-----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, N4ClgSkzgUB4hohgpdqBUKrrx2iHXyB+LFd8dO9RYV9QXC09HbEn6MBNt32vK5PV Ujrj2oKzUIRFOWtAuRLBRw== 0000950149-01-501025.txt : 20010711 0000950149-01-501025.hdr.sgml : 20010711 ACCESSION NUMBER: 0000950149-01-501025 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 20010710 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEL MONTE FOODS CO CENTRAL INDEX KEY: 0000866873 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FRUITS, VEG & PRESERVES, JAMS & JELLIES [2033] IRS NUMBER: 133542950 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-64802 FILM NUMBER: 1677236 BUSINESS ADDRESS: STREET 1: ONE MARKET PLZ STREET 2: C/O DEL MONTE CORP CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 4152473000 FORMER COMPANY: FORMER CONFORMED NAME: DMPF HOLDINGS CORP DATE OF NAME CHANGE: 19600201 S-4 1 f73660s-4.txt REGISTRATION STATEMENT ON FORM S-4 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 2001 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ DEL MONTE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEW YORK 2033 56-1221479 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
DEL MONTE FOODS COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 6719 13-3542950 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
ONE MARKET @ THE LANDMARK, SAN FRANCISCO, CALIFORNIA 94105 (415) 247-3000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) RICHARD G. WOLFORD CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER ONE MARKET @ THE LANDMARK, SAN FRANCISCO, CALIFORNIA 94105 (415) 247-3000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE OF PROCESS) COPIES TO: DOUGLAS D. SMITH, ESQ. GIBSON, DUNN & CRUTCHER LLP ONE MONTGOMERY STREET SAN FRANCISCO, CALIFORNIA 94104 (415) 393-8300 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this registration statement becomes effective and all other conditions to the exchange offer pursuant to the registration rights agreement described in the enclosed prospectus have been satisfied or waived. 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. [ ] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] CALCULATION OF REGISTRATION FEE - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION SECURITIES TO BE REGISTERED REGISTERED SECURITY PRICE(1) FEE(1) - --------------------------------------------------------------------------------------------------------------------------- Series B 9 1/4% Senior Subordinated Notes Due 2011..................... $300,000,000 100% $300,000,000 $75,000 - --------------------------------------------------------------------------------------------------------------------------- Guarantee of the Series B 9 1/4% Senior Subordinated Notes Due 2011.............................. $300,000,000 None(2) None(2) None(2) - --------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the registration fee in accordance with Rule 457(f) of the Securities Act of 1933, as amended. (2) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is payable for the Guarantee. 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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 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. PROSPECTUS SUBJECT TO COMPLETION DATED , 2001 $300,000,000 [DEL MONTE LOGO] DEL MONTE CORPORATION OFFER TO EXCHANGE SERIES B 9 1/4% SENIOR SUBORDINATED NOTES DUE 2011 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OUTSTANDING 9 1/4% SENIOR SUBORDINATED NOTES DUE 2011 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2001, UNLESS EXTENDED We are offering to exchange our Series B 9 1/4% Senior Subordinated Notes Due 2011, which have been registered under the Securities Act of 1933, as amended, for any and all of our outstanding 9 1/4% Senior Subordinated Notes Due 2011 issued on May 15, 2001. THE EXCHANGE NOTES - The terms of the registered exchange notes to be issued are substantially identical to the terms of the outstanding notes that we issued on May 15, 2001, except for transfer restrictions, registration rights and liquidated damages provisions relating to the outstanding notes which will not apply to the exchange notes. - Interest on the exchange notes accrues at the rate of 9.25% per annum, payable semiannually in arrears in cash each May 15 and November 15, commencing on November 15, 2001. - The issuer, Del Monte Corporation, or DMC, may redeem the notes in whole or in part beginning on May 15, 2006 at an initial redemption price equal to 104.625% of their principal amount plus accrued interest. In addition, on or before May 15, 2004, DMC may redeem up to 35% of the notes at a redemption price equal to 109.250% of their principal amount plus accrued interest using proceeds from an offering of DMC's capital stock or from the proceeds of an offering of the capital stock of DMC's parent company Del Monte Foods Company, or DMFC. - The notes will rank equally with all of our other unsecured senior subordinated indebtedness and will be junior to our senior indebtedness. The notes are guaranteed on a subordinated basis by DMFC. - We do not intend to list the exchange notes on any securities exchange. MATERIAL TERMS OF THE EXCHANGE OFFER - The exchange offer expires at 5 p.m., New York City time, on , 2001, unless extended. - All outstanding notes that are validly tendered and not validly withdrawn will be exchanged for an equal principal amount of exchange notes which are registered under the Securities Act of 1933. - Tenders of outstanding notes may be withdrawn at any time prior to the expiration of the exchange offer. - The exchange offer is not subject to any minimum tender condition, but is subject to the terms of the registration rights agreement that we entered into on May 15, 2001 with the placement agents for the outstanding notes and DMFC. - We will not receive any proceeds from the exchange offer. We will pay the expenses of the exchange offer. ------------------------- FOR A DISCUSSION OF RISKS THAT SHOULD BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OUTSTANDING NOTES IN THE EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 9. THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL WE ACCEPT SURRENDER FOR EXCHANGE FROM, HOLDERS OF OUTSTANDING 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. ------------------------- The date of this prospectus is , 2001 3 This prospectus incorporates important business and financial information about us that is not included in or delivered with this prospectus. This information is available without charge to investors in the notes upon written or oral request. Requests should be made to: Attn.: Secretary Del Monte Corporation One Market @ The Landmark P.O. Box 193575 San Francisco, CA 94119-3575 (415) 247-3000 The exchange offer is expected to expire on , 2001, and investors must make their investment decisions by this expiration date. Therefore, in order to obtain timely delivery of the requested information, we must receive your request by , 2001, or the date that is no later than five business days before the expiration date. See "Where You Can Find More Information." ------------------------- TABLE OF CONTENTS
PAGE ---- Summary..................................................... 1 Risk Factors................................................ 9 The Exchange Offer.......................................... 17 Use of Proceeds............................................. 25 Capitalization.............................................. 26 Selected Historical Consolidated Financial Data............. 27 Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 29 Business.................................................... 35 Management.................................................. 53 Description of the Exchange Notes........................... 54 Description of Existing Indebtedness........................ 104 Certain Federal Income Tax Considerations................... 106 Legal Matters............................................... 108 Experts..................................................... 108
------------------------- IN MAKING AN INVESTMENT DECISION, YOU MUST RELY ON YOUR OWN EXAMINATION OF OUR BUSINESS AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE NOTES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THESE AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You acknowledge that: - you have been afforded an opportunity to request from us, and to review, all additional information considered by you to be necessary to verify the accuracy of, or to supplement, the information contained in this prospectus; and - no person has been authorized to give any information or to make any representation concerning us or the notes (other than as contained in this prospectus and information given by our duly authorized officers and employees in connection with investors' examination of us and the terms of the offering) and, if given or made, that other information or representation should not be relied upon as having been authorized by us. THE NOTES MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS. YOU SHOULD BE AWARE THAT YOU MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. i 4 ------------------------- See "Risk Factors" immediately following the "Summary" for a description of specified factors relating to an investment in the notes. We are not making any representation to you regarding the legality of an investment by you under appropriate legal investment or similar laws. You should consult with your own advisors as to legal, tax, business, financial and related aspects of a purchase of the notes. ------------------------- You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell the notes only where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the notes. Market data and certain industry forecasts used throughout this prospectus were obtained from internal surveys, market research, publicly available information and industry publications. Industry publications, internal surveys, industry forecasts and market research, while believed to be reliable, have not been independently verified, and neither we nor the placement agents make any representation as to the accuracy of such information. ------------------------- WHERE YOU CAN FIND MORE INFORMATION We filed a registration statement with the Securities and Exchange Commission under the Securities Act to register the exchange notes to be issued in this exchange offer. As allowed by the Commission's rules, this prospectus does not contain all of the information that you can find in the registration statement and its exhibits. As a result, statements made in this prospectus concerning the contents of a contract, agreement or other document are not necessarily complete. If we have filed any contract, agreement or other document as an exhibit to the registration statement, you should read the exhibit for a more complete understanding of the document or matter involved. DMFC files annual, quarterly and special reports, proxy statements and other information with the Commission. You may read and copy at prescribed rates any of these documents at the public reference rooms of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, 7 World Trade Center, 14th Floor, New York, New York, 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the Commission at (202) 942-8090 for further information on the public reference rooms. The Commission also maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission (http://www.sec.gov). We are incorporating by reference additional documents filed by DMFC with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, after the date of this prospectus and before the exchange of the outstanding notes for the exchange notes. This means that we are disclosing important information to you by referring you to those documents. The information that DMFC may file later with the Commission will automatically update and supersede information in this prospectus. You may request a free copy of these filings by writing or telephoning us at the following address: Attn.: Secretary Del Monte Corporation One Market @ The Landmark P.O. Box 193575 San Francisco, CA 94119-3575 (415) 247-3000 The indenture governing the outstanding notes will also govern the exchange notes. The outstanding notes and the exchange notes, together, are a single series of debt securities. The indenture requires us to ii 5 provide quarterly and annual financial reports of DMFC or DMC as applicable to holders of the exchange notes. You should not assume that the information in this prospectus is accurate as of any date other than the date of this prospectus, or the respective dates of those documents we incorporate by reference, regardless of when you received this prospectus. You should rely on the information incorporated by reference or provided in the registration statement. We have not authorized anyone else to provide you with different information. The exchange offer is being made to, and we will accept surrender for exchange from, holders of outstanding notes only in jurisdictions where the exchange offer is permitted. ------------------------- FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements, including those in the sections captioned "Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." DMFC may also make forward-looking statements in its periodic reports to the Commission on Forms 10-K, 10-Q, 8-K, in its annual report to shareholders, proxy statements, offering circulars and prospectuses and press releases, and we may also make forward-looking statements in other written materials and in oral statements made by our officers, directors or employees to third parties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on plans, estimates and projections at the time we make the statements, and you should not place undue reliance on them. We do not undertake to update any of these statements in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, among others: - general economic and business conditions; - weather conditions; - crop yields; - industry trends; - competition; - raw material costs and availability; - the loss of significant customers; - changes in business strategy or development plans; - availability, terms and deployment of capital; - changes in, or the failure or inability to comply with, governmental regulations, including, without limitation, environmental regulations; and - industry trends and capacity and other factors referenced in this prospectus. For information with respect to these and other factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see the text under the caption "Risk Factors." Potential investors in the exchange notes are urged to consider these factors carefully in evaluating the forward-looking statements contained or incorporated by reference in this prospectus. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by our cautionary statements. The forward-looking statements included or incorporated herein are made only as of the date of this prospectus, or as of the iii 6 date of the document incorporated by reference. We do not intend, and undertake no obligation, to update these forward-looking statements. ------------------------- Del Monte(R), Contadina(R) and S&W(R) are our principal registered trademarks. Some of our other trademarks include Fruit Cup(R), Fruit To-Go(TM), Fruit Naturals(R), Orchard Select(R), Sunfresh(R), FruitRageous(R), Fruit Pleasures(R) and Del Monte Lite(R). iv 7 SUMMARY The following summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you should consider before exchanging the notes. You should read the entire prospectus carefully, including the "Risk Factors" section and the financial statements. Unless the context otherwise requires, "Del Monte Foods Company," or DMFC, means only Del Monte Foods Company, DMC's parent company, "Del Monte Corporation," or DMC, means only Del Monte Corporation, who is the issuer of the notes offered in this prospectus, and "we," "us," and "our" refers to DMFC and its consolidated subsidiaries, including DMC. Our fiscal year ends on June 30, and our fiscal quarters end on the last Sunday of September, December and March. All financial data provided in this prospectus are the financial data of DMFC and its consolidated subsidiaries unless otherwise disclosed. Unless otherwise indicated, references herein to U.S. market share data are based on equivalent case volume sold through retail grocery stores (including Wal-Mart Supercenters; excluding club stores and other supercenters) with at least $2 million in sales and are based upon data provided by ACNielsen Company, an independent market research firm. ACNielsen makes this data available to the public at prescribed rates. Our references to processed vegetables, fruit, and solid tomato products do not include frozen products. Market share data for processed vegetables and solid tomato products include only those categories in which we compete. The data for processed fruit includes the major fruit and single-serve categories in which we compete and excludes the specialty and pineapple categories. Market share data for calendar 2000 includes the S&W lines. DEL MONTE CORPORATION We are the largest producer and distributor of processed vegetables, fruit and solid tomato products in the United States. We manufacture and distribute premium quality, nutritious food products under the Del Monte, Contadina, S&W and other brand names generating net sales of approximately $1.5 billion and adjusted EBITDA of approximately $187 million in fiscal 2000. Our products are sold by most retail grocers, supercenters, club stores and mass merchandisers throughout the United States with the average supermarket carrying approximately 110 of our branded items. The Del Monte brand was introduced in 1892, and we believe it is one of the best known brands for processed food products in the United States. We estimate that Del Monte brand products are purchased by over 80% of U.S. households. Our market share in vegetables is larger than the market share of our four largest branded competitors combined and our market share of canned fruit is larger than the fruit market share of all other branded competitors combined. In addition, our market share for solid tomato products is twice that of our nearest competitor. In calendar 2000, we had market shares of 24.4% of all processed vegetable products, 46.7% of all processed major fruit products and 22.0% of all canned solid tomato products in the United States. As the brand leader in these three major processed food categories, we have a full-line, multi-category presence that we believe provides us with a substantial competitive advantage in selling to the retail grocery industry. We sell our products primarily through grocery chains, club stores and mass merchandisers. Sales through these channels accounted for approximately $1.2 billion (or 80.7%) of our fiscal 2000 sales. Club stores and mass merchandisers are the fastest growing channels of retail distribution. These customers include Wal-Mart/Sam's Club and Costco, and other merchandisers that include full grocery sections, such as Wal-Mart Supercenters and Kmart's Super Ks. Our long-term relationships with customers allow them to rely on our continuity of supply which enables them to reduce their inventory levels. Many of our customers also rely on our value-added services, such as our category and inventory management programs that allow them to more effectively manage their business. THE REFINANCING Pursuant to an offering memorandum dated May 3, 2001, we issued an aggregate of $300 million principal amount of senior subordinated notes. The net proceeds of the offering were used primarily to 1 8 fund the repurchase of the 12 1/4% senior subordinated notes issued by DMC and 12 1/2% senior discount notes issued by DMFC. We also amended and restated our credit facility to provide for up to $740 million, consisting of a $325 million revolving credit facility, with a term of 6 years, and a $415 million term loan, with a term of 7 years. The credit facility is secured by liens on substantially all our assets. Initial borrowings under the credit facility were used primarily to repay amounts outstanding under our then existing credit facility and, thereafter, borrowings may be used for working capital and general corporate purposes. THE EXCHANGE OFFER The Exchange Offer................. Up to $300,000,000 aggregate principal amount of exchange notes registered under the Securities Act are being offered in exchange for the same principal amount of the outstanding notes. The terms of the exchange notes and the outstanding notes are substantially identical. Outstanding notes may be tendered for exchange in whole or in part in any integral multiple of $1,000. We are making the exchange offer in order to satisfy our obligations under the registration rights agreement relating to the outstanding notes. For a description of the procedures for tendering the outstanding notes, see "The Exchange Offer -- Procedures for Tendering Outstanding Notes." Expiration Date.................... 5:00 p.m., New York City time, , 2001, unless the exchange offer is extended, in which case the expiration date will be the latest date and time to which the exchange offer is extended. See "The Exchange Offer -- Terms of the Exchange Offer." Conditions to the Exchange Offer... The exchange offer is subject to customary conditions described under "The Exchange Offer -- Conditions to the Offer," some of which we may waive in our sole discretion. The exchange offer is not conditioned upon any minimum principal amount of outstanding notes being tendered. We reserve the right in our sole and absolute discretion, subject to applicable law, at any time and from time to time: - to delay the acceptance of the outstanding notes for exchange; - to terminate the exchange offer if one or more specific conditions have not been satisfied; - to extend the expiration date of the exchange offer and retain all outstanding notes tendered pursuant to the exchange offer, subject, however, to the right of holders of outstanding notes to withdraw their tendered outstanding notes; or - to waive any condition or otherwise amend the terms of the exchange offer in any respect. See "The Exchange Offer -- Terms of the Exchange Offer." 2 9 Withdrawal Rights.................. Tenders of outstanding notes may be withdrawn at any time on or prior to the expiration date by delivering a written notice of withdrawal to the exchange agent in conformity with the procedures discussed under "The Exchange Offer -- Withdrawal of Tenders." Procedures for Tendering Outstanding Notes................ Tendering holders of outstanding notes must complete and sign a letter of transmittal in accordance with the instructions contained in the letter of transmittal. Tendering holders must forward the completed letter of transmittal by mail, facsimile or hand delivery, together with any other required documents, to the exchange agent, or must submit to the exchange agent the outstanding notes you are tendering or comply with the specified procedures for guaranteed delivery of outstanding notes. Brokers, dealers, commercial banks, trust companies and other nominees may also effect tenders by book-entry transfer. If your outstanding notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, we urge you to contact your nominee holder promptly if you wish to tender outstanding notes pursuant to the exchange offer. See "The Exchange Offer -- Procedures for Tendering Outstanding Notes." Letters of transmittal and certificates representing outstanding notes should not be sent to us. Those documents should be sent only to the exchange agent. The address, and telephone and facsimile numbers, of the exchange agent are set forth in "The Exchange Offer -- Exchange Agent" and in the letter of transmittal. Acceptance of Outstanding Notes and Delivery of Exchange Notes....... Upon consummation of the exchange offer, we will accept any and all outstanding notes that are properly tendered in the exchange offer and not withdrawn prior to 5:00 p.m., New York City time, on the expiration date. The exchange notes issued pursuant to the exchange offer will be delivered promptly after acceptance of the outstanding notes. See "The Exchange Offer -- Terms of the Exchange Offer." Resales of Exchange Notes.......... We believe that you will be able to offer for resale, resell or otherwise transfer exchange notes issued in the exchange offer without compliance with the registration and prospectus delivery provisions of the federal securities laws, provided that: - you are not a broker-dealer; - you are not participating in a distribution of the exchange notes; and - you are not our "affiliate", as the term is defined in Rule 144A under the Securities Act of 1933. 3 10 Our belief is based on interpretations by the staff of the Commission, as set forth in no-action letters issued to third parties unrelated to us. The staff has not considered this exchange offer in the context of a no-action letter, and we cannot assure you that the staff would make a similar determination with respect to this exchange offer. If our belief is not accurate and you transfer an exchange note without delivering a prospectus meeting the requirements of the federal securities laws or without an exemption from these laws, you may incur liability under the federal securities laws. We do not and will not assume, or indemnify you against, this liability. Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes which were acquired by the broker-dealer as a result of market- making or other trading activities must agree to deliver a prospectus meeting the requirements of the federal securities laws in connection with any resale of the exchange notes. See "The Exchange Offer -- Resale of the Exchange Notes." Exchange Agent..................... The exchange agent with respect to the exchange offer is Bankers Trust Company. The address, and telephone and facsimile numbers, of the exchange agent are set forth in "The Exchange Offer -- Exchange Agent" and in the letter of transmittal. Use of Proceeds.................... We will not receive any cash proceeds from the issuance of the exchange notes offered hereby. Certain United States Federal Income Tax Considerations........ You should review the information set forth under "Certain Federal Income Tax Considerations" prior to tendering outstanding notes in the exchange offer. TERMS OF THE EXCHANGE NOTES The exchange offer applies to an aggregate principal amount of $300,000,000 of the outstanding notes. The form and terms of the exchange notes will be identical in all material respects to the form and terms of the outstanding notes, except: - the exchange notes have been registered under the Securities Act and, therefore, will not bear legends restricting their transfer; - holders of the exchange notes will not be entitled to any liquidated damages under the registration rights agreement relating to the outstanding notes; and - holders of the exchange notes will not be, and upon consummation of the exchange offer, holders of the outstanding notes will no longer be, entitled to specific rights under the registration rights agreement for the outstanding notes intended for the holders of unregistered securities. 4 11 The exchange notes will be our obligations entitled to the benefits of the indenture. See "Description of the Exchange Notes." Exchange Notes Offered............. $300 million aggregate principal amount of Series B 9 1/4% Senior Subordinated Notes due May 15, 2011. Issuer............................. Del Monte Corporation (DMC). Guarantor.......................... Del Monte Foods Company (DMFC). Maturity Date...................... May 15, 2011. Interest Rate and Payment Dates.... The exchange notes will bear interest at a rate of 9.25% per annum. Interest on the exchange notes will accrue from the date of original issuance, known as the issue date, and will be payable semi-annually on each May 15 and November 15, commencing November 15, 2001. For a description of the requirement to offer to exchange the exchange notes and the possible effect on the interest rate, see "Description of the Exchange Notes -- Registration Rights." Ranking............................ The exchange notes will be general unsecured obligations of DMC and will be subordinated in right of payment to all of DMC's existing and future senior debt. The notes will rank pari passu with any of DMC's present and future senior subordinated indebtedness and will rank senior to all other subordinated indebtedness of DMC. As of May 15, 2001, DMC had approximately $429.9 million of senior debt outstanding, and DMFC has no guarantor senior debt outstanding, other than guarantees of the indebtedness under the credit facility. Optional Redemption................ The exchange notes are redeemable, in whole or in part, at DMC's option on or after May 15, 2006, initially at 104.750% of their principal amount, plus accrued interest and declining ratably to 100% of their principal amount, plus accrued interest, on or after May 15, 2009. In addition, on or prior to May 15, 2004, DMC, at its option, may redeem up to 35% of the aggregate principal amount of the notes originally issued, including any additional notes, with the net cash proceeds of one or more equity offerings at the redemption price equal to 109.250% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption. We may complete these redemptions only if at least $195 million aggregate principal amount of exchange notes remains outstanding after each redemption, excluding exchange notes held by us, and such redemption occurs within 120 days of the date of the closing of the sale of capital stock. See "Description of the Exchange Notes -- Optional Redemption." Change of Control.................. Upon a change of control, (i) DMC will have the option, at any time on or prior to May 15, 2006, to redeem the notes, in whole but not in part, at a 5 12 redemption price equal to 100% of the principal amount thereof, plus the applicable premium, together with accrued and unpaid interest, if any, to the date of redemption, and (ii) if DMC does not so redeem the notes or if the change of control occurs after May 15, 2006, each holder of the notes will have the right to require DMC to repurchase that holder's notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase. Parent and Subsidiary Guarantees... The exchange notes will be guaranteed on a subordinated basis by DMFC. Certain Covenants.................. The terms of the outstanding notes do, and of the exchange notes will, limit DMC's ability, and its subsidiaries' abilities, to, among other things, incur additional indebtedness, pay dividends or make certain other restricted payments, consummate certain asset sales, enter into certain transactions with affiliates, incur indebtedness that is subordinate in right of payment to any senior debt and senior in right of payment to the notes, incur liens, impose restrictions on the ability of a subsidiary to pay dividends or make certain payments to DMC and its subsidiaries, merge or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets. For additional information regarding the exchange notes, see "Description of the Exchange Notes." ------------------------- RISK FACTORS See "Risk Factors" for a discussion of factors that should be considered with respect to an investment in the exchange notes. 6 13 SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The following table sets forth our historical consolidated financial information. The statement of operations data for the years ended June 30, 2000, 1999, 1998, 1997 and 1996 have been derived from our audited consolidated financial statements. The selected consolidated financial data as of March 31, 2001 and 2000 and for the nine-month periods then ended was derived from our unaudited interim financial statements. The financial data as of March 31, 2001 and 2000, and for the nine-month periods then ended, in our opinion, reflect all adjustments, consisting of only normal, recurring adjustments, necessary for a fair presentation of such data and which have been prepared in accordance with the same accounting principles followed in the presentation of our audited financial statements for the fiscal year ended June 30, 2000. Operating results for the nine-month period ended March 31, 2001 are not necessarily indicative of results to be expected for the full fiscal year. The table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," our consolidated financial statements and related notes and other financial information incorporated in this prospectus by reference.
