Refinancing. "Consolidated Non-Cash Charges" of any Person means, for any period, the aggregate depreciation, amortization and other non-cash charges of such Person and its subsidiaries on a Consolidated basis for such period, as determined in accordance with GAAP (excluding any non-cash charge which requires an accrual or reserve for cash charges for any future period). "Consolidation" means, with respect to any Person, the consolidation of the accounts of such Person and each of its subsidiaries if and to the extent the accounts of such Person and each -6- 13 of its subsidiaries would normally be consolidated with those of such Person, all in accordance with GAAP. The term "Consolidated" shall have a similar meaning. "Corporate Trust Office" means the office of the Trustee or an affiliate or agent thereof at which at any particular time the corporate trust business for the purposes of this Indenture shall be principally administered, which office at the date of execution of this Indenture is located at 101 Barclay Street, Floor 21 West, New York, New York 10286. "Customer Loan" means any advance, loan guarantee or other extension of credit (other than any advance, loan or other extension of credit to a customer in the ordinary course of business that is recorded as an account receivable on the consolidated balance sheet of the Company and its Subsidiaries) (a "loan") provided to a customer of the Company or any Subsidiary in the ordinary course of business of the Company and its Subsidiaries and having a maturity not in excess of five years from the incurrence thereof, provided that any such loan made after the date of this Indenture is evidenced by a note made payable to the Company or its Subsidiaries and is approved by a credit committee or authorized officer of the Company. "Default" means any event which is, or after notice or passage of any time or both would be, an Event of Default. "Depositary" means, with respect to the Securities issued in the form of one or more Book-Entry Securities, The Depository Trust Company ("DTC"), its nominees and successors, or another Person designated as Depositary by the Company, which must be a clearing agency registered under the Exchange Act. "Disinterested Director" means, with respect to any transaction or series of related transactions, a member of the Board of Directors who does not have any material direct or indirect financial interest in or with respect to such transaction or series of related transactions. "EBITDA" means the sum of Consolidated Net Income, Adjusted Consolidated Interest Expense, Consolidated Income Tax Expense and Consolidated Non-Cash Charges deducted in computing Consolidated Net Income, in each case, for such period, of the Company and its Subsidiaries on a Consolidated basis, all determined in accordance with GAAP consistently applied. "Event of Default" has the meaning specified in Article V. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute. "Exchange Offer" means the exchange offer by the Company of Series B Securities for Series A Securities to be effected pursuant to Section 2.1 of the Registration Rights Agreement. -7- 14 "Exchange Offer Registration Statement" means the registration statement under the Securities Act contemplated by Section 2.1 of the Registration Rights Agreement. "Fair Market Value" means, with respect to any asset or property, the sale value that would be obtained in an arm's-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy. Fair Market Value shall be determined by the Board of Directors acting in good faith and shall be evidenced by a resolution of the Board of Directors. "Farmingdale Facility" means the premises located at 150 Price Parkway, Farmingdale, New York that are leased pursuant to the Farmingdale Lease. "Farmingdale Lease" means the lease, dated as of August 1, 1992, between MF Corp., a Wholly Owned Subsidiary of the Company and Gede Realty, Inc., as successor to Marley Properties, Inc., providing for the lease by the Farmingdale Subsidiary of the Farmingdale Facility, as the same may at any time be amended, amended and restated, supplemented or otherwise modified. "Farmingdale Option" means the option to purchase the Farmingdale Facility granted pursuant to the Farmingdale Option Agreement. "Farmingdale Option Agreement" means the option agreement dated March 26, 1993 providing for the grant to the Company of an option to purchase the Farmingdale Facility, as the same may at any time be amended, amended and restated, supplemented or otherwise modified. "Farmingdale Proceeds" means the net cash proceeds received by the Company upon the closing of the sale of the Farmingdale Facility or the Farmingdale Option to a third party that is not an Affiliate of the Company. "Generally Accepted Accounting Principles" or "GAAP" means generally accepted accounting principles in the United States, consistently applied, which are in effect on the date of this Indenture. "Global Securities" means a security evidencing all or a part of the Securities to be issued as Book-Entry Securities issued to the Depositary in accordance with this Indenture. "Guaranteed Debt" of any Person means, without duplication, all Indebtedness of any other Person referred to in the definition of "Indebtedness" contained in this Section guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to supply funds to, or in any other manner invest in, the debtor (including any -8- 15 agreement to pay for property or services without requiring that such property be received or such services be rendered), (iv) to maintain working capital or equity capital of the debtor, or otherwise to maintain the net worth, solvency or other financial condition of the debtor or (v) otherwise to assure a creditor against loss; provided that the term "guarantee" shall not include endorsements for collection or deposit, in either case in the ordinary course of business. "Holder" means a Person in whose name a Security is registered in the Security Register. "Indebtedness" means, with respect to any Person, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, excluding any trade payables and other accrued current liabilities arising in the ordinary course of business, but including, without limitation, all obligations, contingent or otherwise, of such Person in connection with any letters of credit issued under letter of credit facilities, acceptance facilities or other similar facilities and in connection with any agreement to purchase, redeem, exchange, convert or otherwise acquire for value any Capital Stock of such Person, or any warrants, rights or options to acquire such Capital Stock, now or hereafter outstanding, (ii) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments, (iii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), but excluding trade payables arising in the ordinary course of business, (iv) all obligations under Interest Rate Agreements of such Person, (v) all Capital Lease Obligations of such Person, (vi) all Indebtedness referred to in clauses (i) through (v) above of other Persons and all dividends of other Persons, the payment of which is secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien, upon or with respect to property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, (vii) all Guaranteed Debt of such Person, (viii) all Redeemable Capital Stock issued by such Person valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid dividends, and (ix) any amendment, supplement, modification, deferral, renewal, extension, refunding or refinancing of any liability which constitutes Indebtedness of the types referred to in clauses (i) through (viii) above. For purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the Fair Market Value of such Redeemable Capital Stock, such Fair Market Value to be determined in good faith by the board of directors of the issuer of such Redeemable Capital Stock. "Indenture" means this instrument as originally executed (including all exhibits and schedules thereto) and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. -9- 16 "Indenture Obligations" means the obligations of the Company and any other obligor on the Indenture or under the Securities to pay principal of, premium, if any, and interest when due and payable, and all other amounts due or to become due under or in connection with the Indenture, the Securities and the performance of all other obligations to the Trustee and the holders under the Indenture and the Securities, according to the terms thereof. "Independent Financial Advisor" means a nationally recognized investment banking firm (i) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company and (ii) which, in the judgment of the Board of Directors, is otherwise independent and qualified to perform the task for which it is to be engaged. "Initial Purchasers" means Merrill Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation. "Initial Securities" has the meaning stated in the first recital of this Indenture. "Interest Payment Date" means the Stated Maturity of a regular installment of interest on the Securities. "Interest Rate Agreements" means one or more of the following agreements which shall be entered into by one or more financial institutions: interest rate protection agreements (including, without limitation, interest rate swaps, caps, floors, collars and similar agreements) and/or other types of interest rate hedging agreements from time to time. "Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's or the equivalent of such ratings by S&P or Moody's or in the event Moody's or S&P shall cease rating the Securities and the Company shall select any rating agency, the equivalent of such ratings by another rating agency. "Investment" means, with respect to any Person, directly or indirectly, any advance, loan (including guarantees), or other extension of credit or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase, acquisition or ownership (other than ownership obtained without making, or becoming liable, directly or indirectly, contingent or otherwise, for the making of, any advance, loan (or the forgiveness thereof), payment, extension of credit or capital contribution in connection therewith), by such Person of any Capital Stock, bonds, notes, debentures or other securities issued or owned by any other Person and all other items that would be classified as investments on a balance sheet prepared in accordance with GAAP. "Issue Date" means the date on which the Securities are originally issued under this Indenture. -10- 17 "Las Plumas" means Las Plumas Lumber Corporation, a California corporation, or any successors thereto. "Las Plumas Management Agreement" means the management agreement dated as of May 31, 1992 between the Company and Las Plumas as in effect on the date of this Indenture. "Lien" means any mortgage or deed of trust, charge, pledge, lien (statutory or otherwise), privilege, security interest, assignment, deposit, arrangement, easement, hypothecation, claim, preference, priority or other encumbrance upon or with respect to any property of any kind (including any conditional sale, capital lease or other title retention agreement, any leases in the nature thereof, and any agreement to give any security interest), real or personal, movable or immovable, now owned or hereafter acquired. "Maturity" means, when used with respect to any Security, the date on which the principal of such Security becomes due and payable as therein provided or as provided in the Indenture, whether at Stated Maturity, the Offer Date, the Change of Control Purchase Date or the redemption date and whether by declaration of acceleration, Offer in respect of Excess Proceeds, Change of Control Offer in respect of a Change of Control, call for redemption or otherwise. "Moody's" means Moody's Investors Service, Inc. or any successor rating agency. "Net Cash Proceeds" means (a) with respect to any Asset Sale by any Person, the proceeds thereof (without duplication in respect of all Asset Sales) in the form of cash or Temporary Cash Investments including payments in respect of deferred payment obligations when received in the form of, or stock or other assets when disposed of for, cash or Temporary Cash Investments (except to the extent that such obligations are financed or sold with recourse to the Company or any Subsidiary) net of (i) brokerage commissions and other reasonable fees and expenses (including fees and expenses of counsel and investment bankers) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale, (iii) payments made to retire Indebtedness where payment of such Indebtedness is secured by the assets or properties the subject of such Asset Sale, (iv) amounts required to be paid to any Person (other than the Company or any Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale and (v) appropriate amounts to be provided by the Company or any Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an officers' certificate delivered to the Trustee and (b) with respect to any issuance or sale of Capital Stock or options, warrants or rights to purchase Capital Stock, or debt securities or Capital Stock that have been converted into or exchanged for Capital Stock, as referred to under Section 10.9 the proceeds of such issuance or sale in the form of cash or Temporary Cash Investments, including payments in respect of deferred payment obligations when received in the form of, or stock or other assets when disposed of for, cash or -11- 18 Temporary Cash Investments (except to the extent that such obligations are financed or sold with recourse to the Company or any Subsidiary), net of attorney's fees, accountant's fees and brokerage, consultation, underwriting and other fees and expenses actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "Non-U.S. Person" means a Person that is not a "U.S. person" as defined in Regulation S under the Securities Act. "Non-U.S. Subsidiaries" means Subsidiaries organized under the laws of jurisdictions other than the United States and the states and territories thereof. "Officers' Certificate" means a certificate signed by the Chairman of the Board, Vice Chairman, President or a Vice President (regardless of Vice Presidential designation), and by the Treasurer, Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of qualified legal counsel, who may be counsel for the Company or the Trustee, and who shall be reasonably acceptable to the Trustee, including but not limited to an Opinion of Independent Counsel. "Opinion of Independent Counsel" means a written opinion by qualified legal counsel who is not an employee or consultant of the Company and who shall be reasonably acceptable to the Trustee. "Outstanding" when used with respect to Securities means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Securities, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor reasonably satisfactory to the Trustee has been made; (c) Securities, except to the extent provided in Sections 4.2 and 4.3, with respect to which the Company has effected defeasance or covenant defeasance as provided in Article IV; and (d) Securities in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee and Company proof -12- 19 reasonably satisfactory to each of them that such Securities are held by a bona fide purchaser in whose hands the Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor on the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the reasonable satisfaction of the Trustee the pledgee's right so as to act with respect to such Securities and that the pledgee is not the Company or any other obligor on the Securities or any Affiliate of the Company or such other obligor. "Pari Passu Indebtedness" means any Indebtedness of the Company that is pari passu in right of payment to the Securities. "Paying Agent" means any Person authorized by the Company to pay the principal of, premium, if any, or interest on any Securities on behalf of the Company. "Permitted Holders" means Rose Partners, any of the partners of Rose Partners on the Issue Date, and any of their trusts, estates, executors, heirs, successors or assigns, and each of their respective Affiliates. "Permitted Indebtedness" means: (i) Indebtedness of the Company equal to the greater of, without duplication, (a) Indebtedness under the Bank Credit Facility in an aggregate principal amount at any one time outstanding not to exceed $90 million, minus all principal payments made in respect of any term loans thereunder and minus the amount by which any commitments under any revolving credit facility thereunder are permanently reduced, or (b) Indebtedness in an aggregate amount not to exceed the sum of 75% of the net book value of the consolidated inventory of the Company and its Subsidiaries and 85% of the net book value of the consolidated accounts receivable of the Company and its Subsidiaries, in each case calculated in accordance with GAAP; (ii) Indebtedness of the Company (a) represented by the Securities or (b) that is incurred, in any amount, and in whole or in part, to (1) redeem all of the Securities outstanding as described in Article XI, or (2) effect a complete defeasance or a covenant defeasance thereof as described in Article IV, provided that, in either case, Indebtedness incurred under this subclause (b) is actually applied in accordance with the applicable redemption or defeasance provision of the Indenture; -13- 20 (iii) Indebtedness of the Company outstanding on the date of the Indenture and listed on Schedule I hereto; (iv) Indebtedness of the Company owing to a Subsidiary; provided that any Indebtedness of the Company owing to a Subsidiary is made pursuant to an intercompany note and is expressly subordinated in right of payment to the payment and performance of the Company's obligations under the Securities, and, upon an Event of Default, such Indebtedness shall not be due and payable until such Event of Default is cured, waived or rescinded; provided, further, that any disposition, pledge or transfer of any such Indebtedness to a Person (other than a disposition, pledge or transfer to a Subsidiary) shall be deemed to be an incurrence of such Indebtedness by the Company not permitted by this clause (iv); (v) obligations of the Company entered into in the ordinary course of business pursuant to Interest Rate Agreements designed to protect the Company against fluctuations in interest rates in respect of Indebtedness of the Company as long as such obligations do not exceed the aggregate principal amount of such Indebtedness then outstanding; (vi) Indebtedness of the Company represented by Capital Lease Obligations or Purchase Money Obligations or other Indebtedness incurred or assumed in connection with the acquisition, improvement or development of real or personal, movable or immovable, property in each case incurred for the purpose of financing or refinancing all or any part of the purchase price or cost of construction or improvement of property used in the business of the Company and any refinancings of such Indebtedness made in accordance with subclauses (a), (b) and (c) of clause (xi) below, in an aggregate principal amount pursuant to this clause (vi) not to exceed $40 million outstanding at any time; provided that (a) the principal amount of any Indebtedness permitted under this clause (vi) did not in each case at the time of incurrence exceed the cost of the acquired or constructed asset or improvement so financed, and (b) such Indebtedness permitted under this clause (vi) was incurred directly in connection with the addition of new customers to the Company's business or the addition of incremental new business from existing customers; (vii) Indebtedness of the Company in respect of performance bonds, surety bonds and replevin bonds provided by the Company in the ordinary course of business; (viii) guarantees by the Company of obligations of customers of the primary business of the Company, not to exceed at any given time $7.5 million outstanding in the aggregate; for purposes of this clause (viii), the term "guarantee" means, as applied to any obligation, (a) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation and (b) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or -14- 21 performance (or payment of damages in the event of non-performance) of all or any part of such obligation, including, without limiting the foregoing, the payment of amounts drawn down by letters of credit; (ix) Indebtedness in an amount not in excess of $20 million, incurred to finance the relocation of one of the Company's warehouse facilities in existence on the Issue Date; (x) other Indebtedness of the Company that does not exceed $5 million in the aggregate at any one time outstanding; and (xi) any renewals, extensions, substitutions, refundings, refinancings or replacements (collectively, a "refinancing") of any Indebtedness described in clauses (iii) and (iv) of this definition of "Permitted Indebtedness," including any successive refinancings (a) so long as the borrower under such refinancing is the Company or, if not the Company, the same as the borrower of the Indebtedness being refinanced, (b) the aggregate principal amount of Indebtedness represented thereby is not increased by such refinancing by an amount greater than the lesser of (I) the stated amount of any premium or other payment required to be paid in connection with such a refinancing pursuant to the terms of the Indebtedness being refinanced or (II) the amount of premium or other payment actually paid at such time to refinance the Indebtedness, plus, in either case, the amount of expenses of the Company incurred in connection with such refinancing and (c) (A) in the case of any refinancing of Indebtedness that is Subordinated Indebtedness, such new Indebtedness is made subordinated to the Securities at least to the same extent as the Indebtedness being refinanced and (B) in the case of Pari Passu Indebtedness or Subordinated Indebtedness, as the case may be, such refinancing does not reduce the Average Life to Stated Maturity or the Stated Maturity of such Indebtedness. "Permitted Investment" means (i) Investments in any Subsidiary or any Person which, as a result of such Investment, (a) becomes a Subsidiary or (b) is merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or any Subsidiary; (ii) Indebtedness of the Company described under clause (iv) of the definition of "Permitted Indebtedness"; (iii) Investments in any of the Securities; (iv) Temporary Cash Investments; (v) Investments acquired by the Company or any Subsidiary in connection with an Asset Sale permitted under Section 10.12 to the extent such Investments are non-cash proceeds as permitted under such covenant; (vi) Investments in existence on the date of the Indenture; (vii) Investments consisting of Customer Loans, provided that the aggregate principal amount of such Investments described in this clause (vii) shall not exceed $10 million at any given time outstanding to any single customer and its Affiliates, and shall not exceed $35 million at any given time in the aggregate, provided that such $35 million amount shall be reduced by the amount of any SBIC Capital Contribution; (viii) Investments by the Company in any Unrestricted Subsidiary, provided that the aggregate amount of all such Investments described in this clause (viii) shall not exceed $1 million in the aggregate from and after the Issue Date; (ix) an SBIC Capital Contribution; (x) an intercompany loan from the Company to White Rose in the -15- 22 amount of up to $60 million on the Issue Date for the purpose of paying the purchase price payable by White Rose in connection with the White Rose Tender Offer; provided that the amount loaned is so applied; and (xi) any other Investments in the aggregate amount of $5 million at any one time outstanding. In connection with any assets or property contributed or transferred to any Person as an Investment, such property and assets shall be equal to the Fair Market Value (as determined by the Company's Board of Directors) at the time of Investment. "Permitted Subsidiary Indebtedness" means: (i) Indebtedness of a Wholly Owned Subsidiary owing to the Company or another Wholly Owned Subsidiary; provided that such Indebtedness is made pursuant to an intercompany note, and, upon an Event of Default, all amounts owing pursuant to such Indebtedness are immediately due and payable; and provided, further, that (a) any disposition, pledge or transfer of any such Indebtedness to a Person (other than the Company or a Wholly Owned Subsidiary) shall be an incurrence of such Indebtedness by the obligor not within the definition of "Permitted Subsidiary Indebtedness" pursuant to this clause (i), and (b) any transaction pursuant to which any Wholly Owned Subsidiary ceases to be a Wholly Owned Subsidiary shall be deemed to be the incurrence of Indebtedness by such Wholly Owned Subsidiary that is not within the definition of "Permitted Subsidiary Indebtedness" pursuant to this clause (i); (ii) Indebtedness of a Wholly Owned Subsidiary represented by Purchase Money Obligations if such Indebtedness would be permitted by clause (vi) of the definition of Permitted Indebtedness if incurred by the Company; and (iii) Acquired Indebtedness of a Subsidiary that would be permitted to be incurred by the Company if such Acquired Indebtedness were being incurred by the Company. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.8 in exchange for a mutilated Security or in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the mutilated, lost, destroyed, or stolen Security. "Preferred Stock" means, with respect to any Person, any Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over the Capital Stock of any other class in such Person. -16- 23 "Prospectus" means the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including any such prospectus supplement with respect to the terms of the offering of any portion of the Series A Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all material incorporated by reference therein. "Public Equity Offering" means any underwritten public offering of Capital Stock (other than Redeemable Capital Stock) pursuant to a registration statement that has been declared effective by the Commission (other than a registration statement on Form S-8 or any successor form or otherwise relating to equity securities issuable under any employee benefit plan of the Company). "Purchase Money Obligation" means any Indebtedness secured by a Lien on assets related to the business of the Company and its Subsidiaries, and any additions and accessions thereto, which are purchased at any time after the Securities are issued; provided that (i) the security agreement or conditional sales or other title retention contract pursuant to which the Lien on such assets described above is created (collectively a "Purchase Money Security Agreement") shall be entered into within 90 days after the purchase or substantial completion of the construction of such assets and shall at all times be confined solely to the assets so purchased or acquired, any additions and accessions thereto and any proceeds therefrom, (ii) at no time shall the aggregate principal amount of the outstanding Indebtedness secured thereby be increased, except in connection with the purchase of additions and accessions thereto and except in respect of fees and other obligations in respect of such Indebtedness and (iii) (A) the aggregate outstanding principal amount of Indebtedness secured thereby (determined on a per asset basis in the case of any additions and accessions) shall not at the time such Purchase Money Security Agreement is entered into exceed 100% of the purchase price to the Company and its Subsidiaries of the assets subject thereto or (B) the Indebtedness secured thereby shall be with recourse solely to the assets so purchased or acquired, any additions and accessions thereto and any proceeds therefrom. "QIB" means a "Qualified Institutional Buyer" under Rule 144A of the Securities Act. "Qualified Capital Stock" of any Person means any and all Capital Stock of such Person other than Redeemable Capital Stock. "Redeemable Capital Stock" means any Capital Stock that, either by its terms or by the terms of any security into which it is convertible or exchangeable or otherwise, is or upon the happening of any event or passage of time would be, required to be redeemed prior to any Stated Maturity of the principal of the Securities or is redeemable at the option of the holder thereof at any time prior to any such Stated Maturity, or is convertible into or exchangeable for debt securities at any time prior to any such Stated Maturity at the option of the holder thereof. -17- 24 "Redemption Date" when used with respect to any Security to be redeemed pursuant to any provision in this Indenture means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price" when used with respect to any Security to be redeemed pursuant to any provision in this Indenture means the price at which it is to be redeemed pursuant to this Indenture. "Refinancing" means (i) the offering and sale of the Notes pursuant to the Indenture, (ii) the modification of the Bank Credit Facility, (iii) the repayment of the Rose Partners Note, (iv) the consummation of the tender offer by the Company for its 12% Notes outstanding prior to the Issue Date, and the tender offer by White Rose for its 12 3/4% Discount Notes outstanding prior to the Issue Date, (v) the dividend by the Company to White Rose of certain non-cash assets which are unrelated to the Company's primary business and the subsequent dividend of those assets to White Rose's stockholders and (vi) immediately following consummation of the tender offers and the payment of such dividends, the merger of White Rose with and into the Company with the Company surviving the merger. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of June 20, 1997, among the Company and the Initial Purchasers. "Registration Statement" means any registration statement of the Company which covers any of the Series A Securities or Series B Securities pursuant to the provisions of the Registration Rights Agreement, and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Regular Record Date" for the interest payable on any Interest Payment Date means June 1 or December 1, as the case may be (whether or not a Business Day), next preceding such Interest Payment Date. "Responsible Officer" when used with respect to the Trustee means any officer assigned to the Corporate Trust Office of the Trustee or any agent of the Trustee appointed hereunder, including the chairman or vice chairman of the board of directors or the executive committee of the board of directors, the president, any vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers or any other officer appointed hereunder to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject. "Rose Partners" means Rose Partners, L.P., a New York limited partnership, of which Arthur M. Goldberg is the general partner. -18- 25 "S&P" means Standard and Poor's Corporation or any successor rating agency. "Sale and Leaseback Transaction" means any transaction or series of related transactions pursuant to which the Company or a Subsidiary sells or transfers any property or asset in connection with the leasing, or the resale against installment payments, of such property or asset to the seller or transferor. "SBIC" means a wholly owned Unrestricted Subsidiary that meets the requirements of a Small Business Investment Company, as that term is defined in Rule 602 of the Securities Act, as the same may be amended from time to time. "SBIC Capital Contribution" means a single capital contribution by the Company to an SBIC in an amount not in excess of $5 million, which may consist of cash, property or both. "Securities" has the meaning specified in the first recital of this Indenture. "Securities Act" means the Securities Act of 1933, as amended, or any successor statute. "Senior Indebtedness" means Indebtedness of the Company other than Subordinated Indebtedness. "Series A Security" has the meaning stated in the first recital of this Indenture. "Series B Security" has the meaning stated in the first recital of this Indenture. "Shareholder Stock Repurchases" means (A) the repurchase by the Company and retirement into treasury, for the payment of not greater than $5 million in the aggregate, of the Company's common stock after (but in no event more than 18 months after) the Issue Date, which repurchase may only be made if the Company has first (i) irrevocably converted the $27.5 million Capital Lease Obligation relating to its Carteret, New Jersey distribution facility, existing on the Issue Date, to an operating lease, and (ii) delivered an Officers' Certificate to the Trustee to the effect that such conversion has occurred, and (B) the repurchase by the Company and retirement into treasury, for the payment of an amount not greater than the Farmingdale Proceeds, of the Company's common stock after (but in no event more than 12 months after) the Issue Date, which repurchase may only be made if the Company has first (i) sold the Farmingdale Facility or the Farmingdale Option, as the Farmingdale Facility or the Farmingdale Option exist on the Issue Date, for cash and (ii) delivered an Officers' Certificate to the Trustee to the effect that such sale has occurred. "Shelf Registration Statement" means a "shelf" registration statement of the Company pursuant to Section 2.2 of the Registration Rights Agreement, which covers all of the Registrable Securities (as defined in the Registration Rights Agreement) on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the Commission, and all amendments and supplements to such registration statement, including post-effective -19- 26 amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Significant Subsidiary" means any Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.9. "Stated Maturity" when used with respect to any Indebtedness or any installment of interest thereon means the dates specified in such Indebtedness as the fixed date on which the principal of such Indebtedness or such installment of interest, as the case may be, is due and payable. "Subordinated Indebtedness" means Indebtedness of the Company which is by its terms expressly subordinated in right of payment to the Securities. "Subsidiary" means any Person, a majority of the equity ownership or the Voting Stock of which is at the time owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries; provided that any Unrestricted Subsidiary shall not be deemed a Subsidiary under the Indenture. "Tax Sharing Agreement" means the agreement effective as of January 1, 1992, among the Company, White Rose and certain other affiliates of the Company, as in effect on the date of this Indenture. "Temporary Cash Investments" means (i) any evidence of Indebtedness, maturing not more than one year after the date of acquisition, issued by the United States of America, or an instrumentality or agency thereof and guaranteed fully as to principal, premium, if any, and interest by the United States of America; (ii) any certificate of deposit (or, with respect to non- U.S. banking institutions, similar instruments), maturing not more than one year after the date of acquisition, issued by, or time deposit of, a commercial banking institution that is a member of the Federal Reserve System or a commercial banking institution organized and located in a country recognized by the United States of America, in each case, that has combined capital and surplus and undivided profits of not less than $500,000,000 (or the foreign currency equivalent thereof), whose debt has a rating, at the time as of which any investment therein is made, of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P; (iii) commercial paper, maturing not more than one year after the date of acquisition, issued by a corporation (other than an Affiliate or Subsidiary of the Company) organized and existing under the laws of the United States of America with a rating, at the time as of which any investment therein is made, of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P; (iv) any money market deposit accounts or demand deposit accounts issued or offered by a domestic commercial bank or a commercial banking institution organized and located in a country -20- 27 recognized by the United States of America, in each case having capital and surplus in excess of $500,000,000 (or the foreign currency equivalent thereof); provided that the short-term debt of such commercial bank has a rating, at the time of Investment, of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P; and (v) any other Investments, that at any one time do not exceed $100,000 in the aggregate, issued or offered by any domestic commercial bank or any commercial banking institution organized and located in a country recognized by the United States of America. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, or any successor statute. "12% Notes" means the Senior Notes Due 2003 of the Company. "12 3/4% Discount Notes" means the Senior Discount Notes Due 1998 of White Rose. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that exists on the Issue Date and is so designed as an Unrestricted Subsidiary on a schedule attached to the Indenture, (ii) any subsidiary of the Company that at the time of determination shall be an Unrestricted Subsidiary (as designated by the Board of Directors, as provided below) and (iii) any subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any subsidiary of the Company (including any newly acquired or newly formed subsidiary) to be an Unrestricted Subsidiary if all of the following conditions apply: (a) neither the Company nor any of its Subsidiaries provides credit support for Indebtedness of such Unrestricted Subsidiary (including any undertaking, agreement or instrument evidencing such Indebtedness), (b) such Unrestricted Subsidiary is not liable, directly or indirectly, with respect to any Indebtedness other than Unrestricted Subsidiary Indebtedness, (c) any Investment by the Company (other than Investments described in clauses (viii) and (ix) of the definition "Permitted Investments") in such Unrestricted Subsidiary made as a result of designating such subsidiary an Unrestricted Subsidiary shall not violate the provisions described under Section 10.16 hereunder and such Unrestricted Subsidiary is not party to any agreement, contract, arrangement or understanding at such time with the Company or any other subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such other subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company or, in the event such condition is not satisfied, the value of such agreement, contract, arrangement or understanding to such Unrestricted Subsidiary shall be deemed an Investment, and (d) such Unrestricted Subsidiary does not own any Capital Stock in any subsidiary of the Company which is not simultaneously being designated an Unrestricted Subsidiary. Any such designation by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complies with the foregoing conditions and any -21- 28 Investment by the Company (other than Investments described in clause (viii) and (ix) of the definition of "Permitted Investments") in such Unrestricted Subsidiary shall be deemed a Restricted Payment on the date of designation in an amount equal to the greater of (1) the net book value of such Investment or (2) the Fair Market Value of such Investment as determined in good faith by the Board of Directors. The Board of Directors may designate any Unrestricted Subsidiary as a Subsidiary; provided that (i) if such Unrestricted Subsidiary has any Indebtedness, that immediately after giving effect to such designation, the Company could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness or Permitted Subsidiary Indebtedness) pursuant to the restrictions under Section 10.8 and (ii) all Indebtedness of such Subsidiary shall be deemed to be incurred on the date such Unrestricted Subsidiary becomes a Subsidiary. "Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary means Indebtedness of such Unrestricted Subsidiary (a) as to which neither the Company nor any subsidiary is directly or indirectly liable (by virtue of the Company or any such subsidiary being the primary obligor on, guarantor of, or otherwise liable in any respect to, such Indebtedness), and (b) which, upon the occurrence of a default with respect thereto, does not result in, or permit any holder of any Indebtedness of the Company or any subsidiary to declare, a default on such Indebtedness of the Company or any subsidiary or cause the payment thereof to be accelerated or payable prior to its Stated Maturity. "Voting Stock" means Capital Stock of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of a corporation (irrespective of whether or not at the time Capital Stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency). "White Rose" means White Rose Foods, Inc., a Delaware corporation. "White Rose Dividend" means the dividend by the Company of certain non-cash assets with a book value of approximately $4.2 million to White Rose, which White Rose will in turn dividend to its shareholders pursuant to the Refinancing. "White Rose Tender Offer" means the tender offer by White Rose for its 12 3/4% Discount Notes. "Wholly-Owned Subsidiary" means a Subsidiary all the Capital Stock of which is owned by the Company or another Wholly-Owned Subsidiary. -22- 29 Section 1.2. Other Definitions.