NINE MONTHS ENDED FISCAL YEAR ENDED JUNE 30, MARCH 31, ------------------------------------------------------------------- ------------------------- 2000 1999 1998 1997 1996 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- (IN MILLIONS, EXCEPT SHARE AND RATIO DATA) STATEMENT OF OPERATIONS DATA: Net sales..................... $ 1,462.1 $ 1,504.5 $ 1,313.3 $ 1,217.4 $ 1,305.3 $ 1,122.4 $ 1,142.4 Cost of products sold......... 920.5 998.3 898.2 819.3 984.1 739.3 720.3 Selling, administrative and general expense(1).......... 384.2 375.3 316.4 326.9 239.0 278.7 304.4 Operating income.............. 146.5 112.8 82.2 71.2 82.2 90.4 107.9 Interest expense.............. 67.1 77.6 77.5 52.0 67.2 58.3 51.2 Net income (loss)............. 128.7 13.5 5.5 (58.1) 103.8 Net income (loss) attributable to common shares............ 128.7 9.9 0.2 (127.9) 21.8 25.6 39.0 Diluted net income (loss) per common share................ $ 2.42 $ 0.23 $ 0.01 $ (2.07) $ 0.29 $ 0.49 $ 0.73 Weighted average number of diluted shares outstanding(2).............. 53,097,898 42,968,652 32,355,131 61,703,436 75,047,353 52,692,344 53,147,206 OTHER FINANCIAL AND OPERATING DATA: Cash flows provided by (used in) operating activities.... $ (7.1) $ 96.1 $ 97.0 $ 25.2 $ 58.4 $ (4.8) $ (57.4) Cash flows provided by (used in) investing activities.... (65.9) (86.2) (222.0) 37.0 169.9 (77.9) (41.0) Cash flows provided by (used in) financing activities.... 71.2 (9.9) 127.0 (63.4) (222.8) 86.5 97.5 SELECTED RATIOS: Ratio of earnings to fixed charges(3).................. 2.0 1.4 1.1 NA 2.8 1.5 1.9 Deficiency of earnings to cover fixed charges(3)...... -- -- -- $ 15.9 -- -- --
MARCH 31, 2001 (IN MILLIONS) BALANCE SHEET DATA: Working capital............................................. $ 234.9 Total assets................................................ 1,192.0 Total debt.................................................. 725.6 Stockholders' equity (deficit).............................. 36.5
- ------------------------- (1) In connection with our recapitalization, which was consummated on April 18, 1997, we incurred approximately $25.0 million in administrative and general expenses primarily for management incentive payments and, in part, for severance payments. 7 14 (2) For fiscal 1997, the effect of common stock equivalents was not included in the weighted average number of diluted shares outstanding as these common stock equivalents were anti-dilutive due to a net operating loss. (3) For purposes of determining the ratio of earnings to fixed charges and the deficiency of earnings to cover fixed charges, earnings are defined as income (loss) before extraordinary item, cumulative effect of accounting change and provision (benefit) for income taxes plus fixed charges. Fixed charges consist of interest expense on all indebtedness (including amortization of deferred debt issue costs) and the interest component of rent expense. 8 15 RISK FACTORS Before you tender your notes in the exchange offer, you should carefully consider the following factors in addition to the other information contained in this prospectus. OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NOTES. We have a substantial amount of indebtedness. The following chart shows certain important credit statistics. See "Description of Existing Indebtedness."
AS OF MARCH 31, 2001 (IN MILLIONS, EXCEPT RATIO DATA) Total indebtedness(1)................................ $725.6 Stockholders' equity (deficit)....................... 36.5 Debt to equity ratio................................. 19.8
AS OF MARCH 31, 2001 (IN MILLIONS, EXCEPT RATIO DATA) Ratio of earnings to fixed charges................... 1.5x
- ------------------------- (1) Total indebtedness includes a revolving credit facilities balance of $167.5 million at March 31, 2001. The maximum amount of our borrowings in fiscal 2001, through March 31, 2001, was $842.1 million. Concurrent with the consummation of the refinancing, we entered into an amended and restated credit facility in an aggregate amount of $740 million. We have the ability to increase this amount by $100 million without obtaining any approvals under the credit facility, subject to the willingness of new or existing lenders to commit to such an increase. See "Description of Existing Indebtedness." The indenture also allows us to borrow a significant amount of additional money. See "Description of the Exchange Notes -- Certain Covenants." Our substantial indebtedness could have important consequences to you such as: - limiting our ability to obtain additional financing to fund our growth strategy, working capital, capital expenditures, debt service requirements or other cash requirements; - limiting our ability to invest operating cash flow in our business because we use a substantial portion of these funds to pay debt service; - limiting our ability to compete with companies that are not as highly leveraged and that may be better positioned to withstand economic downturns; - increasing our vulnerability to economic downturns and changing market conditions; and - increasing our vulnerability to fluctuations in market interest rates, since some of our debt has floating interest rates. Our ability to pay our debt service depends partly on our performance, which in turn can be affected by general economic or competitive conditions beyond our control. Our financial position could also prevent us from obtaining necessary financing at favorable rates, including at times when we must refinance maturing debt. 9 16 WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE OUR INDEBTEDNESS. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL. Our ability to make payments on and to refinance our debt, including the exchange notes and the credit facility, and to fund planned capital expenditures and possible expansions will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that may be beyond our control. We cannot assure you that our business will generate sufficient cash flow or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness, including the notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the notes and the credit facility, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including the exchange notes and our credit facility, on commercially reasonable terms or at all. DESPITE OUR SIGNIFICANT INDEBTEDNESS, WE MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT THROUGH ADDITIONAL BORROWINGS. THIS COULD FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE. The indenture permits us to borrow up to an additional $100 million under our credit facility (from an initial capacity of $740 million) from additional commitments from new or existing lenders without any additional approval from the existing lenders. All of the borrowings under the credit facility will be senior to the exchange notes. In addition to substantial amounts of money from other sources and amounts that may be borrowed under the credit facility, the indenture also allows us to borrow money. If new debt is added to our current debt levels, the related risks that we now face could intensify. See "Capitalization," "Selected Historical Consolidated Financial Data," "Description of Existing Indebtedness" and "Description of the Exchange Notes." WE ARE DEPENDENT UPON A LIMITED NUMBER OF CUSTOMERS. A relatively limited number of customers account for a large percentage of our total sales. If the trend of consolidation among retailers continues, this percentage may increase. During the six-month period ended December 31, 2000, our 15 largest customers represented approximately 58% of our sales, with sales to Wal-Mart and its affiliates representing approximately 15% of sales. In recent years, there has been significant consolidation among our customers through acquisitions. Our business may be seriously harmed if we experience a loss of any of our significant customers or suffer a substantial reduction in orders from these customers. OUR BUSINESS STRATEGY POSES SPECIAL RISKS ASSOCIATED WITH OUR ABILITY TO REDUCE COSTS, REACH TARGETED CUSTOMERS AND COMPLETE ACQUISITIONS SUCCESSFULLY. The success of our business strategy depends in part on our ability to reduce costs. We plan to use improved processing technologies to maintain our position as a low cost and efficient producer. Our business strategy also depends on our ability to increase sales of our higher margin products, such as our Fruit Cup single serve fruit products, diced tomatoes, specialty vegetables and Orchard Select jarred fruit, and to increase product distribution through high volume club stores, such as Sam's Clubs and Costco, and mass merchandisers, such as Wal-Mart Supercenters. We also plan to grow through acquisitions. All of these plans involve risks, including the following: - We may not complete capital projects on time or within budget. - Acquisitions may not be accretive and may negatively impact operating results. - Our customers generally do not enter into long-term contracts and generally purchase products based on their inventory levels. They can stop purchasing our products at any time. Losing any significant customer would affect sales volumes and could also have a negative effect on our reputation. 10 17 - Acquisitions could require the consent of our bank lenders and could involve amendments to our principal credit facility to permit us to comply with our financial covenants. These lenders could also impose conditions on their consent that could adversely affect our operating flexibility. - We may not be able to successfully integrate acquired businesses, including personnel, operating facilities and information systems, into our existing operations. The timing and number of acquisitions could make these risks more difficult to address. The process of integrating acquired businesses could distract management from other opportunities or problems in our business. The benefits of an acquisition often take a long time to develop, and there is no guarantee that any acquisition will in fact produce any benefits. - In pursuing acquisitions, we could incur substantial additional debt and contingent liabilities, which could in turn restrict our ability to pursue other important elements of our business strategy or our ability to comply with our financial covenants. OUR OPERATING RESULTS ARE NEGATIVELY IMPACTED BY THE CURRENT TREND OF OUR CUSTOMERS REDUCING THEIR LEVELS OF INVENTORY. Our trade customers have been reducing their inventory levels significantly during the last several fiscal quarters. As a result, our sales to trade customers are less than the volume of purchases of our products by consumers. The effect of this trend was significant in the fourth quarter of fiscal 2000, as trade customers reduced the inventory levels they had built in preparation for possible "Year 2000" shortages. The inventory reduction continued at a modest rate in the first three quarters of this fiscal year. The reduction of inventory decreased our shipments in the short term and adversely affected our growth rate, gross margin and working capital requirements. If the trend of reducing trade inventory levels continues, it could adversely affect our operating results. OUR OPERATING RESULTS ARE HIGHLY SEASONAL. INTERFERENCE WITH OUR PRODUCTION SCHEDULE DURING PEAK MONTHS COULD NEGATIVELY IMPACT OUR OPERATING RESULTS. We do not manufacture the majority of our products continuously throughout the year, but instead have a seasonal production period that is limited to approximately three to four months during the summer each year. Our working capital requirements are also seasonal and are most significant in the first and second fiscal quarters. An unexpected plant shutdown or any other material interference with our production schedule, would adversely affect our operating results. Our sales tend to peak in the second and third quarters of each fiscal year, mainly as a result of the holiday period in November and December and the Easter holiday. By contrast, in the first fiscal quarter of each year, sales generally decline, mainly due to less promotional activity and the availability of fresh produce. We believe that the main trends in our operating results are relatively predictable and that we have adequate sources of liquidity to fund operations during periods of low sales. If these trends were to change or be disrupted, however, our operating results could be adversely affected, and we could require additional sources of liquidity to fund our working capital and other cash requirements. OUR BUSINESS IS HIGHLY COMPETITIVE, AND WE CANNOT ASSURE YOU THAT WE WILL MAINTAIN OUR CURRENT MARKET SHARE. Many companies compete in the domestic processed vegetable, fruit and tomato product categories. However, only a few well-established companies operate on both a national and a regional basis with one or several branded product lines. We face strong competition from these and other companies in all our product lines. Important competitive considerations include the following: - Some of our competitors have greater financial resources and operating flexibility. This may permit them to respond better to changes in the industry or to introduce new products and packaging more quickly and with greater marketing support. 11 18 - Several of our product lines are sensitive to competition from regional brands, and many of our product lines compete with imports, private label products and fresh alternatives. No single private label competitor has greater market share than us in our principal product categories. However, for the 52 weeks ended December 30, 2000, private label companies as a group had market shares of 42.4%, 38.4% and 31.6% in the processed vegetable, major fruit and solid tomato categories, respectively. - We cannot predict the pricing or promotional actions of our competitors or whether they will have a negative effect on us. Also, when we raise our prices, we may lose market share to our competitors. - The processed food industry has in the past experienced processing over-capacity and, despite some consolidation in the industry, over-capacity or changes in crop supplies could create an imbalance in supply and demand that may depress sales volumes or prices. WE RELY ON A CONTINUOUS POWER SUPPLY TO CONDUCT OUR OPERATIONS AND CALIFORNIA'S CURRENT ENERGY CRISIS COULD DISRUPT OUR OPERATIONS AND INCREASE OUR EXPENSES. California is in the midst of an energy crisis that could disrupt our fruit and tomato processing operations and increase our expenses. In the event of an acute power shortage, that is, when power reserves for the State of California fall below 1.5%, California has on some occasions implemented, and may in the future continue to implement, rolling blackouts throughout California. We currently do not have backup generators or alternate sources of power in the event of a blackout, and our current insurance may not provide coverage for damages that we or our customers may suffer as a result of any interruption in our power supply. If blackouts interrupt our power supply, we would be temporarily unable to continue operations at our facilities. Any such interruption in our ability to continue operations at our facilities could result in significant increases in production costs and lost revenue, which could substantially harm our business and results of operations. Our energy costs have substantially increased since fiscal 2000 and are expected to continue to increase. This increase and any future increase may have a negative impact on our results of operations. OUR BRAND NAME COULD BE CONFUSED WITH NAMES OF OTHER COMPANIES WHO, BY THEIR ACT OR OMISSION, COULD ADVERSELY AFFECT THE VALUE OF OUR BRAND NAME. We have licensed the Del Monte brand name to various unaffiliated companies for use internationally and in the United States. The common stock of one licensee, Fresh Del Monte Produce N.V., is publicly traded in the United States. Acts or omissions by these unaffiliated companies may adversely affect the value of the Del Monte brand name, the trading prices for our common stock and demand for our products. Third party announcements or rumors about these licensees could also have these negative effects. WE FACE A POTENTIAL INABILITY TO FUND A CHANGE OF CONTROL OFFER. THE CREDIT FACILITY WILL PROHIBIT US FROM PURCHASING ANY EXCHANGE NOTES. IN ADDITION, WE MAY NOT HAVE SUFFICIENT FUNDS TO SATISFY OUR OBLIGATIONS. The indenture requires us to offer to repurchase the exchange notes upon the occurrence of specific kinds of change of control events. Certain important corporate events that would increase the level of our indebtedness, such as leveraged recapitalizations, may not constitute a "change of control" under the indenture. The credit facility generally prohibits us from repurchasing any exchange notes and will also provide that any change of control under the notes will be a default under that agreement. Any future credit or other debt agreements to which we become a party may contain similar restrictions and provisions. If a change of control occurs at a time when we are prohibited from repurchasing exchange notes, we could seek the consent of our lenders to repurchase the exchange notes or we could attempt to refinance the debt that contains that prohibition. However, we cannot assure you that we will be able to obtain lender consent or refinance those borrowings. Even if such a consent were obtained or the debt is refinanced, we cannot assure you that we would have the funds necessary to repurchase the exchange notes. Our failure to repurchase the exchange notes would be a default under the indenture which would, 12 19 in turn, be a default under the credit facility and, potentially, other senior debt. If the senior debt were to be accelerated, we may be unable to repay these amounts and make the required repurchase of notes. YOUR RIGHT TO RECEIVE PAYMENTS ON THE EXCHANGE NOTES WILL BE JUNIOR TO THE CREDIT FACILITY AND POSSIBLY TO ALL OF OUR FUTURE BORROWINGS. THE GUARANTEE OF THE EXCHANGE NOTES IS JUNIOR TO ALL OF DMFC'S INDEBTEDNESS AND POSSIBLY TO ALL OF ITS FUTURE BORROWINGS. The exchange notes are junior to all of our existing and future indebtedness, other than trade payables and any future indebtedness that expressly provides that it ranks equal with, or subordinated in right of payment to, the notes. The guarantee is junior to all of DMFC's existing and future indebtedness, other than trade payables and any future indebtedness that expressly provides that it ranks equal with, or subordinated in right of payment to, the guarantee. As a result, upon any distribution to our creditors in a bankruptcy, liquidation, reorganization or similar proceeding, the holders of our senior debt will be entitled to be paid in full before any payment will be made on the exchange notes. In addition, upon any distribution to our creditors in a bankruptcy, liquidation, reorganization or similar proceeding, the holders of our senior debt will be entitled to be paid in full before any payment will be made on the guarantee. In addition, all payments on, or acquisition of the exchange notes and the guarantee may be blocked for 179 days in the event of a payment default or certain other defaults under the credit facility or any other designated senior debt. Such payments may only be blocked once within any 360 consecutive days in the event of certain defaults on such senior debt. In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to us, holders of the exchange notes will participate with trade creditors and all other holders of our subordinated indebtedness in the assets remaining after we have paid all of the senior debt. However, because the indenture requires that amounts otherwise payable to holders of the exchange notes in a bankruptcy or similar proceeding be paid to holders of senior debt instead, holders of the exchange notes may receive less ratably than holders of trade payables in any such proceeding. In any of these cases, holders of the exchange notes may not be paid in full. We conduct a limited portion of our operation through subsidiaries. There are no limits in the indenture on our unrestricted subsidiaries' ability to incur new debt or liabilities. Claims of creditors of the subsidiary, including trade creditors, generally will have priority with respect to the assets and earnings of such subsidiary over the claims of our creditors, including the holders of the notes. The exchange notes, therefore, will be effectively subordinated to creditors (including trade creditors) of our subsidiaries. As of May 15, 2001, the exchange notes were subordinated to $429.9 million of our senior debt, and approximately $279.7 million was available for borrowing as additional senior debt under our credit facility. Also, the guarantee of the exchange notes by DMFC is subordinated to DMFC's guarantee of amounts outstanding under the credit facility. We are also permitted to borrow substantial additional indebtedness, including senior debt, in the future under the terms of the indenture governing the notes. IN ADDITION TO THE EXCHANGE NOTES BEING JUNIOR TO THE CREDIT FACILITY AND POSSIBLY ALL OF OUR FUTURE BORROWINGS, THE EXCHANGE NOTES WILL NOT BE SECURED BY ANY OF OUR ASSETS. IN ADDITION, OUR ASSETS WILL SECURE THE CREDIT FACILITY AND POSSIBLY OTHER DEBT. In addition to being subordinated to all of our existing and future indebtedness, other than trade payables and any future indebtedness that expressly provides that it ranks equal with, or subordinated in right of payment to the exchange notes, the exchange notes will not be secured by any of our assets. Our obligations under the credit facility will be secured by liens on substantially all of our assets, and DMFC's guarantee under the credit facility will be secured by a pledge of DMC's common stock. If we become insolvent or are liquidated, or if payment under the credit facility or of other secured obligations is accelerated, the lenders under the credit facility or the obligees with respect to the other secured obligations will be entitled to exercise the remedies available to a secured lender under applicable law and the applicable agreements and instruments. Accordingly, such lenders will have a prior claim with respect 13 20 to such assets and there may not be sufficient assets remaining to pay amounts due on the exchange notes then outstanding. RESTRICTIVE COVENANTS IN THE CREDIT FACILITY AND THE INDENTURE MAY RESTRICT OUR ABILITY TO PURSUE OUR BUSINESS STRATEGIES. OUR ABILITY TO COMPLY WITH THESE RESTRICTIONS DEPENDS ON MANY FACTORS BEYOND OUR CONTROL. The credit facility and the indenture include, certain covenants that, among other things, restrict our ability to: - borrow money; - pay dividends or make distributions on our stock; - make investments; - create liens other than a lien securing the credit facility; - enter into transactions with affiliates; - sell assets; - merge, consolidate or sell substantially all of our assets; and - make capital expenditures. We are also required by the credit facility to maintain certain financial ratios, including maximum debt to EBITDA ratios, a minimum interest coverage ratio, and a minimum fixed charge coverage ratio. All of these restrictive covenants may restrict our ability to expand or to pursue our business strategies. Our ability to comply with these and other provisions of the indenture and the credit facility may be affected by changes in DMC's operating and financial performance, changes in business conditions or results of operations, adverse regulatory developments or other events beyond our control. The breach of any of these covenants could result in a default under our indebtedness, which could cause those obligations to become due and payable. If we default, we could be prohibited from making payments with respect to the exchange notes until the default is cured or all indebtedness under the credit facility, and other senior debt is paid in full. If any of our indebtedness were to be accelerated, there can be no assurance that we would be able to repay it. THE GUARANTEE OF THE EXCHANGE NOTES DOES NOT PROVIDE SIGNIFICANT ADDITIONAL ASSURANCE OF PAYMENT TO THE HOLDERS OF THE EXCHANGE NOTES. The exchange notes are guaranteed on a subordinated basis by DMFC. The indenture does not contain any financial covenants or similar provisions which would limit DMFC's ability to incur other debt or obligations, to pay dividends or to engage in other transactions. In addition, the events of default in the indenture do not include any events of bankruptcy or insolvency relating to DMFC. The only material asset of DMFC is the stock of DMC. However, the indenture does not contain any covenants that limit DMFC's ability to acquire other assets. DMFC does not have any income from operations and has no material assets other than DMC's stock. DMFC is not expected to generate income from operations or acquire additional assets in the near future and no assurance can be given that it will ever do so. Accordingly, the guarantee does not provide any significant additional assurance of payment to the holders of the notes. Enforcement of the guarantee against DMFC or any future guarantors would be subject to certain defenses available to guarantors generally and would also be subject to certain defenses available to DMC regarding enforcement of the exchange notes, including the right to force the trustee of the notes to exercise its remedies prior to commencement of any action on the guarantee. DMFC will waive, with respect to the exchange notes, all such defenses to the extent it may legally do so. See "Description of the Exchange Notes -- Guarantee." 14 21 FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID GUARANTEES AND REQUIRE NOTEHOLDERS TO RETURN PAYMENTS RECEIVED FROM GUARANTORS. Under the federal bankruptcy and comparable provisions of state fraudulent transfer laws, the guarantee could be voided, or claims in respect of the guarantee could be subordinated to all other debts of the guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by the guarantee: - received less than reasonably equivalent value or fair consideration for the incurrence of the guarantee and was insolvent or rendered insolvent by reason of the incurrence of the guarantee; - was engaged in a business or transaction for which the guarantor's remaining assets constituted unreasonably small capital; or - intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature. In addition, any payment by the guarantor pursuant to the guarantee could be voided and required to be returned to the guarantor or to a fund for the benefit of the creditors of the guarantor. The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, the guarantor would be considered insolvent if: - the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; - if the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or - it could not pay its debts as they became due. The indenture requires that if a future significant subsidiary guarantees any other debt of DMC, it must guarantee the notes. These considerations will also apply to these guarantees. NO PUBLIC MARKET EXISTS FOR THE EXCHANGE NOTES. THE OFFERING OR SALE OF THE EXCHANGE NOTES IS SUBJECT TO SIGNIFICANT LEGAL RESTRICTIONS AS WELL AS UNCERTAINTIES REGARDING THE LIQUIDITY OF THE TRADING MARKET FOR THE EXCHANGE NOTES. No public market exists for the exchange notes, and a market offering liquidity may not develop. The exchange notes will not be listed on any securities exchange, but are expected to be eligible for trading in the PORTAL market. If the exchange notes are traded after their initial issuance, they may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar securities, our performance and other factors. We have been advised by the placement agents that they intend to make a market in the exchange notes after consummation of the offering, as permitted by applicable laws and regulations. However, the placement agents are not obligated to do so and any such market-making activities may be discontinued at any time without notice. General declines in the market for similar securities may also adversely affect the liquidity of, and trading market for, the exchange notes. These declines may adversely affect liquidity and trading markets independent of our financial performance and prospects. OUR BUSINESS IS SUBJECT TO THE RISK OF ENVIRONMENTAL LIABILITY, AND WE COULD BE NAMED AS A RESPONSIBLE PARTY. As a result of our agricultural and food processing activities, we are subject to various environmental laws and regulations. Many of these laws and regulations are becoming increasingly stringent and compliance with them is becoming increasingly complex and expensive. We have been named as a 15 22 potentially responsible party and may be liable for environmental investigations and remediation costs at certain designated "Superfund Sites" under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, commonly known as CERCLA, or under similar state laws. Based on available information, we are defending ourselves in these actions as appropriate. However, we cannot assure you that none of the matters will have a material adverse impact on our financial position or results of operations. We may in the future be named as a potentially responsible party at other currently or previously owned or operated sites, and additional remediation requirements could be imposed on us. Other properties could be identified for investigation or proposed for listing under CERCLA or similar state laws. Also, under the Federal Food, Drug and Cosmetic Act and the Food Quality Protection Act of 1996, the U.S. Environmental Protection Agency is involved in a series of regulatory actions relating to the evaluation and use of pesticides in the food industry. The effect of such actions and future actions on the availability and use of pesticides could have a material adverse impact on our financial condition or results of operations. TEXAS PACIFIC GROUP, OR TPG, CONTINUES TO CONTROL US WHICH COULD LEAD TO A CONFLICT OF INTEREST. TPG owns approximately 47% of DMFC's common stock. TPG will likely continue to use its significant ownership interest to influence and control our management and policies. We also have contractual relationships with TPG, under which TPG provides us with financial advisory and other services. These arrangements could give rise to conflicts of interest. SEVERE WEATHER CONDITIONS AND NATURAL DISASTERS CAN AFFECT CROP SUPPLIES AND REDUCE OUR OPERATING RESULTS. Severe weather conditions and natural disasters, such as floods, droughts, frosts, earthquakes or pestilence, may affect the supply of our products. Irregular weather patterns may persist over a long period and further impact the supply of our products. These events can result in reduced supplies of raw materials, lower recoveries of usable raw materials, higher costs of cold storage if harvests are accelerated and processing capacity is unavailable or interruptions in our production schedules if harvests are delayed. Competing manufacturers can be affected differently depending on the location of their supplies. If our supplies of raw materials are reduced, we may not be able to find enough supplemental supply sources on favorable terms, which could have a material adverse effect on our business, operating results and financial condition. 16 23 THE EXCHANGE OFFER PURPOSE AND EFFECT OF THE EXCHANGE OFFER On May 15, 2001, we sold $300.0 million in principal amount of the outstanding notes in a private placement through Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, Deutsche Banc Alex. Brown, Inc., JP Morgan, a division of Chase Securities, Inc., ABN AMRO Incorporated, and BMO Nesbitt Burns Corp., to a limited number of "Qualified Institutional Buyers," as defined under the Securities Act of 1933, and to limited persons outside the United States. In connection with the sale of the outstanding notes, we, and the placement agents entered into a registration rights agreement, dated as of May 15, 2001. Under that agreement, we must, among other things, use our best efforts to file with the Commission a registration statement under the Securities Act of 1933 covering the exchange offer and to cause that registration statement to become effective under the Securities Act of 1933. Upon the effectiveness of that registration statement, we must also offer each holder of the outstanding notes the opportunity to exchange its securities for an equal principal amount of exchange notes. You are a holder with respect to the exchange offer if you are a person in whose name any outstanding notes are registered on our books or any other person who has obtained a properly completed assignment of outstanding notes from the registered holder. We are making the exchange offer to comply with our obligations under the registration rights agreement. A copy of the registration rights agreement has been filed as an exhibit to the registration statement of which this prospectus is a part. In order to participate in the exchange offer, you must represent to us among other things, that: - you are not a broker-dealer; - you are not participating in a distribution of the exchange notes; and - you are not our "affiliate" as the term is defined in Rule 144A under the Securities Act of 1933. RESALE OF THE EXCHANGE NOTES Based on previous interpretations by the staff of the Commission set forth in no-action letters issued to third parties, we believe that the exchange notes issued in the exchange offer may be offered for resale, resold and otherwise transferred by you, except if you are our affiliate, without compliance with the registration and prospectus delivery provisions of the Securities Act of 1933, provided that the representations set forth in "Purpose and Effect of the Exchange Offer" apply to you. See Morgan Stanley & Co. Incorporated, SEC No-Action Letter (available June 5, 1991). If you tender in the exchange offer with the intention of participating in a distribution of the exchange notes, you cannot rely on the interpretation by the staff of the Commission as set forth in the no-action letters and you must comply with the registration and prospectus delivery requirements of the Securities Act of 1933 in connection with a secondary resale transaction. In the event that our belief regarding resale is inaccurate, those who transfer exchange notes in violation of the prospectus delivery provisions of the Securities Act of 1933 and without an exemption from registration under the federal securities laws may incur liability under these laws. We do not assume, nor will we indemnify you against, this liability. The exchange offer is not being made to, nor will we accept surrenders for exchange from, holders of outstanding 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 the particular jurisdiction. Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where the outstanding notes were acquired by that broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. In order to facilitate the disposition of exchange notes by broker-dealers participating in the exchange offer, we have agreed, subject to specific conditions, to make this prospectus, as it may be amended or 17 24 supplemented from time to time, available for delivery by those broker-dealers to satisfy their prospectus delivery obligations under the Securities Act of 1933. TERMS OF THE EXCHANGE OFFER Upon the terms and conditions in this prospectus, and in the accompanying letter of transmittal, we will accept all outstanding notes validly tendered prior to 5:00 p.m., New York City time, on the expiration date. We will issue $1,000 in principal amount of exchange notes in exchange for an equal principal amount of outstanding notes tendered and accepted in the exchange offer. You may tender some or all of your outstanding notes pursuant to the exchange offer in any denomination of $1,000 or in integral multiples thereof. In addition, in connection with any resales of exchange notes, any broker-dealer who acquired outstanding notes for its own account as a result of market-making activities or other trading activities must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the exchange notes. The Commission has taken the position that participating broker-dealers may fulfill their prospectus delivery requirements for the exchange notes, other than a resale of an unsold allotment from the original sales of outstanding notes, with the prospectus contained in the exchange offer registration statement. Under the registration rights agreement, we are required to allow participating broker-dealers, and other persons, if any, subject to similar prospectus delivery requirements, to use the prospectus contained in the exchange offer registration statement in connection with the resale of exchange notes. However, we are not required to amend or supplement this prospectus for a period exceeding 180 days after the date of the last expiration date. "Expiration date" means 5:00 p.m. New York City time, on , 2001 unless we, in our sole discretion, extend the exchange offer. If we do, the "expiration date" will be 5:00 p.m. New York City time on the latest date to which the exchange offer is extended. The expiration date will be at least 20 business days from the date that this prospectus is mailed to the holders of the outstanding notes. We have also agreed that in the event that either we do not consummate the exchange offer or a shelf registration statement is not declared effective on or prior to December 31, 2001, the interest rate of the outstanding notes will be increased by one-half of one percent (.5%) per annum until the earlier of the consummation of the exchange offer or the effectiveness of the shelf registration statement. If we consummate the exchange offer on or before December 31, 2001, we will not be required to file a shelf registration statement to register any outstanding notes, and the interest rate on any outstanding notes will remain at the initial level of 9.25% per annum. The exchange offer will be deemed to have been consummated upon our having exchanged, pursuant to the exchange offer, exchange notes for all outstanding notes that have been properly tendered and not withdrawn by the expiration date. In this event, holders of outstanding notes not participating in the exchange offer who are seeking liquidity in their investment would have to rely on exemptions to registration requirements under the securities laws, including the Securities Act. The form and terms of the exchange notes will be the same as the form and terms of the outstanding notes except that the exchange notes will not bear legends restricting the transfer thereof. The exchange notes will evidence the same debt as the outstanding notes. The exchange notes will be issued under and entitled to the benefits of the indenture. As of the date of this prospectus, $300,000,000 aggregate principal amount of the outstanding notes are outstanding and there are two registered holders thereof. In connection with the issuance of the outstanding notes, we arranged for the outstanding notes to be eligible for trading in the Private Offering, Resale and Trading through Automated Linkages Market. The PORTAL market is the National Association of Securities Dealers' screen based, automated market trading of securities eligible for resale under Rule 144A. The exchange notes will also be issuable and transferable in book-entry form through DTC. 18 25 We will be deemed to have accepted validly tendered outstanding notes when, as and if we have given oral or written notice of acceptance to the exchange agent. See "-- Exchange Agent." The exchange agent will act as agent for the tendering holders of outstanding notes for the purpose of receiving exchange notes from us and delivering exchange notes to the holders. If any tendered outstanding notes are not accepted for exchange because of an invalid tender or the occurrence of certain other events described in this prospectus, certificates for the unaccepted outstanding notes will be returned, without expense, to the tendering holder as promptly as practicable after the expiration date. Holders of outstanding notes who tender in the exchange offer will not be required to pay: - brokerage commissions or fees; or - transfer taxes with respect to the exchange of outstanding notes pursuant to the exchange offer, subject to the instructions in the accompanying letter of transmittal. We will pay all charges and expenses, other than specified taxes, in connection with the exchange offer. See "-- Fees and Expenses." Holders of outstanding notes do not have any appraisal or dissenters' rights in connection with the exchange offer. We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement and the applicable requirements of the Exchange Act and the rules and regulations of the Commission interpreting the Exchange Act. Outstanding notes that are not tendered for exchange in the exchange offer will remain outstanding and be entitled and continue to accrue interest, but will not be entitled to any rights or benefits under the registration rights agreement. EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "expiration date" means 5:00 p.m. New York City time, on , 2001 unless we, in our sole discretion, extend the exchange offer. If we do, the "expiration date" will be 5:00 p.m. New York City time on the latest date to which the exchange offer is extended. If we extend the expiration date, we will: - notify the exchange agent of any extension by oral or written notice; and - mail an announcement of the extension to the record holders of outstanding notes prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Any announcement may state that we are extending the exchange offer for a specified period of time. If any of the conditions listed under the heading "Conditions to the Offer" occur and are not waived by us, by giving oral or written notice to the exchange agent, we reserve the right: - to delay acceptance of any outstanding notes; - to extend the exchange offer; - to terminate the exchange offer; - to refuse to accept outstanding notes not previously accepted; and - to amend the terms of the exchange offer in any manner we deem to be advantageous to the holders of the outstanding notes. Any delay in acceptance, extension, termination or amendment will be followed as promptly as possible by oral or written notice to the exchange agent. If the exchange offer is amended in a manner we determine constitutes a material change, we will promptly disclose the amendment in a way reasonably calculated to inform you of the amendment. 19 26 Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, we have no obligation to publish, advertise, or otherwise communicate any public announcement, other than by making a timely release to the Dow Jones News Service. INTEREST ON THE EXCHANGE NOTES The exchange notes will bear interest from the last interest payment date on which interest was paid on the outstanding notes. If interest has not yet been paid, the outstanding notes will bear interest from May 15, 2001. Interest will be paid with the first interest payment on the notes. Interest on the outstanding notes accepted for exchange will cease to accrue upon issuance of the exchange notes. The exchange notes will bear interest at a rate of 9.25% per annum. Interest on the exchange notes will be payable semi-annually, in arrears, on each May 15 and November 15 commencing November 15, 2001 and continuing following the consummation of the exchange offer. Untendered outstanding notes that are not exchanged for exchange notes pursuant to the exchange offer will bear interest at a rate of 9.25% per annum after the expiration date. PROCEDURES FOR TENDERING OUTSTANDING NOTES To tender in the exchange offer, you must do the following: - complete, sign and date the letter of transmittal, or a facsimile of it; - have the signatures guaranteed, if required by the letter of transmittal; and - mail or deliver the letter of transmittal, or the facsimile, together with the outstanding notes and any other required documents, to the exchange agent. The exchange agent must receive these documents by 5:00 p.m., New York City time, on the expiration date. Any financial institution that is a participant in DTC's Book-Entry Transfer Facility system may make book-entry delivery of the outstanding notes by causing DTC to transfer the outstanding notes into the exchange agent's account via the ATOP system in accordance with DTC's transfer procedure. Although delivery of outstanding notes may be effected through book-entry transfer into the exchange agent's account at DTC, the letter of transmittal, or its facsimile, with any required signature guarantees and documents, must, in any case, be transmitted to and received or confirmed by the exchange agent at its addresses in this prospectus prior to 5:00 p.m., New York City time, on the expiration date. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. Your tender of outstanding notes will constitute an agreement between you and us in accordance with the terms and subject to the conditions in this prospectus and in the letter of transmittal. Delivery of all documents must be made to the exchange agent at its address listed in this prospectus. Holders may also request that their respective brokers, dealers, commercial banks, trust companies or nominees effect tender for them. The method of delivery of outstanding notes and the letter of transmittal and all other required documents to the exchange agent is up to you. However, you also bear the risks of non-delivery. Instead of delivery by mail, we recommend that you use an overnight or hand delivery service. In all cases, you should allow sufficient time to assure timely delivery. No letter of transmittal should be sent to us. Only a holder of outstanding notes may tender outstanding notes in the exchange offer. The term "holder" with respect to the exchange offer means any person in whose name outstanding notes are registered on our books or any other person who has obtained a properly completed bond power from the registered holder or any person whose outstanding notes are held of record by DTC who desires to deliver the outstanding notes by book-entry transfer at DTC. 20 27 Any beneficial holder whose outstanding notes are registered in the name of the holder's broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct the registered holder to tender on the holder's behalf. If the beneficial holder wishes to tender on the holder's own behalf, the beneficial holder must, prior to completing and executing the letter of transmittal and delivering the outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in the holder's name or obtain a properly completed bond power from the registered holder. The transfer of record ownership may take considerable time. Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an "eligible institution" unless the outstanding notes tendered are: - tendered by a registered holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the letter of transmittal; or - tendered for the account of an "eligible institution." An eligible institution is: - a member firm 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 an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act; or - an "eligible institution" that is a participant in a recognized medallion signature guarantee program. If the letter of transmittal is signed by a person other than the registered holder of any outstanding notes listed therein, the outstanding notes tendered must be endorsed or accompanied by appropriate bond powers which authorize that person to tender the outstanding notes on behalf of the registered holder, in either case signed as the name of the registered holder or holders appears on the outstanding notes. If the letter of transmittal or any outstanding notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, the person should indicate this when signing, and unless waived by us, submit evidence satisfactory to us of that person's authority to so act with the letter of transmittal. We will determine, in our sole discretion, all questions as to the validity, form, and eligibility, including time of receipt, acceptance and withdrawal of the tendered outstanding notes. Our determination will be final and binding. We reserve the absolute right to reject any and all outstanding notes not properly tendered or any outstanding notes of which our acceptance would, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive any irregularities or conditions of tender as to particular outstanding notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of outstanding notes must be cured within the time as we determine. Neither we, the exchange agent nor any other person is under any duty to give notification of defects or irregularities with respect to tenders of outstanding notes. Additionally, none of them will incur any liability for failure to give this notification. Tenders of outstanding notes will not be deemed to have been made until these irregularities have been cured or waived. Any outstanding notes received by the exchange agent that have defects or irregularities not cured or waived by us will be returned to you without cost by the exchange agent, unless otherwise provided in the letter of transmittal as soon as practicable after the expiration date. In addition, we reserve the right in our sole discretion to: - purchase or make offers for any outstanding notes that remain outstanding subsequent to the expiration date; - terminate the exchange offer according to the terms in "-- Conditions to the Offer"; and 21 28 - to the extent permitted by applicable law, purchase outstanding notes in the open market, in privately negotiated transactions or otherwise. The terms of any of these purchases or offers may differ from the terms of the exchange offer. GUARANTEED DELIVERY PROCEDURES If you wish to tender your outstanding notes and either your outstanding notes are not immediately available, or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents to the exchange agent prior to the expiration date, or if you cannot complete the procedure for book-entry transfer on a timely basis, you may effect a tender if: - the tender is made through an eligible institution; - prior to the expiration date, the exchange agent receives from an eligible institution a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail or hand delivery, stating the name and address of the holder of the outstanding notes, the certificate number or numbers of such outstanding notes and the principal amount of outstanding notes tendered, stating that the tender is being made, and guaranteeing that, within three business days after the expiration date, the letter of transmittal, or facsimile thereof, together with the certificate(s) representing the outstanding notes, unless the book-entry transfer procedures are to be used, to be tendered in proper form for transfer and any other documents required by the letter of transmittal, will be deposited by the eligible institution with the exchange agent; and - the properly completed and executed letter of transmittal, or facsimile thereof, together with the certificates representing all tendered outstanding notes in proper form for transfer, or confirmation of a book-entry transfer into the exchange agent's account at DTC of outstanding notes delivered electronically, and all other documents required by the letter of transmittal are received by the exchange agent within three business days after the expiration date. If you wish to tender your outstanding notes according to the guaranteed delivery procedures, make your request to the exchange agent and a notice of guaranteed delivery will be sent to you. WITHDRAWAL OF TENDERS Except as otherwise provided in this prospectus, tenders of outstanding notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration date. To withdraw a tender of outstanding notes in the exchange offer, a written or facsimile transmission notice of withdrawal must be received by the exchange agent at the address given in this prospectus prior to 5:00 p.m., New York City time, on the expiration date. Any notice of withdrawal must: - specify the name of the person having deposited the outstanding notes to be withdrawn; - identify the outstanding notes to be withdrawn, including the certificate number or numbers and principal amount of the outstanding notes; - be signed by the depositor in the same manner as the original signature on the letter of transmittal by tendering the outstanding notes, including any required signature guarantees, or be accompanied by documents of transfer sufficient to permit the trustee of the outstanding notes to register the transfer of the outstanding notes into the name of the depositor withdrawing the tender; and - specify the name in which any outstanding notes are to be registered, if different from that of the depositor. All questions as to the validity, form and eligibility, including time of receipt, of any withdrawal notices will be determined by us, and will be final and binding on all parties. Any outstanding notes so withdrawn will be deemed not to have been validly tendered for purposes of the exchange offer, and no exchange notes will be issued unless the outstanding notes previously withdrawn are validly retendered. 22 29 Any outstanding notes that have been tendered but which are not accepted for exchange will be returned to the holder without cost to the holder as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn outstanding notes may be retendered by following one of the procedures described above under "Procedures for Tendering Outstanding Notes" at any time prior to the expiration date. CONDITIONS TO THE OFFER Regardless of any other term of the exchange offer, we are not required to accept for exchange or to exchange any outstanding notes that are not accepted for exchange according to the terms of the exchange offer. Additionally, we may terminate or amend the exchange offer as provided in this prospectus before accepting the outstanding notes if: - any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer, which, in our judgment, might materially impair our ability to proceed with the exchange offer; or - any law, statute, rule or regulation is proposed, adopted or enacted, or any existing law, statute, rule or regulation is interpreted by the staff of the Commission in a manner, which, in our judgment, might materially impair our ability to proceed with the exchange offer. These conditions are for our sole benefit. We may assert them in whole or in part at any time and from time to time, in our sole discretion. Our failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any right and the right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, we will not accept for exchange any outstanding notes tendered, and no exchange notes will be issued in exchange for any outstanding notes, if at the time of tender: - a stop order is threatened by the Commission or is in effect for the registration statement that this prospectus is a part of; or - a stop order is threatened or in effect regarding qualification of the indenture under the Trust Indenture Act of 1939, as amended. If we determine that we may terminate or amend the exchange offer, we may: - refuse to accept any outstanding notes and return any tendered outstanding notes to the holder; - extend the exchange offer and retain all outstanding notes tendered prior to the expiration of the exchange offer, subject to the rights of the holders of tendered outstanding notes to withdraw their tendered outstanding notes; - waive the termination event with respect to the exchange offer and accept all properly tendered outstanding notes that have not been withdrawn; or - amend the exchange offer at any time prior to 5:00 p.m. New York City time on the expiration. If the waiver or amendment constitutes a material change in the exchange offer, we will disclose the change by means of a supplement to this prospectus that will be distributed to each registered holder of outstanding notes, and we will extend the exchange offer for a period of five to ten business days, if the exchange offer would otherwise expire during that period, depending on the significance of the waiver or amendment and the manner of disclosure to the registered holders of the outstanding notes. The exchange offer is not conditioned on any minimum principal amount of outstanding notes being tendered for exchange. 23 30 EXCHANGE AGENT Bankers Trust Company has been appointed as exchange agent for the exchange offer. Questions and requests for assistance and requests for additional copies of this prospectus or of the letter of transmittal should be directed to the exchange agent addressed as follows: BY HAND DELIVERY: BY MAIL: Bankers Trust Company Bankers Trust Company Corporate Trust & Agency Services P.O. Box 2927737 Attn: Reorganization Unit Nashville, TN 37229-2737 123 Washington St., 1st Floor Attn: Reorganization Unit New York, NY 10006 Telephone number: 1-800-735-7777 BY OVERNIGHT COURIER: BY FACSIMILE: Bankers Trust Company Facsimile transmission:(615) 835-3701 648 Grassmere Park Road (for eligible institutions only) Nashville, TN 37211 Confirmation: (615) 835-3572
FEES AND EXPENSES We will bear the expenses of soliciting tenders pursuant to the exchange offer. The principal solicitation for tenders pursuant to the exchange offer is being made by mail. Additional solicitations may be made by our officers and regular employees and our affiliates in person, by telegraph or by telephone. We will not make any payments to brokers, dealers or other persons soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable customary fees for its services and will reimburse the exchange agent for its reasonable out-of-pocket expenses in connection with this exchange offer. We may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses they incur in forwarding copies of this prospectus, letters of transmittal and related documents to the beneficial owners of the outstanding notes and in handling or forwarding tenders for exchange. We will pay the fees and expenses incurred in connection with the exchange offer, for the following: - the exchange agent; - the trustee; - accounting; and - legal services. We will pay all transfer taxes, if any, applicable to the exchange of outstanding notes pursuant to the exchange offer. The amount of these transfer taxes, whether imposed on the registered holder or any other persons, will be payable by the tendering holder if: - certificates representing exchange notes or outstanding notes not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the outstanding notes tendered; - tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or - a transfer tax is imposed for any reason other than the exchange of outstanding notes pursuant to the exchange offer. If satisfactory evidence of payment of, or exemption from, these taxes is not submitted with the letter of transmittal, the amount of these transfer taxes will be billed directly to the tendering holder. 24 31 ACCOUNTING TREATMENT The exchange notes will be recorded at the same carrying value as the outstanding notes, which is face value, as reflected in our accounting records on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized by us upon the consummation of the exchange offer. The expenses of the exchange offer will be amortized by us over the term of the exchange notes under generally accepted accounting principles. SOME ADVERSE CONSEQUENCES OF FAILURE TO EXCHANGE If you fail to exchange your outstanding notes for exchange notes under the exchange offer, you will remain subject to the restrictions on transfer of your outstanding notes. In general, you may not offer or sell the outstanding notes unless they are registered under the Securities Act, or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding notes under the Securities Act. Based on interpretations by the Commission, exchange notes issued in the exchange offer may be offered for resale, resold or otherwise transferred by their holders, other than any holder that is our "affiliate" within the meaning of Rule 405 under the Securities Act, without compliance with the registration and prospectus delivery provisions of the Securities Act, so long as the holders acquired the exchange notes in the ordinary course of the holders' business and the holders have no arrangement or understanding with respect to the distribution of the exchange notes to be acquired in the exchange offer. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the exchange notes: - cannot rely on the applicable interpretations by the Commission; and - must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. The amount of outstanding notes after the exchange offer is complete will be reduced by the amount of outstanding notes that will be tendered and exchanged for exchange notes in the exchange offer. We expect that a substantial portion of the outstanding notes will be tendered and accepted in the exchange offer. In that case, the trading market for the outstanding notes will be adversely affected. USE OF PROCEEDS We will not receive any proceeds from this offer. 25 32 CAPITALIZATION The following table sets forth our capitalization as of March 31, 2001. Please read this table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and notes incorporated in this prospectus by reference.