Defined in Term Section - ---- ---------- "Act" 1.5 "Agent Members" 3.6 "Change of Control Offer" 10.13 "Change of Control Purchase Date" 10.13 "Change of Control Purchase Notice" 10.13 "Change of Control Purchase Price" 10.13 "covenant defeasance" 4.3 "Defaulted Interest" 3.9 "defeasance" 4.2 "Defeasance Redemption Date" 4.4 "Defeased Securities" 4.1 "Deficiency" 10.12 "Excess Proceeds" 10.12 "Global Securities" 2.1 "incur" 10.8 "Institutional Accredited Investors 2.1 "Non-Global Purchasers 2.1 "Offer" 10.12 "Offer Date" 10.12 "Offered Price" 10.12 "Offshore Global Security" 2.1 "Offshore Securities Exchange Date" 2.1 "Pari Passu Debt Amount" 10.12 "Pari Passu Offer" 10.12 "Permanent Offshore Physical Securities" 2.1 "Permitted Payment" 10.9 "Physical Securities" 3.6 "Private Placement Legend" 2.2 "refinancing" 10.9 "Regulation S" 2.1 "Required Filing Dates" 10.17 "Restricted Payments" 10.9 "Rule 144A" 2.1 "Security Amount" 10.12 "Security Register" 3.5 "Security Registrar" 3.5 "Special Payment Date" 3.9 "Surviving Entity" 8.1 "Treasury Rate" 10.14 "U.S. Global Security" 2.1
-23- 30 "U.S. Government Obligations" 4.4 "U.S. Physical Securities 2.1 Section 1.3. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company and each other obligor on the Securities shall furnish to the Trustee an Officers' Certificate in a form and substance reasonably acceptable to the Trustee stating that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel in a form and substance reasonably acceptable to the Trustee stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that, in the case of any such application or request as to which the furnishing of any certificates and/or opinions is specifically required by any provision of this Indenture, relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include: (a) a statement to the effect that each individual or firm signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement to the effect that, in the opinion of each such individual or such firm, he has made such examination or investigation as is necessary to enable him or them to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such individual or such firm, such condition or covenant has been complied with. Section 1.4. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to such matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. -24- 31 Any certificate or opinion of an officer of the Company or other obligor on the Securities may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any certificate or opinion of such an officer or of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or other obligor on the Securities with respect to such factual matters and which contains a statement to the effect that the information with respect to such factual matters is in the possession of the Company or other obligor on the Securities, unless such officer or counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Opinions of Counsel required to be delivered to the Trustee may have qualifications customary for opinions of the type required, and counsel delivering such Opinions of Counsel may rely on certificates of the Company or government or other officials customary for opinions of the type required, including certificates certifying as to matters of fact, including that various financial covenants have been complied with. Any certificate or opinion of an officer of the Company or other obligor on the Securities may be based, insofar as it relates to accounting matters, upon a certificate or opinion of, or representations by, an accountant or firm of accountants in the employ of the Company, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the accounting matters upon which his certificate or opinion may be based are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent with respect to the Company. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 1.5. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. -25- 32 (b) The ownership of Securities shall be proved by the Security Register. (c) Any request, demand, authorization, direction, notice, consent, waiver or other Act by the Holder of any Security shall bind every future Holder of the same Security or the Holder of every Security issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, suffered or omitted to be done by the Trustee, any Paying Agent or the Company or any other obligor on the Securities in reliance thereon, whether or not notation of such action is made upon such Security. (d) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. Section 1.6. Notices, etc., to Trustee and the Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with: (a) the Trustee by any Holder or by the Company or any other obligor on the Securities shall be sufficient for every purpose hereunder if made, given, furnished or filed, in writing, by first-class mail postage prepaid (return receipt requested) or delivered in person or by recognized overnight courier to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Administration or at any other address furnished in writing prior thereto to the Holders, the Company or any other obligor on the Securities by the Trustee; or (b) the Company shall be sufficient for every purpose (except as provided in Section 5.1(c)) hereunder if in writing and mailed, first-class postage prepaid or delivered by recognized overnight courier, to the Company addressed to it at 380 Middlesex Avenue, Carteret, New Jersey 07008, Attention: Chief Financial Officer, or at any other address previously furnished in writing to the Trustee by the Company. Section 1.7. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holder's address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest -26- 33 date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice when mailed to a Holder in the aforesaid manner shall be conclusively deemed to have been received by such Holder whether or not actually received by such Holder. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause, it shall be impracticable to mail notice of any event as required by any provision of this Indenture, then any method of giving such notice as shall be reasonably satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. Section 1.8. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with any provision of the Trust Indenture Act or another provision which is required or deemed to be included in this Indenture by any of the provisions of the Trust Indenture Act, the provision or requirement of the Trust Indenture Act shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, such provision of the Trust Indenture Act shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. Section 1.9. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.10. Successors and Assigns. All covenants and agreements in this Indenture by the Company and any other obligor on the Securities shall bind their successors and assigns, whether so expressed or not. Section 1.11. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. -27- 34 Section 1.12. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person (other than the parties hereto and their successors hereunder, any Paying Agent and the Holders) any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.13. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). Section 1.14. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Maturity or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal or premium, if any, need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at Maturity or the Stated Maturity, and no interest shall accrue with respect to such payment for the period from and after such Interest Payment Date, Redemption Date, Maturity or Stated Maturity, as the case may be, to the next succeeding Business Day. Section 1.15. Schedules. All schedules attached hereto are by this reference made a part with the same effect as if herein set forth in full. Section 1.16. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. ARTICLE II SECURITY FORMS Section 2.1. Forms Generally. The Securities and the Trustee's certificate of authentication thereon shall be in substantially the forms set forth in this Article II, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted hereby and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as -28- 35 may be required to comply with the rules of any securities exchange, any organizational document or governing instrument or applicable law or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Security. The definitive Securities shall be printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. Initial Securities offered and sold in reliance on Rule 144A under the Securities Act ("Rule 144A") shall be issued initially in the form of one or more permanent global Securities substantially in the form set forth in Section 2.2 (the "U.S. Global Security") deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the U.S. Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary or its nominee, as hereinafter provided. Initial Securities (i) originally purchased by or transferred to institutional "accredited investors" (as defined in Rule 501(a)(l),(2),(3) and (7) under the Securities Act) ("Institutional Accredited Investors") who are not QIBs or (ii) held by QIBs who elect to take physical delivery of their certificates instead of holding their interest through the U.S. Global Security (collectively, the "Non-Global Purchasers"), will be in registered form without interest coupons (the "U.S. Physical Securities"). Upon the transfer of U.S. Physical Securities, which were initially issued to a Non-Global Purchaser, to a QIB, such U.S. Physical Securities will, unless the transferee requests otherwise or the U.S. Global Security has previously been exchanged in whole for U.S. Physical Securities, be exchanged for an interest in the U.S. Global Security. Initial Securities offered and sold in reliance on Regulation S under the Securities Act ("Regulation S") shall be issued initially in the form of a global note certificate substantially in the form set forth in Section 2.2 (the "Offshore Global Security" and, together with the U.S. Global Security, the "Global Securities"). The Offshore Global Security will be deposited with the Trustee as custodian for the Depositary and will be registered in the name of the Depositary until the later of the completion of the distribution of the Initial Securities and the termination of the "restricted period" (as defined in Regulation S) with respect to the offer and sale of the Initial Securities (the "Offshore Securities Exchange Date"). Prior to the Offshore Securities Exchange Date, transfers of beneficial interests in the Offshore Global Security can only be effected through the Depositary in accordance with the requirements of Section 3.7 hereof. At any time following the Offshore Securities Exchange Date (but in no event before such date), upon receipt by the Trustee and the Company of a certificate substantially in the form of Exhibit A hereto, the Company shall execute, and the Trustee shall authenticate and deliver, one or more permanent certificated Securities in registered form substantially in the form set forth in Section 2.2 (the -29- 36 "Permanent Offshore Physical Securities"), in exchange for the surrender of a Holder's beneficial ownership interest in the Offshore Global Security of like tenor and amount. Section 2.2. Form of Face of Security. (a) The form of the face of any Series A Securities authenticated and delivered hereunder shall be substantially as follows: Unless and until (i) an Initial Security is sold under an effective Registration Statement or (ii) an Initial Security is exchanged for a Series B Security in connection with an effective Registration Statement, in each case pursuant to the Registration Rights Agreement, then (A) the U.S. Global Security and each U.S. Physical Security shall bear the legend set forth below (the "Private Placement Legend") on the face thereof and (B) the Offshore Global Security and each Permanent Offshore Physical Security shall bear the Private Placement Legend on the face thereof until at least 41 days after the Issue Date: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION PURSUANT TO RULE 903 OR 904 OF REGULATION S, (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A INSIDE THE -30- 37 UNITED STATES, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) OUTSIDE THE UNITED STATES PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) INSIDE THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPHS (A)(1), (A)(2), (A)(3) OR (A)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. AS USED HEREIN, THE TERMS "UNITED STATES," "OFFSHORE TRANSACTION," AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. [Each global security, whether or not an initial security, shall also bear the following legend on the face thereof:] THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE -31- 38 RESTRICTIONS SET FORTH IN SECTIONS 3.6 AND 3.7 OF THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. -32- 39 DI GIORGIO CORPORATION 10% SENIOR NOTES DUE 2007, SERIES A CUSIP NO. __________ No._______________ $__________________ Di Giorgio Corporation, a Delaware corporation (herein called the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to ___________ or registered assigns, the principal sum of __________ United States dollars on June 15, 2007, at the office or agency of the Company referred to below, and to pay interest thereon from June 20, 1997, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually on June 15 and December 15 in each year, commencing December 15, 1997 at the rate of 10% per annum, subject to adjustments as described in the second following paragraph, in United States dollars, until the principal hereof is paid or duly provided for. Interest shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The Holder of this Series A Security is entitled to the benefits of the Registration Rights Agreement (the "Registration Rights Agreement") among the Company and the Initial Purchasers, dated June 20, 1997, pursuant to which, subject to the terms and conditions thereof, the Company is obligated to consummate the Exchange Offer pursuant to which the Holder of this Security shall have the right to exchange this Security for 10% Senior Notes due 2007, Series B (herein called the "Series B Securities") in like principal amount as provided therein. The Series A Securities and the Series B Securities are together referred to as the "Securities." The Series A Securities rank pari passu in right of payment with the Series B Securities. In the event that (a) the Exchange Offer Registration Statement is not filed with the Commission on or prior to the 60th calendar day following the date of original issue of the Series A Securities, (b) the Exchange Offer Registration Statement has not been declared effective on or prior to the 120th calendar day following the date of original issue of the Series A Securities, (c) the Exchange Offer is not consummated on or prior to the 150th calendar day following the date of original issue of the Series A Securities or a Shelf Registration Statement is not declared effective on or prior to the 150th calendar day following the date of original issue of the Series A Securities (or, if a Shelf Registration Statement is required to be filed because of the request by any Initial Purchaser, 30 days following the request by any such Initial Purchaser that the Company file the Shelf Registration Statement) or (d) the Exchange Offer Registration Statement or Shelf Registration Statement is declared effective but thereafter ceases to be effective or usable within the applicable period, as provided in the Registration Rights Agreement (each such event referred to in clauses (a) through (d) above, a "Registration Default"), the interest rate borne by the Series A Securities (except in the case of clause (c), in which case only the Series A Securities which have not been exchanged in the Exchange Offer) -33- 40 shall be increased by an amount equal to one-quarter of one percent per annum upon the occurrence of any Registration Default, which rate (as increased as aforesaid) will increase by an additional one quarter of one percent each 90-day period that such additional interest continues to accrue under any such circumstance, with an aggregate maximum increase in the interest rate equal to one percent (1%) per annum. Following the cure of all Registration Defaults the accrual of additional interest will cease and the interest rate will revert to the original rate. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or any Predecessor Security) is registered at the close of business on the Regular Record Date for such interest, which shall be the June 1 or December 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid, or duly provided for, and interest on such defaulted interest at the interest rate borne by the Series A Securities, to the extent lawful, shall forthwith cease to be payable to the Holder on such Regular Record Date, and may either be paid to the Person in whose name this Security (or any Predecessor Security) is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in this Indenture. Payment of the principal of, premium, if any, and interest on, this Security, and exchange or transfer of the Security, will be made at the office or agency of the Company in The City of New York maintained for that purpose (which initially will be the Corporate Trust Office of the Trustee), or at such other office or agency as may be maintained for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the address of the Person entitled thereto as such address shall appear on the Security Register. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been duly executed by the Trustee referred to on the reverse hereof or by the authenticating agent appointed as provided in the Indenture by manual signature of an authorized signer, this Security shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. -34- 41 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by the manual or facsimile signature of its authorized officers and its corporate seal to be affixed or reproduced hereon. DI GIORGIO CORPORATION By:______________________________________ Title:___________________________________ Attest: __________________________________ Authorized Officer TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the 10% Senior Notes due 2007, Series A referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee By:______________________________________ Authorized Signer Dated: -35- 42 OPTION OF HOLDER TO ELECT PURCHASE If you wish to have this Security purchased by the Company pursuant to Section 10.12 or Section 10.13, as applicable, of the Indenture, check the Box: [ ]. If you wish to have a portion of this Security purchased by the Company pursuant to Section 10.12 or Section 10.13 as applicable, of the Indenture, state the amount (in original principal amount): $____________________ Date:__________ Your Signature:_______________________________ (Sign exactly as your name appears on the other side of this Security) Signature Guarantee:______________________________________ [Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Securities Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Securities Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act.] (b) The form of the face of any Series B Securities authenticated and delivered hereunder shall be substantially as follows: [Each global security, whether or not an initial security, shall also bear the following legend on the face thereof:] THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.6 AND 3.7 OF THE INDENTURE. -36- 43 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. -37- 44 DI GIORGIO CORPORATION 10% SENIOR NOTES DUE 2007, SERIES B CUSIP NO.____________ No.________________ $________________ Di Giorgio Corporation, a Delaware corporation (herein called the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to __________ or registered assigns, the principal sum of ___________ United States dollars on June 15, 2007, at the office or agency of the Company referred to below, and to pay interest thereon from June 20, 1997, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually on June 15 and December 15 in each year, commencing December 15, 1997 at the rate of 10% per annum, in United States dollars, until the principal hereof is paid or duly provided for; provided that to the extent interest has not been paid or duly provided for with respect to the Series A Security exchanged for this Series B Security, interest on this Series B Security shall accrue from the most recent Interest Payment Date to which interest on the Series A Security which was exchanged for this Series B Security has been paid or duly provided for. Interest shall be computed on the basis of a 360-day year comprised of twelve 30-day months. This Series B Security was issued pursuant to the Exchange Offer pursuant to which the 10% Senior Notes due 2007, Series A (herein called the "Series A Securities") in like principal amount were exchanged for the Series B Securities. The Series B Securities rank pari passu in right of payment with the Series A Securities. In addition, for any period in which the Series A Security exchanged for this Series B Security was outstanding, in the event that (a) the Exchange Offer Registration Statement was not filed with the Commission on or prior to the 60th calendar day following the date of original issue of the Series A Security, (b) the Exchange Offer Registration Statement was not declared effective on or prior to the 120th calendar day following the date of original issue of the Series A Security, (c) the Exchange Offer was not consummated on or prior to the 150th calendar day following the date of original issue of the Series A Security or a Shelf Registration Statement was not declared effective on or prior to the 150th calendar day following the date of original issue of the Series A Security (or, a Shelf Registration Statement was required to be filed 30 days following a request by an Initial Purchaser) or (d) the Exchange Offer Registration Statement or Shelf Registration Statement was declared effective but thereafter ceased to be effective or usable within the applicable period (each such event referred to in clauses (a) through (d) above, a "Registration Default"), the interest rate borne by the Series A Securities (except in the case of clause (c), in which case only the Series A Securities which have not been exchanged in the Exchange Offer) was increased by one-quarter of one percent per annum upon the occurrence of the Registration Default, which rate (as increased as aforesaid) will increase by an additional one -38- 45 quarter of one percent each 90-day period that such additional interest continues to accrue under any such circumstance, with an aggregate maximum increase in the interest rate equal to one percent (1%) per annum. Following the cure of all Registration Defaults the accrual of additional interest will cease and the interest rate will revert to the original rate; provided that, to the extent interest at such increased interest rate has been paid or duly provided for with respect to the Series A Security, interest at such increased interest rate, if any, on this Series B Security shall accrue from the most recent Interest Payment Date to which such interest on the Series A Security has been paid or duly provided for; provided, however, that, if after any such reduction in interest rate, a different event specified in clause (a), (b), (c) or (d) above occurs, the interest rate shall again be increased pursuant to the foregoing provisions. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or any Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the June 1 or December 1(whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid, or duly provided for, and interest on such defaulted interest at the interest rate borne by the Series B Securities, to the extent lawful, shall forthwith cease to be payable to the Holder on such Regular Record Date, and may either be paid to the Person in whose name this Security (or any Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in this Indenture. Payment of the principal of, premium, if any, and interest on, this Security, and exchange or transfer of the Security, will be made at the office or agency of the Company in The City of New York maintained for such purpose (which initially will be the Corporate Trust Office of the Trustee), or at such other office or agency as may be maintained for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the address of the Person entitled thereto as such address shall appear on the Security Register. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been duly executed by the Trustee referred to on the reverse hereof or by the authenticating agent appointed as provided in the Indenture by manual signature of an authorized signer, this Security shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. -39- 46 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by the manual or facsimile signature of its authorized officers and its corporate seal to be affixed or reproduced hereon. DI GIORGIO CORPORATION By:______________________________________ Title:___________________________________ Attest: __________________________________ Authorized Officer TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the 10% Senior Notes due 2007, Series B referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee By:______________________________________ Authorized Signer Dated: OPTION OF HOLDER TO ELECT PURCHASE If you wish to have this Security purchased by the Company pursuant to Section 10.12 or Section 10.13, as applicable, of the Indenture, check the Box: [ ] If you wish to have a portion of this Security purchased by the Company pursuant to Section 10.12 or Section 10.13 as applicable, of the Indenture, state the amount (in original principal amount): -40- 47 $_____________________. Date:__________ Your Signature:_______________________________ (Sign exactly as your name appears on the other side of this Security) Signature Guarantee:_______________________________________ [Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Securities Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Securities Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act.] Section 2.3. Form of Reverse of Securities. (a) The form of the reverse of the Series A Securities shall be substantially as follows: DI GIORGIO CORPORATION 10% Senior Notes due 2007, Series A This Security is one of a duly authorized issue of Securities of the Company designated as its 10% Senior Notes due 2007, Series A (herein called the "Securities"), limited (except as otherwise provided in the Indenture referred to below) in aggregate principal amount to $155,000,000, issued under and subject to the terms of an indenture (herein called the "Indenture") dated as of June 20, 1997, between the Company and The Bank of New York, as trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. The Indenture contains provisions for defeasance at any time of (a) the entire Indebtedness on the Securities and (b) certain restrictive covenants and related defaults and Events of Default, in each case upon compliance with certain conditions set forth therein. The Securities are subject to redemption at any time on or after June 15, 2002, at the option of the Company, in whole or in part, on not less than 30 nor more than 60 days' prior notice to the Holders by first-class mail, in amounts of $1,000 or an integral multiple thereof, at -41- 48 the following redemption prices (expressed as percentages of the principal amount), if redeemed during the 12-month period beginning on June 15 of the years indicated below:
Redemption Year Price ---- ---------- 2002........................................ 105.00% 2003........................................ 103.33% 2004........................................ 101.67%
and thereafter at 100% of the principal amount, in each case, together with accrued and unpaid interest, if any, to the Redemption Date (subject to the rights of Holders of record on relevant Regular Record Dates or Special Record Dates to receive interest due on an Interest Payment Date). If less than all of the Securities are to be redeemed, the Trustee shall select the Securities or portions thereof to be redeemed pro rata, by lot or by any other method the Trustee shall deem fair and reasonable Upon the occurrence of a Change of Control, each Holder may require the Company to purchase such Holder's Securities in whole or in part in integral multiples of $1,000, at a purchase price in cash in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, pursuant to a Change of Control Offer in accordance with the procedures set forth in the Indenture. In addition, at any time on or prior to June 15, 2000, the Company may, at its option, use the net proceeds of one or more Public Equity Offerings to redeem up to an aggregate of 35% of the aggregate principal amount of Securities originally issued under the Indenture at a redemption price equal to 110% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to the Redemption Date; provided that at least $100,750,000 aggregate principal amount of Securities remains outstanding immediately after the occurrence of such redemption. In order to effect the foregoing redemption, the Company must mail a notice of redemption no later than 60 days after the related Public Equity Offering and must consummate such redemption within 90 days of the closing of the Public Equity Offering. Under certain circumstances, in the event the Net Cash Proceeds received by the Company from any Asset Sale (which proceeds are not used to repay Senior Indebtedness or invested in properties or other assets that replace the properties and assets that were the subject of the Asset Sale or which will be used in the businesses of the Company or its Subsidiaries existing on the date of the Indenture or in businesses reasonably related thereto) exceeds a specified amount, the Company will be required to set aside such proceeds in a separate account pending an offer by the Company to apply such proceeds to the repayment of the Securities and certain Indebtedness ranking pari passu in right of payment to the Securities. -42- 49 In the case of any redemption or repurchase of Securities in accordance with the Indenture, interest installments whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities of record as of the close of business on the relevant Regular Record Date or Special Record Date referred to on the face hereof. Securities (or portions thereof) for whose redemption and payment provision is made in accordance with the Indenture shall cease to bear interest from and after the Redemption Date. In the event of redemption or repurchase of this Security in accordance with the Indenture in part only, a new Security or Securities for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If an Event of Default shall occur and be continuing, the principal amount of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions (including certain amendments permitted without the consent of any Holders) as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders under the Indenture and the Securities at any time by the Company and the Trustee with the consent of the Holders of a specified percentage in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and the Securities and certain past Defaults under the Indenture and their consequences. Any such consent or waiver by or on behalf of the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent or wavier is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company or any other obligor on the Securities (in the event such other obligor is obligated to make payments in respect of the Securities), which is absolute and unconditional, to pay the principal of, premium, if any, and interest on, this Security at the times, place, and rate, and in the coin or currency, herein prescribed. If this Series A Security is in certificated form, then as provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable on the Security Register of the Company, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose in The City of New York or at such other office or agency of the Company as may be maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or its attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations -43- 50 and for the same aggregate principal amount, will be issued to the designated transferee or transferees. If this Series A Security is in certificated form, then as provided in the Indenture and subject to certain limitations therein set forth, the Holder, provided it is a Qualified Institutional Buyer, may exchange this Series A Security for a Book-Entry Security by instructing the Trustee (by completing the Transferee Certificate in the form in Appendix I) to arrange for such Series A Security to be represented by a beneficial interest in a Global Security in accordance with the customary procedures of the Depository unless the Company has elected not to issue a Global Security. If this Series A Security is a Global Security, it is exchangeable for a Series A Security in certificated form as provided in the Indenture and in accordance with the rules and procedures of the Trustee and the Depositary. In addition, certificated securities shall be transferred to all beneficial holders in exchange for their beneficial interests in a Global Security if (x) the Depository notifies the Company that it is unwilling or unable to continue as depository for a Global Security and a successor depositary is not appointed by the Company within 90 days or (y) there shall have occurred and be continuing an Event of Default and the Security Registrar has received a request from the Depositary. Upon any such issuance, the Trustee is required to register such certificated Series A Securities in the name of, and cause the same to be delivered to, such Person or Persons (or the nominee of any thereof). All such certificated Series A Securities would be required to include the Private Placement Legend. Series A Securities in certificated form are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Series A Securities are exchangeable for a like aggregate principal amount of Securities of a differing authorized denomination, as requested by the Holder surrendering the same. At any time when the Company is not subject to Sections 13 or 15(d) of the Exchange Act, upon the written request of a Holder of a Series A Security, the Company will promptly furnish or cause to be furnished such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) to such Holder or to a prospective purchaser of such Series A Security who such Holder informs the Company is reasonably believed to be a "Qualified Institutional Buyer" within the meaning of Rule 144A under the Securities Act, as the case may be, in order to permit compliance by such Holder with Rule 144A under the Securities Act. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this -44- 51 Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF). All terms used in this Security which are defined in the Indenture and not otherwise defined herein shall have the meanings assigned to them in the Indenture. [The Transferee Certificate, in the form of Appendix I hereto, will be attached to the Series A Security.] (b) The form of the reverse of the Series B Securities shall be substantially as follows: DI GIORGIO CORPORATION 10% Senior Notes due 2007, Series B This Security is one of a duly authorized issue of Securities of the Company designated as its 10% Senior Notes due 2007, Series B (herein called the "Securities"), limited (except as otherwise provided in the Indenture referred to below) in aggregate principal amount to $155,000,000, issued under and subject to the terms of an indenture (herein called the "Indenture") dated as of June 20, 1997, between the Company and The Bank of New York, as trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. The Indenture contains provisions for defeasance at any time of (a) the entire Indebtedness on the Securities and (b) certain restrictive covenants and related Defaults and Events of Default, in each case upon compliance with certain conditions set forth therein. The Securities are subject to redemption at any time on or after June 15, 2002, at the option of the Company, in whole or in part, on not less than 30 nor more than 60 days' prior notice to the Holders by first-class mail, in amounts of $1,000 or an integral multiple thereof, at the following redemption prices (expressed as percentages of the principal amount), if redeemed during the 12-month period beginning June 15 of the years indicated below: -45- 52
Redemption Year Price ---- ---------- 2002..................................... 105.00% 2003..................................... 103.33% 2004..................................... 101.67%
and thereafter at 100% of the principal amount, in each case, together with accrued and unpaid interest, if any, to the Redemption Date (subject to the rights of Holders of record on relevant Regular Record Dates or Special Record Dates to receive interest due on an Interest Payment Date). If less than all of the Securities are to be redeemed, the Trustee shall select the Securities or portions thereof to be redeemed pro rata, by lot or by any other method the Trustee shall deem fair and reasonable. Upon the occurrence of a Change of Control, each Holder may require the Company to purchase such Holder's Securities in whole or in part in integral multiples of $1,000, at a purchase price in cash in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, pursuant to a Change of Control Offer and in accordance with the procedures set forth in the Indenture. In addition, at any time on or prior to June 15, 2000, the Company may, at its option, use the net proceeds of one or more Public Equity Offerings to redeem up to an aggregate of 35% of the aggregate principal amount of Securities originally issued under the Indenture at a redemption price equal to 110% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to the Redemption Date; provided that at least $100,750,000 aggregate principal amount of Securities remains outstanding immediately after the occurrence of such redemption. In order to effect the foregoing redemption, the Company must mail a notice of redemption no later than 60 days after the related Public Equity Offering and must consummate such redemption within 90 days of the closing of the Public Equity Offering. Under certain circumstances, in the event the Net Cash Proceeds received by the Company from any Asset Sale (which proceeds are not used to repay Senior Indebtedness or invested in properties or other assets that replace the properties and assets that were the subject of the Asset Sale or which will be used in the businesses of the Company or its Subsidiaries existing on the date of the Indenture or in businesses reasonably related thereto) exceeds a specified amount, the Company will be required to set aside such proceeds in a separate account pending an offer by the Company to apply such proceeds to the repayment of the Securities and certain Indebtedness ranking pari passu in right of payment to the Securities. In the case of any redemption or repurchase of Securities in accordance with the Indenture, interest installments whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities of record as of the close of business on the relevant Regular Record Date or Special Record Date referred to on the face hereof. Securities (or -46- 53 portions thereof) for whose redemption and payment provision is made in accordance with the Indenture shall cease to bear interest from and after the Redemption Date. In the event of redemption or repurchase of this Security in accordance with the Indenture in part only, a new Security or Securities for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If an Event of Default shall occur and be continuing, the principal amount of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions (including certain amendments permitted without the consent of any Holders) as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders under the Indenture and the Securities at any time by the Company and the Trustee with the consent of the Holders of a specified percentage in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and the Securities and certain past Defaults under the Indenture and their consequences. Any such consent or waiver by or on behalf of the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company or any other obligor on the Securities (in the event such other obligor is obligated to make payments in respect of the Securities), which is absolute and unconditional, to pay the principal of, and premium, if any, and interest on, this Security at the times, place, and rate, and in the coin or currency, herein prescribed. If this Series B Security is in certificated form, then as provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Series B Security is registrable on the Security Register of the Company, upon surrender of this Series B Security for registration of transfer at the office or agency of the Company maintained for such purpose in The City of New York or at such other office or agency of the Company as may be maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or its attorney duly authorized in writing, and thereupon one or more new Series B Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. If this Series B Security is a U.S. Global Security, it is exchangeable for a Series B Security in certificated form as provided in the Indenture and in accordance with the rules and -47- 54 procedures of the Trustee and the Depositary. In addition, certificated securities shall be transferred to all beneficial holders in exchange for their beneficial interests in the U.S. Global Security if (x) the Depository notifies the Company that it is unwilling or unable to continue as depository for the U.S. Global Security and a successor depositary is not appointed by the Company within 90 days or (y) there shall have occurred and be continuing an Event of Default and the Security Registrar has received a request from the Depositary. Upon any such issuance, the Trustee is required to register such certificated Series B Securities in the name of, and cause the same to be delivered to, such Person or Persons (or the nominee of any thereof). Series B Securities in certificated form are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Series B Securities are exchangeable for a like aggregate principal amount of Securities of a differing authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF). All terms used in this Security which are defined in the Indenture and not otherwise defined herein shall have the meanings assigned to them in the Indenture. [The Transferee Certificate, in the form of Appendix II hereto, will be attached to the Series B Security.] ARTICLE III THE SECURITIES Section 3.1. Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is limited to $155,000,000 in principal amount of Securities, except for -48- 55 Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Section 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 9.6, 10.12, 10.13 or 11.8. The Securities shall be known and designated as the "10% Senior Notes due 2007" of the Company. The Stated Maturity of the Securities shall be June 15, 2007, and the Securities shall each bear interest at the rate of 10% per annum, as such interest rate may be adjusted as set forth in the Securities, from June 20, 1997, or from the most recent Interest Payment Date to which interest has been paid, payable semiannually on June 15 and December 15 in each year, commencing December 15, 1997, until the principal thereof is paid or duly provided for. Interest on any overdue principal, interest (to the extent lawful) or premium, if any, shall be payable on demand. The principal of, premium, if any, and interest on, the Securities shall be payable and the Securities will be exchangeable and transferable at an office or agency of the Company in The City of New York maintained for such purposes (which initially will be the Corporate Trust Office of the Trustee); provided, however, that payment of interest may be made at the option of the Company by check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Security Register. For all purposes hereunder, the Series A Securities and the Series B Securities will be treated as one class and are together referred to as the "Securities." The Series A Securities rank pari passu in right of payment with the Series B Securities. The Securities shall be subject to repurchase by the Company pursuant to an Offer as provided in Section 10.12. Holders shall have the right to require the Company to purchase their Securities, in whole or in part, in the event of a Change of Control pursuant to Section 10.13. The Securities shall be redeemable as provided in Article XI and in the Securities. At the election of the Company, the entire Indebtedness on the Securities or certain of the Company's obligations and covenants and certain Events of Default thereunder may be defeased as provided in Article IV. Section 3.2. Denominations. The Securities shall be issuable only in fully registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. Section 3.3. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by one of its Chairman of the Board, its President, its Chief Executive Officer, its Chief Financial Officer or one of its Vice -49- 56 Presidents attested by its Secretary or one of its Assistant Secretaries. The signatures of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities; and the Trustee in accordance with such Company Order shall authenticate and make available for delivery such Securities as provided in this Indenture and not otherwise. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. In case the Company or any of its Subsidiaries, pursuant to Article VIII, shall, in a single transaction or through a series of related transactions, be consolidated or merged with or into any other Person or shall sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to any Person, and the successor Person resulting from such consolidation or surviving such merger, or into which the Company shall have been merged, or the successor Person which shall have participated in the sale, assignment, conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article VIII, any of the Securities authenticated or delivered prior to such consolidation, merger, sale, assignment, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Securities executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Securities surrendered for such exchange and of like principal amount; and the Trustee, upon Company Request of the successor Person, shall authenticate and deliver Securities as specified in such request for the purpose of such exchange. If Securities shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section 3.3 in exchange or substitution for or upon registration of transfer of any Securities, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Securities at the time Outstanding for Securities authenticated and delivered in such new name. -50- 57 The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities on behalf of the Trustee. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Security Registrar or Paying Agent to deal with the Company and its Affiliates. If an officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates such Security such Security shall be valid nevertheless. Section 3.4. Temporary Securities. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and make available for delivery, temporary Securities which are printed, lithographed, typewritten or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 10.2, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and make available for delivery in exchange therefor a like principal amount of definitive Securities of authorized denominations. Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. Section 3.5. Registration, Registration of Transfer and Exchange. The Company shall cause the Trustee to keep, so long as it is the Security Registrar, at the Corporate Trust Office of the Trustee, or such other office as the Trustee may designate, a register (the register maintained in such office or in any other office or agency designated pursuant to Section 10.2 being herein sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as the Security Registrar may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee shall initially be the "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. The Company may change the Security Registrar or appoint one or more co-Security Registrars without notice. Upon surrender for registration of transfer of any Security at the office or agency of the Company designated pursuant to Section 10.2, the Company shall execute, and the Trustee shall -51- 58 authenticate and make available for delivery, in the name of the designated transferee or transferees, one or more new Securities of the same series of any authorized denomination or denominations, of a like aggregate principal amount. Furthermore, any Holder of the U.S. Global Security or the Offshore Global Security shall, by acceptance of either such Global Security, agree that transfers of beneficial interests in such Global Security may be effected only through a book-entry system maintained by the Holder of such Global Security (or its agent), and that ownership of a beneficial interest in a Security shall be required to be reflected in a book entry. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denomination or denominations, of a like aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and make available for delivery, Securities of the same series which the Holder making the exchange is entitled to receive: provided that no exchange of Series A Securities for Series B Securities shall occur until an Exchange Offer Registration Statement shall have been declared effective by the Commission and that the Series A Securities exchanged for the Series B Securities shall be canceled. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same Indebtedness, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer, or for exchange, repurchase or redemption, shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made to a Holder for any registration of transfer, exchange or redemption of Securities, except for any tax or other governmental charge that may be imposed in connection therewith, other than exchanges pursuant to Sections 3.3, 3.4, 3.5, 9.6, 10.12, 10.13 or 11.8 not involving any transfer. The Company shall not be required (a) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of the Securities selected for redemption under Section 11.4 and ending at the close of business on the day of such mailing or (b) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of Securities being redeemed in part. -52- 59 Every Security shall be subject to the restrictions on transfer provided in the legend required to be set forth on the face of each Security pursuant to Section 2.2, and the restrictions set forth in this Section 3.5, and the Holder of each Security, by such Holder's acceptance thereof (or interest therein), agrees to be bound by such restrictions on transfer. The restrictions imposed by this Section 3.5 upon the transferability of any particular Security shall cease and terminate on (a) the later of June 20, 1999 or two years after the last date on which the Company or any Affiliate of the Company was the owner of such Security (or any predecessor of such Security) or (b) (if earlier) if and when such Security has been sold pursuant to an effective registration statement under the Securities Act or transferred pursuant to Rule 144 or Rule 904 under the Securities Act (or any successor provision), unless the Holder thereof is an affiliate of the Company, within the meaning of Rule 144 (or such successor provisions). Any Security as to which such restrictions on transfer shall have expired in accordance with their terms or shall have terminated may, upon surrender of such Security for exchange to the Security Registrar in accordance with the provision of this Section 3.5 (accompanied, in the event that such restrictions on transfer have terminated pursuant to Rule 144 or Rule 904 (or any successor provision), by an Opinion of Counsel satisfactory to the Company and the Trustee, to the effect that the transfer of such Security has been made in compliance with Rule 144 or Rule 904 (or any such successor provision)), be exchanged for a new Security, of like tenor and aggregate principal amount, which shall not bear the Private Placement Legend. The Company shall inform the Trustee of the effective date of any Registration Statement registering the Securities under the Securities Act no later than two Business Days after such effective date. Except as provided in the preceding paragraph, any Security authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, any U.S. Global Security or Offshore Global Security, whether pursuant to this Section 3.5, Section 3.4, 3.8, 9.6 or 11.8 or otherwise, shall also be a U.S. Global Security or Offshore Global Security, as the case may be, and shall bear the legend specified in Section 2.2. Section 3.6. Book-Entry Provisions for Global Securities. (a) The Global Securities initially shall (i) be registered in the name of the Depositary, (ii) be deposited with, or on behalf of, the Depositary or with the Trustee as custodian for the Depositary and (iii) bear legends as set forth in Section 2.2. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or the Trustee as its custodian, or under the Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary, or shall impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Security. -53- 60 (b) Transfers of a Global Security shall be limited to transfers of such Global Security in whole, but not in part, to the Depositary, its successors or their respective nominees. Interests of beneficial owners in a Global Security may be transferred in accordance with the rules and procedures of the Depositary and the provisions of Section 3.7. Beneficial owners may obtain U.S. Physical Securities in exchange for their beneficial interests in the U.S. Global Security upon request in accordance with the Depositary's and the Security Registrar's procedures. In addition, at any time following the Offshore Securities Exchange Date, upon receipt by the Trustee and the Company of a certificate substantially in the Form of Exhibit A hereto, the Company shall execute, and the Trustee shall authenticate and deliver to beneficial owners, in exchange for their beneficial interest in the Offshore Global Security, Permanent Offshore Physical Securities (together with the U.S. Physical Securities, the "Physical Securities"). In connection with the execution, authentication and delivery of either of such Physical Securities, the Security Registrar shall reflect on its books and records a decrease in the principal amount of the relevant Global Security equal to the principal amount of such Physical Securities and the Company shall execute and the Trustee shall authenticate and deliver one or more Physical Securities having an equal aggregate principal amount. In addition, Physical Securities shall be issued to all beneficial owners in exchange for their beneficial interests in a Global Security if (i) the Depositary notifies the Company that it is unwilling or unable to continue as a depositary for a Global Security and a successor depositary is not appointed by the Company within 90 days of such notice or (ii) an Event of Default has occurred and is continuing and the Security Registrar has received a request from the Depositary. (c) In connection with any transfer of a portion of the beneficial interest in a Global Security pursuant to subsection (b) of this Section to beneficial owners who are required to hold Physical Securities, the Security Registrar shall reflect on its books and records the date and a decrease in the principal amount of the Global Security in an amount equal to the principal amount of the beneficial interest in the Global Security to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Physical Securities of like tenor and amount. (d) In connection with the transfer of an entire Global Security to beneficial owners pursuant to subsection (b) of this Section, such Global Security shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary, in exchange for its beneficial interest in the U.S. Global Security or Offshore Global Security, as the case may be, an equal aggregate principal amount of U.S. Physical Securities or Permanent Offshore Physical Securities, as the case may be, of authorized denominations. (e) Any Physical Security delivered in exchange for an interest in Global Securities pursuant to subsection (c) or subsection (d) of this Section shall, except as otherwise provided by paragraph (a)(i)(x) and paragraph (f) of Section 3.7, bear the Private Placement Legend. -54- 61 (f) The registered holder of a Global Security may grant proxies and otherwise authorize any person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. Section 3.7. Special Transfer Provisions. Unless and until (i) an Initial Security is sold under an effective Registration Statement, or (ii) an Initial Security is exchanged for a Series B Security in connection with the Exchange Offer, in each case pursuant to the Registration Rights Agreement, the following provisions shall apply: (a) Transfers to Non-QIB Institutional Accredited Investors. The following provisions shall apply with respect to the registration of any proposed transfer of an Initial Security to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) which is not a QIB (excluding Non-U.S. Persons): (i) The Security Registrar shall register the transfer of any Initial Security whether or not such Initial Security bears the Private Placement Legend, if (x) the requested transfer is at least two years after the Issue Date of the Initial Securities or (y) the proposed transferee has delivered to the Security Registrar a certificate substantially in the form of Exhibit B hereto. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in a Global Security, upon receipt by the Security Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with the Depositary's and the Security Registrar's procedures therefor, the Security Registrar shall reflect on its books and records the date and a decrease in the principal amount of the applicable Global Security in an amount equal to the principal amount of the beneficial interest in the Global Security transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more U.S. Physical Securities of like tenor and amount. (b) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of an Initial Security to a QIB (excluding Non-U.S. Persons): (i) If the Security to be transferred consists of Physical Securities, the Security Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Initial Security stating, or has otherwise advised the Company and the Security Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to the transferee who has signed the certification provided for on the form of Initial Security, stating, or has otherwise advised the Company and the Security Registrar in writing, that it is -55- 62 purchasing the Initial Security for its own account or an account with respect to which it exercises sole investment discretion and that it, or the person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) If the proposed transferee is an Agent Member, and the Initial Security to be transferred consists of Physical Securities which after transfer are to be evidenced by an interest in the U.S. Global Security, upon receipt by the Security Registrar of instructions given in accordance with the Depositary's and the Security Registrar's procedures therefor, the Security Registrar shall reflect on its books and records the date and an increase in the principal amount of the U.S. Global Security in an amount equal to the principal amount of the Physical Securities to be transferred, and the Trustee shall cancel the Physical Security so transferred. (iii) If the Security to be transferred consists of an interest in the U.S. Global Security, and the proposed transferee is a Agent Member, the Security Registrar shall reflect such transfer on its books and records. (c) Transfers by Non-U.S. Persons on or Prior to July 31, 1997. The following provisions shall apply with respect to registration of any proposed transfer of an Initial Security by a Non-U.S. Person on or prior to July 31, 1997: (i) If the proposed transferee is (x) a Non-U.S. Person and the proposed transferor has delivered to the Security Registrar a certificate substantially in the form of Exhibit C hereto or (y) a QIB and the proposed transferor has advised the Company and the Security Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has advised the Company and the Security Registrar in writing, that it is purchasing the Initial Security for its own account or an account with respect to which it exercises sole investment discretion and that it, or the person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A, upon instructions given in accordance with the Depositary's procedures, the Security Registrar shall register the transfer of any Initial Security by reflecting on its books and records a decrease in the principal amount at maturity of the Offshore Global Security in an amount equal to the beneficial interest in such Global Security so transferred. -56- 63 (ii) If the proposed transferee is a Agent Member, upon receipt by the Security Registrar of instructions given in accordance with the Depositary's and the Security Registrar's procedures therefor, the Security Registrar shall reflect on its books and records the date and an increase in the principal amount at maturity of the U.S. Global Security in an amount equal to the principal amount of the beneficial interest in the Offshore Global Security to be transferred, and the Trustee shall decrease the principal amount at maturity of the Offshore Global Security represented by the beneficial interest therein so transferred. (d) Transfers by Non-U.S. Persons on or after July 31, 1997. The following provisions shall apply with respect to any transfer of an Initial Security by a Non-U.S. Person on or after July 31, 1997: (i) If the Initial Security to be transferred is a Permanent Offshore Physical Security, the Security Registrar shall register such transfer. (ii) If the proposed transferee is an Agent Member, upon receipt by the Security Registrar of instructions given in accordance with the Depositary's and the Security Registrar's procedures therefor, the Security Registrar shall reflect on its books and records the date and an increase in the principal amount of the U.S. Global Security in an amount equal to the principal amount of the Permanent Offshore Physical Security to be transferred, and the Trustee shall cancel the Permanent Offshore Physical Security so transferred. (e) Transfers to Non-U.S. Persons at Any Time. The following provisions shall apply with respect to any transfer of an Initial Security to a Non-U.S. Person: (i) Prior to July 31, 1997, and subject to (ii) below, the Security Registrar shall register any proposed transfer of an Initial Security to a Non-U.S. Person upon receipt of a certificate substantially in the form of Exhibit C hereto from the proposed transferor, by reflecting on its books and records an increase in the principal amount at maturity of the Offshore Global Security in an amount equal to the principal amount of the Securities transferred. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Security, upon receipt by the Security Registrar of (x) the document, if any, required by paragraph (i), and (y) instructions in accordance with the Depositary's and the Security Registrar's procedures thereof, the Security Registrar shall reflect on its books and records the date and a decrease in the principal amount of the U.S. Global Security in an amount equal to the principal amount of the beneficial interest in the U.S. Global Security transferred, and an increase in the same amount to the principal amount at maturity of the Offshore Global Security. -57- 64 (iii) On and after July 31, 1997, and subject to paragraph (iv) below, the Security Registrar shall register any proposed transfer to any Non-U.S. Person (x) if the Initial Security to be transferred is a Permanent Offshore Physical Security, or (y) if the Initial Security to be transferred is a U.S. Physical Security or an interest in the U.S. Global Security, upon receipt of a certificate substantially in the form of Exhibit C from the proposed transferor and (z) in the case of any of clause (x) or (y), the Company shall execute, and the Trustee shall authenticate and deliver, one or more Permanent Offshore Physical Securities of like tenor and amount. (iv) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Security, upon receipt by the Security Registrar of (x) the document, if any, required by paragraph (iii), and (y) instructions in accordance with the Depositary's and the Security Registrar's procedures therefor, the Security Registrar shall reflect on its books and records the date and a decrease in the principal amount of the U.S. Global Security in an amount equal to the principal amount of the beneficial interest in the U.S. Global Security to be transferred and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Permanent Offshore Physical Securities of like tenor and amount. (f) Private Placement Legend. Upon the registration of transfer, exchange or replacement of Securities not bearing the Private Placement Legend, the Security Registrar shall deliver Securities that do not bear the Private Placement Legend. Upon the registration of transfer, exchange or replacement of Securities bearing the Private Placement Legend, the Security Registrar shall deliver only Securities that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraphs (a)(i)(x), (d)(i) or (e)(iii) of this Section 3.7 exist or (ii) there is delivered to the Security Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (g) General. By its acceptance of any Security bearing the Private Placement Legend, each Holder of such a Security acknowledges the restrictions on transfer of such Security set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Security only as provided in this Indenture. The Security Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.6 or this Section 3.7. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Security Registrar. Section 3.8. Mutilated, Destroyed, Lost and Stolen Securities. If (a) any mutilated Security is surrendered to the Trustee, or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and -58- 65 there is delivered to the Company, any other obligor on the Securities and the Trustee, such security or indemnity, in each case, as may be required by them to save each of them harmless, then, in the absence of notice to the Company, any other obligor on the Securities or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon a Company Request the Trustee shall authenticate and make available for delivery, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a replacement Security of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a replacement Security, pay such Security. Upon the issuance of any replacement Securities under this Section, the Company may require the payment of a sum sufficient to pay all documentary, stamp or similar issue or transfer taxes or other governmental charges that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every replacement Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company and any other obligor on the Securities, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. Section 3.9. Payment of Interest; Interest Rights Preserved. Interest on any Security which is payable, and is punctually paid or duly provided for, on the Stated Maturity of such interest shall be paid to the Person in whose name the Security (or any Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest payment. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on the Stated Maturity of such interest, and interest on such defaulted interest at the then applicable interest rate borne by the Securities, to the extent lawful (such defaulted interest and interest thereon herein collectively called "Defaulted Interest"), shall forthwith cease to be payable to the Holder on the Regular Record Date, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Subsection (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or any relevant Predecessor Securities) are -59- 66 registered at the close of business on a Special Record Date for the Payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date (not less than 30 days after such notice) of the proposed payment (the "Special Payment Date"), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the Special Payment Date, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this Subsection. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the Special Payment Date and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company in writing of such Special Record Date. In the name and at the expense of the Company, the Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at its address as it appears in the Security Register, not less than 10 days prior to such Special Record Date, Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Payment Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities are registered on such Special Record Date and shall no longer be payable pursuant to the following Subsection (b). (b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after written notice given by the Company to the Trustee of the proposed payment pursuant to this Subsection, such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 3.9, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 3.10. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and the Company, or the Trustee on behalf of the Company, shall use CUSIP numbers in notices of redemption or exchange as a convenience to Holders; provided, however, that any such notice shall state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or exchange and that reliance may be placed only on the other identification numbers printed on the Securities; and -60- 67 provided further, however, that failure to use CUSIP numbers in any notice of redemption or exchange shall not affect the validity or sufficiency of such notice. Section 3.11. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of, premium, if any and (subject to Section 3.9) interest on, such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. Section 3.12. Cancellation. All Securities surrendered for payment, purchase, redemption, registration of transfer or exchange shall be delivered to the Trustee and, if not already canceled, shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as in this Section 3.12, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be returned to the Company. The Trustee shall provide the Company a list of all Securities that have been canceled from time to time as requested by the Company. Section 3.13. Computation of Interest. Interest on the Securities shall be computed on the basis of a 360-day year comprised of twelve 30-day months. ARTICLE IV DEFEASANCE AND COVENANT DEFEASANCE Section 4.1. Company's Option to Effect Defeasance or Covenant Defeasance. The Company may, at its option by Board Resolution, at any time, with respect to the Securities, elect to have either Section 4.2 or Section 4.3 be applied to all of the Outstanding Securities (the "Defeased Securities"), upon compliance with the conditions set forth below in this Article IV. -61- 68 Section 4.2. Defeasance and Discharge. Upon the Company's exercise under Section 4.1 of the option applicable to this Section 4.2, the Company and any other obligor on the Securities, if any, shall be deemed to have been discharged from its obligations with respect to the Defeased Securities on the date the conditions set forth in Section 4.4 below are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Company and any other obligor on the Securities shall be deemed to have paid and discharged the entire Indebtedness represented by the Defeased Securities, which shall thereafter be deemed to be "Outstanding" only for the purposes of Section 4.5 and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company and upon Company Request, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of Defeased Securities to receive, solely from the trust fund described in Section 4.4 and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on, such Securities, when such payments are due, (b) the Company's obligations with respect to such Defeased Securities under Sections 3.4, 3.5, 3.8, 10.2 and 10.3, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder, including, without limitation, the Trustee's rights under Section 6.7, and (d) this Article IV. Subject to compliance with this Article IV, the Company may exercise its option under this Section 4.2 notwithstanding the prior exercise of its option under Section 4.3 with respect to the Securities. Section 4.3. Covenant Defeasance. Upon the Company's exercise under Section 4.1 of the option applicable to this Section 4.3, the Company and any other obligor on the Securities shall be released from its obligations under any covenant or provision contained or referred to in Sections 10.5 through 10.18, inclusive, and the provisions of clauses (iii) and (v) of Section 8.1(a), with respect to the Defeased Securities on and after the date the conditions set forth in Section 4.4 below are satisfied (hereinafter, "covenant defeasance"), and the Defeased Securities shall thereafter be deemed to be not "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "Outstanding" for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to the Defeased Securities, the Company and any other obligor on the Securities may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section or Article, whether directly or indirectly, by reason of any reference elsewhere herein to any such Section or Article or by reason of any reference in any such Section or Article to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Sections 5.1(c), (d) or (e), but, except as specified above, the remainder of this Indenture and such Defeased Securities shall be unaffected thereby. In the event covenant defeasance occurs, the Events of Default specified in Sections 5.1(e) and (f) will no longer constitute Events of Default with respect to the Securities. -62- 69 Section 4.4. Conditions to Defeasance or Covenant Defeasance. The following shall be the conditions to application of either Section 4.2 or Section 4.3 to the Defeased Securities: (1) The Company shall irrevocably have deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (a) United States dollars in an amount, (b) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms and with no further reinvestment will provide, not later than one day before the due date of any payment, money in an amount, or (c) a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants or a nationally recognized investment banking firm expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee to pay and discharge, the principal of, premium, if any, and interest on, the Defeased Securities, on the Stated Maturity of such principal or interest (or on any date after June 15, 2002 (such date being referred to as the "Defeasance Redemption Date") if at or prior to electing to exercise either its option applicable to Section 4.2 or its option applicable to Section 4.3, the Company has delivered to the Trustee an irrevocable notice to redeem all of the Outstanding Securities on the Defeasance Redemption Date). For this purpose, "U.S. Government Obligations" means securities that are (i) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt; (2) In the case of an election under Section 4.2, the Company shall have delivered to the Trustee an Opinion of Independent Counsel in the United States stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date hereof, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Independent Counsel in the United States shall confirm that, the Holders of the Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred; -63- 70 (3) In the case of an election under Section 4.3, the Company shall have delivered to the Trustee an Opinion of Independent Counsel in the United States to the effect that the Holders of the Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (4) No Default or Event of Default (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) shall have occurred and be continuing on the date of such deposit or insofar as Section 5.1(g) or (h) is concerned, at any time during the period ending on the 91st day after the date of deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period); (5) Such defeasance or covenant defeasance shall not cause the Trustee for the Securities to have a conflicting interest for purposes of the Trust Indenture Act with respect to any other securities of the Company; (6) Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a Default under, (A) this Indenture or (B) any other agreement or instrument to which the Company or any Significant Subsidiary is a party or by which the Company or any Significant Subsidiary is bound, if such breach, violation, or default thereof would have a material adverse effect on the Company and its Subsidiaries taken as a whole; (7) Such defeasance or covenant defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act of 1940, as amended, unless such trust shall be registered under such Act or exempt from registration thereunder; (8) The Company shall have delivered to the Trustee an Opinion of Independent Counsel in the United States to the effect that after the 91st day following the deposit, the trust funds will not be subject to avoidance under Section 547 of the United States Bankruptcy Code (or any successor provision thereto) and related judicial decisions; (9) The Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the holders of the Securities over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; (10) No event or condition shall exist that would prevent the Company from making payments of the principal of, premium, if any, and interest on the Securities on the date of such deposit or at any time ending on the 91st day after the date of such deposit; and (11) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Independent Counsel, each stating that all conditions precedent provided for relating -64- 71 to either the defeasance under Section 4.2 or the covenant defeasance under Section 4.3 (as the case may be) have been complied with. Opinions of Counsel or Opinions of Independent Counsel required to be delivered under this Section shall be in form and substance reasonably satisfactory to the Trustee and may have qualifications customary for opinions of the type required and counsel delivering such opinions may rely on certificates of the Company or government or other officials customary for opinions of the type required, which certificates shall be limited as to matters of fact, including that various financial covenants have been complied with. Section 4.5. Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the last paragraph of Section 10.3, all United States dollars and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee pursuant to Section 4.4 in respect of the Defeased Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (excluding the Company or any of its Affiliates acting as Paying Agent), as the Trustee may determine, to the Holders of such Securities of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 4.4 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is imposed, assessed or for the account of the Holders of the Defeased Securities. Anything in this Article IV to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any United States dollars or U.S. Government Obligations held by it as provided in Section 4.4 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect defeasance or covenant defeasance. Section 4.6. Reinstatement. If the Trustee or Paying Agent is unable to apply any United States dollars or U.S. Government Obligations in accordance with Section 4.2 or 4.3, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Securities shall be revived and reinstated, with present and prospective effect, as though no deposit had occurred pursuant to Section 4.2 or 4.3, as the case may be, until such time as the -65- 72 Trustee or Paying Agent is permitted to apply all such United States dollars or U.S. Government Obligations in accordance with Section 4.2 or 4.3, as the case may be; provided, however, that if the Company makes any payment to the Trustee or Paying Agent of principal of, premium, if any, or interest on any Security following the reinstatement of its obligations, the Trustee or Paying Agent shall promptly pay any such amount to the Holders of the Securities and the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the United States dollars and U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE V REMEDIES Section 5.1. Events of Default. "Event of Default," wherever used herein, 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) there shall be a default in the payment of any interest on any Security when it becomes due and payable, and such default shall continue for a period of 30 days; (b) there shall be a default in the payment of the principal of (or premium, if any, on) any Security at its Maturity (upon acceleration, optional or mandatory redemption, required repurchase or otherwise); (c) there shall be a default in the performance, or breach, of any covenant or agreement of the Company under this Indenture (other than a default in the performance, or breach, of a covenant or agreement which is specifically dealt with in clauses (a), (b) or (d) of this Section 5.1) and such default or breach shall continue for a period of 30 days after written notice has been given, by certified mail, (x) to the Company by the Trustee or (y) to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities, which notice shall specify that it is a "notice of default" and shall demand that such a default be remedied; (d) (i) there shall be a default in the performance or breach of the provisions of Article VIII; (ii) the Company shall have failed to make or consummate an Offer required in accordance with the provisions of Section 10.12; or (iii) the Company shall have failed to make or consummate a Change of Control Offer required in accordance with the provisions of Section 10.13; -66- 73 (e) one or more defaults shall have occurred under any of the agreements, indentures or instruments under which the Company or any Subsidiary then has outstanding Indebtedness in excess of $6,500,000, individually or in the aggregate, and either (a) such default results from the failure to pay such Indebtedness at its stated final maturity or (b) such default or defaults have resulted in the acceleration of the maturity of such Indebtedness; (f) one or more judgments, orders or decrees for the payment of money in excess of $6,500,000, either individually or in the aggregate, shall be rendered against the Company or any Subsidiary or any of their respective properties (except with respect to the Farmingdale Facility) and shall not be discharged and either (a) any creditor shall have commenced an enforcement proceeding upon such judgment, order or decree or (b) there shall have been a period of 60 consecutive days during which a stay of enforcement of such judgment, order or decree, by reason of an appeal or otherwise, shall not be in effect; provided that the amount of such money judgment, order or decree shall be calculated net of any insurance coverage that the Company has determined in good faith is available in whole or in part with respect to such money judgment, order or decree; (g) there shall have been the entry by a court of competent jurisdiction of (i) a decree or order for relief in respect of the Company or any Significant Subsidiary in an involuntary case or proceeding under any applicable Bankruptcy Law or (ii) a decree or order adjudging the Company or any Significant Subsidiary bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Significant Subsidiary under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any Significant Subsidiary or of any substantial part of their respective properties, or ordering the winding up or liquidation of their respective affairs, and any such decree or order for relief shall continue to be in effect, or any such other decree or order shall be unstayed and in effect, for a period of 60 consecutive days; or (h) (1) the Company or any Significant Subsidiary commences a voluntary case or proceeding under any applicable Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or insolvent, (2) the Company or any Significant Subsidiary consents to the entry of a decree or order for relief in respect of the Company or such Significant Subsidiary in an involuntary case or proceeding under any applicable Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or proceeding against it, (3) the Company or any Significant Subsidiary files a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, (4) the Company or any Significant Subsidiary (A) consents to the filing of such petition or the appointment of, or taking possession by, a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or such Significant Subsidiary or of any substantial part of their respective properties, (B) makes an assignment for the benefit of creditors or (C) admits in writing its inability to pay its -67- 74 debts generally as they become due, or (5) the Company or any Significant Subsidiary takes any corporate action in furtherance of any such actions in this paragraph (h). Section 5.2. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Sections 5.1(g) and (h) with respect to the Company) shall occur and be continuing with respect to this Indenture, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities then Outstanding may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all Securities to be due and payable, by a notice in writing to the Company (and to the Trustee if given by the Holders of the Securities) and upon any such declaration, such principal, premium, if any, and interest shall become due and payable immediately. If an Event of Default specified in clause (g) or (h) of Section 5.1 occurs with respect to the Company and is continuing, then all the Securities shall ipso facto become and be due and payable immediately in an amount equal to the principal amount of the Securities, together with accrued and unpaid interest, if any, to the date the Securities become due and payable, without any declaration or other act on the part of the Trustee or any Holder. Thereupon, the Trustee may, at its discretion, proceed to protect and enforce the rights of the Holders of the Securities by appropriate judicial proceedings. After such declaration of acceleration with respect to the Securities, but before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in aggregate principal amount of the Securities Outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (a) the Company has paid or deposited with the Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee under this Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, (ii) all overdue interest on all Outstanding Securities, (iii) the principal of and premium, if any, on any Outstanding Securities which have become due otherwise than by such declaration of acceleration and interest thereon at a rate borne by the Securities, and (iv) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Securities; and (b) all Events of Default, other than the non-payment of principal of the Securities which have become due solely by such declaration of acceleration, have been -68- 75 cured or waived as provided in Section 5.13. No such rescission shall affect any subsequent Default or impair any right consequent thereon. If payment of the Securities is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify the agent under the Bank Credit Facility of the acceleration. If any indebtedness under the Bank Credit Facility is outstanding, the Company may not pay the Securities until five Business Days after the agent under the Bank Credit Facility receives notice of such acceleration, and, thereafter, may pay the Securities only if this Indenture otherwise permits payments at that time. Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (a) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (b) default is made in the payment of the principal of, premium, if any, on any Security at the Stated Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and premium, if any, and interest, with interest upon the overdue principal and premium, if any, and, to the extent that payment of such interest shall be legally enforceable, upon overdue installments of interest, at the rate borne by the Securities; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor on the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor on the Securities, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders under this Indenture by such appropriate private or judicial proceedings as the Trustee shall deem most effectual to protect and enforce such rights, subject however to Section 5.12. No recovery of any such judgment upon any property of the Company shall affect or impair any rights, powers or remedies of the Trustee or the Holders. -69- 76 Section 5.4. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor on the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal, and premium, if any, and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (b) 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 similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 5.5. Trustee May Enforce Claims without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. -70- 77 Section 5.6. Application of Money Collected. Any money collected by the Trustee pursuant to this Article or otherwise on behalf of the Holders or the Trustee pursuant to this Article or through any proceeding or any arrangement or restructuring in anticipation or in lieu of any proceeding contemplated by this Article shall be applied, subject to applicable law, in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium, if any, or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 6.7; SECOND: To the payment of the amounts then due and unpaid upon the Securities for principal, premium, if any, and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal, premium, if any, and interest; and THIRD: The balance, if any, to the Person or Persons entitled thereto, including the Company, provided that all sums due and owing to the Holders and the Trustee have been paid in full as required by this Indenture. Section 5.7. Limitation on Suits. No Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or the Securities, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (b) the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as trustee hereunder; (c) such Holder or Holders have offered to the Trustee an indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee for 15 days after its receipt of such notice, request and offer (and if requested, provision) of indemnity has failed to institute any such proceeding; and -71- 78 (e) no direction inconsistent with such written request has been given to the Trustee during such 15-day period by the Holders of a majority in principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner provided in this Indenture and for the equal and ratable benefit of all the Holders. Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right based on the terms stated herein, which is absolute and unconditional, to receive payment of the principal of, premium, if any, and (subject to Section 3.9) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption or repurchase, on the Redemption Date or the repurchase date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. Section 5.9. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case the Company, any other obligor on the Securities, the Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 5.10. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 5.11. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and -72- 79 remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 5.12. Control by Holders. The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, provided that (a) such direction shall not be in conflict with any rule of law or with this Indenture (including, without limitation, Section 5.7) or expose the Trustee to personal liability, or be unduly prejudicial to Holders not joining therein; and (b) subject to the provisions of Section 315 of the Trust Indenture Act, the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 5.13. Waiver of Past Defaults. The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may on behalf of the Holders of all Outstanding Securities waive any past Default hereunder and its consequences, except a Default (a) in the payment of the principal of, premium, if any, or interest on any Security; or (b) in respect of a covenant or a provision hereof which under this Indenture cannot be modified or amended without the consent of the Holder of each Security Outstanding affected by such modification or amendment. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 5.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant -73- 80 in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant, but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of, premium, if any, or interest on, any Security on or after the respective Stated Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date). Section 5.15. Waiver of Stay, Extension or Usury Laws. Each of the Company and any other obligor on the Securities covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company from paying all or any portion of the principal of, premium, if any, or interest on the Securities contemplated herein or in the Securities or which may affect the covenants or the performance of this Indenture; and each of the Company and any other obligor on the Securities (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.16. Remedies Subject to Applicable Law. All rights, remedies and powers provided by this Article V may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law in the premises, and all the provisions of this Indenture are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Indenture invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law. ARTICLE VI THE TRUSTEE Section 6.1. Duties of Trustee. Subject to the provisions of Trust Indenture Act Sections 315(a) through 315(d): (a) if a Default or an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of his own affairs; -74- 81 (b) except during the continuance of a Default or an Event of Default: (1) the Trustee need perform only those duties as are specifically set forth in this Indenture and no covenants or obligations shall be implied in this Indenture that are adverse to the Trustee; and (2) in the absence of bad faith or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture; (c) the Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this Subsection (c) does not limit the effect of Subsection (b) of this Section 6.1; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith, in accordance with a direction of the Holders of a majority in principal amount of Outstanding Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power confirmed upon the Trustee under this Indenture; (d) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it; (e) whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to Subsections (a), (b), (c) and (d) of this Section 6.1; and (f) the Trustee shall not be liable for interest on any money or assets received by it except as the Trustee may agree with the Company. Assets held in trust by the Trustee need not be segregated from other assets except to the extent required by law. -75- 82 Section 6.2. Notice of Defaults. Within 90 days after a Responsible Officer of the Trustee receives notice of the occurrence of any Default, the Trustee shall transmit by mail to all Holders and any other Persons entitled to receive reports pursuant to Section 313(c) of the Trust Indenture Act, as their names and addresses appear in the Security Register, notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of, premium, if any, or interest on any Security, the Trustee shall be protected in withholding such notice if and so long as a trust committee of Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders. Section 6.3. Certain Rights of Trustee. Subject to the provisions of Section 6.1 hereof and Trust Indenture Act Sections 315(a) through 315(d): (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of Indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) the Trustee may consult with counsel of its selection and any advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred therein or thereby in compliance with such request or direction; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture other than any liabilities arising out of the negligence, bad faith or willful misconduct of the Trustee; -76- 83 (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, appraisal, bond, debenture, note, coupon, security or other paper or document unless requested in writing to do so by the Holders of not less than a majority in aggregate principal amount of the Securities then Outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation so requested by the Holders of not less than 25% in aggregate principal amount of the Securities Outstanding shall be paid by the Company or, if paid by the Trustee or any predecessor Trustee, shall be repaid by the Company upon demand; provided, further, the Trustee in its discretion may make such further inquiry or investigation into such facts or matters as it may deem fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (g) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; and (h) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. Section 6.4. Trustee Not Responsible for Recitals, Dispositions of Securities or Application of Proceeds Thereof. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder and that the statements made by it in any Statement of Eligibility and Qualification on Form T-1 supplied to the Company are true and accurate subject to the qualifications set forth therein. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof nor shall the Trustee be responsible for any statement in any registration statement for the Securities under the Securities Act or responsible for the determination as to which beneficial owners are entitled to receive notices hereunder. -77- 84 Section 6.5. Trustee and Agents May Hold Securities; Collections; etc. The Trustee, any Paying Agent, Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities, with the same rights it would have if it were not the Trustee, Paying Agent, Security Registrar or such other agent and, subject to Sections 6.8 and 6.13 hereof and Trust Indenture Act Sections 310 and 311, may otherwise deal with the Company and receive, collect, hold and retain collections from the Company with the same rights it would have if it were not the Trustee, Paying Agent, Security Registrar or such other agent. Section 6.6. Money Held in Trust. All moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Except for funds or securities deposited with the Trustee pursuant to Article IV, the Trustee shall be required to invest all moneys received by the Trustee, until used or applied as herein provided, in Temporary Cash Investments in accordance with the directions of the Company. The Trustee shall be under no liability to the Company for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. Section 6.7. Compensation and Indemnification of Trustee and Its Prior Claim. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as the parties shall agree in writing from time to time for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Company covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence, bad faith or willful misconduct. The Company also covenants and agrees to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any claim, loss, liability, tax, assessment or other governmental charge (other than taxes applicable to the Trustee's compensation hereunder) or expense incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including enforcement of this Section 6.7 and also including any liability which the Trustee may incur as a result of failure to withhold, pay or report any tax, assessment or other governmental charge, and the costs and expenses of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligations of the Company under this Section 6.7 to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for -78- 85 reasonable expenses, disbursements and advances shall constitute an additional obligation hereunder and shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee and each predecessor Trustee. Section 6.8. Conflicting Interests. The Trustee shall comply with the provisions of Section 310(b) of the Trust Indenture Act. Section 6.9. Trustee Eligibility. There shall at all times be a Trustee hereunder which shall be eligible to act as trustee under Trust Indenture Act Section 310(a)(5) and which shall have a combined capital and surplus of at least $100,000,000, to the extent there is an institution eligible and willing to serve. If the Trustee does not have a Corporate Trust Office in The City of New York, the Trustee may appoint an agent in The City of New York reasonably acceptable to the Company to conduct any activities which the Trustee may be required under this Indenture to conduct in The City of New York. If such Trustee publishes reports of condition at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 6.9, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.9, the Trustee shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 6.10. Resignation and Removal; Appointment of Successor Trustee. (a) No resignation or removal of the Trustee and no appointment of a successor trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor trustee under Section 6.11. (b) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign by giving written notice thereof to the Company. Upon receiving such notice or resignation, the Company shall promptly appoint a successor trustee by written instrument executed by authority of the Board of Directors of the Company, a copy of which shall be delivered to the resigning Trustee and a copy to the successor trustee. If an instrument of acceptance by a successor trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may, or any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper, appoint and prescribe a successor trustee. -79- 86 (c) The Trustee may be removed at any time for any cause or for no cause by an Act of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with the provisions of Trust Indenture Act Section 310(b) after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, (2) the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation. then, in any case, (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 5.14, the Holder of any Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor trustee and shall comply with the applicable requirements of Section 6.11. If, within 60 days after such resignation, removal or incapability, or the occurrence of such vacancy, the Company has not appointed a successor Trustee, a successor trustee shall be appointed by the Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee. Such successor trustee so appointed shall forthwith upon its acceptance of such appointment become the successor trustee and supersede the successor trustee appointed by the Company. If no successor trustee shall have been so appointed by the Company or the Holders of the Securities and accepted appointment in the manner hereinafter provided, the Trustee or the Holder of any Security who has been a bona fide Holder for at least six months may, subject to Section 5.14, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Securities as their names and addresses appear -80- 87 in the Security Register. Each notice shall include the name of the successor trustee and the address of its Corporate Trust Office or agent hereunder. Section 6.11. Acceptance of Appointment by Successor. Every successor trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee as if originally named as Trustee hereunder; but, nevertheless, on the written request of the Company or the successor trustee, upon payment of its charges pursuant to Section 6.7 then unpaid, such retiring Trustee shall pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. No successor trustee with respect to the Securities shall accept appointment as provided in this Section 6.11 unless at the time of such acceptance such successor trustee shall be eligible to act as trustee under the provisions of Trust Indenture Act Section 310(a) and this Article VI and shall have a combined capital and surplus of at least $100,000,000 and have a Corporate Trust Office or an agent selected in accordance with Section 6.9. Upon acceptance of appointment by any successor trustee as provided in this Section 6.11, the Company shall give notice thereof to the Holders of the Securities, by mailing such notice to such Holders at their addresses as they shall appear on the Security Register. If the acceptance of appointment is substantially contemporaneous with the appointment, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.10. If the Company fails to give such notice within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be given at the expense of the Company. Section 6.12. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee (including the trust created by this Indenture) shall be the successor of the Trustee hereunder, provided that such corporation shall be eligible under Trust Indenture Act Section 310(a) and this Article VI and shall have a combined capital and surplus of at least $100,000,000 and have a Corporate Trust Office or an agent selected in accordance with Section 6.9, without the execution or filing of any paper or any further act on the part of any of the parties hereto. -81- 88 In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have; provided that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. Section 6.13. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company (or other obligor on the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). A Trustee who has resigned or been removed shall be subject to Trust Indenture Act Section 311(a) to the extent indicated therein. ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 7.1. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee: (a) semiannually, not more than 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date; and (b) at such other times as the Trustee may reasonably request in writing, within 30 days after receipt by the Company of any such request, a list of similar form and content to that in Subsection (a) hereof as of a date not more than 15 days prior to the time such list is furnished; provided, however, that if and so long as the Trustee shall be the Security Registrar, no such list need be furnished. -82- 89 Section 7.2. Disclosure of Names and Addresses of Holders. Holders may communicate pursuant to Trust Indenture Act Section 312(b) with other Holders with respect to their rights under this Indenture or the Securities, and the Trustee shall comply with Trust Indenture Act Section 312(b). The Company, the Trustee, the Registrar and any other Person shall have the protection of Trust Indenture Act Section 312(c). Further, every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of any information as to the names and addresses of the Holders in accordance with Trust Indenture Act Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Trust Indenture Action Section 312. Section 7.3. Reports by Trustee. (a) Within 60 days after May 15 of each year commencing with the first May 15 after the issuance of Securities, the Trustee, if so required under the Trust Indenture Act shall transmit by mail to all Holders in the manner and to the extent provided in Trust Indenture Act Section 313(c), a brief report dated as of such May 15 in accordance with and with respect to the matters required by Trust Indenture Act Section 313(a). The Trustee shall also transmit by mail to the Holders, in the manner and to the extent provided in Trust Indenture Act Section 313(c), a brief report in accordance with and with respect to the matters required by Trust Indenture Act Sections 313(a) and 313(b)(2). (b) A copy of each report transmitted to Holders pursuant to this Section 7.3 shall, at the time of such transmission, be mailed to the Company and filed with each stock exchange, if any, upon which the Securities are listed and also with the Commission. The Company will notify the Trustee promptly if the Securities are listed on any stock exchange. Section 7.4. Reports by Company. The Company shall: (a) file with the Trustee, in accordance with Section 10.17 hereof, and in any event within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company is required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall (i) deliver to the Trustee annual audited financial statements of the Company and its Subsidiaries, prepared on a consolidated basis in conformity with GAAP, within 120 days after the end of each fiscal year of the Company, and (ii) file with the Trustee and, to the extent permitted by law, the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such -83- 90 of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (b) file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants for this Indenture as are required from time to time by such rules and regulations (including such information, documents and reports referred to in Trust Indenture Act Section 314(a)); and (c) within 15 days after the filing thereof with the Trustee, transmit by mail to all Holders in the manner and to the extent provided in Trust Indenture Act Section 313(c), such summaries of any information, documents and reports required to be filed by the Company pursuant to Section 10.17 hereunder and subsections (a) and (b) of this Section as is required and not prohibited by rules and regulations prescribed from time to time by the Commission. ARTICLE VIII CONSOLIDATION, MERGER, SALE OF ASSETS Section 8.1. Company May Merge, Consolidate, etc., Only on Certain Terms. The Company will not, in a single transaction or through a series of related transactions, consolidate with or merge with or into any other Person or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to any Person or group of affiliated Persons, or permit any of its Subsidiaries to enter into any such transaction or series of related transactions if such transaction or series of related transactions, in the aggregate, would result in a sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Company and its Subsidiaries on a Consolidated basis to any other Person or group of affiliated Persons, unless at the time and after giving effect thereto: (i) either (a) the Company will be the continuing corporation or (b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, conveyance, transfer, lease or disposition all or substantially all of the properties and assets of the Company and its Subsidiaries on a Consolidated basis (the "Surviving Entity") will be a corporation duly organized and validly existing under the laws of the United States of America, any state thereof or the District of Columbia and such Person expressly assumes, by a supplemental indenture, in a form satisfactory to the Trustee, all the obligations of the Company under the Securities and hereunder, as the case may be, and the Securities and this Indenture will remain in full force and effect as so supplemented; -84- 91 (ii) immediately before and immediately after giving effect to such transaction on a pro forma basis (and treating any Indebtedness not previously an obligation of the Company or any of its Subsidiaries which becomes the obligation of the Company or any of its Subsidiaries as a result of such transaction as having been incurred at the time of such transaction), no Default or Event of Default will have occurred and be continuing; (iii) immediately before and immediately after giving effect to such transaction on a pro forma basis (on the assumption that the transaction occurred on the first day of the four-quarter period for which financial results are available ending immediately prior to the consummation of such transaction with the appropriate adjustments with respect to the transaction being included in such pro forma calculation), the Company (or the Surviving Entity if the Company is not the continuing obligor hereunder) could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness or Permitted Subsidiary Indebtedness) under Section 10.8; and (iv) at the time of the transaction the Company or the Surviving Entity will have delivered, or caused to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel, each to the effect that such consolidation, merger, transfer, sale, assignment, conveyance, transfer, lease or other transaction and the supplemental indenture in respect thereof comply with this Indenture and that all conditions precedent herein provided for relating to such transaction have been complied with; provided, however, that clauses (i) through (iv) of this Section 8.1 shall not prohibit (a) the merger of White Rose into the Company on the Issue Date, and (b) any merger between or among Subsidiaries of the Company. Section 8.2. Successor Substituted. Upon any consolidation or merger, or any sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Company in accordance with Section 8.1, the successor Person formed by such consolidation or into which the Company is merged or the successor Person to which such sale, assignment, conveyance, transfer, lease or disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, with the same effect as if such successor had been named as the Company herein. When a successor assumes all the obligations of its predecessor under this Indenture or the Securities, the predecessor shall be released from such assumed obligations and covenants under the indenture and the Securities, as the case may be; provided that in the case of a transfer by lease, the predecessor shall not be released from the payment of principal and interest on the Securities. -85- 92 ARTICLE IX SUPPLEMENTAL INDENTURES Section 9.1. Supplemental Indentures and Agreements without Consent of Holders. Without the consent of any Holders, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto in form and substance satisfactory to the Trustee, for any of the following purposes: (a) to evidence the succession of another Person to the Company or any other obligor on the Securities, and the assumption by any such successor of the covenants of the Company or obligor herein and in the Securities in accordance with Article VIII; (b) to add to the covenants of the Company or any other obligor on the Securities for the benefit of the Holders, or to surrender any right or power conferred on the Company or any other obligor on the Securities, as applicable, herein or in the Securities; (c) to cure any ambiguity, or to correct or supplement any provision herein or in any supplemental indenture or the Securities which may be defective or inconsistent with any other provision herein or in the Securities or to make any other provisions with respect to matters or questions arising under this Indenture or the Securities; provided that, in each case, such provisions shall not adversely affect the interest of the Holders; (d) to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act, as contemplated by Section 9.5 or otherwise; (e) to evidence and provide the acceptance of the appointment of a successor trustee hereunder; or (f) to mortgage, pledge, hypothecate or grant a security interest in favor of the Trustee for the benefit of the Holders as additional security for the payment and performance of the Company's Indenture Obligations, in any property, or assets, including any of which are required to be mortgaged, pledged or hypothecated, or in which a security interest is required to be granted to the Trustee pursuant to this Indenture or otherwise. Section 9.2. Supplemental Indentures and Agreements with Consent of Holders. Except as permitted by Section 9.1, with the consent of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company when authorized by Board Resolutions, and the -86- 93 Trustee may (i) enter into an indenture or indentures supplemental hereto in form and substance satisfactory to the Trustee, for the purpose of adding any provisions to or amending, modifying or changing in any manner or eliminating any of the provisions of this Indenture or the Securities (including, but not limited to, for the purpose of modifying in any manner the rights of the Holders under this Indenture or the Securities) or (ii) waive compliance with any provision in this Indenture or the Securities (other than waivers of past Defaults covered by Section 5.13 and waivers of covenants which are covered by Section 10.19); provided, however, that no such supplemental indenture, agreement or instrument shall, without the consent of the Holder of each Outstanding Security affected thereby: (a) change the Stated Maturity of the principal of, or any installment of interest on, or change to an earlier date any redemption date of, or waive a default in the payment of the principal or interest on, any such Security or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the coin or currency in which the principal of any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); (b) amend, change or modify the obligation of the Company to make and consummate an Offer with respect to any Asset Sale or Asset Sales in accordance with Section 10.12 or the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with Section 10.13, including, in each case, amending, changing or modifying any definitions relating thereto; (c) reduce the percentage in principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver or compliance with certain provisions of this Indenture; (d) modify any of the provisions of this Section 9.2 or Section 5.13 or 10.19, except to increase the percentage of such Outstanding Securities required for any such actions or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each such Security affected thereby; (e) except as otherwise permitted under Article VIII, consent to the assignment or transfer by the Company of any of its rights and obligations hereunder; or (f) amend or modify any of the provisions of this Indenture in any manner which subordinates the Securities in right of payment to other Indebtedness of the Company. -87- 94 Upon the written request of the Company accompanied by a copy of Board Resolutions authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Holders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture. It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture but it shall be sufficient if such Act shall approve the substance thereof. Section 9.3. Execution of Supplemental Indentures and Agreements. In executing, or accepting the additional trusts created by, any supplemental indenture, agreement, instrument or waiver permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Trust Indenture Act Sections 315(a) through 315(d) and Section 6.2 hereof) shall be fully protected in relying upon, an Opinion of Counsel and an Officers' Certificate stating that the execution of such supplemental indenture, agreement or instrument is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture, agreement or instrument which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 9.4. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.5. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.6. Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. -88- 95 Section 9.7. Notice of Supplemental Indentures. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 9.2, the Company shall give notice thereof to the Holders of each Outstanding Security affected, in the manner provided for in Section 1.6, setting forth in general terms the substance of such supplemental indenture. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. ARTICLE X COVENANTS Section 10.1. Payment of Principal, Premium and Interest. The Company shall duly and punctually pay the principal of, premium, if any, and interest on the Securities in accordance with the terms of the Securities and this Indenture. Section 10.2. Maintenance of Office or Agency. The Company shall maintain an office or agency where Securities may be presented or surrendered for payment. The Company also will maintain in The City of New York an office or agency where Securities may be surrendered for registration of transfer, redemption or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The office of the Trustee, at its Corporate Trust Office, will be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of the location and any change in the location of any such offices or agencies. If at any time the Company shall fail to maintain any such required offices or agencies or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the office of the Trustee and the Company hereby appoints the Trustee such agent as its agent to receive all such presentations, surrenders, notices and demands. The Company may from time to time designate one or more other offices or agencies (in or outside of The City of New York) where the Securities may be presented or surrendered for any or all such purposes, and may from time to time rescind such designation. The Company will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such office or agency. The Trustee shall initially act as Paying Agent for the Securities. -89- 96 Section 10.3. Money for Security Payments to Be Held in Trust. If the Company or any of its Affiliates shall at any time act as Paying Agent, it will, on or before each due date of the principal of, premium, if any, or interest on any of the Securities, segregate and hold in trust for the benefit of the Holders entitled thereto a sum sufficient to pay the principal, premium, if any, or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act. If the Company or any of its Affiliates is not acting as Paying Agent, the Company will, on or before each due date of the principal of, premium, if any, or interest on any of the Securities, deposit with a Paying Agent a sum in same day funds sufficient to pay the principal, premium, if any, or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of such action or any failure so to act. If the Company is not acting as Paying Agent, the Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (a) hold all sums held by it for the payment of the principal of, premium, if any, or interest on the Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (b) give the Trustee notice of any Default by the Company (or any other obligor upon the Securities) in the making of any payment of principal, premium, if any, or interest on the Securities; (c) at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; and (d) acknowledge, accept and agree to comply in all aspects with the provisions of this Indenture relating to the duties, rights and disabilities of such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the -90- 97 Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Security and remaining unclaimed for two years after such principal and premium, if any, or interest has become due and payable shall promptly be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), and mail to each such Holder, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification, publication and mailing, any unclaimed balance of such money then remaining will promptly be repaid to the Company. Section 10.4. Corporate Existence. Subject to Article VIII, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence and related rights and franchises (charter and statutory) of the Company and each Subsidiary; provided, however, that the Company shall not be required to preserve any such right or franchise or the corporate existence of any such Subsidiary if the Board of Directors of the Company shall determine that the preservation thereof is no longer necessary or desirable in the conduct of the business of the Company and its Subsidiaries as a whole; and provided, further, however, that the foregoing shall not prohibit a sale, transfer or conveyance of a Subsidiary or any of its assets in compliance with the terms of this Indenture. Section 10.5. Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, on or before the date the same shall become due and payable, (a) all taxes, assessments and governmental charges levied or imposed upon the Company or any of its Subsidiaries shown to be due on any return of the Company or any of its Subsidiaries or otherwise assessed or upon the income, profits or property of the Company or any of its Subsidiaries if failure to pay or discharge the same could reasonably be expected to have a material adverse effect on the ability of the Company to perform its obligations hereunder and (b) all lawful claims for labor, materials and supplies, which, if unpaid, would by law become a Lien upon the property of the Company or any of its Subsidiaries, except for any Lien permitted to be incurred under Section 10.11, if failure to pay or discharge the same could reasonably be expected to have a material adverse effect on the ability of the Company to perform its obligations hereunder; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such -91- 98 tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings properly instituted and diligently conducted and in respect of which appropriate reserves (in the good faith judgment of management of the Company) are being maintained in accordance with GAAP. Section 10.6. Maintenance of Properties. The Company shall cause all material properties owned by the Company or any of its Subsidiaries or used or held for use in the conduct of its business or the business of any of its Subsidiaries to be maintained and kept in good condition, repair and working order (ordinary wear and tear excepted) and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the reasonable judgment of the Company may be consistent with sound business practice and necessary so that the business carried on in connection therewith may be properly conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the maintenance of any of such properties if such discontinuance is, in the reasonable judgment of the Company, desirable in the conduct of its business or the business of any of its Subsidiaries; and provided, further, however, that the foregoing shall not prohibit a sale, transfer or conveyance of a Subsidiary or any of its properties or assets in compliance with the terms of this Indenture. Section 10.7. Insurance. The Company shall at all times keep all of its and its Subsidiaries' properties which are of an insurable nature insured with insurers, believed by the Company in good faith to be financially sound and responsible, against loss or damage to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties in the same general geographic areas in which the Company and its Subsidiaries operate, except where the failure to do so could not reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or prospects of the Company and its Subsidiaries, taken as a whole. Section 10.8. Limitation on Indebtedness. The Company will not create, issue, incur, assume, guarantee or otherwise in any manner become directly or indirectly liable for the payment of or otherwise suffer to exist (collectively, "incur"), any Indebtedness (including any Acquired Indebtedness), other than Permitted Indebtedness, unless such Indebtedness is incurred by the Company and the Company's Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters for which financial results are available immediately preceding the date of incurrence of such Indebtedness (the "Incurrence Date"), taken as one period (and after giving pro forma effect to (i) the incurrence of such Indebtedness and (if applicable) the application of the net proceeds therefrom, including to refinance other Indebtedness, as if such Indebtedness was incurred, and the application of such proceeds occurred, at the beginning of such four-quarter period; (ii) the incurrence, repayment or -92- 99 retirement of any other Indebtedness by the Company since the first day of such four-quarter period as if such Indebtedness was incurred, repaid or retired at the beginning of such four-quarter period (except that, in making such computation, the amount of Indebtedness under any revolving credit facility shall be computed based upon the average daily balance of such Indebtedness during such four-quarter period); (iii) in the case of Acquired Indebtedness, the related acquisition; and (iv) any acquisition or disposition by the Company and its Subsidiaries of any company or any business or any assets out of the ordinary course of business, or any related repayment of Indebtedness, in each case since the first day of such four-quarter period, assuming such acquisition or disposition and any such related payments had been consummated on the first day of such four-quarter period) would be at least 1.8:1 if the Incurrence Date is on or before December 31, 1998, or at least 2.0:1 if the Incurrence Date is after December 31, 1998. The Company will not permit any of its Subsidiaries to incur any Indebtedness (other than Permitted Subsidiary Indebtedness). Section 10.9. Limitation on Restricted Payments. (a) The Company will not, and will not permit any Subsidiary to, directly or indirectly: (i) declare or pay any dividend on, or make any distribution to holders of, any shares of the Company's Capital Stock (other than dividends or distributions payable solely in shares of its Qualified Capital Stock or in options, warrants or other rights to acquire shares of such Qualified Capital Stock); (ii) purchase, redeem or otherwise acquire or retire for value, directly or indirectly, the Company's Capital Stock or any Capital Stock of any Affiliate of the Company (other than (A) Capital Stock of any Wholly-Owned Subsidiary of the Company, (B) the Capital Stock of White Rose upon the merger of White Rose into the Company on the Issue Date, or options, warrants or other rights to acquire such Capital Stock or (C) the Shareholder Stock Repurchases); (iii) prior to any scheduled principal payment, sinking fund payment or maturity of any Subordinated Indebtedness, make any principal payment on, or repurchase, redeem, defease, retire or otherwise acquire for value, such Subordinated Indebtedness (other than any such Indebtedness owed to the Company or a Wholly- Owned Subsidiary); (iv) declare or pay any dividend or distribution on any Capital Stock of any Subsidiary to any Person (other than to the Company or any of its Wholly-Owned Subsidiaries) or purchase, redeem or otherwise acquire or retire for value any Capital Stock of any Subsidiary held by any person (other than the Company or any of its Wholly-Owned Subsidiaries); -93- 100 (v) incur, create or assume any guarantee of Indebtedness of any Affiliate of the Company (other than a Wholly-Owned Subsidiary of the Company); or (vi) make any Investment in any Person (other than Permitted Investments) (any of the foregoing actions described in clauses (i) through (vi), other than any such action that is a Permitted Payment (as defined below), collectively, a "Restricted Payment") (the amount of any such Restricted Payment, if other than cash, being determined by the Board of Directors, whose determination shall be conclusive and evidenced by a Board Resolution); unless (1) immediately before and immediately after giving effect to such proposed Restricted Payment on a pro forma basis, no Default or Event of Default shall have occurred and be continuing and such Restricted Payment shall not be an event which is, or after notice or lapse of time or both, would be, an "event of default" under the terms of any Indebtedness of the Company or its Subsidiaries; (2) immediately before and immediately after giving effect to such Restricted Payment on a pro forma basis, the Company could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness or Permitted Subsidiary Indebtedness) under the provisions described in Section 10.8; and (3) after giving effect to the proposed Restricted Payment, the aggregate amount of all such Restricted Payments declared or made after the date of the Indenture plus the Permitted Payments made under clause (b)(vi), do not exceed $3.0 million plus the sum of: (A) 50% of the aggregate Consolidated Net Income of the Company accrued on a cumulative basis during the period beginning on the first day of the fiscal quarter beginning after the date of the Indenture and ending on the last day of the Company's last fiscal quarter ending prior to the date of the Restricted Payment (or, if such aggregate cumulative Consolidated Net Income shall be a loss, minus 100% of such loss); plus (B) the aggregate Net Cash Proceeds received after the date of the Indenture by the Company either (x) as capital contributions in the form of common equity to the Company or (y) from the issuance or sale (other than to any of its Subsidiaries) of Qualified Capital Stock of the Company or any options, warrants or rights to purchase such Qualified Capital Stock of the Company (except, in each case, to the extent such proceeds are used to purchase, redeem or otherwise retire Capital Stock or Subordinated Indebtedness as set forth below in clause (ii) or (iii) of paragraph (b) below), in each case, other than Net Cash Proceeds received from the issuance or sale of Qualified Capital Stock or options, warrants or rights to purchase Qualified Capital Stock in, or otherwise received in connection with, the Refinancing; plus (C) the aggregate Net Cash Proceeds received after the date of the Indenture by the Company (other than from any of its Subsidiaries) upon the exercise of any options, warrants or rights to purchase Qualified Capital Stock of the Company; plus (D) the aggregate Net Cash Proceeds received after the date of the Indenture by the Company from the conversion or exchange, if any, of debt securities or Redeemable Capital Stock of the Company or its Subsidiaries into or for Qualified -94- 101 Capital Stock of the Company plus, to the extent such debt securities or Redeemable Capital Stock were issued after the date of the Indenture, the aggregate of Net Cash Proceeds from their original issuance; plus (E) in the case of the disposition or repayment of any Investment constituting a Restricted Payment made after the date of the Indenture, an amount equal to the lesser of the return of capital with respect to such Investment and the initial amount of such Investment, in either case, less the cost of the disposition of such Investment. (b) Notwithstanding the foregoing, and in the case of clauses (ii) through (vii) below, so long as there is no Default or Event of Default continuing, the foregoing provisions shall not prohibit the following actions (each of clauses (i) through (vii) being referred to as a "Permitted Payment"): (i) the payment of (1) the White Rose Dividend and (2) any other dividend within 60 days after the date of declaration thereof, if at the date of declaration thereof such other dividend (A) would be permitted by the provisions of paragraph (a) of this Section and (B) shall be deemed to have been paid on such date of declaration for purposes of the calculation required by paragraph (a) of this Section; (ii) the repurchase, redemption, or other acquisition or retirement for value of any shares of any class of Capital Stock of the Company in exchange for (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares or scrip), or out of the Net Cash Proceeds of a substantially concurrent issue and sale for cash (other than to a Subsidiary) of, other shares of Qualified Capital Stock of the Company; provided that the Net Cash Proceeds from the issuance of such shares of Qualified Capital Stock are, to the extent so used, excluded from clause (3)(B) of paragraph (a) of this Section; (iii) the repurchase, redemption, defeasance, retirement or acquisition for value or payment of principal of any Subordinated Indebtedness or Redeemable Capital Stock in exchange for, or in an amount not in excess of the Net Cash Proceeds of, a substantially concurrent issuance and sale for cash (other than to any Subsidiary) of any Qualified Capital Stock of the Company, provided that the Net Cash Proceeds from the issuance of such shares of Qualified Capital Stock are, to the extent so used, excluded from clause (3)(B) of paragraph (a) of this Section; (iv) the repurchase, redemption, defeasance, retirement, refinancing, acquisition for value or payment of principal of any Subordinated Indebtedness (other than Redeemable Capital Stock) (a "refinancing") through the substantially concurrent issuance of new Subordinated Indebtedness of the Company, provided that any such new Subordinated Indebtedness (1) shall be in a principal amount that does not exceed the principal amount so refinanced (or, if such Subordinated Indebtedness provides for an amount less than the principal amount thereof to be due and payable upon a declaration -95- 102 of acceleration thereof, then such lesser amount as of the date of determination), plus the lesser of (I) the stated amount of any premium or other payment required to be paid in connection with such a refinancing pursuant to the terms of the Indebtedness being refinanced or (II) the amount of premium or other payment actually paid at such time to refinance the Indebtedness, plus, in either case, the amount of expenses of the Company incurred in connection with such refinancing; (2) has an Average Life to Stated Maturity greater than the remaining Average Life to Stated Maturity of the Securities; (3) has a Stated Maturity for its final scheduled principal payment later than the Stated Maturity for the final scheduled principal payment of the Securities; and (4) is expressly subordinated in right of payment to the Securities at least to the same extent as the Subordinated Indebtedness to be refinanced; (v) the repurchase, redemption, defeasance, retirement, refinancing, acquisition for value or payment of any Redeemable Capital Stock through the substantially concurrent issuance of new Redeemable Capital Stock of the Company, provided that any such new Redeemable Capital Stock (1) shall have an aggregate liquidation preference that does not exceed the aggregate liquidation preference of the amount so refinanced; (2) has an Average Life to Stated Maturity greater than the remaining Average Life to Stated Maturity of the Securities; and (3) has a Stated Maturity later than the Stated Maturity for the final scheduled principal payment of the Securities; (vi) the repurchase of shares of, or options to purchase shares of, common stock of the Company or any of its Subsidiaries from employees, former employees, directors or former directors of the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such common stock; and (vii) the repurchase, redemption, defeasance, retirement or acquisition for value of the 12 3/4% Discount Notes and the 12% Notes on or prior to their scheduled maturity. Section 10.10. Limitation on Transactions with Affiliates. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into any transaction or series of related transactions (including, without limitation, the sale, purchase, exchange or lease of assets, property or services) with or for the benefit of any Affiliate of the Company (other than the Company or a Subsidiary) unless such transaction or series of related transactions is entered into in good faith and (a) such transaction or series of related transactions is on terms that are no less favorable to the Company or such Subsidiary, as the case may be, than those that would be available in a comparable transaction in arm's-length dealings with an unrelated third party, (b) with respect to any transaction or series -96- 103 of related transactions involving aggregate value in excess of $1,000,000, the Company delivers an Officers' Certificate to the Trustee certifying that such transaction or series of related transactions complies with clause (a) above, and (c) with respect to any transaction or series of related transactions involving aggregate value in excess of $5,000,000, either (A) such transaction or series of related transactions has been approved by a majority of the Disinterested Directors of the Company, or in the event there is only one Disinterested Director, by such Disinterested Director, or (B) the Company delivers to the Trustee a written opinion of an investment banking firm of national standing or other recognized independent expert with experience appraising the terms and conditions of the type of transaction or series of related transactions for which an opinion is required stating that the transactions or series of related transactions are fair to the Company or such Subsidiary from a financial point of view; provided, however, that clauses (a) through (c) above shall not apply to (i) any transaction with an employee or director of the Company or any of its Subsidiaries entered into in the ordinary course of business (including compensation and employee benefit arrangements with any officer, director or employee of the Company or any Subsidiary, including under any stock option or stock incentive plans), (ii) any transactions of payments pursuant to the Tax Sharing Agreement or the Las Plumas Management Agreement, (iii) the merger of White Rose into the Company on the Issue Date and (iv) Restricted Payments made in accordance with the provisions in Section 10.9 or Permitted Payments. Section 10.11. Limitation on Liens. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or incur any Lien of any kind upon any of its property or assets (including any intercompany notes, but excluding any inventory held on consignment), now owned or acquired after the date of the Indenture, or any income or profits therefrom, except if the Securities are directly secured equally and ratably with (or prior to in the case of Liens with respect to Subordinated Indebtedness) the obligation or liability secured by such Lien, excluding, however, from the operation of the foregoing any of the following: (a) Any Lien existing as of the date of the Indenture, as set forth on a schedule to the Indenture. (b) Any Lien arising by reason of (1) any judgment, decree or order of any court, so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (2) taxes not yet delinquent or which are being contested in good faith; (3) good faith deposits in connection with tenders, leases, contracts (other than contracts for the payment of money); (4) zoning restrictions, easements, licenses, reservations, title defects, rights of others for rights of way, utilities, sewers, electric lines, telephone or telegraph lines, and other similar purposes, provisions, covenants, conditions, waivers, restrictions on the use of property or minor irregularities of title (and with respect to leasehold interest, mortgages, obligations, liens and other -97- 104 encumbrances incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without consent of the lessee), none of which materially impairs the use of any parcel of property material to the operation of the business of the Company or any Subsidiary or the value of such property for the purpose of such business; (5) deposits to secure public or statutory obligations, or in lieu of surety or appeal bonds; or (6) operation of law in favor of landlords, mechanics, materialmen, warehousemen, carriers, laborers, employees or suppliers, incurred in the ordinary course of business for sums which are not yet delinquent or are being contested in good faith or negotiations or by appropriate proceedings which suspend the collection thereof. (c) Any Lien on property of the Company or any Subsidiary securing Indebtedness incurred by the Company under subclause (i) of the definition of Permitted Indebtedness. (d) Any Lien securing Acquired Indebtedness created prior to (and not created in connection with, or in contemplation of) the incurrence of such Indebtedness by the Company or any Subsidiary. (e) Any Lien to secure the performance of bids, trade contracts, leases (including without limitation, statutory and common law landlord's liens), statutory obligations, surety and appeal bonds, letters of credit and other obligations of a like nature and incurred in the ordinary course of business of the Company and any Subsidiary. (f) Any Lien securing Indebtedness permitted to be incurred pursuant to clauses (vi) and (ix) of the definition of "Permitted Indebtedness" and which is not prohibited to be incurred under the provisions described in Section 10.8. (g) Any Lien on trucks owned or leased by the Company, or incurred by the Company in connection with the purchase or lease thereof. (h) Any Lien securing Indebtedness incurred to effect a defeasance of the Securities pursuant to the defeasance provisions of the Indenture. (i) Any Lien securing Indebtedness permitted to be incurred under Interest Rate Agreements or otherwise incurred to hedge interest rate risk. (j) Any extension, renewal, refinancing or replacement, in whole or in part, of any lien described in the foregoing clauses (a) through (i) so long as no additional collateral is granted as security thereby. -98- 105 Section 10.12. Limitation on Sale of Assets. (a) The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, consummate an Asset Sale unless (i) at least 75% of the consideration from such Asset Sale is received in cash or Cash Equivalents and (ii) the Company or such Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the shares or assets subject to such Asset Sale (as determined by the board of directors of the Company and evidenced in a board resolution). For the purposes of this covenant, "Cash Equivalents" means (x) the assumption of Indebtedness of the Company or any Subsidiary and the release of the Company or such Subsidiary from all liability on such Indebtedness in connection with such Asset Sale, (y) Temporary Cash Investments, and (z) securities received by the Company or any Subsidiary from the transferee that are promptly converted by the Company or such Subsidiary into cash. (b) If all or a portion of the Net Cash Proceeds of any Asset Sale are not required to be applied to repay permanently any Senior Indebtedness then outstanding as required by the terms thereof, or the Company determines not to apply such Net Cash Proceeds to the permanent prepayment of such Senior Indebtedness, or if no such Senior Indebtedness is then outstanding, then the Company or a Subsidiary may, within 360 days of the Asset Sale invest the Net Cash Proceeds in properties and other assets that (as determined by the Board of Directors) replace the properties and assets that were the subject of the Asset Sale or in properties and assets that will be used in the businesses of the Company or its Subsidiaries existing on the date of the Indenture or in businesses reasonably related thereto. The amount of such Net Cash Proceeds not applied to repay Senior Indebtedness or used or invested within 360 days of the Asset Sale as set forth in this paragraph constitutes "Excess Proceeds." (c) When the aggregate amount of Excess Proceeds exceeds $10 million, the Company will apply the Excess Proceeds to the repayment of the Securities and any other Pari Passu Indebtedness outstanding with provisions requiring the Company to make an offer to purchase or to purchase or redeem such Indebtedness with the proceeds from any Asset Sale as follows: (A) the Company will make an offer to purchase (an "Offer") from all holders of the Securities in accordance with the procedures set forth in the Indenture in the maximum principal amount (expressed as a multiple of $1,000) of Securities that may be purchased out of an amount (the "Securities Amount") equal to the product of such Excess Proceeds multiplied by a fraction, the numerator of which is the outstanding principal amount of the Securities, and the denominator of which is the sum of the outstanding principal amount of the Securities and such Pari Passu Indebtedness (subject to proration in the event such amount is less than the aggregate Offered Price (as defined herein) of all Securities tendered) and (B) to the extent required by such Pari Passu Indebtedness to permanently reduce the principal amount of such Pari Passu Indebtedness, the Company will make an offer to purchase or otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari Passu Offer") in an amount (the "Pari Passu Debt Amount") equal to the excess of the Excess Proceeds over the Securities Amount; provided that in no event will the Company be required to make a Pari Passu Offer in a Pari Passu Debt Amount exceeding the principal amount of such Pari Passu Indebtedness plus the amount of any premium -99- 106 required to be paid to repurchase such Pari Passu Indebtedness. The offer price for the Securities will be payable in cash in an amount equal to 100% of the principal amount of the Securities plus accrued and unpaid interest, if any, to the date (the "Offer Date") such Offer is consummated (the "Offered Price"), in accordance with the procedures set forth in the Indenture. To the extent that the aggregate Offered Price of the Securities tendered pursuant to the Offer is less than the Securities Amount relating thereto or the aggregate amount of Pari Passu Indebtedness that is purchased in a Pari Passu Offer is less than the Pari Passu Debt Amount, the Company will use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Securities and Pari Passu Indebtedness surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Securities to be purchased on a pro rata basis. Upon the completion of the purchase of all the Securities tendered pursuant to an Offer and the completion of a Pari Passu Offer, the amount of Excess Proceeds, if any, shall be reset at zero. (d) Whenever the Excess Proceeds received by the Company exceed $5 million, such Excess Proceeds shall, prior to the purchase of the Securities or any Pari Passu Indebtedness described in paragraph (c) above, be set aside by the Company in a separate account pending (i) deposit with the depository or a paying agent of the amount required to purchase the Securities of Pari Passu Indebtedness tendered in an Offer of a Pari Passu Offer, (ii) delivery by the Company of the Offered Price to the holders of the Securities or Pari Passu Indebtedness tendered in an Offer or a Pari Passu Offer and (iii) application, as set forth above, of Excess Proceeds in the business of the Company and its Subsidiaries. Such Excess Proceeds may be invested in Temporary Cash Investments, provided that the maturity date of any such investment made after the amount of the Excess Proceeds exceeds $5.0 million shall not be later than the Offer Date. The Company shall be entitled to any interest or dividends accrued, earned or paid on such Temporary Cash Investments, provided that the Company shall not withdraw such interest from the separate account if an Event of Default has occurred or is continuing. (e) The Indenture will provide that, if the Company becomes obligated to make an Offer pursuant to clause (c) above, the Securities and the Pari Passu Indebtedness shall be purchased by the Company, at the option of the holders thereof, in whole or in part in integral multiples of $1,000, on a date that is not earlier than 30 days and not later than 60 days from the date the notice of the Offer is given to holders, or such later date as may be necessary for the Company to comply with the requirements under the Exchange Act. (f) The Indenture will provide that the Company will comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any other applicable securities laws or regulations in connection with an Offer. Section 10.13. Purchase of Securities upon a Change of Control. (a) If a Change of Control shall occur at any time, then each Holder shall have the right to require that the Company purchase such Holder's Securities in whole or in part in integral multiples of $1,000 at a purchase price (the "Change of Control Purchase Price") in cash -100- 107 in an amount equal to 101% of the principal amount of such Securities, plus accrued and unpaid interest, if any, to the date of purchase (the "Change of Control Purchase Date"), pursuant to the offer described below in this Section 10.13 (the "Change of Control Offer") and in accordance with the other procedures set forth in subsections (b), (c), (d) and (e) of this Section 10.13. (b) Within 30 days following any Change of Control, the Company shall notify the Trustee thereof and give written notice (a "Change of Control Purchase Notice") of such Change of Control to each Holder by first-class mail, postage prepaid, at his address appearing in the Security Register, stating among other things: (1) that a Change of Control has occurred, the date of such event, and that such Holder has the right to require the Company to repurchase such Holder's Securities at the Change of Control Purchase Price; (2) the circumstances and relevant facts regarding such Change of Control (including but not limited to information with respect to pro forma historical income, cash flow and capitalization after giving effect to such Change of Control); (3) (i) the most recently filed Annual Report on Form 10-K (including audited consolidated financial statements) of the Company, the most recent subsequently filed Quarterly Report on Form 10-Q, as applicable, and any Current Report on Form 8-K of the Company filed subsequent to such Quarterly Report (or in the event the Company is not required to prepare any of the foregoing Forms, the comparable information required to be prepared by the Company pursuant to Section 10.17), (ii) a description of material developments, if any, in the Company's business subsequent to the date of the latest of such reports and (iii) such other information, if any, concerning the business of the Company which the Company in good faith believes will enable such Holders to make an informed investment decision regarding the Change of Control Offer; (4) that the Change of Control Offer is being made pursuant to this Section 10.13 and that all Securities properly tendered pursuant to the Change of Control Offer will be accepted for payment at the Change of Control Purchase Price; (5) the Change of Control Purchase Date, which shall be a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed, or such later date as is necessary to comply with requirements under the Exchange Act; (6) the Change of Control Purchase Price; (7) the names and addresses of the Paying Agent and the offices or agencies referred to in Section 10.2; -101- 108 (8) that Securities must be surrendered on or prior to the Change of Control Purchase Date to the Paying Agent at the office of the Paying Agent or to an office or agency referred to in Section 10.2 to collect payment; (9) that the Change of Control Purchase Price for any Security which has been properly tendered and not withdrawn will be paid promptly following the Change of Control Offer Purchase Date; (10) the procedures that a Holder must follow to accept a Change of Control Offer or to withdraw such acceptance; (11) that any Security not tendered will continue to accrue interest; and (12) that, unless the Company defaults in the payment of the Change of Control Purchase Price, any Securities accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date. (c) Upon receipt by the Company of the proper tender of Securities, the Holder of the Security in respect of which such proper tender was made shall (unless the tender of such Security is properly withdrawn) thereafter be entitled to receive solely the Change of Control Purchase Price with respect to such Security. Upon surrender of any such Security for purchase in accordance with the foregoing provisions, such Security shall be paid by the Company at the Change of Control Purchase Price; provided, however, that installments of interest whose Stated Maturity is on or prior to the Change of Control Purchase Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such on the relevant Regular Record Dates according to the terms and the provisions of Section 3.9. If any Security tendered for purchase in accordance with the provisions of this Section 10.13 shall not be so paid upon surrender thereof, the principal thereof (and premium, if any, thereon) shall, until paid, bear interest from the Change of Control Purchase Date at the rate borne by such Security. Holders electing to have Securities purchased will be required to surrender such Securities to the Paying Agent at the address specified in the Change of Control Purchase Notice at least one Business Day prior to the Change of Control Purchase Date. Any Security that is to be purchased only in part shall be surrendered to a Paying Agent at the office of such Paying Agent (with, if the Company, the Security Registrar or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Security Registrar or the Trustee, as the case may be, duly executed by, the Holder thereof or such Holder's attorneys duly authorized in writing), and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, one or more new Securities of any authorized denomination as requested by such Holder in an aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered that is not purchased. (d) The Company shall (i) not later than the Change of Control Purchase Date, accept for payment Securities or portions thereof tendered pursuant to the Change of Control Offer, (ii) -102- 109 not later than 10:00 a.m. (New York time) on the Change of Control Purchase Date, deposit with the Trustee or with a Paying Agent an amount of money in same day funds (or New York Clearing House funds if such deposit is made prior to the Change of Control Purchase Date) sufficient to pay the aggregate Change of Control Purchase Price of all the Securities or portions thereof which are to be purchased as of the Change of Control Purchase Date and (iii) not later than 10:00 a.m. (New York time) on the Change of Control Purchase Date, deliver to the Paying Agent an Officers' Certificate stating the Securities or portions thereof accepted for payment by the Company. The Paying Agent shall promptly mail or deliver to Holders of Securities so accepted payment in an amount equal to the Change of Control Purchase Price of the Securities purchased from each such Holder, and the Company shall execute and the Trustee shall promptly authenticate and mail or deliver to such Holders a new Security equal in principal amount to any unpurchased portion of the Security surrendered. Any Securities not so accepted shall be promptly mailed or delivered by the Paying Agent at the Company's expense to the Holder thereof. The Company will publicly announce the results of the Change of Control Offer on the Change of Control Purchase Date. For purposes of this Section 10.13, the Company shall choose a Paying Agent which shall not be the Company. (e) A tender made in response to a Change of Control Purchase Notice may be withdrawn if the Company receives, not later than one Business Day prior to the Change of Control Purchase Date, a telegram, telex, facsimile transmission or letter, specifying, as applicable: (1) the name of the Holder; (2) the certificate number of the Security in respect of which such notice of withdrawal is being submitted; (3) the principal amount of the Security (which shall be $1,000 or an integral multiple thereof) delivered for purchase by the Holder as to which such notice of withdrawal is being submitted; (4) a statement that such Holder is withdrawing his election to have such principal amount of such Security purchased; and (5) the principal amount, if any, of such Security (which shall be $1,000 or an integral multiple thereof) that remains subject to the original Change of Control Purchase Notice and that has been or will be delivered for purchase by the Company. (f) Subject to applicable escheat laws, the Trustee and the Paying Agent shall return to the Company any cash that remains unclaimed, together with interest or dividends, if any, thereon, held by them for the payment of the Change of Control Purchase Price; provided, however, that, (x) to the extent that the aggregate amount of cash deposited by the Company pursuant to clause (ii) of paragraph (d) above exceeds the aggregate Change of Control Purchase Price of the Securities or portions thereof to be purchased, then the Trustee shall hold such -103- 110 excess for the Company and (y) unless otherwise directed by the Company in writing, promptly after the Business Day following the Change of Control Purchase Date the Trustee shall return any such excess to the Company together with interest, if any, thereon. (g) The Company shall comply, to the extent applicable, with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any other applicable securities laws or regulations in connection with a Change of Control Offer. Section 10.14. Limitation on Capital Stock of Subsidiaries. The Company will not permit (a) any Subsidiary of the Company to issue any Capital Stock, except for (i) Capital Stock issued to the Company or a Wholly-Owned Subsidiary and (ii) Capital Stock issued by a Person prior to the time (A) such Person becomes a Subsidiary, (B) such Person merges with or into a Subsidiary or (C) a Subsidiary merges with or into such Person; provided that such Capital Stock was not issued or incurred by such Person in anticipation of the type of transaction contemplated by subclause (A), (B) or (C), or (b) any Person (other than the Company, or a Wholly-Owned Subsidiary) to acquire Capital Stock of any Subsidiary from the Company or any Subsidiary, except, in the case of clause (a) or (b), upon the acquisition of all the outstanding Capital Stock of such Subsidiary in accordance with the terms hereof. Section 10.15. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or suffer to exist any consensual encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends or make any other distribution on its Capital Stock, (ii) pay any Indebtedness owed to the Company or any other Subsidiary, (iii) make any Investment in the Company or any other Subsidiary or (iv) transfer any of its properties or assets to the Company or any other Subsidiary, except for: (a) any encumbrance or restriction pursuant to any agreement in effect on the date hereof and listed on Schedule II hereto; (b) any encumbrance or restriction, with respect to a Subsidiary that is not a Subsidiary of the Company on the date hereof, in existence at the time such Person becomes a Subsidiary of the Company and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary; (c) customary non-assignment or subletting provisions of any lease, license or other contract; (d) any restriction entered into in the ordinary course of business contained in any lease of any Subsidiary or any security agreement or mortgage securing Indebtedness of any Subsidiary to the extent such restriction restricts the transfer of property subject to such security agreement, mortgage or lease; and (e) any encumbrance or restriction existing under any agreement that extends, renews, refinances or replaces the agreements containing the encumbrances or restrictions in the foregoing clauses (a), (b), (c) or (d), or in this clause (e); provided that the terms and conditions of any such encumbrances or restrictions are no more restrictive in any material respect than those under or pursuant to the agreement evidencing the Indebtedness so extended, renewed, refinanced or replaced. -104- 111 Section 10.16. Limitations on Unrestricted Subsidiaries. Except for Investments made pursuant to clause (viii) or (ix) of the definition of Permitted Investments, the Company will not make, and will not permit its Subsidiaries to make, an Investment in Unrestricted Subsidiaries if, at the time thereof, the aggregate amount of such Investments would exceed the amount of Restricted Payments then permitted to be made pursuant to Section 10.9. Except for Investments made pursuant to clause (viii) or (ix) of the definition of Permitted Investments, any Investment in Unrestricted Subsidiaries permitted to be made pursuant to this covenant (i) must be permitted to be made pursuant to Section 10.9 and will be treated as a Restricted Payment in calculating the amount of Restricted Payments made by the Company under such Section, and (ii) may be made in cash or property. Section 10.17. Provision of Financial Statements. After the earlier to occur of the consummation of the Exchange Offer and the 150th calendar day following the date of original issue of the Securities, whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, the Company will, to the extent permitted under the Exchange Act, file with the Commission the annual reports, quarterly reports and other documents which the Company would have been required to file with the Commission pursuant to Sections 13(a) or 15(d) of the Exchange Act if the Company were so subject, such documents to be filed with the Commission on or prior to the date (a "Required Filing Date") by which the Company would have been required so to file such documents if the Company were so subject. The Company will also in any event (x) within 15 days of each Required Filing Date occurring after the issuance of the Securities (i) transmit by mail to all Holders, as their names and addresses appear in the Security Register, without cost to such holders and (ii) file with the Trustee copies of the annual reports, quarterly reports and other documents which the Company would have been required to file with the Commission pursuant to Sections 13(a) or 15(d) of the Exchange Act if the Company were subject to either of such Sections and (y) if filing such documents by the Company with the Commission is not permitted under the Exchange Act, promptly upon written request and payment of the reasonable cost of duplication and delivery, supply copies of such documents to any prospective Holder at the Company's cost. So long as any of the Securities remain Outstanding, the Company will make available to any prospective purchaser of Securities or beneficial owner of Securities in connection with any sale thereof the information required by Rule 144A(d)(4) under the Securities Act, until such time as the Company has either exchanged the Securities for securities identical in all material respects which have been registered under the Securities Act or until such time as the Holders thereof have disposed of such Securities pursuant to an effective registration statement under the Securities Act. Section 10.18. Statement by Officers as to Default. (a) The Company will deliver to the Trustee, on or before a date not more than 120 days after the end of each fiscal year of the Company ending after the date hereof, a written statement signed by two executive officers of the Company, one of whom shall be the principal -105- 112 executive officer, principal financial officer or principal accounting officer of the Company, as to compliance herewith, including whether or not, after a review of the activities of the Company during such year and of the Company's performance under this Indenture, to the best knowledge, based on such review, of the signers thereof, the Company has fulfilled all of its respective obligations and is in compliance with all conditions and covenants under this Indenture throughout such year and, if there has been a Default specifying each Default and the nature and status thereof and any actions being taken by the Company with respect thereto. (b) When any Default or Event of Default has occurred and is continuing, or if the Trustee or any Holder or the trustee for or the holder of any other evidence of Indebtedness of the Company or any Subsidiary gives any notice or takes any other action with respect to a claimed default the Company shall deliver to the Trustee by registered or certified mail or facsimile transmission followed by hard copy of an Officers' Certificate specifying such Default, Event of Default, notice or other action, the status thereof and what actions the Company is taking or proposes to take with respect thereto, within ten Business Days of becoming aware of its occurrence. Section 10.19. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any covenant or condition set forth in Sections 10.6 through 10.11 and 10.14 through 10.18, if, before or after the time for such compliance, the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding shall, by Act of such Holders, waive such compliance in such instance with such covenant or provision, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect. ARTICLE XI REDEMPTION OF SECURITIES Section 11.1. Rights of Redemption. (a) The Securities are subject to redemption at any time on or after June 15, 2002, at the option of the Company, in whole or in part, subject to the conditions, and at the Redemption Prices, specified in the form of Security, together with accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders of record on relevant Regular Record Dates and Special Record Dates to receive interest due on relevant Interest Payment Dates and Special Payment Dates). (b) In addition, at any time on or prior to June 15, 2000, the Company may, at its option, use the net proceeds of one or more Public Equity Offerings to redeem up to an aggregate -106- 113 of 35% of the aggregate principal amount of Securities originally issued under this Indenture at a redemption price equal to 110% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to the Redemption Date; provided that at least $100,750,000 aggregate principal amount of Securities remains outstanding immediately after the occurrence of such redemption. In order to effect the foregoing redemption, the Company must mail a notice of redemption no later than 60 days after the related Public Equity Offering and must consummate such redemption within 90 days of the closing of the Public Equity Offering. Section 11.2. Applicability of Article. Redemption of Securities at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article XI. Section 11.3. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities pursuant to Section 11.1 shall be evidenced by a Company Order and an Officers' Certificate. In case of any redemption at the election of the Company, the Company shall, not less than 45 nor more than 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice period shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date and of the principal amount of Securities to be redeemed. Section 11.4. Selection by Trustee of Securities to Be Redeemed. If less than all the Securities are to be redeemed, the particular Securities or portions thereof to be redeemed shall be selected not more than 30 days prior to the Redemption Date. The Trustee shall select the Securities or portions thereof to be redeemed pro rata, by lot or by any other method the Trustee shall deem fair and reasonable. The amounts to be redeemed shall be equal to $1,000 or any integral multiple thereof. The Trustee shall promptly notify the Company and the Security Registrar in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. -107- 114 Section 11.5. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 days nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at its address appearing in the Security Register. All notices of redemption shall state: (a) the Redemption Date; (b) the Redemption Price; (c) if less than all Outstanding Securities are to be redeemed, the identification of the particular Securities to be redeemed; (d) in the case of a Security to be redeemed in part, the principal amount of such Security to be redeemed and that after the Redemption Date upon surrender of such Security, new Security or Securities in the aggregate principal amount equal to the unredeemed portion thereof will be issued; (e) that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price; (f) that on the Redemption Date the Redemption Price will become due and payable upon each such Security or portion thereof to be redeemed, and that (unless the Company shall default in payment of the Redemption Price) interest thereon shall cease to accrue on and after said date; (g) the names and addresses of the Paying Agent and the offices or agencies referred to in Section 10.2 where such Securities are to be surrendered for payment of the Redemption Price; (h) the CUSIP number, if any, relating to such Securities; and (i) the procedures that a Holder must follow to surrender the Securities to be redeemed. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's written request, by the Trustee in the name and at the expense of the Company. If the Company elects to give notice of redemption, it shall provide the Trustee with a certificate stating that such notice has been given in compliance with the requirements of this Section 11.5. -108- 115 The notice if mailed in the manner herein provided shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security. Section 11.6. Deposit of Redemption Price. On or prior to 10:00 a.m., New York time, on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company or any of its Affiliates is acting as Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount of money in same day funds sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date or Special Payment Date) accrued interest on, all the Securities or portions thereof which are to be redeemed on that date. The Paying Agent shall promptly mail or deliver to Holders of Securities so redeemed payment in an amount equal to the Redemption Price of the Securities purchased from each such Holder. All money, if any, earned on funds held in trust by the Trustee or any Paying Agent shall be remitted to the Company. For purposes of this Section 11.6, the Company shall choose a Paying Agent which shall not be the Company. Section 11.7. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Holders will be required to surrender the Securities to be redeemed to the Paying Agent at the address specified in the notice of redemption at least one Business Day prior to the Redemption Date. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price together with accrued interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such on the relevant Regular Record Dates and Special Record Dates according to the terms and the provisions of Section 3.9. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium, if any, shall, until paid, bear interest from the Redemption Date at the rate borne by such Security. Section 11.8. Securities Redeemed or Purchased in Part. Any Security which is to be redeemed or purchased only in part shall be surrendered to the Paying Agent at the office or agency maintained for such purpose pursuant to Section 10.2 (with, if the Company, the Security Registrar or the Trustee so requires, due endorsement by, or -109- 116 a written instrument of transfer in form satisfactory to the Company, the Security Registrar or the Trustee, as the case may be, duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the unredeemed portion of the principal of the Security so surrendered that is not redeemed or purchased. ARTICLE XII SATISFACTION AND DISCHARGE Section 12.1. Satisfaction and Discharge of Indenture. This Indenture shall be discharged and shall cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Securities as expressly provided for herein) as to all Outstanding Securities hereunder, and the Trustee, upon Company Request and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) either (1) all the Securities theretofore authenticated and delivered (other than (i) lost, stolen or destroyed Securities which have been replaced or paid as provided in Section 3.8 or (ii) all Securities for whose payment United States dollars have theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.3) have been delivered to the Trustee for cancellation; or (2) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their Stated Maturity within one year or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company; and the Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount in United States dollars sufficient to pay and discharge the entire Indebtedness on the Securities not theretofore delivered to the Trustee for cancellation, including the principal of, premium, if any, and accrued interest on, such Securities at such Maturity, Stated Maturity or Redemption Date; -110- 117 (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Independent Counsel, in form and substance reasonably satisfactory to the Trustee, each stating that (i) all conditions precedent herein relating to the satisfaction and discharge hereof have been complied with and (ii) such satisfaction and discharge will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound. Notwithstanding the satisfaction and discharge hereof, the obligations of the Company to the Trustee under Section 6.6 and, if United States dollars shall have been deposited with the Trustee pursuant to subclause (2) of subsection (a) of this Section 12.1, the obligations of the Trustee under Section 12.2 and the last paragraph of Section 10.3 shall survive. Section 12.2. Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.3, all United States dollars deposited with the Trustee pursuant to Section 12.1 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal of, premium, if any, and interest on, the Securities for whose payment such United States dollars have been deposited with the Trustee. -111- 118 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written. DI GIORGIO CORPORATION By: /s/ Richard Neff ---------------------------------- Name: Richard Neff Title: Executive Vice President and Chief Financial Officer THE BANK OF NEW YORK, as Trustee By: /s/ Tim Shea ---------------------------------- Name: Tim Shea Title: Assistant Treasurer -112- 119 STATE OF _______________ ) ) ss: COUNTY OF ______________ ) On the ___ day of ____ 1997, before me personally came __________________, to me known, who, being by me duly sworn, did depose and say that he resides at _________________ ________________________________; that he is _______________ of Di Giorgio Corporation, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of such corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed pursuant to authority of the Board of Directors of such corporation; and that he signed his name thereto pursuant to like authority. (NOTARIAL SEAL) ____________________________________ 120 STATE OF _______________ ) ) ss: COUNTY OF ______________ ) On the ___ day of ____ 1997, before me personally came __________________, to me known, who, being by me duly sworn, did depose and say that he resides at _________________ ___________________________________; that he is an authorized officer of The Bank of New York, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of such corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed pursuant to authority of the Board of Directors of such corporation; and that he signed his name thereto pursuant to like authority. (NOTARIAL SEAL) ____________________________________ 121 SCHEDULE I Existing Indebtedness 122 SCHEDULE II Restrictions on Dividends of Subsidiaries None. 123 SCHEDULE III Existing Liens 124 SCHEDULE IV Existing Unrestricted Subsidiaries 125 Exhibit A Form of Certificate to be Delivered upon Termination of Restricted Period On or after July 31, 1997 The Bank of New York 101 Barclay St., Floor 21 West New York, New York 10286 Attention: Corporate Trust Administration Re: Di Giorgio Corporation (the "Company") 10% Senior Notes due 2007 (the "Securities") Ladies and Gentlemen: This letter relates to U.S. $_________ principal amount of Securities represented by the global note certificate (the "Offshore Global Security"). Pursuant to Section 3.6 of the Indenture dated as of June 20, 1997 relating to the Securities (the "Indenture"), we hereby certify that (1) we are the beneficial owner of such principal amount of Securities represented by the Offshore Global Security and (2) we are a person outside the United States to whom the Securities could be transferred in accordance with Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933, as amended. Accordingly, you are hereby requested to issue a certificated Security representing the undersigned's interest in the principal amount of Securities represented by the Global Security, all in the manner provided by the Indenture. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Holder] By:_________________________________ Authorized Signature A-1 126 Exhibit B Form of Certificate to Be Delivered in Connection with Transfers to Non-QIB Institutional Accredited Investors ____________, _______ Di Giorgio Corporation c/o The Bank of New York 101 Barclay Street New York, New York Attention: Corporate Trust Division Re: Di Giorgio Corporation (the "Company") 10% Senior Notes due 2007 (the "Securities") Ladies and Gentlemen: In connection with our proposed purchase of $_______ aggregate principal amount of the Securities: 1. We understand that the Securities have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be sold within the United States or to, or for the benefit of, U.S. Persons except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing the Securities to offer, resell, pledge or otherwise transfer such Securities prior to the date which is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Securities, or any predecessor thereto (the "Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) for so long as the Securities are eligible for resale pursuant to Rule 144A under the Securities Act, inside the United States to a person we reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB") that purchases for its own account or for the account of a QIB to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) outside the United States pursuant to offers and sales to non-U.S. Persons in an Offshore Transaction within the meaning of Regulation S under the Securities Act, (e) inside the United States to an institutional "accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring the Securities for its own account or for the account of such an institutional "accredited investor" for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or (f) pursuant to any B-1 127 other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property and the property of such investor account or accounts be at all times within our or their control and to compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. We acknowledge that the Company and the Trustee reserve the right prior to any offer, sale or other transfer prior to the Resale Restriction Termination Date of the Securities pursuant to clauses (d), (e) and (f) above to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company and the Trustee. As used herein, the terms "United States", "Offshore Transaction", and "U.S. Person" have the respective meanings given to them by Regulation S under the Securities Act. 2. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) purchasing for our own account or for the account of such an institutional "accredited investor," and we are acquiring the Securities for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act or the securities laws of any state of the United States or any other applicable jurisdiction, provided that the disposition of our property and the property of any accounts for which we are acting as fiduciary shall remain at all times within our and their control; and we have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 3. We are acquiring the Securities purchased by us for our own account or for one or more accounts as to each of which we exercise sole investment discretion. 4. We understand that the Trustee will not be required to accept for registration of transfer any Securities acquired by us, except upon presentation of evidence satisfactory to the Company and the Trustee that the foregoing restrictions on transfer have been complied with. We further understand that the Securities purchased by us will be in the form of definitive physical certificates and that such certificates will bear a legend reflecting the substance of this paragraph. We further agree to provide to any person acquiring any of the Securities from us a notice advising such person that resales of the Securities are restricted as stated herein and that certificates representing the Notes will bear a legend to that effect. 5. We acknowledge that you, the Company, the Trustee and others will rely upon our acknowledgments, representations and agreements set forth herein, and we agree to notify B-2 128 you promptly in writing if any of our acknowledgments, representations or agreements herein cease to be accurate and complete. 6. We represent to you that we have full power to make the foregoing acknowledgments, representations and agreements on our own behalf and on behalf of any investor account for which we are acting as a fiduciary or agent. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Very truly yours, By:______________________________________ (Name of Purchaser) Date:____________________________________ B-3 129 Upon transfer, the Securities should be registered in the name of the new beneficial owner as follows: Name:___________________________________________________________________________ Address:________________________________________________________________________ Taxpayer ID Number:_____________________________________________________________ B-4 130 Exhibit C Form of Certificate to Be Delivered in Connection with Transfers Pursuant to Regulation S ____________________, ______ The Bank of New York 101 Barclay St., Floor 21 West New York, New York 10286 Attention: Corporate Trust Administration Re: Di Giorgio Corporation (the "Company") 10% Senior Notes due 2007 (the "Securities") Ladies and Gentlemen: In connection with our proposed sale of $________ aggregate principal amount of the Securities, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended, and, accordingly, we represent that: (1) the offer of the Securities was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the U.S. Securities Act of 1933, as amended. In addition, if the sale is made during a restricted period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has C-1 131 been made in accordance with the applicable provisions of Rule 903(c)(2) or Rule 904(c)(1), as the case may be. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By:______________________________________ Authorized Signature C-2 132 APPENDIX I [FORM OF TRANSFER NOTICE] FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification No. ___________________________________ ___________________________________________________________________________ ___________________________________________________________________________ (Please print or typewrite name and address including zip code of assignee) ___________________________________________________________________________ the within Security and all rights thereunder, hereby irrevocably constituting and appointing ___________________________________________________________________________ attorney to transfer such Security on the books of the Company with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES FOR SERIES A SECURITIES EXCEPT PERMANENT OFFSHORE PHYSICAL CERTIFICATES] In connection with any transfer of this Security occurring prior to the date which is the earlier of the date of an effective Registration Statement or June 20, 1999, the undersigned confirms that without utilizing any general solicitation or general advertising that: [Check One] [ ] (a) this Security is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. or I-1 133 [ ] (b) this Security is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Security and the Indenture. If none of the foregoing boxes is checked, the Trustee or other Security Registrar shall not be obligated to register this Security in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 3.7 of the Indenture shall have been satisfied. Date:____________________ ____________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee:____________________ [Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Securities Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Securities Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act.] TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated:______________ _______________________________________________________ NOTICE: To be executed by an authorized signatory I-2 134 APPENDIX II FORM OF TRANSFEREE CERTIFICATE I or we assign and transfer this Security to: Please insert social security or other identifying number of assignee ________________________________________________________________________________ ________________________________________________________________________________ Print or type name, address and zip code of assignee and irrevocably appoint ________________________________________________________________________________ [Agent], to transfer this Security on the books of the Company. The Agent may substitute another to act for him. Dated_______________ Signed________________________________________ (Sign exactly as name appears on the other side of this Security) [Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Securities Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Securities Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act.] EX-4.2 4 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 4.2 --------------------------- Registration Rights Agreement Dated As of June 20, 1997 among Di Giorgio Corporation and Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated, and BT Securities Corporation --------------------------- 2 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is made and entered into this 20th day of June, 1997, among Di Giorgio Corporation, a Delaware corporation (the "Company"), and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation (collectively, the "Initial Purchasers"). This Agreement is made pursuant to the Purchase Agreement, dated June 13, 1997, among the Company and the Initial Purchasers (the "Purchase Agreement"), which provides for, among other things, the sale by the Company to the Initial Purchasers of an aggregate of $155 million aggregate principal amount of the Company's 10% Senior Notes due 2007 (the "Securities"). In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company has agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the Purchase Agreement. In consideration of the foregoing, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "1933 Act" shall mean the Securities Act of 1933, as amended from time to time. "1934 Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. "Closing Date" shall mean the Closing Time as defined in the Purchase Agreement. "Company" shall have the meaning set forth in the preamble and shall also include the Company's successors. "Depositary" shall mean The Depository Trust Company, or any other depositary appointed by the Company; provided, however, that such depositary must have an address in the Borough of Manhattan in the City of New York. "Exchange Offer" shall mean the exchange offer by the Company of Exchange Securities for Registrable Securities pursuant to Section 2.1 hereof. 3 "Exchange Offer Registration" shall mean a registration under the 1933 Act effected pursuant to Section 2.1 hereof. "Exchange Offer Registration Statement" shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form), and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and all documents incorporated by reference therein. "Exchange Period" shall have the meaning set forth in Section 2.1 hereof. "Exchange Securities" shall mean the 10% Senior Notes due 2007 issued by the Company under the Indenture containing terms identical to the Securities in all material respects (except for references to certain interest rate provisions, restrictions on transfers and restrictive legends), to be offered to Holders of Securities in exchange for Registrable Securities pursuant to the Exchange Offer. "Holder" shall mean an Initial Purchaser, for so long as it owns any Registrable Securities, and each of its successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indenture. "Indenture" shall mean the Indenture relating to the Securities, dated as of June 20, 1997, between the Company and The Bank of New York, as trustee, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof. "Initial Purchaser" or "Initial Purchasers" shall have the meaning set forth in the preamble. "Issue Date" shall mean the date on which the Securities are originally issued under the Indenture. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of Outstanding (as defined in the Indenture) Registrable Securities; provided, that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company and other obligors on the Securities or any Affiliate (as defined in the Indenture) of the Company shall be disregarded in determining whether such consent or approval was given by the Holders of such required percentage amount. "Participating Broker-Dealer" shall mean Merrill Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation and any other broker-dealer which -2- 4 makes a market in the Securities and exchanges Registrable Securities in the Exchange Offer for Exchange Securities. "Person" shall mean an individual, partnership (general or limited), corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof. "Prospectus" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including any such prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all material incorporated by reference therein. "Purchase Agreement" shall have the meaning set forth in the preamble. "Registrable Securities" shall mean the Securities; provided, however, that Securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to such Securities shall have been declared effective under the 1933 Act and such Securities shall have been disposed of pursuant to such Registration Statement, (ii) such Securities have been sold to the public pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the 1933 Act, (iii) such Securities shall have ceased to be outstanding or (iv) the Securities have been exchanged for Exchange Securities upon consummation of the Exchange Offer and are thereafter freely tradeable by the holder thereof. "Registration Expenses" shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement, including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. (the "NASD") registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws and compliance with the rules of the NASD (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with blue sky qualification of any of the Exchange Securities or Registrable Securities and any filings with the NASD), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sales agreements and other documents relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing, if any, of any of the Registrable Securities on any securities exchange or exchanges, (v) all rating agency fees, (vi) the fees and disbursements of counsel for the Company and of the independent public accountants of the Company, including the expenses of any special audits or "cold comfort" letters required by or incident to such -3- 5 performance and compliance, (vii) the fees and expenses of the Trustee, and any escrow agent or custodian, (viii) the reasonable fees and disbursements of Mayer, Brown & Platt, special counsel representing the Holders of Registrable Securities and (ix) any fees and disbursements of the underwriters customarily required to be paid by issuers or sellers of securities and the reasonable fees and expenses of any special experts retained by the Company in connection with any Registration Statement, but excluding underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. "Registration Statement" shall mean any registration statement of the Company which covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement, and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "SEC" shall mean the Securities and Exchange Commission or any successor agency or government body performing the functions currently performed by the United States Securities and Exchange Commission. "Securities" shall have the meaning set forth in the preamble. "Shelf Registration" shall mean a registration effected pursuant to Section 2.2 hereof "Shelf Registration Statement" shall mean a shelf registration statement of the Company pursuant to the provisions of Section 2.2 of this Agreement which covers all of the Registrable Securities on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Trustee" shall mean the trustee with respect to the Securities under the Indenture. 2. Registration Under the 1933 Act. 2.1 Exchange Offer. The Company shall use its best efforts to (A) prepare and, as soon as practicable but not later than 60 days following the Closing Date, file with the SEC an Exchange Offer Registration Statement on an appropriate form under the 1933 Act with respect to a proposed Exchange Offer and the issuance and delivery to the Holders, in exchange for the Registrable Securities, a like principal amount of Exchange Securities, (B) cause the Exchange Offer Registration Statement to be declared effective under the 1933 Act -4- 6 within 120 days of the Closing Date, (C) keep the Exchange Offer Registration Statement effective until the closing of the Exchange Offer and (D) cause the Exchange Offer to be consummated not later than 150 days following the Closing Date. The Exchange Securities will be issued under the Indenture. Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Exchange Offer, it being the objective of such Exchange Offer to enable each Holder eligible and electing to exchange Registrable Securities for Exchange Securities (assuming that such Holder (a) is not an affiliate of the Company within the meaning of Rule 405 under the 1933 Act, (b) is not a broker-dealer tendering Registrable Securities acquired directly from the Company for its own account, (c) acquired the Exchange Securities in the ordinary course of such Holder's business and (d) has no arrangements or understandings with any person to participate in the Exchange Offer for the purpose of distributing the Exchange Securities) to transfer such Exchange Securities from and after their receipt without any limitations or restrictions under the 1933 Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States. In connection with the Exchange Offer, the Company shall: (a) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (b) keep the Exchange Offer open for acceptance for a period of not less than 30 calendar days after the date notice thereof is mailed to the Holders (or longer if required by applicable law) (such period referred to herein as the "Exchange Period"); (c) utilize the services of the Depositary for the Exchange Offer; (d) permit Holders to withdraw tendered Registrable Securities at any time prior to 5:00 p.m. (Eastern Standard Time), on the last business day of the Exchange Period, by sending to the institution specified in the notice, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange, and a statement that such Holder is withdrawing his election to have such Securities exchanged; (e) notify each Holder that any Registrable Security not tendered will remain outstanding and continue to accrue interest, but will not retain any rights under this Agreement (except in the case of the Initial Purchasers and Participating Broker-Dealers as provided herein); and (f) otherwise comply in all respects with all applicable laws relating to the Exchange Offer. -5- 7 As soon as practicable after the close of the Exchange Offer, the Company shall: (i) accept for exchange all Registrable Securities duly tendered and not validly withdrawn pursuant to the Exchange Offer in accordance with the terms of the Exchange Offer Registration Statement and the letter of transmittal which shall be an exhibit thereto; (ii) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities so accepted for exchange; and (iii) cause the Trustee promptly to authenticate and deliver Exchange Securities to each Holder of Registrable Securities so accepted for exchange in a principal amount equal to the principal amount of the Registrable Securities of such Holder so accepted for exchange. Interest on each Exchange Security will accrue from the last date on which interest was paid on the Registrable Securities surrendered in exchange therefor or, if no interest has been paid on the Registrable Securities, from the Issue Date. The Exchange Offer shall not be subject to any conditions, other than (i) that the Exchange Offer, or the making of any exchange by a Holder, does not violate applicable law or any applicable interpretation of the staff of the SEC, (ii) the due tendering of Registrable Securities in accordance with the Exchange Offer, and (iii) that each Holder of Registrable Securities exchanged in the Exchange Offer shall have made certain customary representations, including representations that such Holder is not an affiliate of the Company within the meaning of Rule 405 under the 1933 Act, that all Exchange Securities to be received by it shall be acquired in the ordinary course of its business and that at the time of the consummation of the Exchange Offer it shall have no arrangement or understanding with any person to participate in the distribution (within the meaning of the 1933 Act) of the Exchange Securities, and any such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to render the use of Form S-4 or other appropriate form under the 1933 Act available. To the extent permitted by law, the Company shall inform the Initial Purchasers of the names and addresses of the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall have the right to contact such Holders and otherwise facilitate the tender of Registrable Securities in the Exchange Offer. 2.2 Shelf Registration. In the event that (i) any changes in law, SEC rules or regulations or applicable interpretations thereof by the staff of the SEC do not permit the Company to effect the Exchange Offer as contemplated by Section 2.1 hereof, (ii) if for any other reason the Exchange Offer Registration Statement is not declared effective within 120 days following the original issue of the Registrable Securities or the Exchange Offer is not consummated within 150 days after the original issue of the Registrable Securities, (iii) upon the request of any Initial Purchaser with respect to any Registrable Securities which it acquired directly from the Company and, with respect to other Registrable Securities held by it, if such Initial -6- 8 Purchaser is not permitted, in the opinion of counsel to such Initial Purchaser, pursuant to applicable law or applicable interpretations of the Staff of the SEC, to participate in the Exchange Offer and thereby receive securities that are freely tradeable without restriction under the 1933 Act and applicable blue sky or state securities laws or (iv) if a Holder is not permitted by applicable law to participate in the Exchange Offer based upon written advice of counsel to the effect that such Holder may not be legally able to participate in the Exchange Offer or does not receive Exchange Securities pursuant to the Exchange Offer which are fully tradeable by the Holder without restriction under the 1933 Act and under applicable blue sky or state securities laws, then in case of each of clauses (i) through (iv) the Company shall, at its cost: (a) As promptly as practicable, file with the SEC, and thereafter shall use its best efforts to cause to be declared effective as promptly as practicable but no later than 150 days after the Issue Date (or, in the case of a request by any Initial Purchaser, within 30 days of such request), a Shelf Registration Statement relating to the offer and sale of the Registrable Securities by the Holders from time to time in accordance with the methods of distribution elected by the Majority Holders participating in the Shelf Registration and set forth in such Shelf Registration Statement. (b) Subject to Section 2.4(b), use its best efforts to keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by Holders for a period of two years (or one year in the case of a request solely by an Initial Purchaser) from the date the Shelf Registration Statement is declared effective by the SEC, or for such shorter period that will terminate when all Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or cease to be outstanding or otherwise to be Registrable Securities. (c) Notwithstanding any other provisions hereof, use its best efforts to ensure that (i) any Shelf Registration Statement and any amendment thereto and any Prospectus forming part thereof and any supplement thereto complies in all material respects with the 1933 Act and the rules and regulations thereunder, (ii) any Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement, and any supplement to such Prospectus (as amended or supplemented from time to time), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in light of the circumstances under which they were made, not misleading. The Company further agrees, if necessary, to supplement or amend the Shelf Registration Statement, as required by Section 3(b) below, and to furnish to the Holders of -7- 9 Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. The Company shall not be required to include any Registrable Securities of a Holder in any Shelf Registration Statement pursuant to this Agreement unless such Holder furnishes to the Company, within 20 business days after receipt by such Holder of a request therefor, such information as the Company may reasonably request for use in connection with such Shelf Registration Statement. 2.3 Expenses. The Company shall pay all Registration Expenses in connection with the registration pursuant to Section 2.1 or 2.2 hereof. Except as provided herein, each Holder shall pay all expenses of its counsel, underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Shelf Registration Statement. 2.4 Effectiveness. The Company will be deemed not to have used its best efforts to cause the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, to become, or to remain, effective during the requisite period if the Company voluntarily takes any affirmative action that would, or omits to take any action which omission would, result in any such Registration Statement not being declared effective or in the holders of Registrable Securities covered thereby not being able to exchange or offer and sell such Registrable Securities during that period as and to the extent contemplated hereby, unless (i) such action is required by applicable law or (ii) with respect to the effectiveness of a Shelf Registration Statement, such action or omission is taken or made by the Company in good faith and for valid business reasons (not including avoidance of the Company's obligations hereunder), including the acquisition or divestiture of assets, so long as the Company complies with the requirements of Section 3(k) hereof, if applicable. (b) The Company may suspend the availability of the Shelf Registration Statement and the use of any Prospectus which is a part thereof (i) for one period not to exceed 60 days in any six month period or (ii) for up to four periods not to exceed an aggregate of 90 days in any 12 month period, if such suspension is effected in good faith and for valid business reasons (not including avoidance of the Company's obligations hereunder), including the acquisition or divestiture of assets, so long as the Company promptly complies with the requirements of Section 3(k) hereof, if applicable. (c) An Exchange Offer Registration Statement pursuant to Section 2.1 hereof or a Shelf Registration Statement pursuant to Section 2.2 hereof will not be deemed to have become effective unless it has been declared effective by the SEC; provided, however, that if, after it has been declared effective, the offering of Registrable Securities pursuant to a Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Registration Statement will be deemed not to have become effective during the period of such -8- 10 interference, until the offering of Registrable Securities pursuant to such Registration Statement may legally resume. 2.5 Interest. In the event that (a) the Exchange Offer Registration Statement is not filed with the Commission on or prior to the 60th calendar day following the Issue Date, (b) the Exchange Offer Registration Statement has not been declared effective on or prior to the 120th calendar day following the Issue Date, (c) the Exchange Offer is not consummated on or prior to the 150th calendar day following the date of original issue of the Securities or a Shelf Registration Statement is not declared effective on or prior to the 150th calendar day following the Issue Date (or, if a Shelf Registration Statement is required to be filed because of the request of any Initial Purchaser, 30 days following the request by any such Initial Purchaser that the Company file the Shelf Registration Statement), or (d) the Exchange Offer Registration Statement or Shelf Registration Statement is declared effective but thereafter ceases to be effective or usable within the applicable period as provided in this Agreement except pursuant to Section 2.4(b) (each such event referred to in clauses (a) through (d) above, a "Registration Default"), the interest rate borne by the Securities (except in the case of clause (c), in which case only the Securities which have not been exchanged in the Exchange Offer) shall be increased by an amount equal to one-quarter of one percent (0.25%) per annum upon the occurrence of any Registration Default, which rate (as increased as aforesaid) will increase by an additional one quarter of one percent (0.25%) each 90-day period that such additional interest continues to accrue under any such circumstance, with an aggregate maximum increase in the interest rate equal to one percent (1%) per annum. Following the cure of all Registration Defaults the accrual of additional interest will cease and the interest rate will revert to the original rate. Upon (w) the filing of the Exchange Offer Registration Statement after the 60-day period described in clause (a) above, (x) the effectiveness of the Exchange Offer Registration Statement after the 120-day period described in clause (b) above, (y) the consummation of the Exchange Offer after the 150-day period or the effectiveness of a Shelf Registration Statement after the 150-day period (or the 30-day period), as the case may be, described in clause (c) above, or (z) after the period during which such Shelf Registration Statement ceases to be effective or usable as described in clause (d) above, and provided that none of the conditions set forth in clauses (a), (b), (c) and (d) above continues to exist, a Registration Default will be deemed to be cured. 2.6 Specific Enforcement. Without limiting the remedies available to the Initial Purchasers and the Holders, the Company acknowledges that any failure by the Company to comply with its obligations under Section 2.1 and Section 2.2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it would not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's obligations under Section 2.1 and Section 2.2 hereof. -9- 11 3. Registration Procedures. In connection with the obligations of the Company with respect to Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Company shall: (a) prepare and file with the SEC a Registration Statement, within the relevant time period specified in Section 2, on the appropriate form under the 1933 Act, which form (i) shall be selected by the Company, (ii) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof, (iii) shall comply as to form in all material respects with the requirements of the applicable form and include or incorporate by reference all financial statements required by the SEC to be filed therewith or incorporated by reference therein, and (iv) shall comply in all respects with the requirements of Regulation S-T under the Securities Act, and use its best efforts to cause such Registration Statement to become effective and remain effective in accordance with Section 2 hereof; (b) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary under applicable law to keep such Registration Statement effective for the applicable period; and cause each Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the 1933 Act and comply with the provisions of the 1933 Act applicable to them with respect to the disposition of all Securities covered by each Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the selling Holders thereof described in this Agreement (including sales by any Participating Broker-Dealer); (c) in the case of a Shelf Registration, (i) notify each Holder of Registrable Securities, at least five days prior to filing, that a Shelf Registration Statement with respect to the Registrable Securities is being filed and advising such Holders that the distribution of Registrable Securities will be made in accordance with the method selected by the Majority Holders participating in the Shelf Registration, (ii) furnish to each Holder of Registrable Securities and to each underwriter of an underwritten offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or underwriter may reasonably request, including financial statements and schedules and, if the Holder so requests, all exhibits in order to facilitate the public sale or other disposition of the Registrable Securities; and (iii) subject to the last paragraph of this Section 3, hereby consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto; -10- 12 (d) use its best efforts to register or qualify the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement and each underwriter of an underwritten offering of Registrable Securities shall reasonably request by the time the applicable Registration Statement is declared effective by the SEC, and do any and all other acts and things which may be reasonably necessary or advisable to enable each such Holder and underwriter to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided, however, that the Company shall not be required to (i) quality as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), or (ii) take any action which would subject it to general service of process or taxation in any such jurisdiction where it is not then so subject; (e) notify promptly each Holder of Registrable Securities under a Shelf Registration or any Participating Broker-Dealer who has notified the Company that it is utilizing the Exchange Offer Registration Statement as provided in paragraph (f) below and, if requested by such Holder or Participating Broker-Dealer, confirm such notice in writing promptly (i) when a Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (ii) of any request by the SEC or any state securities authority for post-effective amendments and supplements to a Registration Statement and Prospectus or for additional information after the Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) in the case of a Shelf Registration, if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to the offering cease to be true and correct in all material respects, (v) of the happening of any event or the discovery of any facts during the period a Shelf Registration Statement is effective which makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or which requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein not misleading and (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities or the Exchange Securities, as the case may be, for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (f) (A) in the case of the Exchange Offer Registration Statement, (i) include in the Exchange Offer Registration Statement a section entitled "Plan of Distribution" which section shall be reasonably acceptable to the Initial Purchasers, and which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential -11- 13 "underwriter" status of any broker-dealer that holds Registrable Securities acquired for its own account as a result of market-making activities or other trading activities and that will be the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Securities to be received by such broker-dealer in the Exchange Offer, whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies, in the reasonable judgment of the Initial Purchasers and its counsel, represent the prevailing views of the staff of the SEC, including a statement that any such broker-dealer who receives Exchange Securities for Registrable Securities pursuant to the Exchange Offer may be deemed a statutory underwriter and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities, (ii) furnish to each Participating Broker-Dealer who has delivered to the Company the notice referred to in Section 3(e), without charge, as many copies of each Prospectus included in the Exchange Offer Registration Statement, including any preliminary prospectus, and any amendment or supplement thereto, as such Participating Broker-Dealer may reasonably request, (iii) subject to the last paragraph of this Section 3, hereby consent to the use of the Prospectus forming part of the Exchange Offer Registration Statement or any amendment or supplement thereto, by any person subject to the prospectus delivery requirements of the SEC, including all Participating Broker-Dealers, in connection with the sale or transfer of the Exchange Securities covered by the Prospectus or any amendment or supplement thereto, (iv) use their best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the Prospectus contained therein in order to permit such Prospectus to be lawfully delivered by all Persons subject to the prospectus delivery requirements of the 1933 Act for such period of time as such Persons must comply with such requirements in order to resell the Exchange Securities and (v) include in the transmittal letter or similar documentation to be executed by an exchange offeree in order to participate in the Exchange Offer (x) the following provision: "If the exchange offeree is a broker-dealer holding Registrable Securities acquired for its own account as a result of market-making activities or other trading activities, it will deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of Exchange Securities received in respect of such Registrable Securities pursuant to the Exchange Offer;" and (y) a statement to the effect that by a broker-dealer making the acknowledgment described in clause (x) and by delivering a Prospectus in connection with the exchange of Registrable Securities, the broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the 1933 Act; and -12- 14 (B) in the case of any Exchange Offer Registration Statement, the Company agrees to deliver to the Initial Purchasers on behalf of the Participating Broker-Dealers upon the effectiveness of the Exchange Offer Registration Statement (i) an opinion of Morgan, Lewis & Bockius LLP substantially in the form attached hereto as Exhibit A, (ii) an officers' certificate substantially in the form customarily delivered in a public offering of debt securities and (iii) a comfort letter or comfort letters in customary form if permitted by Statement on Auditing Standards No. 72 of the American Institute of Certified Public Accountants (or if such a comfort letter is not permitted, an agreed upon procedures letter in customary form) at least as broad in scope and coverage as the comfort letter or comfort letters delivered to the Initial Purchasers in connection with the initial sale of the Securities to the Initial Purchasers; (g) (i) in the case of an Exchange Offer, furnish counsel for the Initial Purchasers and (ii) in the case of a Shelf Registration, furnish counsel for the Holders of Registrable Securities copies of any comment letters received from the SEC or any other request by the SEC or any state securities authority for amendments or supplements to a Registration Statement and Prospectus or for additional information; (h) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment; (i) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, and each underwriter, if any, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto, including financial statements and schedules (without documents incorporated therein by reference and all exhibits thereto, unless requested); (j) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations (consistent with the provisions of the Indenture) and registered in such names as the selling Holders or the underwriters, if any, may reasonably request at least two business days prior to the closing of any sale of Registrable Securities; (k) in the case of a Shelf Registration, upon the occurrence of any event or the discovery of any facts, each as contemplated by Sections 3(e)(ii), 3(e)(iii), 3(e)(v) and 3(e)(vi) hereof, use its best efforts to prepare a supplement or post-effective amendment to the Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities or Participating -13- 15 Broker-Dealers, such Prospectus will not contain at the time of such delivery any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or will remain so qualified; (l) obtain a CUSIP number for all Exchange Securities not later than the effective date of a Registration Statement, and provide the Trustee with printed certificates for the Exchange Securities in a form eligible for deposit with the Depositary; (m) (i) cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be, (ii) cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the TIA and (iii) execute, and use its best efforts to cause the Trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner; (n) in the case of a Shelf Registration, enter into agreements (including customary underwriting agreements) and take all other customary and appropriate actions in order to expedite or facilitate the disposition of such Registrable Securities and in such connection whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration: (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in similar underwritten offerings as may be reasonably requested by them; (ii) obtain opinions of counsel to the Company and updates thereof (which opinions (in form, scope and substance) and counsel shall be reasonably satisfactory to the managing underwriters, if any, and the Holders of a majority in principal amount of the Registrable Securities being sold) addressed to each selling Holder and the underwriters, if any, covering the matters customarily covered in opinions requested in sales of securities or underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; (iii) obtain "cold comfort" letters and updates thereof from the Company's independent certified public accountants addressed to the underwriters, if any, and use reasonable efforts to have such letters addressed to the selling Holders of Registrable Securities (to the extent consistent with Statement on Auditing Standards No. 72 of the American Institute of Certified -14- 16 Public Accounts), such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters to underwriters in connection with similar underwritten offerings and such other matters as reasonably requested by such selling Holders and any underwriters; (iv) enter into a securities sales agreement with the Holders and an agent of the Holders providing for, among other things, the appointment of such agent for the selling Holders for the purpose of soliciting purchases of Registrable Securities, which agreement shall be in form, substance and scope customary for similar offerings; (v) if an underwriting agreement is entered into, cause the same to set forth indemnification provisions and procedures substantially equivalent to the indemnification provisions and procedures set forth in Section 4 hereof with respect to the underwriters and all other parties to be indemnified pursuant to said Section or, at the request of any underwriters, in the form customarily provided to such underwriters in similar types of transactions; and (vi) deliver such documents and certificates as may be reasonably requested and as are customarily delivered in similar offerings to the Holders of a majority in principal amount of the Registrable Securities being sold and the managing underwriters, if any. The above shall be done at (i) the effectiveness of such Registration Statement (and each post-effective amendment thereto) and (ii) each closing under any underwriting or similar agreement as and to the extent required thereunder; (o) in the case of a (i) Shelf Registration, or (ii) Prospectus contained in an Exchange Offer pursuant to Section 2.1 which is required to be delivered under the 1933 Act by an Participating Broker-Dealer who seeks to sell Exchange Securities, make available for inspection by representatives of the Holders of the Registrable Securities and any such Participating Broker-Dealer, as the case may be, and any underwriters participating in any disposition pursuant to a Shelf Registration Statement and any counsel or accountant retained by such Holders, Participating Broker Dealers or underwriters, all pertinent financial and other records, pertinent corporate documents and properties of the Company reasonably requested by any such persons, and cause the respective officers, directors, employees, and any other agents of the Company to supply all information reasonably requested by any such representative, underwriter, counsel or accountant in connection with a Registration Statement or Prospectus, and make such representatives of the Company available for discussion of such documents as shall be reasonably requested by the Initial Purchasers; provided, that any such records, documents, properties and such information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such records, documents, properties or information shall be kept confidential by any -15- 17 such representative, underwriter, counsel or accountant and shall be used only in connection with such Registration Statement or Prospectus, unless such information has become available (not in violation of this Agreement) to the public generally or through a third party without an accompanying obligation of confidentiality, and except that such representative, underwriter, counsel or accountant shall have no liability, and shall not be in breach of this provision, if disclosure of such confidential information is made in connection with a court proceeding or required by law, and the Company shall be entitled to request that such representative, underwriter, counsel or accountant sign a confidentiality agreement to the foregoing effect; (p) (i) in the case of an Exchange Offer Registration Statement, a reasonable time prior to the filing of any Exchange Offer Registration Statement, any Prospectus forming a part thereof, any amendment to an Exchange Offer Registration Statement or amendment or supplement to such Prospectus, provide copies of such document to the Initial Purchasers and make such changes in any such document prior to the filing thereof as the Initial Purchasers may reasonably request, and make the representatives of the Company available for discussion of such documents as shall be reasonably requested by the Initial Purchasers; and (ii) in the case of a Shelf Registration, a reasonable time prior to filing any Shelf Registration Statement, any Prospectus forming a part thereof, any amendment to such Shelf Registration Statement or amendment or supplement to such Prospectus, provide copies of such document to the Holders of Registrable Securities, to the Initial Purchasers, to counsel on behalf of the Holders and to the underwriter or underwriters of an underwritten offering of Registrable Securities, if any, make such changes in any such document prior to the filing thereof as the Initial Purchasers, the counsel to the Holders or the underwriter or underwriters reasonably request and make the representatives of the Company available for discussion of such document as shall be reasonably requested by the Holders of Registrable Securities, the Initial Purchasers on behalf of such Holders, or any underwriter; (q) in the case of a Shelf Registration, use its best efforts to cause all Registrable Securities to be listed on any securities exchange on which similar debt securities issued by the Company are then listed if requested by the Majority Holders; or if requested by the underwriter or underwriters of an underwritten offering of Registrable Securities, if any; (r) in the case of a Shelf Registration, use its best efforts to cause the Registrable Securities to be rerated by the appropriate rating agencies, if so requested by the Majority Holders, or if requested by the underwriter or underwriters of an underwritten offering of Registrable Securities, if any; -16- 18 (s) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC and make available to its security holders, as soon as reasonably practicable, an earnings statement covering at least 12 months which shall satisfy the provisions of Section 11 (a) of the 1933 Act and Rule 158 thereunder; (t) cooperate and assist in any filings required to be made with the NASD and, in the case of a Shelf Registration, in the performance of any due diligence investigation by any underwriter and its counsel (including any "qualified independent underwriter" that is required to be retained in accordance with the rules and regulations of the NASD); and (u) upon consummation of an Exchange Offer, obtain a customary opinion of counsel to the Company addressed to the Trustee for the benefit of all Holders of Registrable Securities participating in the Exchange Offer, and which includes an opinion that (i) the Company has duly authorized, executed and delivered the Exchange Securities and the related indenture, and (ii) each of the Exchange Securities and related indenture constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms (with customary exceptions). In the case of a Shelf Registration Statement, the Company may (as a condition to such Holder's participation in the Shelf Registration) require each Holder of Registrable Securities to furnish to the Company such information regarding the Holder and the proposed distribution by such Holder of such Registrable Securities as the Company may from time to time reasonably request in writing. In the event that the Company fails to effect the Exchange Offer or file any Shelf Registration Statement and maintain the effectiveness of any Shelf Registration Statement as provided herein, the Company shall not file any Registration Statement with respect to any securities (within the meaning of Section 2(l) of the 1933 Act) of the Company other than Registrable Securities. If any of the Registrable Securities covered by any Shelf Registration Statement are to be sold in an underwritten offering, the underwriter or underwriters and manager or managers that will manage such offering will be selected by the Majority Holders of such Registrable Securities included in such offering and shall be acceptable to the Company. No Holder of Registrable Securities may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. -17- 19 In the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any notice from the Company of the happening of any event or the discovery of any facts, each of the kind described in Sections 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by the Company, such Holder will deliver to the Company (at its expense) all copies in such Holder's possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. If the Company shall give any such notice to suspend the disposition of Registrable Securities pursuant to a Shelf Registration Statement as a result of the happening of any event or the discovery of any facts, each of the kind described in Sections 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, the Company shall be deemed to have used its best efforts to keep the Shelf Registration Statement effective during such period of suspension provided that the Company shall use its best efforts to file and have declared effective (if an amendment) as soon as practicable an amendment or supplement to the Shelf Registration Statement and shall extend the period during which the Shelf Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions. 4. Indemnification, Contribution. (a) The Company agrees to indemnify and hold harmless the Initial Purchasers, each Holder, each Participating Broker-Dealer, each Person who participates as an underwriter (any such Person being an "Underwriter"), their respective affiliates, and each Person, if any, who controls any of such parties within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each of their respective directors, officers, employees and agents, as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment or supplement thereto) pursuant to which Exchange Securities or Registrable Securities were registered under the 1933 Act, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; -18- 20 (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 4(d) below) any such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by any indemnified party, except to the extent otherwise expressly provided in Section 4(c) hereof), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Initial Purchasers, such Holder or Underwriter expressly for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto); provided, further, that such indemnity with respect to any preliminary prospectus shall not inure to the benefit of any Initial Purchaser, Holder or Underwriter (or any persons controlling such Initial Purchaser, Holder or Underwriter) (i) from whom the person asserting such loss, claim, damage or liability purchased the Securities which are the subject thereof if such person did not receive a copy of the final Prospectus (or the final Prospectus as amended or supplemented) at or prior to the confirmation of the sale of such Securities to such person in any case where the Company complied with its obligations under Sections 3(c) and 3(f)(A)(ii) hereof and any such untrue statement or omission or alleged untrue statement or omission of a material fact contained in such preliminary prospectus (or any amendment or supplement thereto) was corrected in the final Prospectus (or the final Prospectus as amended or supplemented) or (ii) if it resulted from the use of the Prospectus during a period when the use of the Prospectus has been suspended in accordance with Section 2.4(b) or Sections 3(e)(ii), 3(e)(iii), 3(e)(v) and 3(e)(vi) hereof; provided, in each case, that Holders received prior notice of such suspension . (b) Each Holder severally, but not jointly, agrees to indemnify and hold harmless the Company, the Initial Purchasers, each Underwriter and the other selling Holders, and each of their respective directors and officers, and each Person, if any, who controls the Company, the Initial Purchasers, any Underwriter or any other selling Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 4(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged -19- 21 untrue statements or omissions, made in the Shelf Registration Statement (or any amendment thereto) or any Prospectus included therein (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company expressly for use in the Shelf Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement thereto); provided, however, that no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Shelf Registration Statement. (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. Notwithstanding the foregoing, if it so elects within a reasonable time after receipt of such notice, an indemnifying party, jointly with any other indemnifying parties receiving such notice, may assume the defense of such action with counsel chosen by it and approved by the indemnified parties defendant in such action (which approval shall not be unreasonably withheld), unless such indemnified parties reasonably object to such assumption on the ground that there may be legal defenses available to them which are different from or in addition to those available to such indemnifying party. If an indemnifying party assumes the defense of such action, the indemnifying party shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 4 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 4(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days -20- 22 after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. (e) If the indemnification provided for in this Section 4 is for any reason unavailable to, or insufficient to hold harmless, an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand, the Holders on another hand, and the Initial Purchasers on another hand, from the offering of the Securities, the Exchange Securities and the Registrable Securities (taken together) included in such offering or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand, the Holders on another hand and the Initial Purchasers on another hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company from the offering of the Securities, the Exchange Securities and the Registrable Securities (taken together) included in such offering shall in each case be deemed to include the proceeds received by the Company in connection with the offering of the Securities pursuant to the Purchase Agreement. The parties hereto agree that any underwriting discount or commission or reimbursement of fees paid to the Initial Purchasers pursuant to the Purchase Agreement shall not be deemed to be a benefit received by the Initial Purchasers in connection with the offering of the Exchange Securities or Registrable Securities included in such offering. The relative fault of the Company on the one hand, the Holders on another hand, and the Initial Purchasers on another hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, the Holders or the Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Holders and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 4. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or -21- 23 proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 4, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities sold by it were offered exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 4, each Person, if any, who controls an Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Initial Purchaser or Holder, and each director of the Company, each officer of the Company who signed the Registration Statement and each Person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The Initial Purchasers' respective obligations to contribute pursuant to this Section 4 are several in proportion to the principal amount of Securities set forth opposite their respective names in Schedule A to the Purchase Agreement and not joint. 5. Miscellaneous. 5.1 Rule 144 and Rule 144A. For so long as the Company is subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the Company covenants that it will file the reports required to be filed by it under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and regulations adopted by the SEC thereunder. If the Company ceases to be so required to file such reports, the Company covenants that it will upon the request of any Holder of Registrable Securities (a) make publicly available such information as is necessary to permit sales pursuant to Rule 144 under the 1933 Act, (b) deliver such information to a prospective purchaser as is necessary to permit sales pursuant to Rule 144A under the 1933 Act and it will take such further action as any Holder of Registrable Securities may reasonably request, and (c) take such further action that is reasonable in the circumstances, in each case, to the extent required from time to time to enable such Holder to sell its Registrable Securities without registration under the 1933 Act within the limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time to time, or (iii) any similar rules or regulations hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. -22- 24 5.2 No Inconsistent Agreements. The Company has not entered into and the Company will not after the date of this Agreement enter into any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with the rights granted to the holders of the Company's other issued and outstanding securities under any such agreements. 5.3 Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or departure. 5.4 Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (a) if to a Holder, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 5.4, which address initially is the address set forth in the Purchase Agreement with respect to the Initial Purchasers; and (b) if to the Company, initially at the Company's address set forth in the Purchase Agreement, and thereafter at such other address of which notice is given in accordance with the provisions of this Section 5.4. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; two business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next business day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands, or other communications shall be concurrently delivered by the person giving the same to the Trustee under the Indenture, at the address specified in such Indenture. 5.5 Successor and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement -23- 25 and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof. 5.6 Third Party Beneficiaries. The Initial Purchasers (even if the Initial Purchasers are not Holders of Registrable Securities) shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Holders, on the other hand, and shall have the right to enforce such agreements directly to the extent they deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder. Each Holder of Registrable Securities shall be a third party beneficiary to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder. Other than the foregoing sentences, nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Initial Purchasers, the Holders, including Participating Broker-Dealers, each underwriter who participates in an offering of Registrable Securities, their respective affiliates, and the Company and their respective successors and the controlling persons, directors, officers, employees, and agents referred to in Section 4 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole benefit of the Initial Purchasers, the Holders and the Company and the other persons referenced by the preceding sentences and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. 5.7 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 5.8 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 5.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF. 5.10 Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. -24- 26 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. DI GIORGIO CORPORATION By: /s/ Richard Neff --------------------------------- Name: Richard Neff Title: Executive Vice President and Chief Financial Officer Confirmed and accepted as of the date first above written: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BT SECURITIES CORPORATION BY: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ Pascal Maeter ----------------------------------- Name: Pascal Maeter Title: Vice President -25- 27 Exhibit A FORM OF OPINION OF COUNSEL Merrill Lynch, Pierce, Fenner & Smith Incorporated BT Securities Corporation c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated Merrill Lynch World Headquarters North Tower World Financial Center New York, New York 10281-1209 RE: Di Giorgio Corporation 10% Senior Notes due 2007 Ladies and Gentlemen: We have acted as counsel for Di Giorgio Corporation, a Delaware corporation (the "Company"), in connection with the sale by the Company to the Initial Purchasers (as defined below) of $155,000,000 aggregate principal amount of 10% Senior Notes due 2007 (the "Notes") of the Company pursuant to the Purchase Agreement dated June 13, 1997 (the "Purchase Agreement") among the Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation (collectively, the "Initial Purchasers") and the filing by the Company of an Exchange Offer Registration Statement (the "Registration Statement") in connection with an Exchange Offer to be effected pursuant to the Registration Rights Agreement (the "Registration Rights Agreement"), dated June 20, 1997 between the Company and the Initial Purchasers. This opinion is furnished to you pursuant to Section 3(f)(B) of the Registration Rights Agreement. Unless otherwise defined herein, capitalized terms used in this opinion that are defined in the Registration Rights Agreement are used herein as so defined. We have examined such documents, records and matters of law as we have deemed necessary for purposes of this opinion. In rendering this opinion, as to all matters of fact relevant to this opinion, we have assumed the completeness and accuracy of, and are relying solely upon, the representations, warranties and agreements of the Company and the Initial Purchasers set forth in the Purchase Agreement and the statements set forth in certificates of public officials and officers of the Company, without making any independent investigation or inquiry with respect to the completeness or accuracy of such representations, warranties, agreements or statements. This opinion is limited to the laws of the United States of America and the laws of the State of Delaware. -26- 28 Based on and subject to the foregoing, we are of the opinion that: 1. The Exchange Offer Registration Statement and the Prospectus (other than the financial statements, notes or schedules thereto and other financial data and supplemental schedules included therein or omitted therefrom and the Form T-1, as to which we need express no opinion), comply as to form in all material respects with the requirements of the 1933 Act and the applicable rules and regulations promulgated under the 1933 Act. 2. We have participated in the preparation of the Registration Statement and the Prospectus and in the course thereof have had discussions with representatives of the Underwriters, officers, employees and other representatives of the Company and Deloitte & Touche LLP, the Company's independent public accountants, during which the contents of the Registration Statement and the Prospectus were discussed. We have not, however, independently verified and are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Prospectus. Based on our participation as described above, nothing has come to our attention that would lead us to believe that the Registration Statement (except for financial statements, notes and schedules thereto and other financial data included therein as to which we make no statement) at the time it became effective contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus or any amendment or supplement thereto (except for financial statements, notes and schedules thereto and other financial data included therein, as to which we need make no statement), at the time the Prospectus was issued, at the time any such amended or supplemented Prospectus was issued or upon consummation of the Exchange Offer, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. This opinion is being furnished to you solely for your benefit in connection with the transactions contemplated by the Registration Rights Agreement, and may not be used for any other purpose or relied upon by any person other than you. Except with our prior written consent, the opinions herein expressed are not to be used, circulated, quoted or otherwise referred to in connection with any transactions other than those contemplated by the Registration Rights Agreement by or to any other person. Very truly yours, -27- EX-4.4 5 SUPPLEMENTAL INDENTURE 1 EXHIBIT 4.4 ================================================================================ DI GIORGIO CORPORATION AS ISSUER ------------------------------------ $100,000,000 12% SENIOR NOTES, DUE 2003 ------------------------------------ FIRST SUPPLEMENTAL INDENTURE DATED AS OF JUNE 9, 1997 AMENDING AND SUPPLEMENTING THE INDENTURE DATED AS OF FEBRUARY 1, 1993 ------------------------------------ THE BANK OF NEW YORK AS TRUSTEE ------------------------------------ ================================================================================ 2 THIS FIRST SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of June 9, 1997, between DI GIORGIO CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware, as issuer (the "Company") and THE BANK OF NEW YORK a New York banking corporation, as trustee (the "Trustee"). WHEREAS, there has heretofore been executed and delivered to the Trustee an Indenture dated as of February 1, 1993 (the "Original Indenture"), regarding the Company's 12% Senior Notes Series due 2003 (the "Securities"); WHEREAS, the Company has commenced a tender offer (the "Tender Offer") for the Securities and, in connection therewith, has solicited consents (the "Solicitation") from the Holders to certain amendments to the Original Indenture, as set forth in the Offer to Purchase and Consent Solicitation Statement of the Company dated May 16, 1997; and WHEREAS, pursuant to the Solicitation, the Holders of at least a majority in aggregate principal amount of the Securities outstanding (excluding for this purpose any Securities held by the Company, or any Affiliate of the Company) have consented to the amendments effected by this First Supplemental Indenture in accordance with the provisions of the Original Indenture. NOW THEREFORE, in consideration of the foregoing and the mutual premises and covenants contained herein and for other good and valuable consideration, the parties hereto agree as follows. ARTICLE I DEFINITIONS; AMENDMENTS TO ORIGINAL INDENTURE; WAIVER SECTION 1.01 Definitions. Capitalized terms used but not defined in this First Supplemental Indenture shall have the specified meanings therefor set forth in the Original Indenture. SECTION 1.02 Amendments to Original Indenture. (a) The amendments set forth in this First Supplemental Indenture shall become operative on the date that the Company notifies The Bank of New York, in its capacity as Depositary in connection with the Tender Offer, that the Securities tendered are accepted for purchase and payment pursuant to the Tender Offer and shall be deemed effective as of June 9, 1997. If the Securities are not accepted for payment by the Company for any reason, the amendments set forth herein will not become operative. (b) Sections 4.04, 4.05, 4.06, 4.07, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22 and 8.01 of the Original Indenture shall be deleted. (c) Section 5.01 of the Original Indenture shall be amended by deleting clauses (iii), (iv) and (v) thereof and inserting "[intentionally omitted]" in lieu thereof. (d) Section 8.02 of the Original Indenture shall be amended and restated so as to read in its entirety as follows: SECTION 8.02 Successor Corporation. Upon any consolidation or merger or any transfer of all or substantially all of the assets of the Company, the successor corporation formed by such consolidation or into which the Company is merged or to which such transfer is made, shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein. 3 (e) All references in the Original Indenture and the Securities to the sections, subsections and clauses of the Original Indenture and the Securities deleted or amended by the foregoing paragraphs (b) through (d) shall be void and of no further force and effect. (f) All defined terms used in Section 1.01 of the Original Indenture that are used solely in the sections, subsections and clauses deleted by the foregoing paragraphs (b) through (d) shall be void and of no further force and effect. SECTION 1.03 Waiver. If and to the extent that any provision of the covenants set forth in the sections and subsections of the Original Indenture deleted by Section 1.02 (b) through (d) of this First Supplemental Indenture would impair the Company's ability to effect the Tender Offer and the Solicitation, compliance with such provision is hereby waived by the Trustee. ARTICLE II MISCELLANEOUS SECTION 2.01. Instruments To Be Read Together. This First Supplemental Indenture is an indenture supplemental to the Original Indenture; and, as such, said Original Indenture and this First Supplemental Indenture shall henceforth be read together. SECTION 2.02. Confirmation. The Original Indenture as amended and supplemented by this First Supplemental Indenture is in all respects confirmed and preserved. SECTION 2.03. Headings. The headings of the Articles and Sections of this First Supplemental Indenture have been inserted for convenience of reference only, and are not to be considered a part hereof and shall in no way modify or restrict any of the terms and provisions hereof. SECTION 2.04. Governing Law. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE SECURITIES. SECTION 2.05. Counterparts. This First Supplemental Indenture may be executed in any number of counterparts notwithstanding that all parties named herein may not be signatories to the same counterpart, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 2.06. Effectiveness. The provisions of this First Supplemental Indenture will take effect immediately upon its execution and delivery by the Trustee. SECTION 2.08. Acceptance by Trustee. The Trustee accepts the amendments to the Original Indenture effected by this First Supplemental Indenture and agrees to execute the trusts created by the Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture. Without limiting the generality of the foregoing, the Trustee assumes no responsibility for the correctness of the recitals contained herein, which shall be taken as the 2 4 statements of the Company and the Guarantors and except as provided in the Original Indenture the Trustee shall not be responsible or accountable in any whatsoever for or with respect to the validity or execution or sufficiency of this First Supplemental Indenture and the Trustee makes no representation with respect thereto. SECTION 2.08. Trust Indenture Act Controls. If any provision of this First Supplemental Indenture limits, qualifies or conflicts with another provision that is required to be included in this First Supplemental Indenture by the Trust Indenture Act, the required provision shall control. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, all as of the date first written above. DI GIORGIO CORPORATION By /s/ LAWRENCE S. GROSSMAN ------------------------------------ Name: Lawrence S. Grossman Title: Vice President and Corporate Controller THE BANK OF NEW YORK By /s/ TIMOTHY J. SHEA ------------------------------------ Name: Timothy J. Shea Title: Assistant Treasurer 3 EX-10.40 6 AMENDMENT NO. 9, TO CREDIT AGREEMENT 1 Exhibit 10.40 EXECUTION COPY AMENDMENT NO. 9, dated as of May 23, 1997 ("Amendment No. 9") to CREDIT AGREEMENT dated as of February 10, 1993 (as amended through the date hereof, the "Credit Agreement") among DI GIORGIO CORPORATION, as Borrower, the financial institutions parties thereto as LENDERS, BT COMMERCIAL CORPORATION, as Agent for the Lenders, and BANKERS TRUST COMPANY, as Issuing Bank. Terms which are capitalized herein and not otherwise defined shall have the meanings given to such terms in the Credit Agreement. WHEREAS, the Borrower has requested that the Lenders, among other things, extend the Expiration Date and modify various terms and provisions of the Credit Agreement; and WHEREAS, the Lenders have agreed to the foregoing on the terms and subject to the fulfillment of the conditions set forth in this Amendment No. 9; NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and the Lenders hereby agree as follows: SECTION ONE. AMENDMENT. Upon the fulfillment of the conditions precedent set forth in Section Three hereof, effective as of May 23, 1997 the Credit Agreement is hereby amended as follows: (a) Section 1.1 of the Credit Agreement is amended by deleting the definition of the term "Applicable Margin" in its entirety and by substituting the following in lieu thereof: "Applicable Margin" shall mean 2.25% in the case of Eurodollar Rate Loans and .75% in the case of Prime Rate Loans; provided, however, that if the ratio of EBITDA to Interest Expense as at the last day of any period consisting of four consecutive fiscal quarters, based on the financial statements as and for such period, delivered pursuant to subsection 7.1(a) and (b) hereof and as certified pursuant to a certificate executed and delivered by the chief financial officer of the Borrower setting forth in reasonable detail the calculation of such ratio for such period (the "Interest Coverage Certificate", which, for purposes hereof, may be combined with the compliance certificate in the form of Exhibit C) shall be equal to or greater than 2.5 to 1.0, then for the period -1- 2 from the fifth day after such financial statements and Interest Coverage Certificate are delivered to the Agent and the Lenders until the fifth day after an Interest Coverage Certificate (together with the related financial statements) are delivered to the Agent and the Lenders, certifying that the ratio of EBITDA to Interest Expense for the immediately preceding period consisting of four consecutive fiscal quarters is less than 2.5 to 1.0, so long as no Event of Default shall have occurred and then be continuing, the Applicable Margin shall mean 2.00% in the case of Eurodollar Rate Loans and 0.50% in the case of Prime Rate Loans, provided further, that if the financial statements and Interest Coverage Certificate for any fiscal quarter are not delivered on or before the date delivery is required pursuant to subsections 7.1(a) and (b) then, during the period from the date which is five days after such date of required delivery until five days after such financial statements and Interest Coverage Certificate are delivered to the Agent and the Lenders, the Applicable Margin shall mean 2.25% in the case of Eurodollar Rate Loans and .75% in the case of Prime Rate Loans." (b) Section 1.1 of the Credit Agreement is amended by deleting the definition of "Expiration Date" in its entirety and by substituting the following in lieu thereof: "Expiration Date shall mean June 30, 2000." (c) Section 5.6 of the Credit Agreement is amended in its entirety to read as follows: "5.6 Unused Line Fee. At the end of each month the Borrower shall pay to the Agent for the ratable benefit of each of the Lenders a non-refundable fee (the "Unused Line Fee") on the unused portion of such Lender's Revolving Credit Commitment, which fee shall equal (i) for the period from the Closing Date until May 22, 1997, one-half of one percent (.50%) per annum and (ii) for the period from May 23, 1997 until the Expiration Date, three-eighths of one percent (.375%) per annum. The Unused Line Fee shall accrue from the Closing Date until the Expiration Date and shall be due and payable monthly and on the Expiration Date". -2- 3 (d) Section 5.7 (a) of the Credit Agreement is amended in its entirety to read as follows: "5.7 Letter of Credit Fee. (a) The Agent, for the ratable benefit of the Lenders, shall be entitled to charge to the account of the Borrower (i) on the first business day of each month, a fee (the "Letter of Credit Fee"), in an amount equal to (A) one and three-quarters percent (1.75%) per annum of the daily average amount of outstanding documentary Letter of Credit Obligations during the immediately preceding month and (B) two percent (2.00%) per annum of the daily average amount of outstanding standby Letter of Credit Obligations during the immediately preceding month; provided, however that if the ratio of EBITDA to Interest Expense as at the last day of any period consisting of four consecutive fiscal quarters, based on the financial statements as and for such period, delivered pursuant to subsection 7.1(a) and (b) hereof and as certified pursuant to an Interest Coverage Certificate shall be equal to or greater than 2.5 to 1.0, then for the period (the "referenced period") from the fifth day after such financial statements and Interest Coverage Certificate are delivered to the Agent and the Lenders until the fifth day after an Interest Coverage Certificate (together with the related financial statements) are delivered to the Agent and the Lenders, certifying that the ratio of EBITDA to Interest Expense for the immediately preceding period consisting of four consecutive fiscal quarters is less than 2.5 to 1.0 so long as no Event of Default shall be incurred and then be continuing, the Letter of Credit Fee for standby Letter of Credit Obligations shall equal one and three-quarters percent (1.75%) per annum (calculated as hereinabove provided) with respect to each month (or portion thereof) occurring during the referenced period, provided, further, that if the financial statements and Interest Coverage Certificate for any fiscal quarter are not delivered on or before the date delivery is required pursuant to subsections 7.1(a) and (b) then, during the period (the "alternate referenced period") from the date which is five days after such date of required delivery until five days after such financial statements and Interest Coverage Certificate are delivered to the Agent and the Lenders, the Letter of Credit Fee for standby Letter of Credit Obligations shall equal two percent (2%) per annum (calculated as hereinabove provided) with respect to each month (or portion thereof) occurring during the alternate referenced period, and (ii) as and when incurred by the Agent or any Lender, any charges, fees, costs and -3- 4 expenses charged to the Agent or any Lender for the Borrower's account by any Issuing Bank (other than any fees charged to the Agent or any Lender which would be duplicative of the Letter of Credit Fee paid to the Agent for the benefit of the Lenders)(the "Issuing Bank Fees") in connection with the issuance of any Letters of Credit by the Issuing Bank. Each determination by the Agent of Letter of Credit Fees hereunder shall be conclusive and binding for all purposes, absent manifest error." (e) Section 7.1(c) of the Credit Agreement is amended to read in its entirety as follows: "(c) Monthly Financial Statements: as soon as available and in any event within thirty (30) days after the end of each of the fiscal months of January, February, April, May, July, August, October and November, within forty-five (45) days after the end of each of the fiscal months of March, June and September, and within ninety (90) days after the end of the fiscal month of December, a consolidated balance sheet for the Borrower as at the end of such fiscal month and for the fiscal year to date and statements of operations (on a divisional basis, consistent with the Borrower's historical practices), and cash flows for such fiscal month and for the fiscal year to date, together with a comparison to the consolidated balance sheet and statements of operations for the same periods in the prior fiscal year, all in reasonable detail and duly certified (subject to year-end audit adjustments) by the chief executive officer or chief financial officer of the Borrower as having been prepared in accordance with GAAP;" (f) Section 7.1(d) of the Credit Agreement is amended to read in its entirety as follows: "(d) Budgets: Not later than sixty (60) days after the end of each fiscal year, the Budget for the following fiscal year and for each subsequent fiscal year through and including the fiscal year in which the Expiration Date occurs;" (g) Section 7.1(e) of the Credit Agreement is amended to read in its entirety as follows: "(e) Borrowing Base Certificates: upon request by the Agent at any time, and in any event no later than 5:00 p.m. on Monday of each week (or such other day as the Agent may specify in such request), a borrowing base certificate (the "Borrowing Base Certificate") in substantially the form of Exhibit D, duly completed, detailing the Borrower's Eligible Accounts Receivable and Eligible -4- 5 Inventory as of the close of business on the previous Thursday, certified by the Borrower's chief financial officer or treasurer and subject only to adjustment upon completion of the normal year end audit of physical inventory; provided, however, that during the period commencing on the date, if any, that Unused Availability shall be less than $10,000,000, and ending on the date, if any, that Unused Availability shall equal or exceed $10,000,000, the Agent may request and in such event the Borrower shall provide to the Agent, Borrowing Base Certificates twice each week, on Tuesday with respect to the Borrower's Eligible Accounts Receivable and Eligible Inventory as of the close of business on the previous Thursday, and on Thursday, with respect to the Borrower's Eligible Accounts Receivable and Eligible Inventory as of the close of business on the previous Tuesday. In addition, each Borrowing Base Certificate provided hereunder shall have attached to it such additional schedules and/or other information as the Agent may reasonably request;" (h) Section 7.1(g) of the Credit Agreement is amended to read in its entirety as follows: "(g) Customer Notes: Promptly upon request from the Agent, a schedule prepared and certified by the Borrower's chief financial officer or treasurer with respect to the Borrower's Customer Notes indicating the principal amount and final maturity date of all such Customer Notes outstanding as of the end of the previous fiscal quarter, listed according to the obligors thereof;" (i) Section 8.1 of the Credit Agreement is amended by (i) deleting subsections (r) and (s) thereof in their entirety, (ii) substituting the following in lieu thereof and (iii) adding subsections (t) through (dd) thereto, so that subsection (r) through (dd), together with the introductory portion of Section 8.1, shall read as follows: "8.1 Net Worth. The Borrower shall not at any time during any period set forth below permit its Net Worth to be less than the amount set forth below opposite such period, provided that solely for purposes of calculating such Net Worth: (a) the amount of all net losses of the Borrower, on a consolidated basis, arising from the sale, transfer or other disposition permitted hereunder of any fixed assets (such as plant, property, equipment, land or other similar capital assets, including the Farmingdale Lease), up to an aggregate amount of $5,000,000 of such net losses, shall be excluded from such calculation; and (b) the cumulative amount of all dividends which have been paid in cash after the Closing Date as permitted under Section 8.10(a)(iv) hereof as of the date of determination of Net Worth shall be added to Net Worth, and provided further that solely for purposes of calculating Net Income pursuant to this Section 8.1, Net Income of a negative amount shall be deemed to be an amount equal to zero (0). -5- 6
PERIOD AMOUNT ------ ------ (r) last day of fiscal March, $39,000,000 1997 through second-to-last day of fiscal June, 1997 (s) last day of fiscal June, $39,000,000 plus 1997 through second-to-last seventy-five percent day of fiscal September, (75%) of the Net Income 1997 for the preceding fiscal quarter (t) last day of fiscal $39,000,000 plus September, 1997 through seventy-five (75%) of the second-to-last day of fiscal Net Income for the two December, 1997 preceding fiscal quarters (u) last day of fiscal $39,000,000 plus December, 1997 through seventy-five percent second-to-last day of fiscal (75%) of the Net Income March, 1998 for three preceding fiscal quarters (v) last day of fiscal March, $39,000,000 plus 1998 through second-to-last seventy-five percent day of fiscal June, 1998 (75%) of the Net Income for the four preceding fiscal quarters (w) last day of fiscal June, $39,000,000 plus 1998 through second-to-last seventy-five percent day of fiscal September, (75%) of the Net Income 1998 for the five preceding fiscal quarters (x) last day of fiscal $39,000,000 plus September, 1998 through seventy-five percent second-to-last day of fiscal (75%) of the Net Income December, 1998 for the six preceding fiscal quarters
-6- 7
PERIOD AMOUNT ------ ------ (y) last day of fiscal $39,000,000 plus December, 1998 through seventy-five percent second-to-last day of fiscal (75%) of the Net Income March, 1999 for the seven preceding fiscal quarters (z) last day of fiscal March, $39,000,000 plus 1999 through second-to-last seventy-five percent day of fiscal June, 1999 (75%) of the Net Income for the eight preceding fiscal quarters (aa) last day of fiscal June, $39,000,000 plus 1999 through second-to-last seventy-five (75%) of the day of fiscal September, Net Income for the nine 1999 preceding fiscal quarters (bb) last day of fiscal $39,000,000 plus September, 1999 through seventy-five (75%) of the second-to-last day of fiscal Net Income for the ten December, 1999 preceding fiscal quarters (cc) last day of fiscal $39,000,000 plus December, 1999 through seventy-five (75%) of the second-to-last day of fiscal Net Income for the March, 2000 eleven preceding fiscal quarters (dd) last day of fiscal March, $39,000,000 plus 2000 through the Expiration seventy-five percent Date (75%) of the Net Income for the twelve preceding fiscal quarters."