MARCH 31, 2001 -------------- (IN MILLIONS) TOTAL DEBT: Revolving credit facilities(1).............................. $ 167.5 Existing term loans......................................... 375.1 12 1/4% senior subordinated notes of DMC.................... 65.7 12 1/2% senior discount notes of DMFC....................... 117.3 ------- Total debt................................................ 725.6 STOCKHOLDERS' EQUITY: Common stock, $.01 par value; 500,000,000 shares authorized and 52,240,909 shares issued and outstanding at March 31, 2001...................................................... .5 Notes receivable from stockholders.......................... (0.4) Additional paid-in capital.................................. 400.4 Retained earnings (deficit)................................. (364.0) ------- Total stockholders' equity (deficit)...................... 36.5 ------- Total capitalization...................................... $ 762.1
- ------------------------- (1) The total capacity under the revolving credit facilities is $350.0 million. 26 33 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA The following table sets forth our historical consolidated financial information. The statement of operations data for the years ended June 30, 2000, 1999, 1998, 1997 and 1996 and the balance sheet data as of June 30, 2000, 1999, 1998, 1997 and 1996 have been derived from our audited consolidated financial statements. The selected consolidated financial data as of March 31, 2001 and 2000 and for the nine-month period then ended was derived from our unaudited interim financial statements. The financial data as of March 31, 2001 and 2000, and for the nine-month periods then ended, in our opinion, reflect all adjustments, consisting of only normal, recurring adjustments, necessary for a fair presentation of such data and which have been prepared in accordance with the same accounting principles followed in the presentation of our audited financial statements for the fiscal year ended June 30, 2000. Operating results for the nine-month period ended March 31, 2001 are not necessarily indicative of results to be expected for the full fiscal year. The table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," our consolidated financial statements and related notes and other financial information incorporated in this prospectus by reference.
NINE MONTHS ENDED FISCAL YEAR ENDED JUNE 30, MARCH 31, ------------------------------------------------------------------- ------------------------- 2000 1999 1998 1997 1996 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- (IN MILLIONS, EXCEPT SHARE AND RATIO DATA) STATEMENT OF OPERATIONS DATA: Net sales....................... $ 1,462.1 $ 1,504.5 $ 1,313.3 $ 1,217.4 $ 1,305.3 $ 1,122.4 $ 1,142.4 Cost of products sold........... 920.5 998.3 898.2 819.3 984.1 739.3 720.3 Selling, administrative and general expense(1)............ 384.2 375.3 316.4 326.9 239.0 278.7 304.4 Special charges related to plant consolidation................. 10.9 17.2 9.6 -- -- 14.0 9.8 Acquisition expense............. -- 0.9 6.9 -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Operating income................ 146.5 112.8 82.2 71.2 82.2 90.4 107.9 Interest expense................ 67.1 77.6 77.5 52.0 67.2 58.3 51.2 Loss (gain) on sale of divested assets(2)..................... -- -- -- 5.0 (123.3) -- -- Other (income) expense(1)....... -- 2.0 (1.3) 30.1 2.7 (4.7) 0.2 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Income (loss) before income taxes, minority interest, extraordinary item and cumulative effect of accounting change............. 79.4 33.2 6.0 (15.9) 135.6 36.8 56.5 Provision (benefit) for income taxes......................... (53.6) 0.5 0.5 0.6 11.4 11.2 13.6 Minority interest in earnings of subsidiary.................... -- -- -- -- 3.0 -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Income (loss) before extraordinary item and cumulative effect of accounting change............. 133.0 32.7 5.5 (16.5) 121.2 25.6 42.9 Extraordinary loss, net of tax benefit(3).................... 4.3 19.2 -- 41.6 10.3 -- 3.9 Cumulative effect of accounting change(4)..................... -- -- -- -- 7.1 -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net income (loss)............... $ 128.7 $ 13.5 $ 5.5 $ (58.1) $ 103.8 $ 25.6 $ 39.0 =========== =========== =========== =========== =========== =========== =========== Net income (loss) attributable to common shares(5)........... $ 128.7 $ 9.9 $ 0.2 $ (127.9) $ 21.8 $ 25.6 $ 39.0 Diluted net income (loss) per common share.................. $ 2.42 $ 0.23 $ 0.01 $ (2.07) $ 0.29 $ 0.49 $ 0.73 Weighted average number of diluted shares outstanding(6)................ 53,097,898 42,968,652 32,355,131 61,703,436 75,047,353 52,692,344 53,147,206 OTHER DATA: Cash flows provided by (used in) operating activities.......... $ (7.1) $ 96.1 $ 97.0 $ 25.2 $ 58.4 $ (4.8) $ (57.4) Cash flows provided by (used in) investing activities.......... (65.9) (86.2) (222.0) 37.0 169.9 (77.9) (41.0) Cash flows provided by (used in) financing activities.......... 71.2 (9.9) 127.0 (63.4) (222.8) 86.5 97.5 Capital expenditures............ 67.8 55.0 32.1 20.3 15.8 28.2 42.6 SELECTED RATIOS: Ratio of earnings to fixed charges(7).................... 2.0x 1.4x 1.1x NA 2.8x 1.5x 1.9x Deficiency of earnings to cover fixed charges(7).............. -- -- -- $ 15.9 -- -- --
27 34
JUNE 30, MARCH 31, ------------------------------------------------------------------- ------------------------- 2000 1999 1998 1997 1996 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- BALANCE SHEET DATA: Working capital................. $ 149.8 $ 187.3 $ 210.2 $ 118.1 $ 209.2 $ 234.9 $ 158.3 Total assets.................... 1,040.7 872.0 845.1 666.9 735.9 1,192.0 1,023.3 Total debt...................... 632.1 543.4 709.7 609.7 372.4 725.6 651.9 Redeemable preferred stock...... -- -- 32.5 32.2 213.4 -- -- Stockholders' equity (deficit)..................... 10.6 (118.4) (349.8) (398.8) (288.1) 36.5 (79.2)
- ------------------------- (1) In connection with our recapitalization, which was consummated on April 18, 1997, we incurred approximately $25.0 million in administrative and general expenses primarily for management incentive payments and, in part, for severance payments. In addition, we incurred $22.3 million of other expenses in conjunction with the recapitalization, primarily for legal, investment advisory and management fees. (2) In the fiscal quarter ended December 1996, we sold Del Monte Latin America. The combined sales price of $49.5 million, reduced by $1.3 million of related transaction expenses, resulted in a loss of $5.0 million. In November 1995, we sold our pudding business for $88.8 million, net of $3.9 million of related transaction fees. The sale resulted in a gain of $71.3 million. In March 1996, DMC sold its 50.1% ownership interest in Del Monte Philippines for $100.0 million, net of $2.2 million of related transaction fees. The sale resulted in a gain of $52.0 million. (3) During February 2000, we repurchased $31.0 million of DMC's 12 1/4% senior subordinated notes. In conjunction with this debt prepayment, an extraordinary loss of $5.2 million ($4.3 million net of tax benefit of $.9 million) was recorded. This extraordinary loss consisted of $3.7 million of prepayment premiums and a $1.5 million write-off of capitalized deferred debt issue costs and original issue discount. In fiscal 1999, we recorded a $19.2 million extraordinary loss. In conjunction with the February 1999 public equity offering, we redeemed all outstanding preferred stock, a portion of DMC's 12 1/4% senior subordinated notes and a portion of DMFC's 12 1/2% senior discount notes, as well as an early retirement of senior debt. In connection with these payments, we wrote off $5.5 million of capitalized debt issue costs and paid $13.7 million of redemption premium, both of which we recorded as extraordinary items. In fiscal 1997, $41.6 million of expenses related to the early retirement of debt due to the exchange of Pay-in-Kind, or PIK, notes and to our recapitalization was charged to net income. In September 1996, we repurchased PIK notes and, concurrently, exchanged essentially all remaining PIK notes for new PIK notes. In conjunction with this repurchase and exchange, we wrote off capitalized debt issue costs of $3.6 million, net of a discount on the PIK notes, and accounted for that amount as an extraordinary loss. In conjunction with the refinancing of debt that occurred at the time of the recapitalization in fiscal 1997, we recorded a $38.0 million extraordinary loss related to the early retirement of debt. The $38.0 million consisted of previously capitalized debt issue costs of $18.8 million and a note premium payment and a term loan make-whole payment aggregating $19.2 million. In December 1995 and April 1996, we prepaid part of our term loan and senior secured notes. In conjunction with the early debt retirement, we recorded an extraordinary loss of $10.3 million. The extraordinary loss consisted of a $5.0 million prepayment premium and a $5.3 million write-off of capitalized debt issue costs related to the early retirement of debt. (4) Effective July 1, 1995, we adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The cumulative effect of adopting SFAS No. 121 resulted in a charge to fiscal 1996 net earnings of $7.1 million. (5) Net income (loss) attributable to the shares of common stock is computed as net income (loss) reduced by the cash and in-kind dividends for the period on redeemable preferred stock. (6) For fiscal 1997, the effect of common stock equivalents was not included in the weighted average number of diluted shares outstanding as these common stock equivalents were anti-dilutive due to a net operating loss. (7) For purposes of determining the ratio of earnings to fixed charges and the deficiency of earnings to cover fixed charges, earnings are defined as income (loss) before extraordinary item, cumulative effect of accounting change and provision (benefit) for income taxes plus fixed charges. Fixed charges consist of interest expense on all indebtedness (including amortization of deferred debt issue costs) and the interest component of rent expense. 28 35 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion summarizes the significant factors affecting our consolidated operating results, financial condition and liquidity during the three-year period ended June 30, 2000 and the nine-month periods ended March 31, 2001 and 2000. This discussion should be read in conjunction with our audited consolidated financial statements for the three-year period ended June 30, 2000 and the unaudited consolidated financial statements for the nine-month period ended March 31, 2001 and notes thereto incorporated in this prospectus by reference. GENERAL We report our financial results on a July 1 to June 30 fiscal year basis to coincide with our inventory production cycle, which is highly seasonal. Raw product is harvested and packed primarily in the months of June through October, during which time inventories rise to their highest levels. At the same time, consumption of processed products declines, reflecting, in part, lower levels of promotional activity, the availability of fresh alternatives and other factors. This situation impacts operating results as sales volumes, revenues and profitability decline during this period. Results over the remainder of the fiscal year are affected by many factors including industry supply and our share of that supply. See "-- Seasonality." Our core processed vegetables, fruits and tomato products are generally considered staple foods. Like other basic food items, we believe consumers purchase our products regardless of economic cycles. However, we have experienced a reduction in shipments of our products during the last several fiscal quarters, as our trade customers have been reducing their inventory levels significantly. Retail consolidation and competitive pressures are causing many food retailers to concentrate on increasing operating efficiencies, generating cash flow and decreasing working capital requirements. Retailers are focused on decreasing their own inventory requirements by reducing the inventory carried, implementing more sophisticated shelf management programs and consolidating their distribution centers and other infrastructure. Although consumer consumption of our products generally has remained stable, retailers have been selling more of our products out of their inventory rather than purchasing from us. As a result, our volume of product shipments to retailers has been less than the volume of our products purchased by consumers at retailers. The effect of this trend was significant in the fourth quarter of fiscal 2000, as trade customers reduced the inventory levels they had built earlier in preparation for possible "Year 2000" shortages. The trend continued in the first three quarters of fiscal 2001. This reduction of retail inventory decreased our shipments in the short-term and adversely affected our sales growth, operating margin, cash flow and working capital requirements. In addition, it causes us to have excess inventory. The resulting lower sales volume has also affected our ability to offset the increase in production costs experienced in fiscal 2001. Given that we produce the majority of our products in the summer months, we plan to decrease our summer 2001 production to reduce our inventory levels, which should lower our working capital requirements. We believe the trend of reducing trade inventory levels may continue into next year. However, in the long-term, we believe that production and sales will match consumption, but only after retailers stabilize their inventory levels. If our shipments exceed our production in fiscal 2002 as a result of our reduced production, we may generate additional cash flow. Consistent with our strategy to generate growth through acquisitions, as outlined in the section entitled "Business -- Business Strategies," We consummated the acquisition of Contadina in December 1997, Sunfresh in September, 2000 and S&W in March, 2001. The Contadina acquisition solidified us as the branded market leader in the high margin canned solid tomato category and established a strong presence for us in the branded paste-based tomato products category, which includes tomato paste, tomato sauce and pizza sauce. We believe the S&W and Sunfresh acquisitions will also provide further cost savings and growth opportunities. We also reacquired the rights to the Del Monte brand in South America in August 1998, which opened a new geographic market for us. 29 36 In the third quarter of fiscal 1998, we committed to a plan to consolidate processing operations over a three-year period. Moreover, among the facilities we acquired in connection with the Contadina acquisition was a state-of-the-art tomato processing facility at Hanford, California. In addition to diversifying further our revenue base, the Contadina acquisition expanded our processing scale, which has resulted in production cost efficiencies. We closed our San Jose fruit processing facility in December 1999, our Stockton fruit processing facility in September 2000 and the Woodland tomato processing facility in November 2000. In connection with these actions, we recorded charges related to plant consolidation as follows:
NINE MONTHS ENDED FISCAL YEAR ENDED JUNE 30, MARCH 31, ---------------------------- -------------- 2000 1999 1998 2001 2000 ------- ------- ------ ----- ----- (IN MILLIONS) Severance accrual................................... $ -- $ -- $6.6 $ 0.6 $ -- Severance accrual reversal.......................... (1.3) -- -- (0.7) -- Asset write-off..................................... -- 3.5 -- 10.5 -- Asset write-down reversal........................... (0.7) -- -- -- (0.7) Ongoing fixed costs and asset removal/disposal costs............................................. 8.6 4.3 -- 2.8 6.8 Accelerated depreciation............................ 4.3 9.4 3.0 0.8 3.7 ----- ----- ---- ----- ----- Special charges related to plant consolidation...... $10.9 $17.2 $9.6 $14.0 $ 9.8 ===== ===== ==== ===== =====
Our results over the next three-year period are expected to be affected by related plant consolidation charges as follows: $0.7 million in the last three months of fiscal 2001, $1.8 million in fiscal 2002 and $.7 million in fiscal 2003. The plant consolidation plan is a major component of a capital investment program identified over three years ago. A total of $85.7 million has been spent on this program as of March 31, 2001. Our goal for this program is to achieve cumulative cost savings by the end of the fifth year estimated at approximately $170 million. As of March 31, 2001, approximately $102.3 million in cumulative cost savings had been generated by this capital investment program. RECENT DEVELOPMENTS We recently announced our financial results as of March 31, 2001. Please see our quarterly report on Form 10-Q filed with the Commission May 15, 2001, incorporated in this prospectus by reference. RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain items from our consolidated statements of income, expressed as percentages of our net sales for such periods:
NINE MONTHS ENDED FISCAL YEAR ENDED JUNE 30, MARCH 31, -------------------------- -------------- 2000 1999 1998 2001 2000 ------ ------ ------ ----- ----- Net sales.......................................... 100.0% 100.0% 100.0% 100.0% 100.0% Cost of products sold.............................. 63.0 66.4 68.4 65.9 63.1 Selling, administrative and general expense........ 26.3 24.9 24.1 24.8 26.6 Special charges related to plant consolidation..... 0.7 1.1 0.7 1.2 0.9 Acquisition expense................................ -- 0.1 0.5 -- -- ----- ----- ----- ----- ----- Operating income................................. 10.0% 7.5% 6.3% 8.1% 9.4% ===== ===== ===== ===== ===== Interest expense................................... 4.6% 5.2% 5.9% 5.2% 4.5% ===== ===== ===== ===== =====
30 37 The following table sets forth, for the periods indicated, our net sales by product categories, expressed in dollar amounts and as percentages of our total net sales for such periods:
NINE MONTHS ENDED FISCAL YEAR ENDED JUNE 30, MARCH 31, -------------------------------- -------------------- 2000 1999 1998 2001 2000 -------- -------- -------- -------- -------- (IN MILLIONS) NET SALES: Processed vegetables(1)................ $ 507.7 $ 508.0 $ 466.2 $ 386.8 $ 402.1 Processed fruit(1)..................... 564.6 562.3 526.5 445.1 431.6 Tomato products(1)..................... 377.4 423.8 320.6 279.3 299.3 -------- -------- -------- -------- -------- Subtotal domestic.................... 1,449.7 1,494.1 1,313.3 1,111.2 1,133.0 South America.......................... 12.9 10.4 -- 11.5 9.7 Intercompany sales..................... (0.5) -- -- (0.3) (0.3) -------- -------- -------- -------- -------- Total net sales...................... $1,462.1 $1,504.5 $1,313.3 $1,122.4 $1,142.4 ======== ======== ======== ======== ======== AS A PERCENTAGE OF NET SALES: Processed vegetables(1)................ 34.7% 33.7% 35.5% 34.4% 35.2% Processed fruit(1)..................... 38.6 37.4 40.1 39.7 37.8 Tomato products(1)..................... 25.8 28.2 24.4 24.9 26.2 -------- -------- -------- -------- -------- Subtotal domestic.................... 99.1 99.3 100.0 99.0 99.2 South America.......................... 0.9 0.7 -- 1.0 0.8 Intercompany sales..................... -- -- -- -- -- -------- -------- -------- -------- -------- Total................................ 100.0% 100.0% 100.0% 100.0% 100.0% ======== ======== ======== ======== ========
- ------------------------- (1) Includes sales of the entire product line across each channel of distribution, including sales to grocery chains, club stores, supercenters, mass merchandisers and other grocery retailers, as well as our foodservice, food ingredients, export and vegetable private label businesses and military sales. SEASONALITY Please see our annual report on Form 10-K filed with the Commission on September 8, 2000, incorporated in this prospectus by reference. NINE MONTHS ENDED MARCH 31, 2000 VS. NINE MONTHS ENDED MARCH 31, 2001 Please see our quarterly report on Form 10-Q filed with the Commission on May 15, 2001, incorporated in this prospectus by reference. FISCAL 2000 VS. FISCAL 1999 Please see our annual report on Form 10-K filed with the Commission on September 8, 2000, incorporated in this prospectus by reference. FISCAL 1999 VS. FISCAL 1998 Please see our annual report on Form 10-K filed with the Commission on September 8, 2000, incorporated in this prospectus by reference. RECENTLY ISSUED ACCOUNTING STANDARDS Please see our annual report on Form 10-Q filed with the Commission on May 15, 2001, incorporated in this prospectus by reference. 31 38 LIQUIDITY AND CAPITAL RESOURCES Please see our quarterly report on Form 10-Q filed with the Commission on May 15, 2001, incorporated in this prospectus by reference. Operating Activities Please see our quarterly report on Form 10-Q filed with the Commission on May 15, 2001 and our annual report on Form 10-K filed with the Commission on September 8, 2000, incorporated in this prospectus by reference. Investing Activities In the nine-month period ended March 31, 2001, cash used in investing activities increased by $36.9 million as compared to the same period in 1999, primarily due to the acquisition of the S&W brand and product line. In fiscal 2000, cash used in investing decreased by $20.3 million as compared to fiscal 1999, primarily due to the purchase of the South American business in fiscal 1999. In fiscal 1999, cash used in investing decreased by $135.8 million as compared to fiscal 1998 due to the purchase of Contadina in fiscal 1998. Capital expenditures for the nine-month period ended March 31, 2001 were $28.2 million, including $5.3 million towards our program to consolidate processing operations. We plan an aggregate of approximately $46.5 million in capital expenditures for fiscal 2001 with approximately $5.5 million of those expenditures to be incurred in connection with our continuing program to consolidate processing operations. Capital expenditures for fiscal 2000 were $67.8 million, including $11.0 million for the purchase of the Cambria, Wisconsin plant and approximately $.6 million for domestic environmental compliance, as we continued the implementation of a program which is intended to generate cost savings by introducing new equipment that would result in general production efficiencies. Of the remaining $56.2 million of capital expenditures for fiscal 2000, we spent approximately $21.5 million in connection with our plans to consolidate processing operations and $34.7 million for general manufacturing improvements. We continually evaluate our capital expenditure requirements, and such plans are subject to change depending on market conditions, our cash position, the availability of alternate means of financing and other factors. We expect to fund capital expenditures from internally generated cash flows and by borrowing from available financing sources. Financing Activities -- Nine Months Ended March 31, 2001 Activity Please see our quarterly report on Form 10-Q filed with the Commission on May 15, 2001, incorporated in this prospectus by reference. Financing Activities -- 2000 Activity Please see our annual report on Form 10-K filed with the Commission on September 8, 2000, incorporated in this prospectus by reference. Financing Activities -- 1999 Activity Please see our annual report on Form 10-K filed with the Commission on September 8, 2000, incorporated in this prospectus by reference. Financing Activities -- 1998 Activity Please see our annual report on Form 10-K filed with the Commission on September 8, 2000, incorporated in this prospectus by reference. 32 39 Restrictive Covenants The term loans and the revolver agreements contain restrictive covenants which require us to meet certain financial tests, including minimum fixed charge coverage, minimum adjusted net worth and maximum leverage ratios. These requirements and ratios generally become more restrictive over time, subject to allowances for seasonal fluctuations. We were in compliance with all debt covenants at March 31, 2001. The credit agreements applicable to DMC generally limit its ability to make cash payments to DMFC through restricted payment covenants, thereby limiting DMFC's ability to pay monetary dividends. Pension Funding Please see our annual report on Form 10-K filed with the Commission September 8, 2000, incorporated in this prospectus by reference. Environmental Matters Please see our annual report on Form 10-K filed with the Commission September 8, 2000, incorporated in this prospectus by reference. Tax Net Operating Loss Carryforwards As of March 31, 2001, we had $30.9 million in net operating loss carryforwards for tax purposes, which will expire in 2012. Applicable laws may limit our use of these net operating loss carryforwards in any year. Inflation Please see our annual report on Form 10-K filed with the Commission September 8, 2000, incorporated in this prospectus by reference. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT POLICIES Our primary market risk exposure is that of interest rate risk. Our bank debt generally incurs interest at a reference rate plus a spread. As interest rates increase, we would incur higher interest expense and conversely a decrease in interest rates would reduce interest expense. A 100 basis point change in the reference on our bank debt rate would result in an approximate 13% change in interest expense assuming consistent debt levels. We have entered into interest rate cap agreements limiting our exposure to interest rate increases, thus limiting the impact of interest rate increases on future income. These interest rate cap agreements are not accounted for as hedge activities and as such are adjusted to fair value through income. The impact of these fair value adjustments are immaterial. We use derivatives only for purposes of managing risk associated with the underlying exposures. We do not trade or use instruments with the objective of earning financial gains on interest rate fluctuations alone, nor do we use instruments where there are not underlying exposures. Complex instruments involving leverage or multipliers are not used. We believe that our use of these instruments to manage risk is in our best interest and that any resulting market risk exposure would not materially effect our operating results. (Market risk exposure has been defined as the change in fair value of a derivative financial instrument assuming a hypothetical 10% adverse change in market rates.) We also have an insignificant degree of market risk exposure in regards to currency risk. Except for sales by our subsidiaries within South America, we require payment in United States currency. If non-United States domiciled customers' local currency devalues significantly against the United States dollar, the customers could potentially encounter difficulty in making the United States dollar-denominated payments. 33 40 We do not believe we face any material commodity risk since we purchase most of our raw product requirements under arrangements whereby pricing has not fluctuated significantly in recent years. See "Business -- Supply." 34 41 BUSINESS GENERAL We are the largest producer and distributor of processed vegetables, fruit and solid tomato products in the United States. We manufacture and distribute premium quality, nutritious food products under the Del Monte, Contadina, S&W and other brand names generating net sales of approximately $1.5 billion and adjusted EBITDA of approximately $187 million in fiscal 2000. Our products are sold by most retail grocers, supercenters, club stores and mass merchandisers throughout the United States with the average supermarket carrying approximately 110 of our branded items. The Del Monte brand was introduced in 1892 and we believe it is one of the best known brands for processed food products in the United States. We estimate that Del Monte brand products are purchased by over 80% of U.S. households. Our market share in vegetables is larger than the market share of our four largest branded competitors combined and our market share of canned fruit is larger than the fruit market share of all other branded competitors combined. In addition, our market share for solid tomato products is twice that of our nearest competitor. In calendar 2000, we had market shares of 24.4% of all processed vegetable products, 46.7% of all processed major fruit products and 22.0% of all canned solid tomato products in the United States. As the brand leader in these three major processed food categories, we have a full-line, multi-category presence that we believe provides us with a substantial competitive advantage in selling to the retail grocery industry. We sell our products primarily through grocery chains, club stores and mass merchandisers. Sales through these channels accounted for approximately $1.2 billion (or 80.7%) of our fiscal 2000 sales. Club stores and mass merchandisers are the fastest growing channels of retail distribution. These customers include Wal-Mart/Sam's Club and Costco, and other merchandisers that include full grocery sections, such as Wal-Mart Supercenters and Kmart's Super Ks. Our long-term relationships with customers allow them to rely on our continuity of supply which enables them to reduce their inventory levels. Many of our customers also rely on our value-added services, such as our category and inventory management programs that allow them to more effectively manage their business. We operate 12 production facilities in California, the Midwest, Washington and Texas, as well as seven strategically located distribution centers. We have over 2,500 contracts to purchase vegetables, fruit and tomatoes from individual growers and cooperatives located in various geographic regions of the United States, principally California, the Midwest, the Northwest and Texas. This diversity of sourcing helps insulate us from localized disruptions during the growing season, such as weather conditions, that can affect the price and supply of vegetables, fruit and tomatoes. COMPANY STRENGTHS We believe we have the following strengths: - Steady, Non-Cyclical Consumption. Our processed vegetables, fruits and tomato products are generally considered staple foods and enjoy high consumer household penetration. During the past decade, sales of processed vegetable, fruit and tomato products have been relatively stable and have grown at approximately 1% per annum. Like other basic food items, we believe consumers purchase our products reasonably independent of economic cycles. - Exceptional Brand Recognition and Leading Market Share. Our products are found nationally in eight out of ten homes, and we believe the Del Monte brand is one of the best known brands of canned food in the United States. Brand name is a leading competitive factor as consumers of processed fruits, vegetables and tomatoes equate strong brand names with superior quality and taste. As a result, leading brands, such as Del Monte, are able to command a substantial pricing premium over their less established branded and private label competitors. Since 1997, we have increased market share in all of our product categories. In calendar 2000, our 46.7% market share of major fruit was larger than the combined market shares of all other branded competitors, and our 24.4% 35 42 market share of processed vegetables was larger than the combined market shares of our four largest branded competitors. We had a 22.0% market share in the high margin solid segment of the processed tomato market over the same period. In addition to being the brand leader in our three major categories, we have been able to increase our leading market share while maintaining or increasing our price premium over private labels in each of these categories. The following graph illustrates our significantly larger fiscal 2000 sales, on an equivalent case basis, compared to other branded competitors. GRAPH Del Monte 85.0 Hunt's 30.0 Green Giant 20.0 Libby's 7.0
Source: ACNielsen SCANTRACK - Strong Retailer Relationships. We sell our products to virtually every food retailer in the United States. We have developed strong long-term relationships with all major participants in the retail grocery trade and are the preferred supplier to most of our customers. Our top 15 customers have all been our customers for at least ten years and, in most cases, for 20 years or more. We believe that these relationships will become increasingly important as consolidation among grocery retailers continues. Competitive pressures on food retailers are causing many retailers to prefer large suppliers that are able to provide consumer-favored brands, a single source of vegetable, fruit and tomato products and national distribution networks that insure continuity of supply. Furthermore, retailers also prefer suppliers that can offer sophisticated category and inventory management programs that enable them to more effectively manage their businesses. By offering these value- added services, we have been able to differentiate ourselves from our branded and private label competitors, increase shelf space devoted to Del Monte products, maximize distribution efficiencies and maintain our leading market position. - Category Management Services. Our category management services enable our customers to more efficiently manage their shelf space, product mix and promotions for an entire product category, including other brands and private label products. As the "Category Captain," we recommend shelf space allocation in our customers' stores, coordinate advertising and promotional activities and analyze individual product performance. These activities help our retail customers leverage Del Monte brands to drive center-store traffic and sales. - Inventory Management Services. Our vendor managed inventory services enable our customers to optimize their inventory requirements while maintaining their ability to service consumers. We utilize proprietary software to track and manage our customers' inventory levels based on real-time demands. We believe that providing these value-added services enhances our relationships with our retail customers and drives our sales growth and long-term competitiveness. - Extensive Sales and Distribution System. Our extensive sales and distribution network allows us to efficiently deliver products to more than 2,700 customer destinations nationwide. This network enables us to deliver product to customers when they need it, thereby allowing them to reduce their 36 43 own inventory levels. We operate seven strategically located distribution centers in addition to storage at our manufacturing facilities, which offer customers a variety of services, including electronic data interchange and direct store shipments. Our infrastructure enables us to provide our customers with inventory management programs, which further enhance our customer relationships. Our distribution centers, warehouse facilities and storage capacity at our production facilities have a combined storage capacity of approximately 7 million square feet. We believe our distribution infrastructure and associated services provide us with a competitive advantage over other branded and private label competitors as they allow us to fully service national retailers quickly and efficiently. - Leading Innovator in New Products and Packaging. We believe we are the leading product innovator in our processed food categories and have successfully introduced many new products and packaging. We have continually exhibited significant expertise in developing new products and packaging to generate increased sales. These capabilities are leveragable across all our categories and allow us to maintain or improve our category leadership, market share and pricing power versus private label manufacturers. We have recently introduced several new products including Fruit Pleasures, a flavored, individually packaged fruit targeted at the adult snacking market; FruitRageous, a fruit snack targeted at the kids snacking market; Fruit To-Go, individual fruit cups packaged in plastic and targeted at convenient on-the-go snacking; and pull-top lids on our buffet vegetables. In addition, through Orchard Select, Tropical Select, and our recently acquired Sunfresh citrus lines, all glass-packaged products, we have extended our presence in the store to the produce aisle, which targets a different consumer than typically shops in the canned aisle of the store. - Low Cost Producer. We believe we are one of the lowest cost producers of processed vegetables, fruit and tomatoes in the United States. In fiscal 1997, we identified a five-year capital expenditure program, which is now substantially complete. By the end of fiscal 2001, we will have spent approximately $90 million, primarily on plant consolidation and manufacturing upgrades. This investment has significantly reduced costs through increased operational efficiency. By utilizing state-of-the-art, automated manufacturing machinery, we are able to significantly reduce labor costs. Through fiscal 2001, we estimate that we will have realized $114.2 million in cost savings. We also benefit from many long-term relationships with more than 1,700 growers who, along with us, work to maximize yields of raw product. These relationships also help to ensure a consistent supply of raw product. - Proven Acquisition Track Record. We have made several acquisitions that have augmented our internal growth by successfully integrating acquisitions into existing operations, reducing costs and increasing market share. Acquisitions, such as Contadina, have enabled us to increase market share and extend our product lines. Our acquisition of Sunfresh solidified our position in the fruit-in-glass market and diversified us into citrus products. With the S&W acquisition, we expect to realize significant cost savings, increase our West Coast market share and enhance our relationships with key mass merchandisers. The S&W acquisition also increases our international presence and, like Contadina, we are not restricted from selling the S&W product internationally. We will continue to focus on targeting complementary branded and higher-margin food products and pursuing acquisitions that are accretive to earnings and that offer opportunities for synergies. - Experienced Management Team. The management team has demonstrated a history of strong operating performance while remaining attentive to growth. The management team consists of Richard G. Wolford, Chairman and Chief Executive Officer, Wesley J. Smith, Chief Operating Officer, and David L. Meyers, Executive Vice President of Administration and Chief Financial Officer. Mr. Wolford, Mr. Smith and Mr. Meyers are veteran senior managers, each with approximately 30 years of experience in the food industry. Since our recapitalization in 1997, the management team has executed its strategy and improved financial performance. Revenues have increased from $1.2 billion in fiscal 1997 to $1.5 billion in fiscal 2000, representing compound annual growth of 7.7%. Adjusted EBITDA has increased at a greater rate from $119 million to 37 44 $187 million over the same period, representing compound annual growth of 16.3% with adjusted EBITDA margins increasing from 10.1% to 12.8%. BUSINESS STRATEGY Our business strategy includes the following key elements: - Grow Strategic Core Business. We will focus on our core retail processed vegetable, multi-serve fruit and solid tomato products, which currently account for approximately 56% of sales and have grown by approximately 5% annually during the past three years. We will dedicate resources to grow these strategic segments and increase our market share through: - Consumption-focused marketing that addresses consumers' needs for convenience, quality and value; - Product and packaging enhancements, such as flavored diced tomatoes and flavored peaches that provide consumers with additional product choices and pull-top cans that increase product convenience; - A continued focus on our high-growth club store and mass merchant retail channels while de-emphasizing our lower-margin commodity foodservice business; and - International sales opportunities, both through our operations in South America and our recently acquired S&W brand in Asia. - Expand in Targeted Growth Markets. As a leading innovator in our product categories, we intend to continue to develop new products using packaging innovations and new formulations that target the higher-margin, healthy kid snacking, healthy adult snacking and packaged produce market segments. We have steadily increased these segments of our business and intend to build on this established platform. We have successfully introduced snack products with enhanced flavorings and individual packaging using similar raw products and manufacturing processes. We have been a leader in the $2 billion healthy kid snacking category with single-serve diced fruit snacks. The category has grown by 49% during the past two years as we have expanded our single-serve business with the introduction of Fruit To-Go. We intend to develop new products to target the $1 billion healthy adult snacking category which currently consists of products such as yogurt cups and health bars. Through our internally developed Orchard Select line, we entered the $3 billion packaged produce market segment, which includes items such as packaged salads, value-added vegetables, pre-cut fruit and fruit-in-glass products. Our fruit-in-glass product category is growing rapidly and has grown by approximately 11.5% during the past year. In addition to the incremental sales, fruit- in-glass diversifies our product presence into the fresh produce aisle. Our recent acquisition of Sunfresh further extends our glass-packaged produce into citrus products. Plastic- and glass-packaged products represented approximately 6% of fiscal 2001 second quarter sales and were not part of our revenue mix in 1997. We intend to pursue additional product and packaging concepts to further extend the brand beyond the canned foods aisle. - Focus on Costs and Cash Flow Generation. We will continue to focus on being a low-cost, efficient competitor in our categories in order to maximize cash flow. As in the past, we will continue to invest in our operations in an effort to reduce costs and increase operational efficiency. We also expect to generate cash flow by: - Focusing on reducing our on-hand inventory through a disciplined sales process and reducing 2001 summer pack; - Realizing operating cost savings from acquisitions, such as S&W, whose products will now be manufactured in our low-cost facilities; and 38 45 - Actively pursuing the sale of manufacturing facilities that were closed as part of our plant consolidation program in San Jose (17 acres), Stockton (31 acres) and Woodland (40 acres), California. - Focused Acquisitions. Our acquisition strategy will continue to focus on branded businesses, channel expansion, category expansion and product innovation that will allow us to leverage our infrastructure. We believe we have the infrastructure and the sales and distribution leverage to successfully integrate acquisitions while achieving operational synergies. Since 1997, this strategy has resulted in the acquisitions of Contadina, Sunfresh and S&W. The recent acquisition of Sunfresh expanded our position and growth opportunities in packaged produce. Sunfresh's product line complements Orchard Select and expands our offering into citrus products and addresses the breakfast market. Our acquisition of S&W expanded our product offerings, strengthened our penetration of club stores and mass merchandisers, improved our West Coast market share, increased international sales opportunities and provided us with an opportunity to improve profitability for the S&W brand by leveraging our low-cost manufacturing capabilities. THE INDUSTRY The domestic canned food industry is generally characterized by relatively stable growth based on modest price and population increases. We believe that fundamentals for the overall packaged food industry are favorable since these products are generally staple items purchased by consumers. The following chart illustrates that for the three major industry categories, aggregate consumer consumption has been relatively stable throughout the last decade. CONSUMER GRAPH INDUSTRY CASE VOLUME
FRUIT VEGETABLES TOMATOES ----- ---------- -------- 1990 50014 101335 145427 1991 51357 101520 147885 1992 47932 102340 151668 1993 47408 102741 152622 1994 47843 99168 156524 1995 47716 105252 157656 1996 45941 102548 160950 1997 43644 98563 157564 1998 44923 106229 154266 1999 46833 107975 157535 2000 47600 104716 154550
Source: ACNielsen SCANTRACK, 1998 - 2000 includes Supercenters While consumption growth is predicted to be modest in the United States, certain product segments that address changing consumer needs, such as the healthy kid snacking, healthy adult snacking and packaged produce market segments, offer opportunities for growth. The processed vegetable, fruit and solid tomato categories are comprised of the brand leader (Del Monte) and other manufacturers who, in aggregate, participate in a significant segment of the total market. These categories also have large private label segments. Branded food manufacturers typically lead pricing and innovation in the processed food categories in which we compete. Although private label products have been prominent in vegetable, fruit and tomato markets for many years, the aggregate market share of the private label segment has remained relatively stable over the past decade in each of our principal product categories. For the 52 weeks ended July 1, 2000, private label products, as a group, represented 42.8%, 38.8% and 32.0% of processed vegetable, major fruit and solid tomato product sales, respectively. For the 52 weeks ended December 30, 2000, private label products, as a group, represented 42.4%, 38.4% and 31.6% of processed vegetable, major fruit and solid tomato product sales, respectively. 39 46 SALES GRAPH PRIVATE LABEL MARKET SHARE
PRVT. LABEL FRUIT PRVT. LABEL VEGETABLES PRVT. LABEL TOMATOES ----------------- ---------------------- -------------------- FY89 44.00 41.20 33.10 FY90 43.30 38.40 31.50 FY91 44.70 39.30 30.60 FY92 41.90 37.80 31.40 FY93 42.90 37.80 30.50 FY94 41.20 38.10 30.10 FY95 40.10 36.20 28.60 FY96 44.20 41.20 29.10 FY97 42.10 42.90 28.60 FY98 39.80 44.00 29.70 FY99 41.10 42.50 31.90 FY00 38.80 42.80 32.00
Source: ACNielsen SCANTRACK Food producers have been impacted by two key trends affecting their retail customers: consolidation and increased competitive pressures. In 1992, the top five retailers in the United States accounted for approximately 19% of retail sales. By 2000, this percentage had increased to approximately 39% of retail sales. Retailers are rationalizing costs in an effort to improve profitability and service the debt burden incurred during consolidation. Retailers quickly targeted distribution infrastructure and inventory levels. In addition, more traditional grocers have experienced increasing competition from rapidly growing mass merchandisers and club stores, which offer every-day low prices. This competitive pressure has further focused retailers on increasing supply-chain efficiencies and decreasing working capital requirements. Sustaining strong relationships with retailers has become a critical success factor for food companies and is driving initiatives such as category and inventory management. Food companies that offer such value added services have been able to increase shelf space, maximize distribution efficiencies, further strengthen their relationships with retailers and maintain their leadership position. Although consumer consumption for certain processed food categories has remained stable, retailers have been selling products from their inventory rather than purchasing from food producers in an effort to reduce inventory levels. As a result, many food producers experienced reduced shipment volumes as trade customers reduced their inventory levels. In the short-term, the reduction of retail inventory has decreased producer shipments and has adversely affected sales, operating margins, cash flow and working capital requirements. However, in the long-term, we believe that lower inventory levels will favor established national brands. We believe the more efficient retailers will prefer large suppliers that: - have well established consumer-favored brands; - provide a single source for major product categories, such as vegetable, fruit and tomato; - possess national distribution networks that insure continuity of supply; and - offer sophisticated inventory and category management services. Branded food manufacturers typically lead pricing and innovation in the processed food categories in which we compete. Based on statistical information compiled by ACNielsen, however, private label products generally have the largest market shares in the vegetable and solid tomato categories. The aggregate market share of the private label segment has remained relatively stable over the past several years in each of our principal product categories. We believe that the private label segment has historically been fragmented among regional vegetable and tomato producers seeking to compete principally based on price. For the 52 weeks ended July 1, 2000, private label products as a group represented 42.8%, 38.8% and 32.0% of processed vegetable, major fruit and solid tomato product sales, respectively, and for the six-month period ended December 30, 2000, private label products as a group represented 40.6%, 38.8% and 32.2% of processed vegetable, major fruit and solid tomato product sales, respectively. 40 47 OUR PRODUCTS We have a full-line, multi-category presence with products in three major processed food categories: vegetable, fruit and tomato products.
FISCAL 2000 PERCENT OF FISCAL NET SALES 2000 TOTAL SALES ----------- ----------------- (IN MILLIONS) Vegetables........................................ $507.7 34.7% Fruit............................................. 564.6 38.6 Tomato............................................ 377.4 25.8 Other............................................. 12.4 0.9
Vegetables Based on internal estimates using data compiled by ACNielsen from various industry and other sources, we believe that retail sales of processed vegetables in the United States (including all grocery, convenience, drug and warehouse stores, mass merchandisers, supercenters, military and other sales) generated approximately $3.3 billion in sales in calendar 2000. We believe that the domestic processed vegetable industry is a mature category characterized by high household penetration. We view the processed retail vegetable market as consisting of two distinct categories: core vegetables and specialty products. We compete in each of these categories. We believe that these categories generated industry sales of approximately $1.5 billion in calendar 2000. The core category represents the largest volume category, accounting for $1.1 billion or approximately 77% of calendar 2000 processed vegetable supermarket case sales (excluding pickles and tomato products). Our entries in the core category include cut green beans and French-style green beans, as well as whole kernel and cream-style corn, peas, mixed vegetables, spinach, carrots and potatoes. The specialty category, which includes asparagus, lima beans, wax beans, zucchini and a variety of corn offerings, represented $328 million or approximately 22% of calendar 2000 processed vegetable supermarket case sales. Many of our specialty vegetable products are enhanced with flavors and seasonings, such as zucchini in tomato sauce and Fiesta corn, which is made with red and green peppers. Our specialty vegetables are priced at a premium compared to our other vegetable products and carry higher margins. We offer a no-salt product line across most of our core varieties. All of our vegetable products are offered to the retail market principally in 14- to 15-ounce sizes, as well as in smaller can sizes known as buffet products. We also produce six and eight can multi-packs, primarily for our club store and mass merchandiser customers. Within the core and specialty product lines (including buffet), the Del Monte brand accounted for $413.8 million in retail sales in calendar 2000. During the 52 weeks ended December 30, 2000, Del Monte brand vegetable products enjoyed an average premium of $.16 (34.3%) per item over private label products, and held a 23.6% share of the processed vegetable market for that period. 41 48 Competitors in processed vegetables include a small number of branded and private label competitors. In the core vegetable category, we are the branded market share leader and for the 52 weeks ended December 30, 2000, held a 26.7% market share in green beans, a 23.1% market share in corn and a 20.0% market share in peas. Our core vegetable products are distributed in substantially all grocery outlets. We also are the branded market share leader in the specialty category and are the overall market share leader in the buffet category. Private label products taken as a whole command the largest share of the processed vegetable market, but their market share has remained relatively stable over the past decade. Our primary branded competitors in the market include Green Giant nationally and regional brands such as Freshlike, Stokely and Libby's, in addition to private label producers.
VEGETABLE MARKET SHARE 52 WEEKS ENDED DECEMBER 30, 2000 ----------------- Del Monte................................................... 24.4% Green Giant................................................. 12.3 Libby's..................................................... 3.4 Stokely..................................................... 2.1 Freshlike................................................... 2.2 All private label combined.................................. 42.4
We have relationships with approximately 900 vegetable growers located primarily in Wisconsin, Illinois, Minnesota, Washington, and Texas. As part of the S&W acquisition, we acquired the S&W line of processed beans. This product line is co-packed for us and includes garbanzo, kidney, black and other specialty beans. Fruit Based on internal estimates using data compiled by ACNielsen from various industry and other sources, we believe that the processed fruit industry in the United States generated more than $2.6 billion in sales in calendar 2000. We believe the domestic processed fruit industry is a mature category characterized by high household penetration. We are the largest processor of branded processed fruit in the United States. We compete in four distinct categories of the processed fruit industry: major, specialty, single-serve, and pineapple products. We believe that these categories generated industry sales of more than $1.2 billion in calendar 2000. The major category consists of cling peaches, pears and fruit cocktail/mixed fruit with products offered across package sizes from 15 to 30 ounces. The specialty category includes apricots, freestone and spiced peaches, mandarin oranges, cherries and tropical mixed fruit. We believe that the major fruit, fruit cups and specialty fruit categories of the processed fruit market together accounted for approximately $946 million of total processed fruit industry sales in calendar 2000. Major fruit and fruit cups accounted for sales by retailers of $763 million in calendar 2000. Sales by retailers of Del Monte brand major fruit products totaled $399 million in calendar 2000. We were the branded share leader with a 45.2% market share based on case volume sold for the 52 weeks ended December 30, 2000. We are also the share leader in every major sub-category of the major fruit category. In single-serve fruit cup, we have over 60% market share. Our major fruit products are distributed in substantially all grocery outlets, club stores and mass merchandiser outlets. We are a key brand in the specialty category as a whole and the market leader in apricots and freestone and spiced peaches. Specialty fruits are higher margin, lower volume "niche" items, which benefit from Del Monte brand recognition. Our apricot and freestone peach products are distributed in over 94% and 66% of grocery outlets, respectively. Tropical fruits and mandarin oranges are distributed in 87% and 66% of grocery outlets, respectively. 42 49 We are the leading manufacturer of fruit-in-glass products. Following initial success in test markets, we completed national distribution in fiscal 1999 of Orchard Select, a premium fruit product packaged in glass primarily sold in the produce section. In fiscal 2000, the Orchard Select product line was successfully expanded with a new apricot entry. Based on the success of Orchard Select, a tropical fruit extension of the fruit-in-glass product line has been introduced under the brand Tropical Select. Through our recent acquisition of Sunfresh, we have tapped into the breakfast food market with offerings such as grapefruit, mango and tropical fruit. An important focus of our new fruit product development efforts is the production of high quality, convenient and nutritious products, particularly snack-type products. We believe that we have substantial opportunities to leverage the Del Monte brand name to attract new consumers by increasing sales of our new products, such as our single-serve line. We believe that we will be able to leverage our presence in existing categories, to capitalize on our manufacturing capabilities and to expand our presence in the market beyond the canned food aisle. Single-serve fruit has been a substantial growth area for us. The newest product line, our Fruit To-Go plastic cups, achieved 93% distribution in grocery outlets as of December 30, 2000, its year of introduction. We compete in the processed fruit business on the basis of product quality and category support to both the trade and consumers. On the industry's highest volume can size, the "300" size (approximately 15 to 16 ounces), the Del Monte brand commanded an average $.13 (13.9%) per item premium during the 52 weeks ended December 30, 2000. We also face competition from private label and branded products in the processed fruit category from Signature Fruit Company, which recently acquired the fruit assets of Tri-Valley Growers, and from Pacific Coast Producers, a grower cooperative.