(j) Section 8.2 of the Credit Agreement is amended by deleting subsection (r) thereof and by adding subsections (r) through (u) thereof, so that such subsections (s) through (u), together with the introductory portion of Section 8.2, shall read as follows: -7- 8 "8.2 Interest Coverage Ratio. The Borrower shall not permit its ratio of EBITDA to Interest Expense as of the end of each of the following periods to be less than the ratio set forth below opposite each such period in the applicable column: Minimum Interest Coverage Period Ratio ---------------------------------------------------- (r) the fiscal quarter ending in 1.85 to 1.00 June, 1997, together with the three preceding fiscal quarters (s) the fiscal quarter ending in 1.85 to 1.00 September, 1997, together with the three preceding fiscal quarters (t) the fiscal quarter ending in 1.85 to 1.00 December, 1997, together with the three preceding fiscal quarters (u) the fiscal quarter ending in 2.00 to 1.00" March, 1998, and each fiscal quarter thereafter, in each case together with the three preceding fiscal quarters (k) Section 8.3 of the Credit Agreement is amended by deleting such Section in its entirety and by substituting the bracketed phrase "[intentionally deleted]" in lieu of the text of such Section. (l) Section 8.8 of the Credit Agreement is amended by deleting such Section in its entirety and by substituting the following in lieu thereof: "8.8 No Corporate Changes. The Borrower will not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly, merge, consolidate or otherwise alter or modify the Borrower's or any Restricted Subsidiary's structure, status or existence, provided, however, that any Restricted Subsidiary may be merged or consolidated with or into the Borrower (so long as the Borrower shall be the continuing or surviving corporation) or any one of the other Restricted Subsidiaries, and provided further that the Farmingdale Subsidiary may not be merged or consolidated with or into the Borrower. The Borrower will not directly or indirectly enter into or engage in any operation or activity that is unrelated to the warehousing, trucking and distribution of food and related -8- 9 unrelated to the warehousing, trucking and distribution of food and related products. The Borrower shall give the Agent at least ten (10) Business Days prior written notice of any operation or activity which any Subsidiary shall enter into or engage in if such operation or activity is unrelated to the warehousing, trucking or distribution of food and related products. Unless the Borrower shall have given the Agent at least ten (10) Business Days prior written notice of any of the following changes, but only to the extent any such change may adversely affect the Agent's or the Lenders' rights and remedies hereunder, the Borrower will not, and shall not, permit any of the Restricted Subsidiaries to, directly or indirectly, alter or modify the Borrower's or any Restricted Subsidiary's Articles or Certificate of Incorporation, corporate names, mailing addresses, or principal places of business." (m) Section 8.10(b) of the Credit Agreement is amended in its entirety to read as follows: "(b) make any optional payment or prepayment on or redemption (including, without limitation, by making payments to a sinking or analogous fund) or repurchase of any Indebtedness (other than Indebtedness pursuant to this Credit Agreement), including, without limitation, the Senior Notes; provided that (i) the Borrower may refinance Indebtedness permitted to be incurred under Section 8.5(e); (ii) the Borrower may make mandatory redemptions of the Senior Notes with the net proceeds of certain Asset Sales (as defined in the Senior Note Indenture), and (iii) any Subsidiary may make payments on account of Indebtedness owing by it to the Borrower or to any other Subsidiary, and provided further that the Borrower may prepay, purchase or repurchase the Indebtedness in respect of the Senior Notes at any time after the first anniversary of the Closing Date, so long as (A) no Default or Event of Default has occurred and is continuing or would result therefrom and (B) after giving effect to any such proposed prepayment, purchase or repurchase, there shall be an aggregate amount of Unused Availability of at least $15,000,000, provided further that in determining Unused Availability for the purpose of this Section 8.10(b), the Borrower shall certify to the Agent and the Lenders that its trade payables have been paid in a manner consistent with the Borrower's historical practices." (n) Section 8.11(k)(ii) of the Credit Agreement is amended in its entirety to read as follows: "(ii) advances or loans made in the ordinary course of the Borrower's business to its other Subsidiaries, provided that (A) the aggregate principal amount of such loans and advances to such other Subsidiaries outstanding at any one time does not exceed in the case of this clause (ii) the sum of $500,000 and (B) after giving -9- 10 effect to any such advance or loan, the Borrower shall have Unused Availability of at least $15,000,000." (o) Section 11.5 of the Credit Agreement is amended by deleting the first sentence thereof and by substituting the following in lieu thereof: "11.5 Notices. Except as otherwise provided herein, all notices and correspondences hereunder shall be in writing and sent by certified or registered mail, return receipt requested, or by overnight delivery service, with all charges prepaid, if to or by overnight delivery service, with all charges prepaid, if to the Agent, or any of the Lenders, then to BT Commercial Corporation, 14 Wall Street, New York, NY 10005, Attention: Frederic Thomas, if to the Issuing Bank, then to Bankers Trust Company, 1 BT Plaza, 130 Liberty Street, New York, New York 10006, Attention: Jack Kurzer, and if to the Borrower, then to (i) Borrower at 380 Middlesex Avenue, Carteret, New Jersey 07008, Attention: Richard Neff, or by facsimile transmission, promptly confirmed in writing sent by first class mail, of the Agent, or any of the Lenders, at (212) 618-2640, and if to the Borrower at (908) 541-3730." (p) Schedule B to the Credit Agreement is deleted in its entirety and Schedule B hereto is substituted in lieu thereof. SECTION TWO. REPRESENTATIONS AND WARRANTIES. To induce the Lenders to enter into this Amendment No. 9, the Borrower warrants and represents to the Lenders as follows: (a) the recitals contained in this Amendment No. 9 are true and correct in all respects; (b) after giving effect to this Amendment No. 9, all of the representations and warranties contained in the Credit Agreement and each other Credit Document to which the Borrower is a party continue to be true and correct in all material respects as of the date hereof, as if repeated as of the date hereof, except for such representations and warranties which, by their terms, are only made as of a previous date; (c) the execution, delivery and performance of this Amendment No. 9 by the Borrower is within its corporate powers, has been duly authorized by all necessary corporate action, the Borrower has received all necessary consents to and approvals for the execution, delivery and performance of this Amendment No. 9 (if any shall be required) and this Amendment No. 9 does not and will not contravene or conflict with any provision of law or of the charter or by-laws of the Borrower or with the terms or provisions of any other document or agreement to which the Borrower is a party or by which the Borrower or its property may be bound; and -10- 11 (d) upon its execution, this Amendment No. 9 shall be a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms. SECTION THREE. CONDITIONS PRECEDENT. This Amendment No. 9 shall become effective upon the date that the last of the following events shall have occurred: (a) the Agent shall have received a fully executed counterpart of this Amendment No. 9; (b) no Default shall have occurred and be continuing which constitutes an Event of Default or would constitute an Event of Default upon the giving of notice or lapse of time or both, and no event or development which has had or is reasonably likely to have a Material Adverse Effect shall have occurred, in each case since the date of delivery to the Agent and the Lenders of the Borrower's most recent financial statement, and the Agent and the Lenders shall have received a certificate from the Borrower, executed by its Chief Financial Officer, as to the truth and accuracy of this paragraph (b); (c) the Borrower shall have paid in cash to the Agent, for the ratable benefit of each of the Lenders, a non-refundable fee in the amount of $300,000; (d) the Borrower shall have delivered to the Agent a copy of the corporate resolutions of the Borrower's Board of Directors authorizing the execution, delivery and performance of this Amendment No. 9 by the Borrower; and (e) the Agent and the Lenders shall have received such additional documents to further effectuate the purpose of this Amendment No. 9 as any of them or their respective counsel may reasonably request. SECTION FOUR. GENERAL PROVISIONS. (a) Except as herein expressly amended, the Credit Agreement and all other agreements, documents, instruments and certificates executed in connection therewith are ratified and confirmed in all respects and shall remain in full force and effect in accordance with their respective terms. (b) All references to the Credit Agreement shall mean the Credit Agreement as amended as of the effective date hereof, and as amended hereby and as hereafter amended, supplemented and modified from time to time. -11- 12 (c) This Amendment No. 9 may be executed by the parties hereto individually or in combination, in one or more counterparts, each of which shall be an original and all which shall constitute one and the same agreement. (d) This Amendment No. 9 shall be governed by, construed and interpreted in accordance with the internal laws of the State of New York, without regard to the conflicts of law principles thereof. IN WITNESS WHEREOF, each of the Borrower, the Lenders, the Issuing Bank and the Agent has signed below to indicate its agreement with the foregoing and its intent to be bound thereby. DI GIORGIO CORPORATION By: /s/ Robert A. Zorn -------------------------------- Name: Robert A. Zorn Title: Senior Vice President and Treasurer BT COMMERCIAL CORPORATION, as Agent and as a Lender By: /s/ Frederic W. Thomas, Jr. -------------------------------- Name: Frederic W. Thomas, Jr. Title: Vice President LASALLE NATIONAL BANK, as a Lender By: /s/ Christopher G. Clifford -------------------------------- Name: Christopher G. Clifford Title: Senior Vice President IBJ SCHRODER BANK & TRUST COMPANY, as a Lender By: /s/ Wing C. Louie -------------------------------- Name: Wing C. Louie Title: Vice President -12- 13 CONGRESS FINANCIAL CORPORATION, as a Lender By: /s/ Josephine Norris ---------------------------- Name: Josephine Norris Title: Vice President PNC BANK, as a Lender By: /s/ Michael Richards ----------------------------- Name: Michael Richards Title: Vice President GIBRALTAR CORPORATION, as a Lender By: /s/ Peter J. Hollitscher ------------------------------ Name: Peter J. Hollitscher Title: Vice President BANKERS TRUST COMPANY, as Issuing Bank By: /s/ Frederic W. Thomas Jr. ------------------------------- Name: Frederic W. Thomas Jr. Title: Vice President -13- EX-10.41 7 AMENDMENT NO. 10 TO CREDIT AGREEMENT 1 EXHIBIT 10.41 EXECUTION COPY AMENDMENT NO. 10, dated as of June 11, 1997 ("Amendment No. 10") to CREDIT AGREEMENT dated as of February 10, 1993 (as amended through the date hereof, the "Credit Agreement") among DI GIORGIO CORPORATION, as Borrower, the financial institutions parties thereto as LENDERS, BT COMMERCIAL CORPORATION, as Agent for the Lenders, and BANKERS TRUST COMPANY, as Issuing Bank. Terms which are capitalized herein and not otherwise defined shall have the meanings given to such terms in the Credit Agreement. WHEREAS, the Borrower has requested that the Lenders, among other things, (i) consent to the making of the White Rose Advance,the issuance of the New Senior Notes and the incurrence of Indebtedness in connection therewith, the making of the Dividends and the consummation of the White Rose Merger, as such terms are defined in this Amendment No. 10 and (ii) modify various terms and provisions of the Credit Agreements; and WHEREAS, the Lenders have agreed to the foregoing on the terms and subject to the fulfillment of the conditions set forth in this Amendment No. 10; NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and the Lenders hereby agree as follows: Section One. Consent. The Borrower has requested the Lenders' consent to the following transactions: (a) the making by the Borrower of an advance to White Rose Foods, Inc. ("White Rose") in an amount not to exceed $60 million (the "White Rose Advance") simultaneously with the repurchase by White Rose (with such funds and other funds) of outstanding White Rose Notes, substantially upon the terms and conditions (the "White Rose Notes Repurchase Terms") set forth in Annex A attached hereto; (b) the incurrence of Indebtedness by the Borrower in connection with the issuance of up to $160 million principal amount of the Borrower's unsecured notes due ten years after issuance (the "New Senior Notes"), the proceeds of which shall be used by the Borrower (i) to make the White Rose Advance, (ii) to retire, purchase and cancel, or defease all or substantially all of the outstanding Senior Notes substantially upon the terms and conditions (the "Senior Notes Repurchase Terms") set forth in Annex B attached hereto, (iii) after the White Rose Merger, as defined in subparagraph (d) hereof, to retire, purchase and cancel, or defease all or substantially all of the remaining outstanding White Rose Notes substantially upon the White Rose Notes Repurchase Terms and (iv) for the 2 other purposes set forth in the draft of the Borrower's Offering Memorandum dated May 29, 1997 (the "Offering Memorandum") attached hereto as Annex C: (c) the making by the Borrower of a dividend or dividends, if made prior to the White Rose Merger (as defined in subparagraph (d) below), to White Rose, or if made on or after the White Rose Merger, to Rose Partners, of the following assets of the Borrower and, in connection therewith, the release by the Lenders of all security interests held by the Lenders on such assets: (i) the Las Plumas Note, (ii) certain real property located in Adams County, Colorado, and the improvements located thereon, and (iii) a certain note receivable due from J-Tex International Holdings, Ltd. (collectively, the "Dividends"); and (d) the merger of White Rose with and into the Borrower (the "White Rose Merger"), substantially upon the terms attached hereto as Annex D. Effective upon the fulfillment of each of the conditions precedent set forth in clauses (i) through (vi) below in this Section One and in Section Four, the Lenders (1) hereby release their lien on and security interest in the Las Plumas Note, and any collateral for the Las Plumas Note, reassign same to the Borrower without recourse, representation or warranty of any kind and the Note Pledge Agreement in respect of the Las Plumas Note executed as of February 10, 1993 by the Borrower in favor of the Agent is hereby terminated by mutual consent and (2) hereby consent to (a) the White Rose Advance, (b) the incurrence by Borrower of Indebtedness in connection with the issuance of up to $160 million principal amount of New Senior Notes (the "New Senior Notes Offering") and (c) the making of the Dividends (each of the foregoing events, a "Transaction Event"): (i) White Rose shall have made capital contributions to the Borrower of certain promissory notes (collectively the "Rose Partner Notes") executed in favor of White Rose by Rose Partners, L.P. or certain of its partners, in an aggregate amount of not less than $8,674,000; (ii) the Agent and the Lenders shall have received a true and correct copy of an indenture between the Borrower and a trustee pertaining to the issuance of the New Senior Notes, the terms of which indenture shall not be inconsistent in any material respect with the terms thereof described in the Offering Memorandum; (iii) each of the Transaction Events shall have occurred and shall be effective as of a date no later than the date occurring 180 days from the date of this Amendment No. 10; -2- 3 (iv) on or before the date upon which the New Senior Notes Offering shall have been consummated, the Borrower shall have paid in cash to the Agent, for the ratable benefit of each of the Lenders, a non-refundable fee in the amount of $150,000; (v) no Default shall have occurred and be continuing which constitutes an Event of Default or would constitute an Event of Default upon the giving of notice or lapse of time or both, and no event or development which has had or is reasonably likely to have a Material Adverse Effect shall have occurred, in each case since the date of delivery to the Agent and the Lenders of the Borrower's most recent financial statement, and the Agent and the Lenders shall have received a certificate from the Borrower, executed by its Treasurer or its Chief Financial Officer, as to the truth and accuracy of this clause (v); and (vi) the Agent and the Lenders shall have received such additional documents to further effectuate the purpose of this Section One as any of them or their respective counsel may reasonably request. Effective upon the fulfillment of each of the conditions set forth in clauses (vii) through (xiii) below in this Section One and in Section Four, the Lenders hereby consent to the consummation of the White Rose Merger: (vii) the Borrower shall have made the White Rose Advance and received the proceeds of the issuance of up to $160 million principal amount of the New Senior Notes; (viii) the Borrower shall have received payment in full in cash of the unpaid principal balance of and all accrued interest on the Rose Partner Notes contributed as capital to the Borrower, as described in clause (i) hereof and White Rose shall have repurchased White Rose Notes which aggregate in principal amount not less than that percentage of the aggregate principal amount of the White Rose Notes necessary for the holders thereof to effectively consent to the elimination of certain covenants and events of default contained in the indenture pursuant to which the White Rose Notes were originally issued, such repurchases to have been consummated substantially upon the White Rose Repurchase Terms; (ix) the Borrower shall have repurchased Senior Notes which aggregate in principal amount not less than that percentage of the aggregate principal amount of the Senior Notes necessary for the holders thereof to effectively consent to the elimination of certain covenants and events of default contained in the Senior Note Indenture, such repurchases to have been consummated substantially upon the Senior Notes Repurchase Terms; 4 (x) between the date of this Amendment No. 10 and the consummation of the White Rose Merger, White Rose shall not have incurred any liabilities or obligations, contingent or otherwise, or transferred or otherwise disposed of any of its assets other than in connection with the repurchase of White Rose Notes and the making of a dividend or dividends to the stockholders of White Rose of the assets received by White Rose from the Borrower pursuant to the Dividends. (xi) after giving effect to the White Rose Merger, no Default shall have occurred and be continuing which constitutes an Event of Default or would constitute an Event of Default upon the giving of notice or lapse of time or both, and no event or development which has had or is reasonably likely to have a Material Adverse Effect shall have occurred, in each case since the date of delivery to the Agent and the Lenders of the Borrower's most recent financial statement, and the Agent and the Lenders shall have received a certificate from the Borrower, executed by its Treasurer or Chief Financial Officer, as to the truth and accuracy of this clause (xi); (xii) the Agent and the Lenders shall have received such additional documents to further effectuate the purpose of this Section One as any of them or their respective counsel may reasonably request; and (xiii) the White Rose Merger shall have been consummated not more than sixty (60) days after the first date upon which any White Rose Notes are repurchased by White Rose pursuant to the White Rose Repurchase Terms. Section Two. Amendment. Upon the effectiveness of the Consent contained in Section One hereof and the fulfillment of the conditions precedent set forth in Section Four hereof, the Credit Agreement is hereby amended as of the date of Amendment No. 10 as follows: (a) The following terms and the definitions thereof are added to Section 1.1 in the appropriate alphabetical order: "White Rose Merger Consummation Date" shall mean the effective date of consummation of the White Rose Merger. "Net Worth Base Amount" shall mean (i) at all times prior to the Merger Consummation Date, the sum of $39,000,000 and (ii) on and after the Merger Consummation Date, an amount equal to (A) the amount of the Borrower's opening Net Worth, as set forth in the pro forma balance sheet of the Borrower, giving effect to the consummation of the White Rose Merger (which pro forma balance sheet shall have been delivered to the Agent and the Lenders in accordance with Section 5(e) of Amendment No. 10 to the Credit Agreement, dated -4- 5 as of June 11, 1997 among the Borrower, the Lenders, the Agent and the Issuing Bank), minus (B) $3,000,000 minus (C) one half (1/2) of the aggregate amount of cash used by the Borrower to purchase, redeem or acquire the shares of its common stock permitted to be so purchased, redeemed or acquired pursuant to Section 8.10 (a)(iv). "New Senior Notes" shall mean the Borrower's senior unsecured notes due ten years after issuance in the aggregate principal amount of up to $160 million, to be issued pursuant to the New Senior Note Indenture. "New Senior Note Indenture" shall mean that certain Indenture, in form and substance satisfactory to the Agent and the Lenders, pursuant to which the New Senior Notes shall be issued. "New Senior Note Issuance Date" shall mean the date of issuance of the New Senior Notes pursuant to the New Senior Note Indenture. "White Rose" shall mean White Rose Foods, Inc., a Delaware corporation. "White Rose Merger" shall mean a merger of White Rose with and into the Borrower on terms and conditions satisfactory to the Agent and the Lenders. (b) Section 3.2(b) of the Credit Agreement is amended in its entirety to read as follows: "(b) The "Allowable Inventory Percentage" shall mean the maximum rate of advance against Eligible Inventory, and shall equal seventy percent (70%) on the Closing Date. Commencing as of the first Business Day of the first fiscal quarter of fiscal 1994, and on the first Business Day of every fiscal quarter thereafter, the Allowable Inventory Percentage shall decrease by one and one quarter percent (1 and 1/4%), until the Allowable Inventory Percentage shall be reduced to 60%. Commencing on the New Senior Note Issuance Date, the Allowable Inventory Percentage shall be increased to seventy percent (70%), and thereafter commencing on the first Business Day of October, 1997, and on the first Business Day of each succeeding fiscal quarter, the Allowable Inventory Percent- age shall decrease by one percent (1%), until the Allowable Inventory Percentage shall be permanently reduced to 60%." (c) Section 3.4(d) of the Credit Agreement is amended by deleting clause (i) thereof in its entirety. (d) Section 8.1 of the Credit Agreement is amended by (i) deleting subsections (r) and (s) thereof in their entirety, (ii) substituting the following in lieu thereof and (iii) adding -5- 6 subsections (t) through (dd) thereto, so that subsections (r) through (dd), together with the introductory portion of Section 8.1 shall read as follows: "8.1 Net Worth. The Borrower shall not at any time during any period set forth below permit its Net Worth to be less than the amount set forth below opposite such period, provided that solely for purposes of calculating such Net Worth: (a) the amount of all net losses of the Borrower, on a consolidated basis, arising from the sale, transfer or other disposition permitted hereunder of any fixed assets (such as plant, property, equipment, land or other similar capital assets, including the Farmingdale Lease), up to an aggregate amount of $5,000,000 of such net losses, shall be excluded from such calculation: and (b) the cumulative amount of all dividends which have been paid in cash after the Closing Date as permitted under Section 8.10(a)(iii) hereof as of the date of determination of Net Worth shall be added to Net Worth, and provided further that solely for purposes of calculating Net Income pursuant to this Section 8.1, Net Income of a negative amount shall be deemed to be an amount equal to zero (0). Period Amount ------ ------ (r) last day of fiscal March, Net Worth Base Amount 1997 through second-to-last day of fiscal June, 1997 (s) last day of fiscal June, Net Worth Base Amount 1997 through second-to-last plus seventy-five percent day of fiscal September, (75%) of the Net Income 1997 for the preceding fiscal quarter (t) last day of fiscal Net Worth Base Amount September, 1997 through plus seventy-five (75%) second-to-last day of fiscal of the Net Income for the December, 1997 two preceding fiscal quarters (u) last day of fiscal Net Worth Base Amount December, 1997 through plus seventy-five percent second-to-last day of fiscal (75%) of the Net Income March, 1998 for three preceding fiscal quarters -6- 7 Period Amount ------ ------ (v) last day of fiscal March, Net Worth Base Amount 1998 through second-to-last plus seventy-five percent day of fiscal June, 1998 (75%) of the Net Income for the four preceding fiscal quarters (w) last day of fiscal June, Net Worth Base Amount 1998 through second-to-last plus seventy-five percent day of fiscal September, 1998 (75%) of the Net Income for the five preceding fiscal quarters (x) last day of fiscal Net Worth Base Amount September, 1998 through plus seventy-five percent second-to-last day of fiscal (75%) of the Net Income December, 1998 for the six preceding fiscal quarters (y) last day of fiscal Net Worth Base Amount December, 1998 through plus seventy-five percent second-to-last day of fiscal (75%) of the Net Income March, 1999 for the seven preceding fiscal quarters (z) last day of fiscal March, Net Worth Base Amount 1999 through second-to-last plus seventy-five percent day of fiscal June, 1999 (75%) of the Net Income for the eight preceding fiscal quarters (aa) last day of fiscal June, Net Worth Base Amount 1999 through second-to-last plus seventy-five (75%) day of fiscal September, of the Net Income for the 1999 nine preceding fiscal quarters (bb) last day of fiscal Net Worth Base Amount September, 1999 through plus seventy-five (75%) second-to-last day of fiscal of the Net Income for the December, 1999 ten preceding fiscal quarters -7- 8 Period Amount ------ ------ (cc) last day of fiscal Net Worth Base Amount December, 1999 through plus seventy-five (75%) second-to-last day of fiscal of the Net Income for the March, 2000 eleven preceding fiscal quarters (dd) last day of fiscal March, Net Worth Base Amount 2000 through the Expiration plus seventy-five percent Date (75%) of the Net Income for the twelve preceding fiscal quarters." (e) Section 8.2 of the Credit Agreement is amended by deleting subsections (r) through (u) thereof, and adding subsections (r) through (dd) thereof, so that such subsections (r) through (dd) thereof, together with the introductory portion of Section 8.2, shall read as follows: "8.2 Interest Coverage Ratio. The Borrower shall not permit its ratio of EBITDA to Interest Expense as of the end of each of the following periods to be less than the applicable ratio set forth below opposite each such period in the applicable column:
Minimum Interest Minimum Interest Coverage Ratio Coverage Ratio Prior to the New On and After the Senior Note New Senior Note Period Issuance Date Issuance Date - ------ ---------------- ---------------- (r) the fiscal quarter ending in June, 1.85 to 1.00 1.50 to 1.00 1997, together with the three preceding fiscal quarters (s) the fiscal quarter ending in 1.85 to 1.00 1.60 to 1.00 September, 1997, together with the three preceding fiscal quarters (t) the fiscal quarter ending in 1.85 to 1.00 1.60 to 1.00 December, 1997, together with the three preceding fiscal quarters
-8- 9
Minimum Interest Minimum Interest Coverage Ratio Coverage Ratio Prior to the New On and After the Senior Note New Senior Note Period Issuance Date Issuance Date - ------ ---------------- ---------------- (u) the fiscal quarter ending in March, 2.00 to 1.00 1998, and each fiscal quarter thereafter, in each case together with the three preceding fiscal quarters (v) the fiscal quarter ending in March, 1.65 to 1.00 1998, together with the three preceding fiscal quarters (w) the fiscal quarter ending in June, 1.70 to 1.00 1998, together with the three preceding fiscal quarters (x) the fiscal quarter ending in 1.70 to 1.00 September, 1998, together with the three preceding fiscal quarters (y) the fiscal quarter ending in 1.75 to 1.00 December, 1998, together with the three preceding fiscal quarters (z) the fiscal quarter ending in March, 1.80 to 1.00 1999, together with the three preceding fiscal quarters (aa) the fiscal quarter ending in June, 1.85 to 1.00 1999, together with the three preceding fiscal quarters (bb) the first quarter ending in 1.85 to 1.00 September, 1999, together with the three preceding fiscal quarters (cc) the fiscal quarter ending in 1.90 to 1.00 December, 1999, together with the three preceding fiscal quarters (dd) the fiscal quarter ending in March, 1.95 to 1.00 2000, together with the three preceding fiscal quarters
-9- 10 (f) Section 8.10 of the Credit Agreement is amended by (i) deleting the word "or" at the end of clause (iii) of Section 8.10(a) and substituting the word "and" in lieu thereof, and by adding a new clause (iv) thereafter as follows and (ii) deleting Section 8.10(b) in its entirety and substituting the following in lieu thereof: "(iv) beginning after the date of issuance of the New Senior Notes, the Borrower may purchase, redeem or acquire for cash shares of its common stock for an aggregate price of up to $5,000,000, provided that (A) no Default or Event of Default shall have occurred and then be continuing or would result therefrom, (B) the condition set forth in clause (A)(i) of the defined term "Shareholder Stock Repurchases" contained in the New Senior Note Indenture (as in effect on the New Senior Note Issuance Date) shall have occurred, (C) immediately after giving effect to any such proposed purchase, redemption or acquisition, there shall be an aggregate amount of Unused Availability of at least $15,000,000 and (D) on a pro forma basis, the ratio of EBITDA to Interest Expense for the period of four consecutive fiscal quarters (the "referenced period") ending with the fiscal quarter immediately prior to the fiscal quarter during which such proposed purchase, redemption or acquisition shall be consummated (such ratio to be calculated as if such purchase, redemption or acquisition shall have occurred at the beginning of such referenced period), shall be no less than the minimum ratio of EBITDA to Interest Expense set forth in Section 8.2 established for such referenced period, provided further that in determining Unused Availability for the purpose of this Section 8.10(a)(v), the Borrower shall certify to the Agent and the Lenders that its trade payables have been paid in a manner consistent with the Borrower's historical practices; or" "(b) make any optional payment or prepayment on or redemption (including, without limitation, by making payments to a sinking or analogous fund) or repurchase of any Indebtedness (other than Indebtedness pursuant to this Credit Agreement), including, without limitation, the Senior Notes and/or New Senior Notes, as the case may be: provided that (i) the Borrower may refinance Indebtedness permitted to be incurred under Section 8.5(e); (ii) the Borrower may make mandatory redemptions of the Senior Notes with the net proceeds of certain Asset Sales (as defined in the Senior Note Indenture), and (iii) any Subsidiary may make payments on account of Indebtedness owing by it to the Borrower or to any other Subsidiary, and provided further that the Borrower may prepay, purchase or repurchase the Indebtedness in respect of (iv) the Senior Notes at any time after the first anniversary of the Closing Date, so long as (A) no Default or Event of Default has occurred and is continuing or would result therefrom and (B) after giving effect to any such proposed prepayment, purchase or repurchase, -10- 11 there shall be an aggregate amount of Unused Availability of at least $15,000,000, and (v) the New Senior Notes so long as (A) no Default or Event of Default has occurred and is continuing or would result therefrom and (B) after giving effect to any such proposed prepayment, purchase or repurchase, there shall be an aggregate amount of Unused Availability of at least $15,000,000, provided further that in determining Unused Availability for the purpose of this Section 8.10(b), the Borrower shall certify to the Agent and the Lenders that its trade payable have been paid in a manner consistent with the Borrower's historical practices." (g) Section 9.1 of the Credit Agreement as amended by (i) deleting clause (ii) of paragraph (f) thereof in its entirety and by substituting the following in lieu thereof and (ii) deleting paragraph (b) thereof in its entirety and substituting the following in lieu thereof: "(ii) a change of control (as defined in the New Senior Note Indenture, as in effect on the New Senior Note Issuance Date) shall occur, or" "(h) any material covenant, agreement or obligation of any party contained in or evidenced by any of the Credit Documents shall cease to be in full force and effect other than as a result of actions taken or not taken by the Agent, the Issuing Bank or the Lenders, or any Credit Document to which the Borrower is a party shall be cancelled, terminated, revoked or rescinded without the express prior written consent of the Agent (other than as a result of actions taken or not taken by the Agent, the Issuing Bank or the Lenders), or any action or proceeding shall have been commenced by the Borrower, DIG Holding, White Rose Foods, Inc., or any of their Subsidiaries or Affiliates, or by any member of the Goldberg Holders (as defined in the Senior Note Indenture) or any member of the Permitted Holders (as defined in the New Senior Note Indenture as in effect on the New Senior Note Issuance Date), as the case may be, seeking to cancel, revoke, rescind or disaffirm the obligations of any party to any Credit Document, or any court or other governmental authority shall issue a judgment, order, decree or ruling to the effect that any of the obligations of any party to any Credit Document are illegal, invalid or unenforceable." SECTION THREE. REPRESENTATIONS AND WARRANTIES. To induce the Lenders to enter into this Amendment No. 10, the Borrower warrants and represents to the Lenders as follows: (a) the recitals contained in this Amendment No. 10 are true and correct in all respects: -11- 12 (b) after giving effect to this Amendment No. 10, all of the representations and warranties contained in the Credit Agreement and each other Credit Document to which the Borrower is a party continue to be true and correct in all material respects as of the date hereof, as if repeated as of the date hereof, except for such representations and warranties which, by their terms, are only made as of a previous date; (c) the execution, delivery and performance of this Amendment No. 10 by the Borrower is within its corporate powers, has been duly authorized by all necessary corporate action, the Borrower has received all necessary consents to and approvals for the execution, delivery and performance of this Amendment No. 10 (if any shall be required) and this Amendment No. 10 does not and will not contravene or conflict with any provision of law or of the charter or by-laws of the Borrower or with the terms or provisions of any other document or agreement to which the Borrower is a party or by which the Borrower or its property may be bound; and (d) upon its execution, this Amendment No. 10 shall be a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms. SECTION FOUR. CONDITIONS PRECEDENT. This Amendment No. 10 shall become effective upon the date that the last of the following events shall have occurred: (a) the Agent shall have received a fully executed counterpart of this Amendment No. 10; (b) no Default shall have occurred and be continuing which constitutes an Event of Default or would constitute an Event of Default upon the giving of notice or lapse of time or both, and no event or development which has had or is reasonably likely to have a Material Adverse Effect shall have occurred, in each case since the date of delivery to the Agent and the Lenders of the Borrower's most recent financial statement, and the Agent and the Lenders shall have received a certificate from the Borrower, executed by its Chief Financial Officer, as to the truth and accuracy of this paragraph (b): (c) the Borrower shall have delivered to the Agent a copy of the corporate resolutions of the Borrower's Board of Directors authorizing the execution, delivery and performance of this Amendment No. 10 by the Borrower; and (d) the Agent and the Lenders shall have received such additional documents to further effectuate the purpose of this Amendment No. 10 as any of them or their respective counsel may reasonably request. -12- 13 SECTION FIVE. General Provisions. (a) Except as herein expressly amended, the Credit Agreement and all other agreements, documents, instruments and certificates executed in connection therewith are ratified and confirmed in all respects and shall remain in full force and effect in accordance with their respective terms. (b) All references to the Credit Agreement shall mean the Credit Agreement as amended as of the effective date hereof, and as amended hereby and as hereafter amended, supplemented and modified from time to time. (c) This Amendment No. 10 may be executed by the parties hereto individually or in combination, in one or more counterparts, each of which shall be an original and all which shall constitute one and the same agreement. (d) This Amendment No. 10 shall be governed by, construed and interpreted in accordance with the internal laws of the State of New York, without regard to the conflicts of law principles thereof. (e) The Borrower covenants and agrees that at least ten (10) Business Days prior to the White Rose Merger Consummation Date, the Borrower shall prepare and deliver to the Agent and the Lenders a pro forma balance sheet of the Borrower, giving effect to the consummation of the White Rose Merger, which balance sheet shall include a calculation in reasonable detail of the components of the Borrower's opening Net Worth, such financial statement to be certified by the Borrower's Chief Financial Officer as having been prepared in accordance with GAAP, consistently applied. (f) The Borrower hereby authorizes the Agent to charge the Borrower's account with the amount of the fee described in Section One (iv) hereof on the New Senior Note Issuance Date. (g) The Borrower acknowledges and confirms its understanding and agreement that the Agent has the authority and right under the Credit Agreement, in the exercise of its reasonable discretion, to establish, as of any date of determination, a reserve against Eligible Accounts Receivable and Eligible Inventory in an amount equal to all or a portion of (as the Agent may so determine) the aggregate (face amount of all White Rose Notes and Senior Notes outstanding as of such date of determination which have not been retired, purchased, and cancelled or defeased. -13- 14 IN WITNESS WHEREOF, each of the Borrower, the Lenders, the Issuing Bank and the Agent has signed below to indicate its agreement with the foregoing and its intent to be bound thereby. DI GIORGIO CORPORATION By: Robert A. Zorn ----------------------------- Name: Robert A. Zorn Title: Senior Vice President and Treasurer BT COMMERCIAL CORPORATION, as Agent and as a Lender By: ----------------------------- Name: Title: LASALLE NATIONAL BANK, as a Lender By: ----------------------------- Name: Title: IBJ SCHRODER BANK & TRUST COMPANY, as a Lender By: ----------------------------- Name: Title: CONGRESS FINANCIAL CORPORATION, as a Lender By: ----------------------------- Name: Title: -14- 15 IN WITNESS WHEREOF, each of the Borrower, the Lenders, the Issuing Bank and the Agent has signed below to indicate its agreement with the foregoing and its intent to be bound thereby. DI GIORGIO CORPORATION By: ----------------------------- Name: Title: BT COMMERCIAL CORPORATION, as Agent and as a Lender By: Frederic W. Thomas, Jr. ----------------------------- Name: Frederic W. Thomas, Jr. Title: Vice President LASALLE NATIONAL BANK, as a Lender By: ----------------------------- Name: Title: IBJ SCHRODER BANK & TRUST COMPANY, as a Lender By: ----------------------------- Name: Title: CONGRESS FINANCIAL CORPORATION, as a Lender By: ----------------------------- Name: Title: -14- 16 IN WITNESS WHEREOF, each of the Borrower, the Lenders, the Issuing Bank and the Agent has signed below to indicate its agreement with the foregoing and its intent to be bound thereby. DI GIORGIO CORPORATION By: ----------------------------- Name: Title: BT COMMERCIAL CORPORATION, as Agent and as a Lender By: ----------------------------- Name: Title: LASALLE NATIONAL BANK, as a Lender By: /s/Christopher G. Clifford ----------------------------- Name: Christopher G. Clifford Title: Senior Vice President IBJ SCHRODER BANK & TRUST COMPANY, as a Lender By: ----------------------------- Name: Title: CONGRESS FINANCIAL CORPORATION, as a Lender By: ----------------------------- Name: Title: -14- 17 IN WITNESS WHEREOF, each of the Borrower, the Lenders, the Issuing Bank and the Agent has signed below to indicate its agreement with the foregoing and its intent to be bound thereby. DI GIORGIO CORPORATION By: ----------------------------- Name: Title: BT COMMERCIAL CORPORATION, as Agent and as a Lender By: ----------------------------- Name: Title: LASALLE NATIONAL BANK, as a Lender By: ----------------------------- Name: Title: IBJ SCHRODER BANK & TRUST COMPANY, as a Lender By: /s/Wing C. Louie ----------------------------- Name: Wing C. Louie Title: Vice President CONGRESS FINANCIAL CORPORATION, as a Lender By: ----------------------------- Name: Title: -14- 18 IN WITNESS WHEREOF, each of the Borrower, the Lenders, the Issuing Bank and the Agent has signed below to indicate its agreement with the foregoing and its intent to be bound thereby. DI GIORGIO CORPORATION By: ----------------------------- Name: Title: BT COMMERCIAL CORPORATION, as Agent and as a Lender By: ----------------------------- Name: Title: LASALLE NATIONAL BANK, as a Lender By: ----------------------------- Name: Title: IBJ SCHRODER BANK & TRUST COMPANY, as a Lender By: ----------------------------- Name: Title: CONGRESS FINANCIAL CORPORATION, as a Lender By: /s/Josephine Norris ----------------------------- Name: Josephine Norris Title: Vice President -14- 19 PNC BANK, as a Lender By: /s/ Michael A. Richards ----------------------- Name: Michael A. Richards Title: Vice President SUMMIT COMMERCIAL/GIBRALTAR CORP., as a Lender By: ------------------------- Name: Title: BANKERS TRUST COMPANY, as Issuing Bank By: ------------------------- Name: Title: -15- 20 PNC BANK, as a Lender By: ----------------------- Name: Title: SUMMIT COMMERCIAL/GIBRALTAR CORP., as a Lender By: Peter J. Hollitscher ------------------------- Name: Peter J. Hollitscher Title: Vice President BANKERS TRUST COMPANY, as Issuing Bank By: ------------------------- Name: Title: -15- 21 PNC BANK, as a Lender By: ----------------------- Name: Title: SUMMIT COMMERCIAL/GIBRALTAR CORP., as a Lender By: ------------------------- Name: Title: BANKERS TRUST COMPANY, as Issuing Bank By: Frederic W. Thomas, Jr. ------------------------- Name: Frederic W. Thomas, Jr. Title: Vice President -15- EX-12.1 8 RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12.1 DI GIORGIO CORPORATION AND SUBSIDIARIES RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN THOUSANDS)
FISCAL YEAR ENDED THIRTEEN-WEEKS ENDED -------------------------------------------------------------------- --------------------- JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 30, DECEMBER 28, MARCH 30, MARCH 29, 1993 1994 1994 1995 1996 1996 1997 ---------- ---------- ------------ ------------ ------------ --------- --------- Income (loss) from continuing operations before taxes.............. $ (1,409) $ 935 $ (3,475) $ (2,201) $ 4,904 $ (167) $ 1,615 Fixed Charges: Interest expense.......... 14,409 18,232 20,370 24,887 23,955 6,138 5,709 Amortization of debt expense................. 3,366 1,600 1,479 1,457 1,138 284 288 Interest portion of rental expense(1).............. 2,487 2,485 2,374 2,112 2,207 555 565 ------- ------- ------- ------- ------- ------ ------ Total fixed charges.......... 20,262 22,317 24,223 28,456 27,300 6,977 6,562 ------- ------- ------- ------- ------- ------ ------ Adjusted income (loss) before fixed charges...... 18,853 23,252 20,748 26,255 32,204 6,810 8,177 ======= ======= ======= ======= ======= ====== ====== Ratio of earnings to fixed charges................... -- 1.04x -- -- 1.18x -- 1.25x ======= ======= ======= ======= ======= ====== ====== Deficiency in earnings available to cover fixed charges................... $ 1,409 $ -- $ 3,475 $ 2,201 $ -- $ 167 $ -- ======= ======= ======= ======= ======= ====== ======
- --------------- (1) Represents the portion of rentals deemed representative of the interest included herein. EX-23.2 9 CONSENT OF DELOITTE & TOUCHE LLP 1 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the use in this Registration Statement of Di Giorgio Corporation and subsidiaries on Form S-4 of our report dated February 21, 1997 (June 20, 1997 as to Notes 1 and 18) appearing in the Prospectus, which is part of this Registration Statement, and of our report dated February 21, 1997 (June 20, 1997 as to Notes 1 and 18), relating to the financial statement schedule appearing elsewhere in this Registration Statement. We also consent to the reference to us under the heading "Experts" in such Prospectus. DELOITTE & TOUCHE LLP Parsippany, New Jersey June 27, 1997 -----END PRIVACY-ENHANCED MESSAGE-----