MAJOR FRUIT MARKET SHARE 52 WEEKS ENDED DECEMBER 30, 2000 ----------------- Del Monte................................................... 46.7% Libby's..................................................... 7.1 All private label combined.................................. 38.4
We have relationships with approximately 800 fruit growers located in California, Oregon and Washington. We believe the retail pineapple industry in the U.S. generated approximately $256 million in sales in calendar 2000. Individual pineapple items are differentiated by cut style, with varieties including sliced, chunk, tidbits and crushed. Our retail pineapple line consists of sliced, chunk, tidbits, crushed and juice products in a variety of container sizes. We sell a significant amount of our pineapple products through the foodservice and ingredients channels. We are the second leading brand of canned pineapple with a 16.1% market share for the 52-week period ended December 30, 2000. Dole is the industry leader with a market share of 44.3%. Private label and foreign pack brands comprise the low-price category of this category and hold market shares of 29.2% and 9.4%, respectively. We source virtually 100% of our pineapple requirements from our former subsidiary, Del Monte Philippines, under a long-term supply agreement. The agreement provides pricing based on fixed margins. Tomato Products Based on internal estimates using data compiled by ACNielsen from various industry and other sources, we believe that processed tomato products generated calendar 2000 industry-wide sales of more than $5.5 billion, of which $549 million was in the solid tomato category. The processed tomato category can be separated into two distinct product categories, solid tomato and paste-based tomato products, which differ widely in terms of profitability, price sensitivity and growth potential. 43 50 We are the leader in processed solid tomato products, in which products differentiate by cut style, with varieties including stewed, crushed, diced, chunky, wedges and puree. Solid tomato products generally have higher margins than paste-based tomato products and are the fastest growing category of our tomato business. While total sales of canned tomato products have grown steadily in recent years, we believe that the diced category of the retail canned solid tomato category (which also includes chunky tomatoes and tomato wedges) has been growing at a substantially greater rate than the category as a whole, as consumer preferences have trended toward more convenient cut and seasoned tomato products. As a result of the Contadina acquisition, we extended our presence in this category through the addition of Contadina's share of the market for crushed and stewed tomato products. The canned solid tomato category has evolved to include additional value-added items, such as flavored diced tomato products. We believe that there is opportunity to increase sales of solid tomato products through line extensions that capitalize on our manufacturing and marketing expertise.
SOLID TOMATO PRODUCTS MARKET SHARE 52 WEEKS ENDED DECEMBER 30, 2000 ----------------- Del Monte................................................... 22.0% Hunt's...................................................... 10.4 All private labels combined................................. 31.6
Paste-based tomato products include such products as ketchup, tomato sauce, tomato paste and spaghetti and pizza sauces. We market our spaghetti and sloppy joe sauces, as well as our ketchup products, under the Del Monte brand name using a "niche" marketing strategy targeted toward value-conscious consumers seeking a branded, high quality product. Our tomato paste products are marketed under the Contadina brand name, which is an established national brand for Italian-style tomato products. Contadina also targets the branded food service tomato market, including small restaurants that use Contadina brand products such as finished spaghetti and pasta sauces. We face competition in the tomato product market from brand name competitors including ConAgra's Hunt's in the solid tomato, paste and sauce categories; Heinz and Hunt's in the ketchup category; and Hunt's, Campbell Soup's Prego and Unilever's Ragu in the spaghetti sauce category. In addition, we face competition from private label products in all major categories. While we have a small share of the overall tomato product market, we are the largest branded competitor in the solid tomato category. We have relationships with approximately 40 tomato growers located primarily in California, where approximately 95% of domestic tomatoes are produced. FOREIGN SALES AND OPERATIONS Significant opportunities exist in emerging markets such as Latin America and Asia. In Latin America, we re-acquired the rights to the Del Monte name in August 1998 and, as a result, may be able to capitalize on our product innovation and agricultural expertise. In Asia, we have an opportunity to expand through the introduction of the Contadina brand and the expansion of the S&W brand, which is already known in the region. Export Markets Sales to export markets were $50.8 million for the year ended June 30, 2000 and $27.0 million for the six months ended December 31, 2000. For the year ended June 30, 2000, sales of Del Monte and Contadina branded products to licensees in Asia were $14.2 million and to licensees in Mexico, Central America and the Caribbean were $8.9 million. Additionally, sales of Del Monte and Contadina branded 44 51 products to U.S. exporters for distribution in South America totaled $23.0 million for the year ended June 30, 2000. For the six months ended December 31, 2000, sales to licensees in Asia were $7.8 million, to licensees in Central America and the Caribbean were $3.9 million and to exporters for South America were $13.8 million. S&W branded products are sold primarily in Asia and Latin America. Foreign Operations On August 28, 1998, we reacquired rights to the Del Monte brand in South America from Nabisco, Inc. and purchased Nabisco's processed vegetable and tomato business in Venezuela, including a food processing plant in Venezuela. In addition, we established subsidiaries in Colombia and Ecuador during fiscal 2000 and have since added a subsidiary in Peru. Sales for our South American subsidiaries for the year ended June 30, 2000 were $12.9 million. For the six months ended December 31, 2000, sales for our South American subsidiaries were $7.3 million. The plant in Venezuela is located in Turmero, approximately 70 miles from Caracas. All purchases of raw materials, primarily vegetables, are made from approximately 15 growers in Venezuela with whom we have contracts. Any remaining requirements are fulfilled through the open market. Products sourced from our Venezuelan plant represent 75% of our sales in South America, with 9% of these sales sourced from us and 16% sourced from co-packers. Our products in Venezuela are sold through four local distributors. In Colombia, Ecuador, and Peru, our products are sold through one national distributor in each country. RESEARCH AND DEVELOPMENT Our research and development organization provides product, packaging and process development, and analytical and microbiological services, as well as agricultural research and seed production. In fiscal 2000, 1999, 1998 and the six-month period ended December 31, 2000, research and development expenditures (net of revenue for services to third parties) were $6.6 million, $6.2 million, $5.3 million and $3.4 million, respectively. We maintain a research and development facility in Walnut Creek, California, where we develop product line extensions and conduct research in a number of areas related to our business including seed production, packaging, pest management, food science and plant breeding. SUPPLY We own virtually no agricultural land. Each year, we buy over 1 million tons of fresh vegetables, fruit and tomatoes under more than 2,500 contracts with individual growers and cooperatives located primarily in the United States. Many of these are long-term relationships. No supplier accounts for more than 5% of our raw product requirements, and we do not consider our relationship with any particular supplier to be material to our operations. We are exploring ways in which to extend our growing season. For example, we have been planting green bean crops in Texas, which has a longer growing season than our other bean growing locations in the Midwest region. Like other processed vegetable, fruit and tomato product manufacturers, we are subject to market-wide raw product price fluctuations resulting from seasonal or other factors. We have maintained long-term relationships with growers to help ensure a consistent supply of raw products. Our vegetable growers are primarily located in Wisconsin, Illinois, Minnesota, Washington and Texas. We provide the growers with planting schedules, seeds, insecticide management and hauling capabilities and actively participate in agricultural management and quality control with respect to all sources of supply. Our vegetable supply contracts are generally for a one-year term and require delivery of a specified quantity and quality. Prices are renegotiated each year. We believe that one of our competitive advantages in the processed vegetable category derives from our proprietary seed varieties. For example, we believe that our "Del Monte Blue Lake Green Bean" variety delivers higher yields than green bean varieties used by our competitors. In addition, our green bean production is primarily on irrigated fields, which facilitates production of high quality, uniformly-sized beans. Our fruit and tomato growers are located primarily in California. Pear growers are also located in Oregon and Washington. Our fruit supply contracts range from one to ten years. Prices are generally 45 52 negotiated with grower associations and are reset each year. Contracts to purchase yellow cling peaches generally require us to purchase all of the fruit produced by a particular orchard or block of trees. Contracts for other fruits require delivery of specified quantities each year. We actively participate in agricultural management, agricultural practices, quality control and ensure compliance with all pesticide/herbicide regulations. In connection with the sale of DMC's 50.1% interest in Del Monte Philippines, a joint venture operating primarily in the Philippines, on March 29, 1996, we signed an eight-year supply agreement whereby we must source substantially all of our pineapple requirements from Del Monte Philippines. Prior to December 1993, we produced almost all of the cans used to package our products in the United States at our nine can manufacturing facilities located throughout the United States. In December 1993, we sold substantially all the assets (and certain related liabilities) of our can manufacturing business to Silgan Container Corporation. The transaction included the sale or lease of our nine can manufacturing facilities. In connection with this agreement, we entered into a ten-year supply agreement with Silgan, with optional successive five-year extensions by either party. The base term of the supply agreement has since been extended to December 21, 2006. Under the agreement and subject to certain exceptions, we must purchase all of our requirements for metal food and beverage containers in the United States from Silgan. However, we are entitled to consider competitive bids for up to 50% of our requirements. Silgan has the right to match any competitive offer. In addition, if Silgan is unable to supply all of such requirements for any reason, we are entitled to purchase the excess from another supplier. Price levels were originally set based on our costs of self-manufactured containers. Price changes under the contract reflect changes in the manufacturer's costs. The agreement may be terminated by either party, without penalty, on notice given 12 months' prior to the end of the term of the agreement. Our total annual can usage is approximately two billion cans. PRODUCTION AND DISTRIBUTION We have a seasonal production business and produce the majority of our products between June and October. Most of our seasonal plants operate at close to full capacity during the packing season. As of December 31, 2000, we operated 12 production facilities and seven distribution centers in the United States. Our production facilities are owned properties, while our distribution centers are owned or leased. We have approximately 7 million square feet of storage capacity available at our various production and distribution centers. The warehousing and storage facilities are primarily leased facilities, which are generally under long-term leases. Virtually all of our properties, whether owned or leased, are subject to liens or security interests. Three of our production facilities and one distribution facility are located in California. As a result of the recent California energy crisis, we have proactively focused on securing sufficient electric and natural gas supplies for our production needs and have implemented energy reduction projects to reduce our energy usage and costs. Although California's power supplies remain unpredictable, we believe all of our California production facilities will have the necessary energy to operate during the 2001 summer pack season. We have also developed operating procedures to mitigate the risk of unexpected power outages during some of our pack operations. Our Modesto plant is serviced by the Modesto Irrigation District, which generates electricity locally and has long-term supply contracts for its remaining requirements. We have an electric supply contract effective through our 2003 summer pack at Modesto which provides for highly favorable pricing. Our Kingsburg plant is on an essential-services circuit, which reduces risk of service interruption. Our Hanford plant is connected to a high-voltage transmission line that is an integral component of the service grid and has lower rates. We have adopted a plan to voluntarily reduce power usage at Hanford by 5% to 15% to lessen the possibility of a total service interruption during peak operating periods. 46 53 The following table lists our production facilities and distribution centers.
SQUARE FOOTAGE ------------------ LOCATION OWNED LEASED PRIMARY PRODUCT LINE -------- ------- ------- -------------------- PRODUCTION FACILITIES:(1) Hanford, CA.................... 651,000 675,000 Tomato Products Kingsburg, CA.................. 229,000 270,000 Peaches and Zucchini Modesto, CA.................... 440,000 372,000 Apricots, Peaches, Fruit Cocktail, Fruit Cup, Chunky Fruit and Diced Pears Mendota, IL.................... 246,000 240,000 Peas, Corn, Lima Beans, Mixed Vegetables, Carrots and Peas & Carrots Plymouth, IN................... 156,000 133,000 Paste-Based Tomato Products and Pineapple Juice Sleepy Eye, MN................. 230,000 -- Peas and Corn Crystal City, TX............... 362,000 -- Green Beans, Spinach, Carrots, Beets, Potatoes and Tomato Sauce Toppenish, WA.................. 228,000 273,000 Asparagus, Corn, Lima Beans and Peas Yakima, WA..................... 214,000 14,000 Cherries and Pears Cambria, WI.................... 136,000 -- Green Beans, Italian Beans, Corn and Peas Markesan, WI................... 299,000 -- Green Beans, Wax Beans and Italian Beans Plover, WI..................... 298,000 210,000 Beans, Carrots, Beets and Potatoes DISTRIBUTION CENTERS: Birmingham, AL................. -- 293,000 Clearfield, UT................. -- 80,000 Dallas, TX..................... -- 175,000 McAllen, TX.................... 138,000 -- Rochelle, IL................... 425,000 -- Stockton, CA................... -- 512,000 Swedesboro, NJ................. 267,000 --
- ------------------------- (1) Includes owned manufacturing and owned or leased on-site warehouse and storage capacity. We relocated our tomato processing operations from our Modesto facility to our Hanford facility, and our vegetable processing plant located in Arlington, Wisconsin was closed, following the summer 1998 pack. We closed our San Jose plant in December 1999, our Stockton facility in September 2000, and our Woodland facility in November 2000. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." We currently are actively pursuing the sale of our San Jose, Stockton and Woodland facilities. Co-packers are used for pineapple, tropical fruit salad, citrus fruits, pickles and certain other products, including several products sold under the S&W brand. From time to time, we also use co-packers to supplement supplies of certain canned vegetables, fruit and tomato products. Our distribution organization is responsible for the distribution of finished goods to over 2,700 customer destinations. Customers can order products to be delivered via third party trucking, rail or on a customer pickup basis. Our distribution centers provide, among other services, casing, labeling, special packaging and cold storage. Other services we provide to customers include the One Purchase Order/One Shipment system, in which our most popular products are listed on a consolidated invoicing service; the UCS Electronic Data Interchange, a paperless system of purchase orders and invoices; and the Store Order Load Option (SOLO) system, in which products are shipped directly to stores. SALES, MARKETING AND VALUE-ADDED SERVICES Sales and Marketing We sell our retail products through a retail broker network, which consists of 100% independent broker representation at the market level, managed by our sales managers, and through an in-house, or 47 54 direct, sales force with responsibility for club stores, mass merchandisers and supercenters. Retail brokers are independent, commissioned sales organizations which represent multiple manufacturers and, during the six-month period ended December 31, 2000, accounted for 64% of our total net sales. We retain our brokers through a standardized retail grocery brokerage agreement. Brokers are typically paid a percentage of sales, generally 2.5%, which may be increased to 3.0% based on the broker's accomplishment of specified sales objectives. Either party may terminate such agreements on 30 days' prior notice. Our broker network represents us to a broad range of grocery retailers. Our club store, mass merchandiser and supercenter sales force calls on these customers directly (non-brokered) and is responsible for the development and implementation of sales programs for non-grocery channels of distribution that include Wal-Mart, Costco, BJ's and Target. During the six-month period ended December 31, 2000, this channel accounted for 18% of our total net sales. We make foodservice, food ingredients, private label, military and other sales through both our direct sales force and retail brokers. During the six-month period ended December 31, 2000, these sales accounted for 14% of our total net sales. Our marketing function includes product development, pricing strategy, consumer promotion, advertising, publicity and package design. We use consumer advertising and promotion support, together with trade spending, to generate awareness of new items and initial trial by consumers and to strengthen recognition of the Del Monte, Contadina and S&W brand names. Value-Added Services We have enhanced our sales and marketing efforts with proprietary software applications that assist us in managing the timing and scope of our trade and consumer promotions. Our category management software is designed to assist customers in managing an entire product category including other branded and private label products in the same category. Customers using our category management service are able to more rapidly identify sales levels for various product categories so as to achieve an optimal product mix. Utilization of our category management tools has resulted in increased shelf presence for our products, particularly fruit products, relative to those of our competitors. For example, when a major chain centralized their category management efforts, we joined with them to optimize total item assortment. The results were a 12% increase in Del Monte vegetable item count and an 8% decrease in competitive branded item count. During the last three years, we have provided category management services to substantially all of our major customers. We also offer vendor managed inventory services which enable our customers to optimize their inventory requirements while maintaining their ability to service consumers. We manage approximately 35% of our retail volume. The services we provide include proprietary inventory management software that analyzes historical and budgeted data to determine the optimal inventory levels and the human resources necessary to implement the software and maintain the optimal inventory and service levels. These services are provided to our customers at no additional cost to them. We believe providing these value-added services will continue to enhance our relationship with our retail customers and continue to help drive our sales growth and long-term competitiveness. CUSTOMERS We sell our products to virtually every food retailer in the U.S., and we have developed strong, long-term relationships with all major participants in the retail grocery trade. Our 15 largest customers during the six-month period ended December 31, 2000 represented approximately 58% of our sales, with sales to one customer, Wal-Mart, representing approximately 15% of sales. These top 15 customers have all been our customers for at least ten years and, in some cases, for 20 years or more. In recent years, there has been significant consolidation in the grocery industry through acquisitions. We have sought to establish and strengthen our alliances with key customers by offering sophisticated proprietary software applications to assist customers in managing inventories. We plan to continue to expand the use of these applications with our customers, who increasingly rely on sophisticated manufacturers such as us as they become more diverse through consolidations. 48 55 COMPETITION We face substantial competition throughout our product lines from numerous well-established businesses operating nationally or regionally with single or multiple branded product lines, as well as with private label manufacturers. In general, we compete on the basis of quality, breadth of product line and price. See "Business -- The Industry" and "Business -- Our Products." INFORMATION SYSTEMS In November 1992, we entered into an agreement with Electronic Data Systems Corporation to provide services and administration to us in support of our information services functions. Payments under the terms of the agreement are based on scheduled monthly base charges subject to an inflation adjustment. The agreement expires in November 2002 with optional successive one-year extensions. We periodically review our information systems needs. In June 2000, we implemented a capability improvement program to upgrade business processes and information systems. The Enterprise Resource Planning system and Advanced Planning system are components of a seven-phase program which is expected to continue over a three-year period, concluding in June 2003. Total program costs, consisting primarily of capital expenditures, are estimated at $36 million, of which approximately $4 million was spent in the year ended June 30, 2000. Expenditures of $8 million are estimated for fiscal 2001 and a total of $24 million is estimated for fiscal 2002 and 2003 combined. As of December 31, 2000, approximately $4 million had been spent on the project for fiscal 2001. EMPLOYEES As of March 1, 2001, we had approximately 2,600 full-time employees. In addition, approximately 11,400 individuals are hired on a temporary basis during the pack season. We consider our relations with our employees to be good. For more than 20 years, we have not experienced any work stoppages or strikes. We have ten collective bargaining agreements with nine union locals covering approximately 7,100 of our hourly and seasonal employees. One collective bargaining agreement expires in calendar 2001, and three expire in calendar 2002. INTELLECTUAL PROPERTY We own a number of registered and unregistered trademarks for use in connection with various food products, including the marks Del Monte, Contadina, S&W, Fruit Cup, Fruit To-Go, Fruit Naturals, Orchard Select, Sunfresh, FruitRageous, Fruit Pleasures and Del Monte Lite. These trademarks are important to us because brand name recognition is a key factor in the success of our products. The current registrations of these trademarks in the United States and foreign countries are effective for varying periods of time, and may be renewed periodically, provided that we, as the registered owner, or our licensees, where applicable, comply with all applicable renewal requirements including, where necessary, the continued use of the trademarks in connection with similar goods. We are not aware of any material challenge to our ownership of our major trademarks. We own nine issued U.S. patents covering machines used in filling, cleaning and sealing cans, food preservation methods, extracts and colors, and peeling and coring devices. The patents expire between 2002 and 2016 and cannot be renewed. Patents are generally not material to our business. We claim copyright protection in our proprietary category management software and vendor-managed inventory software. Our customers receive reports generated by these software programs and provide data to us for use in connection with the programs. The software itself, however, is not licensed to our customers. In addition, we claim copyright protection in our proprietary trade promotion software. These copyrights are not registered. 49 56 We have developed a number of proprietary vegetable seed varieties, which we protect by restricting access and/or by the use of non-disclosure agreements. There is no guarantee that these means will be sufficient to protect the secrecy of our seed varieties. In addition, other companies may independently develop similar seed varieties. We have obtained U.S. plant variety protection certificates under the Plant Variety Protection Act on some of our proprietary seed varieties. Under a protection certificate, the breeder has the right, among other rights, to exclude others from offering or selling the variety or reproducing it in the United States. The protection afforded by a protection certificate generally runs for 20 years from the date of its issuance. In connection with our purchase of Contadina from Nestle USA, Inc. in 1997, we acquired the rights to Contadina tomato products but Nestle retained the rights to use the Contadina brand name on refrigerated pastas and sauces through December 2002. We granted various perpetual, exclusive, royalty-free licenses for use of the Del Monte name and trademark, along with certain other trademarks, patents, copyrights and trade secrets, generally outside of the United States to the acquiring companies or their affiliates. In particular, in connection with the 1990 RJR Nabisco sale and the divestitures of our non-core and foreign operations subsequent to that sale and with respect to all food and beverage products other than fresh fruits, vegetables and produce, Nabisco Canada holds the rights to use the Del Monte trademark in Canada; Kikkoman Corporation holds the rights to use Del Monte trademarks in the Asia and Pacific Rim (excluding the Philippines); Del Monte Royal Foods and its affiliates hold the rights in Europe, Africa, the Middle East and the Indian Subcontinent. Fresh Del Monte Produce N.V. holds the rights to use the Del Monte name and trademark with respect to fresh fruit, vegetables and produce throughout the world. With respect to dried fruit, nuts and certain snack products, Premier Valley Foods holds the rights to use Del Monte trademarks in the United States, Mexico, Central America and the Caribbean. In connection with 1996 agreements to sell Del Monte Mexico, International Home Foods (now owned by ConAgra) acquired the right to use the Del Monte trademarks with respect to processed food and beverage products in Mexico and Del Monte Pan American of Panama acquired similar rights in Central America and the Caribbean. Dewey Limited (an affiliate of Del Monte Royal Foods) owns the rights in the Philippines to the Del Monte brand name. With our South America acquisition, we reacquired the rights to the Del Monte brand in South America. We retain the right to review the quality of the licensee's products under each of our license agreements. We generally may inspect the licensees' facilities for quality and the licensees must periodically submit samples to us for inspection. Licensees may grant sublicenses but all sublicensees are bound by these quality control standards and other terms of the license. We have also granted various security and tangible interests in our trademarks and related trade names, copyrights, patents, trade secrets and other intellectual property to our creditors, in connection with certain bank financing, and to our licensees, to secure certain of our obligations under the license agreements. GOVERNMENTAL REGULATION As a manufacturer and marketer of food products, our operations are subject to extensive regulation by various federal government agencies, including the Food and Drug Administration, the United States Department of Agriculture and the Federal Trade Commission, as well as state and local agencies, with respect to production processes, product attributes, packaging, labeling, storage and distribution. Under various statutes and regulations, such agencies prescribe requirements and establish standards for safety, purity and labeling. In addition, advertising of our products is subject to regulation by the FTC, and our operations are subject to certain health and safety regulations, including those issued under the Occupational Safety and Health Act. Our manufacturing facilities and products are subject to periodic inspection by federal, state and local authorities. We seek to comply at all times with all such laws and regulations, and we are not aware of any instances of material non-compliance. We maintain all permits and licenses relating to our operations. We believe our facilities and practices are sufficient to maintain compliance with applicable governmental laws and regulations. Nevertheless, there is no guarantee that we 50 57 will be able to comply with any future laws and regulations. Failure by us to comply with applicable laws and regulations could subject us to civil remedies including fines, injunctions, recalls or seizures as well as potential criminal sanctions. ENVIRONMENTAL COMPLIANCE As a result of our agricultural, food processing and canning activities, we are subject to numerous environmental laws and regulations. Many of these laws and regulations are becoming increasingly stringent and compliance with them is becoming increasingly expensive. We seek to comply at all times with all of these laws and regulations and are not aware of any instances of material non-compliance. We cannot predict the extent to which any environmental law or regulation that may be enacted or enforced in the future may affect our operations. We are engaged in a continuing program to maintain our compliance with existing laws and regulations and to establish compliance with anticipated future laws and regulations. In connection with the sale of one of our facilities, we are remediating conditions resulting from the release of petroleum-based elements from underground storage tanks. We are also conducting a groundwater investigation at one of our properties for hydrocarbon contamination that we believe resulted from the operations of an unaffiliated prior owner of the property. At the present time, we are unable to predict the total cost for the remediation. Further, investigation and remediation of environmental conditions may in the future be required at other properties currently or formerly owned or operated by us. Nonetheless, we do not expect that these and other such remediation costs will have a material adverse effect on our financial condition or results of operations. Governmental authorities and private claimants have notified us that we are a potentially responsible party or may otherwise be potentially responsible for environmental investigation and remediation costs at certain contaminated sites under CERCLA or under similar state laws. With the exception of one previously owned site, we have potential liability at each site because we allegedly sent certain wastes from our operations to these sites for disposal or recycling. These wastes consisted primarily of vegetative waste, empty metal drums (which previously held raw materials), used oils and solvents, solder dross and paint waste. With respect to a majority of the sites at which we have been identified as a potentially responsible party, we have settled our liability with the responsible regulatory agency. Based upon the information currently available, we do not expect that our liability for the remaining site will be material. We may be identified as a potentially responsible party at additional sites in the future. We spent approximately $1.8 million on domestic environmental expenditures from fiscal 1998 through fiscal 2000, primarily related to UST remediation activities and upgrades to boilers and wastewater treatment systems. We project that we will spend an aggregate of approximately $3.7 million in fiscal 2001 and 2002 on domestic capital projects and other expenditures in connection with environmental compliance, primarily for boiler upgrades, compliance costs related to the consolidation of our fruit and tomato processing operations and continued UST remediation activities. We believe that our CERCLA and other environmental liabilities will not have a material adverse effect on our financial position or results of operations. LEGAL PROCEEDINGS DMFC is a defendant in an action brought by PPI Enterprises (U.S.), Inc. in the U.S. District Court for the Southern District of New York on May 25, 1999. The plaintiff has alleged that we breached certain purported contractual and fiduciary duties and made misrepresentations and failed to disclose material information to the plaintiff about the value of our business and its prospects for sale. The plaintiff also alleges that it relied on our alleged statements in selling its shares of our preferred and common stock to a third party at a price lower than that which the plaintiff asserts it could have received absent our alleged conduct. The complaint seeks compensatory damages of at least $24 million, plus punitive damages. This case is in the early stages of procedural motions and we cannot at this time reasonably estimate a range of exposure, if any. We believe that this proceeding is without merit and plan to defend it vigorously. 51 58 We are involved from time to time in various legal proceedings incidental to our business, including claims with respect to product liability, worker's compensation and other employee claims, tort and other general liability, for which we carry insurance or are self-insured, as well as trademark, copyright and related litigation. While it is not feasible to predict or determine the ultimate outcome of these matters, we believe that none of these legal proceedings will have a material adverse effect on our financial position. 52 59 MANAGEMENT The following table sets forth the name, age and position of individuals who hold positions as our executive officers. There are no family relationships between any or our directors or executive officers and any of our other directors or executive officers. Executive officers are elected by the board of directors and serve at the discretion of the board.
NAME AGE POSITIONS ---- --- --------- Richard G. Wolford................... 56 Chairman, President and Chief Executive Officer Wesley J. Smith...................... 54 Chief Operating Officer David L. Meyers...................... 55 Executive Vice President, Administration and Chief Financial Officer Marvin A. Berg....................... 55 Senior Vice President, Eastern Operations Richard L. French.................... 44 Senior Vice President and Chief Accounting Officer Thomas E. Gibbons.................... 53 Senior Vice President and Treasurer Marc D. Haberman..................... 38 Senior Vice President, Strategic Planning and Business Development Irvin R. Holmes...................... 48 Senior Vice President, Marketing William J. Spain..................... 59 Senior Vice President and Chief Corporate Affairs Officer Robert P. Magrann.................... 57 Senior Vice President, Sales David L. Withycombe.................. 49 Senior Vice President, Western Operations
Richard G. Wolford, Chairman, President and Chief Executive Officer. Mr. Wolford joined us as Chief Executive Officer and a director in April 1997 and was elected Chairman of the Board in May 2000. From 1967 to 1987, he held a variety of positions at Dole Foods, including President of Dole Packaged Foods from 1982 to 1987. From 1988 to 1996, he was Chief Executive Officer of HK Acquisition Corp. where he developed food industry investments with venture capital investors. Wesley J. Smith, Chief Operating Officer. Mr. Smith joined us as Chief Operating Officer and a director in April 1997. From 1972 to 1995, he was employed by Dole Foods in a variety of positions, including senior positions in finance, marketing, operations and general management in California, Hawaii and Honduras. David L. Meyers, Executive Vice President, Administration and Chief Financial Officer. Mr. Meyers joined us in 1989. He was elected as our Chief Financial Officer in December 1992 and served as a member of our Board of Directors from January 1994 until consummation of our recapitalization. Prior to joining us, Mr. Meyers held a variety of financial and accounting positions with RJR Nabisco (1987 to 1989), Nabisco Brands USA (1983 to 1987) and Standard Brands, Inc. (1973 to 1983). Marvin A. Berg, Senior Vice President, Eastern Operations. Mr. Berg joined us in 1976. His experience with us includes a variety of positions in manufacturing. He served as Vice President, Eastern Region Manufacturing from 1995 to 2000. Mr. Berg was elected to his present position in October, 2000. Richard L. French, Senior Vice President and Chief Accounting Officer. Mr. French joined us in 1980 and was elected to his current position in May 1998. Mr. French was our Vice President and Chief Accounting Officer from August 1993 through May 1998 and has held a variety of positions within our financial organization. Thomas E. Gibbons, Senior Vice President and Treasurer. Mr. Gibbons joined us in 1969 and was elected to his current position in February 1995. He was elected as our Vice President and Treasurer in January 1990. Mr. Gibbons' prior experience also includes a variety of positions within our and RJR Nabisco's tax and financial organizations. Marc D. Haberman, Senior Vice President, Strategic Planning and Business Development. Mr. Haberman joined us in January 1999 and was elected to his current position in February 2000. Prior to that he was with Sunbeam Corporation from 1996 until 1998 where he was Category Leader for 53 60 Sunbeam's appliance business. From 1992 to 1996, Mr. Haberman was a consultant with McKinsey & Co., and from 1987 to 1992, he was in brand management at Procter & Gamble. Irvin R. Holmes, Senior Vice President, Marketing. Mr. Holmes joined us in November 1990 and was elected to his current position in December 1999. Prior to that he was with Dole Foods from 1987 until 1990 where he held a variety of sales and marketing positions. From 1977 to 1987, Mr. Holmes held marketing positions with James River/Crown Zellerbach, AMF Ben Hogan Company and Brown & Williamson Tobacco. Robert P. Magrann, Senior Vice President, Sales. Mr. Magrann joined us in May 2001. Prior to that he was with The Couponbasket, Inc. where he was President and Chief Executive officer. Before Couponbasket, Mr. Magrann held executive positions with Kenosia Marketing Corporation, Tetley USA and Borden, Inc. From 1991 to 1994, he was Executive Vice President of E.J. Brach Corporation, where he had overall responsibility for sales, marketing, customer service and public/industry relations and from 1982 to 1991, Mr. Magrann held various senior level positions with Nabisco Brands, Inc. William J. Spain, Senior Vice President and Chief Corporate Affairs Officer. Mr. Spain joined us in 1966 and was elected to his current position in January 1999. Previously, he was our Senior Vice President, Technology. Mr. Spain has also held various positions within our company in corporate affairs, production management, quality assurance, environmental and energy management, and consumer services. David L. Withycombe, Senior Vice President, Western Operations. Mr. Withycombe joined us in 1974. His experience with us includes a variety of positions in manufacturing. He served as Vice President, Western Region Manufacturing from 1992 to 2000. Mr. Withycombe was elected to his present position in October, 2000. DESCRIPTION OF THE EXCHANGE NOTES Except as otherwise indicated below, the following summary applies to both the outstanding notes issued May 15, 2001 pursuant to the indenture (the "Outstanding Notes") and the exchange notes to be issued pursuant to this prospectus (the "Exchange Notes"). The Outstanding Notes were, and the Exchange Notes will be, issued under the indenture (the "Indenture") dated as of May 15, 2001 among Del Monte Corporation, Del Monte Foods Company and Bankers Trust Company, a New York banking corporation, as Trustee (the "Trustee"). The following summary of selected provisions of the Indenture is not complete and is subject to, and is qualified in its entirety by reference to, the Trust Indenture Act of 1939, as amended, and to all of the provisions of the Indenture, including the definitions of terms in the Indenture and those terms made a part of the Indenture by reference to the Trust Indenture Act as in effect on the date of the Indenture. The terms of the Exchange Notes are nearly identical to those of the Outstanding Notes in all material respects, including interest rate and maturity, except that the Exchange Notes will not be subject to: - the restrictions on transfer; - the registration agreement covenants regarding registration; and - the liquidated damages provisions. The Outstanding Notes remain subject to all of these terms. The following description is a summary of the material provisions of the Indenture. It does not restate the Indenture in its entirety. A copy of the Indenture is attached hereto as Exhibit 4.1. You should read the Indenture in its entirety. The definitions of some of the capitalized terms used in the following summary are set forth below under "-- Certain Definitions." For purposes of this "Description of The Exchange Notes" section, references to, Del Monte Corporation include only Del Monte Corporation and not its subsidiaries. We urge you to read the Indenture because it, and not this description, defines your rights as holders of the Exchange Notes. 54 61 The Exchange Notes will: - be unsecured obligations of Del Monte Corporation; - rank subordinate in right of payment to all Senior Debt of Del Monte Corporation; - rank equally with any of Del Monte Corporation's present and future senior subordinated indebtedness; and - be guaranteed by a subordinated guarantee of Del Monte Foods Company. The Exchange Notes will be initially limited to $300,000,000 aggregate principal amount. Subject to compliance with the covenants described below under "-- Covenants" and to applicable law, Del Monte Corporation may issue additional notes (the "Additional Notes") under the Indenture. The Outstanding Notes, the Exchange Notes and any Additional Notes will be treated as a single class for all purposes under the Indenture, including with respect to consents, approvals or other actions taken by Holders under the Indenture, and are collectively referred to as the "Notes." The Exchange Notes will be issued in fully registered form only, without coupons, in denominations of $1,000 and integral multiples of $1,000. The Exchange Notes initially will be issued in book-entry form and represented by one or more global Notes. See "-- Book-Entry; Delivery and Form." Initially, the Trustee will act as the exchange agent, the paying agent and registrar for the Exchange Notes. Notes may be presented for registration or transfer and exchange at the offices of the registrar, which initially will be at the exchange agent's office at Four Albany Street, 4th Floor, New York, New York 10006. Del Monte Corporation may change any exchange agent, paying agent and registrar without notice to Holders of the Notes. Del Monte Corporation will pay principal and premium, if any on the Exchange Notes at the Trustee's office at the above address or, at Del Monte Corporation's option, by wire transfer to an account maintained by the payee with a bank located in the United States. At Del Monte Corporation's option, interest may be paid at the Trustee's office at the above address, by check mailed to the registered address of Holders or, at Del Monte Corporation's option, by wire transfer to an account maintained by the payee with a bank located in the United States. PRINCIPAL, MATURITY AND INTEREST The Exchange Notes are initially limited in aggregate principal amount to $300,000,000 and will mature on May 15, 2011. Interest on the Exchange Notes will accrue at the rate of 9.25% per annum and will be payable semiannually in arrears in cash on each May 15 and November 15, commencing on November 15, 2001, to the persons who are registered Holders at the close of business on the April 30 and October 31 immediately preceding the applicable interest payment date. Interest on the Exchange Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the Issue Date. If, by December 31, 2001, Del Monte Corporation has not consummated a registered exchange offer for the Outstanding Notes or caused a shelf registration statement with respect to resales of the Notes to be declared effective, the annual interest rate borne by the Outstanding Notes will increase by .5% per annum until the consummation of such registered exchange offer or the effectiveness of such registration statement. See "-- Exchange Offer; Registration Rights." The Exchange Notes will not be entitled to the benefit of any mandatory sinking fund. REDEMPTION Optional Redemption. The Exchange Notes will be redeemable, at Del Monte Corporation's option, in whole at any time or in part from time to time, on and after May 15, 2006, upon not less than 30 nor more than 60 days' notice, at the following redemption prices, expressed as percentages of the principal amount of the Exchange Notes to be redeemed, if redeemed during the twelve-month period commencing on May 15 of 55 62 the years set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption, except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates.
YEAR PERCENTAGE ---- ---------- 2006...................................................... 104.625% 2007...................................................... 103.083% 2008...................................................... 101.542% 2009 and thereafter....................................... 100.000%
Optional Redemption upon Equity Offerings. At any time, or from time to time, on or prior to May 15, 2004, Del Monte Corporation may, at its option, use the net cash proceeds (but only to the extent such proceeds consist of cash or Cash Equivalents) of one or more Equity Offerings to redeem Notes in an aggregate principal amount equal to up to 35% of the aggregate principal amount of Notes (including any Additional Notes) originally issued at a redemption price equal to 109.250% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon, if any, to the date of redemption, except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates; provided that Notes in aggregate principal amount equal to at least 65% of the principal amount of Notes (excluding any Additional Notes) originally issued remains outstanding immediately after any such redemption. In order to effect a redemption of Notes as described in this paragraph with the proceeds of any Equity Offering, Del Monte Corporation will make such redemption not more than 120 days after the consummation of any such Equity Offering. Optional Redemption upon a Change of Control on or prior to May 15, 2006. At any time on or prior to May 15, 2006, the Exchange Notes may also be redeemed as a whole at the option of Del Monte Corporation upon the occurrence of a Change of Control, upon not less than 30 nor more than 60 days' prior notice but in no event more than 90 days after the occurrence of such Change of Control, mailed by first-class mail to each Holder's registered address, at a redemption price equal to 100% of the principal amount of the Exchange Notes to be redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to the date of redemption (the "Change of Control Redemption Date"), except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates. "Applicable Premium" means, with respect to an Exchange Note at any Change of Control Redemption Date, the greater of: (i) 1.0% of the principal amount of such Exchange Note; and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Exchange Note at May 15, 2006 (such redemption price being described under "-- Optional Redemption") plus (2) all required interest payments due on such Exchange Note through May 15, 2006 computed using a discount rate equal to the Treasury Rate plus .5% per annum, over (B) the principal amount of such Exchange Note. "Treasury Rate" means the yield to maturity at the time of computation of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Release H.15 (519) which has become publicly available at least two Business Days prior to the Change of Control Redemption Date (or, if such Statistical Release is no longer published, any publicly available source or 56 63 similar market data)) closest to the period from the Change of Control Redemption Date to May 15, 2006, provided, however, that if the period from the Change of Control Redemption Date to May 15, 2006, is not equal to the constant maturity of a U.S. Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of one year) from the weekly average yields of U.S. Treasury securities for which such yields are given, except that if the period from the Change of Control Redemption Date to May 15, 2006, is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year shall be used. SELECTION AND NOTICE OF REDEMPTION In the event that less than all of the Notes are to be redeemed at any time, selection of Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part; provided, further, that if a partial redemption is made with the proceeds of an Equity Offering, selection of the Notes or portions of Notes for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to applicable DTC procedures), unless such method is otherwise prohibited. Notice of redemption shall be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. If any Note is to be redeemed in part only, the notice of redemption that relates to that Note shall state the portion of the principal amount thereof to be redeemed. A new Note in a principal amount equal to the unredeemed portion will be issued in the name of the Holder upon cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions of Notes called for redemption as long as Del Monte Corporation has deposited with the Paying Agent funds in satisfaction of the applicable redemption price pursuant to the Indenture. GUARANTEE The obligations of Del Monte Corporation pursuant to the Exchange Notes, including the repurchase obligation resulting from a Change of Control, are unconditionally guaranteed on a subordinated basis (a "Guarantee") by Holdings. The subordination provisions which are applicable to Holdings' Guarantee will be substantially similar to the subordination provisions which are applicable with respect to the Notes as described below under "-- Subordination," except that Holdings' Guarantee is subordinated in right of payment to all Guarantor Senior Debt of Holdings and is a subordinated obligation of Holdings, while the Notes are senior subordinated obligations of Del Monte Corporation. The Indenture provides that, upon the release by the lenders under the Credit Agreement (including any future refinancings thereof) of all guarantees of Holdings of or relating to the Credit Agreement and all Indebtedness thereunder, Holdings shall be released from its obligations under its Guarantee; provided, however, that (a) any such release shall occur only to the extent that all obligations of Holdings under all of its guarantees of or relating to the Credit Agreement (including any future refinancings thereof) and all Indebtedness thereunder shall also be released and (b) if any payment is made by Del Monte Corporation or Holdings to the lenders under the Credit Agreement in connection with any such release, a pro rata payment shall be made to the Holders based on the ratio of the outstanding principal amount of the Notes to the maximum amount which could be borrowed under the Credit Agreement. Pursuant to the Indenture, Holdings may consolidate with, merge with or into, or transfer all or substantially all its assets to any other Person to the extent described below under "-- Certain Covenants -- Merger, Consolidation and Sale of Assets of Holdings;" provided, however, that if such other Person is not Del Monte Corporation, Holdings' obligations under its Guarantee must be expressly assumed by such other Person. 57 64 The financial covenants in the Indenture generally apply to Del Monte Corporation and its Restricted Subsidiaries. The Indenture does not contain any financial covenants or similar provisions which would limit Holdings' ability to incur Indebtedness or other obligations, to pay dividends or, except to the limited extent described below under "-- Certain Covenants -- Merger, Consolidation and Sale of Assets of Holdings," to engage in other transactions. In addition, the Events of Default in the Indenture do not include any events of bankruptcy or insolvency relating to Holdings, any failure by Holdings to pay Indebtedness or judgments when due, or the acceleration of Indebtedness of Holdings. The only material asset of Holdings is the stock of Del Monte Corporation. However, the Indenture does not contain any covenants which limit Holdings' ability to acquire other assets. In addition, Restricted Subsidiaries may be required to issue Guarantees to the extent described below under "-- Certain Covenants -- Limitation on Guarantees by Domestic Restricted Subsidiaries." See "Risk Factors." SUBORDINATION The payment of all Obligations on the Exchange Notes is subordinated in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations on or in respect of Senior Debt. Upon any payment or distribution of assets of Del Monte Corporation of any kind or character to creditors, whether in cash, property or securities, upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors or marshaling of assets of Del Monte Corporation or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to Del Monte Corporation or its property, whether voluntary or involuntary, all Obligations due or to become due upon all Senior Debt shall first be paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, before any payment or distribution of any kind or character is made on account of any Obligations on the Notes or for the acquisition of any of the Notes for cash or property or otherwise. If any default occurs and is continuing in the payment when due, whether at maturity, upon any redemption, by declaration or otherwise, of any principal of, interest on, unpaid drawings for letters of credit issued in respect of, or regularly accruing fees with respect to, any Designated Senior Debt, no payment of any kind or character shall be made by or on behalf of Del Monte Corporation or any other Person on its or their behalf with respect to any Obligations on the Notes or to acquire any of the Notes for cash or property or otherwise. In addition, if any other event of default occurs and is continuing with respect to any Designated Senior Debt, as such event of default is defined in the instrument creating or evidencing such Designated Senior Debt, permitting the holders of such Designated Senior Debt then outstanding to accelerate the maturity thereof and if the Representative for the respective issue of Designated Senior Debt gives written notice of such event of default to the Trustee (a "Default Notice"), then, unless and until all such events of default have been cured or waived or have ceased to exist or the Trustee receives notice from the Representative for the respective issue of Designated Senior Debt terminating the Blockage Period (as defined below), during the 179 days after the delivery of such Default Notice (the "Blockage Period"), neither Del Monte Corporation nor any other Person on its behalf shall: (x) make any payment of any kind or character with respect to any Obligations on the Notes, or (y) acquire any of the Notes for cash or property or otherwise. Notwithstanding anything in the Indenture to the contrary, in no event will a Blockage Period extend beyond 180 days from the date the payment on the Notes was due and only one such Blockage Period may be commenced within any 360 consecutive days. No event of default which existed or was continuing on the date of the commencement of any Blockage Period with respect to the Designated Senior Debt shall be, or be made, the basis for commencement of a second Blockage Period by the Representative of such Designated Senior Debt whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being 58 65 acknowledged that any subsequent action or any breach of any financial covenants for a period commencing after the date of commencement of such Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose). The subordination provisions of the Indenture expressly provide that they do not limit the right of the Trustee or the Holders of Notes to accelerate the maturity of the Notes upon the occurrence of an Event of Default, provided that all Senior Debt thereafter due or declared to be due shall be first paid in full in cash or Cash Equivalents before the Holders are entitled to receive any payment of any kind or character with respect to the Notes. By reason of such subordination, in the event of the insolvency of Del Monte Corporation, creditors of Del Monte Corporation who are not holders of Senior Debt, including the Holders of the Exchange Notes, may recover less, ratably, than holders of Senior Debt. The obligations of Holdings under its Guarantee are subordinated in right of payment to the obligations of Holdings under its Guarantor Senior Debt (including any guarantees constituting Guarantor Senior Debt of Holdings and any Guarantor Designated Senior Debt of Holdings) on terms substantially similar to those described above. Likewise, the obligations of any Restricted Subsidiary pursuant to any Guarantee that it may issue under the covenant described below under "-- Certain Covenants -- Limitation on Guarantees by Domestic Restricted Subsidiaries" will be subordinated in right of payment to the obligations of such Restricted Subsidiary under its Guarantor Senior Debt (including any guarantees constituting Guarantor Senior Debt and any Guarantor Designated Senior Debt of such Restricted Subsidiary) on terms substantially similar to those described above. By reason of such subordination, in the event of the insolvency of a Guarantor, creditors of such Guarantor who are not holders of its Guarantor Senior Debt, including Holders of the Exchange Notes, may recover less, ratably, than holders of its Guarantor Senior Debt. As of May 15, 2001, Del Monte Corporation had approximately $429.9 million of Senior Debt outstanding and Holdings would have had no Guarantor Senior Debt outstanding other than guarantees of indebtedness under the Credit Agreement. CHANGE OF CONTROL The Indenture provides that upon the occurrence of a Change of Control, if Del Monte Corporation does not redeem the Notes as provided under the heading "Optional Redemption upon Change of Control on or prior to May 15, 2006" above, Del Monte Corporation or Holdings shall make a "Change of Control Offer" and each Holder will have the right to require that Del Monte Corporation or Holdings, as applicable, purchase all or a portion of such Holder's Notes pursuant to such Change of Control Offer, at a purchase price equal to 101% of the principal amount thereof plus accrued interest to the date of purchase. Any Change of Control under the Notes will also constitute an event of default under the Credit Agreement. Accordingly, upon a Change of Control, no payment will be made to holders of Notes unless the lenders under the Credit Agreement waive such event of default or all outstanding indebtedness under the Credit Agreement is paid. See "-- Subordination." In addition, certain other changes of control that do not constitute a Change of Control under the Notes also constitute defaults under the Credit Agreement. Future Senior Debt of Del Monte Corporation and future Guarantor Senior Debt of Holdings may also contain prohibitions against taking certain actions that would constitute a Change of Control or require that such Senior Debt be repaid or repurchased upon a Change of Control. The exercise by the Holders of their right to require Del Monte Corporation to repurchase the Notes could cause a default under Senior Debt of Del Monte Corporation or Guarantor Senior Debt of Holdings, even if the Change of Control itself does not cause a default, due to the financial effect of the repurchase on Del Monte Corporation or Holdings. 59 66 In the Indenture, Del Monte Corporation and Holdings covenant that, prior to the mailing of the notice referred to below, but in any event within 60 days following any Change of Control, they will: (i) repay in full and terminate all commitments under all Indebtedness under the Credit Agreement, all other Senior Debt and all Guarantor Senior Debt of any Guarantor the terms of which require repayment upon a Change of Control or offer to repay in full and terminate all commitments under all Indebtedness under the Credit Agreement and all other such Senior Debt and Guarantor Senior Debt and to repay the Indebtedness owed to each lender which has accepted such offer in full, or (ii) obtain the requisite consents under the Credit Agreement, all other Senior Debt and all Guarantor Senior Debt of any Guarantor to permit the repurchase of the Notes as provided below. Del Monte Corporation and Holdings shall first comply with the covenant in the immediately preceding sentence before Del Monte Corporation shall be required to repurchase Notes pursuant to the provisions described below. The failure by Del Monte Corporation or Holdings to comply with the second preceding sentence shall constitute an Event of Default described in clause (iii) and not in clause (ii) under "Events of Default" below. Within 60 days following the date upon which the Change of Control occurred, unless Del Monte Corporation has mailed a notice with respect to a redemption described under the heading "Optional Redemption upon Change of Control on or prior to May 15, 2006" above with respect to all the Notes in connection with a Change of Control occurring on or prior to May 15, 2006, Del Monte Corporation must send, by first class mail, a notice to each Holder, with a copy to the Trustee and each paying agent, which notice shall govern the terms of the Change of Control Offer. Such notice shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 45 days from the date such notice is mailed, other than as may be required by law (the "Change of Control Payment Date"). Holders electing to have an Exchange Note purchased pursuant to a Change of Control Offer will be required to surrender the Exchange Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Exchange Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Change of Control Payment Date. Neither Del Monte Corporation nor Holdings will be required to make a Change of Control Offer upon a Change of Control if a third party makes a Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by Del Monte Corporation or Holdings, and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer at the price, including accrued and unpaid interest, if any, at the times and in the manner specified in the Indenture. If a Change of Control Offer is made, there can be no assurance that Del Monte Corporation will have available funds sufficient to pay the Change of Control purchase price for all the Notes that might be delivered by Holders seeking to accept the Change of Control Offer. In the event Del Monte Corporation is required to purchase the then outstanding Notes pursuant to a Change of Control Offer, Del Monte Corporation expects that it would seek third party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that Del Monte Corporation would be able to obtain that financing. Restrictions in the Indenture on the ability of Del Monte Corporation and its Restricted Subsidiaries to incur additional Indebtedness, to grant Liens on their property, to make Restricted Payments and to make Asset Sales may also make more difficult or discourage a takeover of Del Monte Corporation or Holdings, whether favored or opposed by the management of Del Monte Corporation or Holdings. Consummation of any of these transactions may require redemption or repurchase of the Notes, and there can be no assurance that Del Monte Corporation or Holdings or the acquiring party will have sufficient financial resources to effect that redemption or repurchase. The restrictions in the Indenture referred to above, as well as the restriction in the Indenture on transactions with Affiliates described below, may make more difficult or discourage any leveraged buyout of Del Monte Corporation or Holdings or any of its 60 67 Subsidiaries by the management of Del Monte Corporation. While those restrictions cover a wide variety of arrangements which have traditionally been used to effect highly leveraged transactions, the Indenture may not afford the Holders of Exchange Notes protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction. Del Monte Corporation or Holdings, as the case may be, will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Change of Control" provisions of the Indenture, Del Monte Corporation shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Change of Control" provisions of the Indenture by virtue thereof. The Change of Control purchase feature is a result of negotiations between Del Monte Corporation and the placement agents. Management has no present intention to engage in a transaction involving a Change of Control, although it is possible that Del Monte Corporation could decide to do so in the future. Subject to the limitations discussed below, Del Monte Corporation could, in the future, enter into transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of its indebtedness and the indebtedness of its subsidiaries outstanding at that time or otherwise affect Del Monte Corporation's capital structure or credit ratings. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that Del Monte Corporation repurchase the Notes in the event of a takeover, recapitalization or similar transaction. CERTAIN COVENANTS The Indenture contains, among others, the following covenants: Limitation on Incurrence of Additional Indebtedness. Del Monte Corporation will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur") any Indebtedness (other than Permitted Indebtedness); provided, however, that if no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of any such Indebtedness, Del Monte Corporation or its Restricted Subsidiaries may incur Indebtedness (including, without limitation, Acquired Indebtedness) if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of Del Monte Corporation is greater than 2.0 to 1.0. Limitation on Restricted Payments. Del Monte Corporation will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of Del Monte Corporation or in options, warrants or other rights to purchase such Qualified Capital Stock) on or in respect of shares of Del Monte Corporation's Capital Stock to holders of such Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any Capital Stock of Del Monte Corporation or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock (in each case other than in exchange for Qualified Capital Stock of Del Monte Corporation or options, warrants or other rights to purchase such Qualified Capital Stock), 61 68 (c) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of Del Monte Corporation that is subordinate or junior in right of payment to the Notes, or (d) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted Payment"), if at the time of such Restricted Payment or immediately after giving effect thereto, (i) a Default or an Event of Default shall have occurred and be continuing, or (ii) Del Monte Corporation is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the covenant described under "Limitation on Incurrence of Additional Indebtedness," or (iii) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the fair market value of such property as determined reasonably and in good faith by the Board of Directors of Del Monte Corporation) shall exceed the sum of: (v) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of Del Monte Corporation earned subsequent to March 31, 2001 and on or prior to the date on which the Restricted Payment occurs or is to occur (the "Reference Date") (treating such period as a single accounting period); plus (w) 100% of the aggregate net cash proceeds received by Del Monte Corporation from any Person (other than a Subsidiary of Del Monte Corporation) from the issuance and sale subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of Del Monte Corporation (including by conversion of Indebtedness into Qualified Capital Stock) and 100% of the fair market value of non-cash consideration received in any such issuance and sale (provided that, as further provided in clause (7) of the immediately succeeding paragraph, to the extent that Del Monte Corporation does not realize cash from the proceeds of the payment, sale or disposition of any such non-cash consideration, the only Restricted Payments which shall be permitted by reason of such non-cash consideration shall be Restricted Payments which are made in kind of the non-cash consideration so received); plus (x) without duplication of any amounts included in this clause (iii), 100% of the aggregate net cash proceeds of any equity contribution received by Del Monte Corporation subsequent to the Issue Date and on or prior to such Reference Date from a holder of Del Monte Corporation's Capital Stock and 100% of the fair market value of non-cash consideration of any such equity contribution received by Del Monte Corporation from a holder of Del Monte Corporation's Capital Stock (provided that, as further provided in clause (7) of the immediately succeeding paragraph, to the extent that Del Monte Corporation does not realize cash from the proceeds of the payment, sale or disposition of any such non-cash consideration, the only Restricted Payments which shall be permitted by reason of such non-cash consideration shall be Restricted Payments which are made in kind of the non-cash consideration so received); plus (y) without duplication, the sum of: (1) the aggregate amount returned in cash subsequent to the Issue Date on or with respect to Investments (other than Permitted Investments), whether through interest payments, principal payments, dividends or other distributions or payments, (2) the net cash proceeds received by Del Monte Corporation or any Restricted Subsidiary subsequent to the Issue Date from the disposition of all or any portion of 62 69 Investments (other than Permitted Investments) (other than any disposition to a Subsidiary of Del Monte Corporation) and 100% of the fair market value of non-cash consideration received in any such disposition (provided that, as further provided in clause (7) of the immediately succeeding paragraph, to the extent that Del Monte Corporation does not realize cash from the proceeds of the payment, sale or disposition of any such non-cash consideration, the only Restricted Payments which shall be permitted by reason of such non-cash consideration shall be Restricted Payments which are made in kind of the non-cash consideration so received), and (3) upon redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of such Subsidiary; plus (z) $50 million; provided, however, that with respect to all Investments made in any Unrestricted Subsidiary or joint venture, the sum of clauses (1), (2) and (3) above with respect to such Investment shall not exceed the aggregate amount of all such Investments made subsequent to the Issue Date in such Unrestricted Subsidiary or joint venture. Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph do not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of such dividend if the dividend would have been permitted on the date of declaration; (2) The acquisition of any shares of Capital Stock of Del Monte Corporation either: (i) solely in exchange for shares of Qualified Capital Stock of Del Monte Corporation or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of Del Monte Corporation) of shares of Qualified Capital Stock of Del Monte Corporation; (3) if no Default or Event of Default shall have occurred and be continuing, the acquisition of any Indebtedness of Del Monte Corporation that is subordinate or junior in right of payment to the Notes either: (i) solely in exchange for shares of Qualified Capital Stock of Del Monte Corporation or Refinancing Indebtedness of Del Monte Corporation, or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of Del Monte Corporation) of: (A) shares of Qualified Capital Stock of Del Monte Corporation or Holdings, provided that, in the case of Qualified Capital Stock of Holdings, Holdings contributes to the capital of Del Monte Corporation all or a portion of the net cash proceeds from the sale of such Qualified Capital Stock in at least the amount necessary to pay the aggregate acquisition cost of such Indebtedness, or (B) Refinancing Indebtedness; (4) so long as no Default or Event of Default shall have occurred and be continuing, payments for the purpose of and in an amount equal to the amount required to permit Holdings to redeem or repurchase Common Stock of Holdings or options in respect thereof from employees or officers of Holdings or any of its Subsidiaries or their estates or authorized representatives upon the death, disability or termination of employment of such employees or officers in an aggregate amount not to exceed $10 million; 63 70 (5) the making of distributions, loans or advances in an amount not to exceed $1 million per annum sufficient to permit Holdings to pay the ordinary operating expenses of Holdings related to Holdings' ownership of Capital Stock of Del Monte Corporation; (6) the payment of any amounts pursuant to the Tax Sharing Agreement; and (7) in the event that Del Monte Corporation has not realized cash from the proceeds of the payment, sale or disposition of any non-cash consideration referred to in clause (iii)(w), (iii)(x) and (iii)(y)(2) of the immediately preceding paragraph, Restricted Payments permitted by reason of such non-cash consideration; provided, that such Restricted Payments may be made only in kind of the non-cash consideration so received. In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the immediately preceding paragraph, amounts expended pursuant to clauses (1), (4) and (7) shall be included in such calculation and amounts expended pursuant to clauses (2), (3), (5) and (6) shall be excluded from such calculation. Not later than the date of making any Restricted Payment, Del Monte Corporation shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment complies with the Indenture and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon Del Monte Corporation's or Holdings' latest available internal quarterly financial statements. The Trustee shall have no duty or obligation to recalculate or otherwise verify the accuracy of the calculations set forth in any such Officers' Certificate. Limitation on Asset Sales. Del Monte Corporation will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) Del Monte Corporation or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (in each case as determined in good faith by Del Monte Corporation's Board of Directors), (ii) at least 75% of the consideration received by Del Monte Corporation or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents and shall be received at the time of such disposition; provided that: (A) the amount of any liabilities (as shown on Del Monte Corporation's or such Restricted Subsidiary's most recent balance sheet) of Del Monte Corporation or any such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets, (B) the fair market value of any marketable securities received by Del Monte Corporation or a Restricted Subsidiary in exchange for any such assets that are converted into cash within 90 days after such Asset Sale, and (C) any Designated Noncash Consideration received by Del Monte Corporation or any of its Restricted Subsidiaries in such Asset Sale having an aggregate fair market value, when taken together with all other Designated Noncash Consideration received pursuant to this clause (C) since the Issue Date that is at that time outstanding, not to exceed 10% of the Consolidated Net Tangible Assets of Del Monte Corporation based on its most recent consolidated balance sheet at the time of the receipt of such Designated Noncash Consideration from such Asset Sale (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value), 64 71 shall be deemed to be cash for purposes of this provision; and provided, further, that Del Monte Corporation and its Restricted Subsidiaries may make Asset Sales not exceeding $5 million in the aggregate in each year for non-cash consideration; and (iii) in the event and to the extent that the Net Cash Proceeds received by Del Monte Corporation or any of its Restricted Subsidiaries from one or more Asset Sales occurring on or after the Issue Date in any period of 12 consecutive months exceed 10% of Consolidated Net Tangible Assets (determined as of the date closest to the commencement of such 12-month period for which a consolidated balance sheet of Del Monte Corporation and its Subsidiaries has been prepared), then Del Monte Corporation shall or shall cause the relevant Restricted Subsidiary, within 360 days after the date Net Cash Proceeds so received exceed 10% of Consolidated Net Tangible Assets, to apply such excess Net Cash Proceeds: (A) to prepay any Senior Debt and, in the case of any prepaid Senior Debt under any revolving credit facility, effect a permanent reduction in the availability under such revolving credit facility, or to so prepay any Indebtedness of a Wholly Owned Restricted Subsidiary, (B) to make an Investment (or enter into a definitive agreement committing to so invest within 360 days after the date of such agreement and to make such Investment as provided in such agreement) in properties and assets that replace the properties and assets that were the subject of such Asset Sale or in properties and assets that will be used in the business of Del Monte Corporation and its Restricted Subsidiaries as it exists on the date of such Asset Sale or in businesses that are the same as such business of Del Monte Corporation and its Restricted Subsidiaries on the date of such Asset Sale or similar or reasonably related thereto ("Replacement Assets"), or (C) a combination of prepayment and investment permitted by the foregoing clauses (iii)(A) and (iii)(B). Pending the final application of such Net Cash Proceeds, Del Monte Corporation may temporarily reduce borrowings under the Credit Agreement or any other revolving credit facility, if any, or otherwise invest such Net Cash Proceeds in Cash Equivalents, in each case in a manner not prohibited by the Indenture. Subject to the last sentence of this paragraph, on the 361st day after an Asset Sale or such earlier date, if any, as the Board of Directors of Del Monte Corporation or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clause (iii)(A), (iii)(B) or (iii)(C) of the second preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied (or committed to be applied pursuant to a definitive agreement as described above) on or before such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the second preceding sentence (each a "Net Proceeds Offer Amount") shall be applied by Del Monte Corporation or such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 60 days following the applicable Net Proceeds Offer Trigger Date, from all Holders (and, if required by the terms of any other Indebtedness of Del Monte Corporation ranking pari passu with the Notes in right of payment and which has similar provisions requiring Del Monte Corporation either to make an offer to repurchase or to otherwise repurchase, redeem or repay such Indebtedness with the proceeds from Asset Sales (the "Pari Passu Indebtedness"), from the holders of such Pari Passu Indebtedness) on a pro rata basis (in proportion to the respective principal amounts or accreted value, as the case may be, of the Notes and any such Pari Passu Indebtedness) an aggregate principal amount of Notes (plus, if applicable, an aggregate principal amount or accreted value, as the case may be, of Pari Passu Indebtedness) equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Notes (or 100% of the principal amount or accreted value, as the case may be, of such Pari Passu Indebtedness), plus accrued and unpaid interest thereon, if any, to the date of purchase; provided, however, that if at any time any non-cash consideration (including any Designated Noncash Consideration) received by Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation, as the case may be, in connection with any Asset Sale is converted into or sold or 65 72 otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this covenant. Del Monte Corporation may defer the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $10 million resulting from one or more Asset Sales (at which time the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $10 million, shall be applied as required pursuant to this paragraph, and in which case the Net Proceeds Offer Trigger Date shall be deemed to be the earliest date that the Net Proceeds Offer Amount is equal to or in excess of $10 million). In the event of the transfer of substantially all (but not all) of the property and assets of Del Monte Corporation and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted under the covenant described under "Merger, Consolidation and Sale of Assets," the successor corporation shall be deemed to have sold the properties and assets of Del Monte Corporation and its Restricted Subsidiaries not so transferred for purposes of this covenant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it were an Asset Sale. In addition, the fair market value of such properties and assets of Del Monte Corporation or its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant. Each Net Proceeds Offer will be mailed to the record Holders as shown on the register of Holders within 25 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent that the aggregate principal amount of Notes (plus, if applicable, the aggregate principal amount or accreted value, as the case may be, of Pari Passu Indebtedness) validly tendered by the holders thereof and not withdrawn exceeds the Net Proceeds Offer Amount, Notes of tendering Holders (and, if applicable, Pari Passu Indebtedness tendered by the holders thereof) will be purchased on a pro rata basis (based on the principal amount of the Notes and, if applicable, the principal amount or accreted value, as the case may be, of any such Pari Passu Indebtedness tendered and not withdrawn). To the extent that the aggregate amount of the Notes (plus, if applicable, the aggregate principal amount or accreted value, as the case may be, of any Pari Passu Indebtedness) tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, Del Monte Corporation may use such excess Net Proceeds Offer Amount for general corporate purposes or for any other purpose not prohibited by the Indenture. Upon completion of any such Net Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero. A Net Proceeds Offer shall remain open for a period of 20 Business Days or such longer period as may be required by law. Del Monte Corporation or the applicable Restricted Subsidiary, as the case may be, will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Asset Sale" provisions of the Indenture, Del Monte Corporation shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Asset Sale" provisions of the Indenture by virtue thereof. Notwithstanding the foregoing, Del Monte Corporation and its Restricted Subsidiaries will be permitted to consummate an Asset Swap if: (i) at the time of entering into such Asset Swap or immediately after giving effect to such Asset Swap, no Default or Event of Default shall have occurred or be continuing or would occur as a consequence thereof, and (ii) in the event that such Asset Swap involves an aggregate amount in excess of $10 million, the terms of such Asset Swap have been approved by a majority of the members of the Board of Directors of Del Monte Corporation. 66 73 Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. Del Monte Corporation will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary of Del Monte Corporation to: (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances or to pay any Indebtedness or other obligation owed to Del Monte Corporation or any other Restricted Subsidiary of Del Monte Corporation; or (c) transfer any of its property or assets to Del Monte Corporation or any other Restricted Subsidiary of Del Monte Corporation, except for such encumbrances or restrictions existing under or by reason of: (1) applicable law; (2) the Indenture, including any Guarantee; (3) customary non-assignment provisions of any contract or lease governing a leasehold or ownership interest of any Restricted Subsidiary of Del Monte Corporation; (4) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired; (5) agreements existing on the Issue Date (including, without limitation, the Credit Agreement) to the extent and in the manner such agreements are in effect on the Issue Date; (6) secured Indebtedness otherwise permitted to be incurred pursuant to the provisions of the covenants described under "-- Limitation on Incurrence of Additional Indebtedness" above and "-- Limitation on Liens" below that limit the right of the debtor to dispose of the assets securing such Indebtedness; (7) customary net worth or non-assignment provisions contained in leases and other agreements entered into by a Restricted Subsidiary in the ordinary course of business; (8) customary restrictions with respect to a Restricted Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock of such Restricted Subsidiary; (9) customary provisions in joint venture agreements and other similar agreements relating solely to the securities, assets and revenues of such joint venture or other business venture; (10) an agreement governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clause (2), (4), (5) or (6) above; provided, however, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are not, in the aggregate, materially less favorable to Del Monte Corporation as determined by the Board of Directors of Del Monte Corporation in its reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clause (2), (4), (5) or (6); and (11) Standard Securitization Undertakings relating to a Receivables Subsidiary or Special Purpose Vehicle. Limitation on Preferred Stock of Restricted Subsidiaries. Del Monte Corporation will not permit any of its Restricted Subsidiaries (other than a Receivables Subsidiary or a Special Purpose Vehicle) to issue any Preferred Stock (other than to Del Monte Corporation or to a Wholly Owned Restricted Subsidiary of Del Monte Corporation) or permit any Person (other than Del Monte Corporation or a Wholly Owned Restricted Subsidiary of Del Monte Corporation) 67 74 to own any Preferred Stock of any Restricted Subsidiary of Del Monte Corporation (other than a Receivables Subsidiary or a Special Purpose Vehicle). Limitation on Liens. Del Monte Corporation will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets of Del Monte Corporation or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom for purposes of security unless: (i) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes, the Notes are secured by a Lien on such property, assets or proceeds or such right to receive income or profits, as the case may be, that is senior in priority to such Liens and (ii) in all other cases, the Notes are equally and ratably secured, except for (A) Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date; (B) Liens securing Senior Debt and Liens on assets of Restricted Subsidiaries securing guarantees of Senior Debt; (C) Liens securing the Notes; (D) Liens of Del Monte Corporation or a Wholly Owned Restricted Subsidiary of Del Monte Corporation on assets of any Restricted Subsidiary of Del Monte Corporation; (E) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness which has been secured by a Lien permitted under the Indenture and which has been incurred in accordance with the provisions of the Indenture; provided, however, that such Liens (1) are not materially less favorable to the Holders and are not materially more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced and (2) do not extend to or cover any property or assets of Del Monte Corporation or any of its Restricted Subsidiaries not securing the Indebtedness so Refinanced; and (F) Permitted Liens. Prohibition on Incurrence of Senior Subordinated Debt. Del Monte Corporation will not incur or suffer to exist any Indebtedness that is senior in right of payment to the Notes and subordinate in right of payment to any other Indebtedness of Del Monte Corporation. Del Monte Corporation will not cause or permit any Restricted Subsidiary which is a Guarantor to incur or suffer to exist any Indebtedness (including any guarantee) that is senior in right of payment to the Guarantee of such Guarantor and subordinate in right of payment to any other Indebtedness (including any other guarantee) of such Guarantor. Restriction of Lines of Business to Food, Food Distribution and Related Businesses. Del Monte Corporation shall not, and shall not permit any Restricted Subsidiary to, engage in any material business activity except for food, food distribution and related businesses. 68 75 Merger, Consolidation and Sale of Assets of Del Monte Corporation. Del Monte Corporation will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of Del Monte Corporation to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of Del Monte Corporation's assets (determined on a consolidated basis for Del Monte Corporation and its Restricted Subsidiaries), whether as an entirety or substantially as an entirety, to any Person unless: (i) either: (1) Del Monte Corporation shall be the surviving or continuing corporation, or (2) the Person (if other than Del Monte Corporation) formed by such consolidation or into which Del Monte Corporation is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of Del Monte Corporation and its Restricted Subsidiaries as an entirety or substantially as an entirety (the "Surviving Entity") (x) shall be a corporation organized and validly existing under the laws of the United States or any state thereof or the District of Columbia and (y) shall expressly assume, by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of and premium, if any, and interest (including, without limitation, any Additional Interest) on all of the Notes and the performance of every covenant of the Notes, the Indenture and the Registration Rights Agreement on the part of Del Monte Corporation to be performed or observed; (ii) immediately after giving effect to such transaction and the assumption contemplated by clause (i)(2)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), Del Monte Corporation or such Surviving Entity, as the case may be, shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the covenant described under "Certain Covenants -- Limitation on Incurrence of Additional Indebtedness;" (iii) immediately before and immediately after giving effect to such transaction and the assumption contemplated by clause (i)(2)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of such transaction), no Default or Event of Default shall have occurred and be continuing; and (iv) Del Monte Corporation or such Surviving Entity, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with the applicable provisions of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied. Notwithstanding the foregoing, the merger of Del Monte Corporation with an Affiliate incorporated solely for the purpose of reincorporating Del Monte Corporation in another jurisdiction shall be permitted without regard to clause (ii) of the immediately preceding paragraph. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of Del Monte Corporation the Capital Stock of which constitutes all or substantially all of the properties and assets of Del Monte Corporation, shall be deemed to be the transfer of all or substantially all of the properties and assets of Del Monte Corporation. 69 76 The Indenture provides that upon any consolidation or merger of Del Monte Corporation or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of Del Monte Corporation in accordance with the foregoing in which Del Monte Corporation is not the continuing corporation, the successor Person formed by such consolidation or into which Del Monte Corporation is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, Del Monte Corporation under the Indenture and the Notes with the same effect as if such Surviving Entity had been named as such; provided, however, that Del Monte Corporation shall not be released from its obligations under the Indenture or the Notes in the case of a lease. Merger, Consolidation and Sale of Assets of Holdings. Holdings will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Subsidiary of Holdings to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of Holdings' assets (determined on a consolidated basis for Holdings and its Subsidiaries), whether as an entirety or substantially as an entirety, to any Person unless: (i) either: (1) Holdings shall be the surviving or continuing corporation, or (2) the Person (if other than Holdings) formed by such consolidation or into which Holdings is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of Holdings as an entirety or substantially as an entirety (the "Surviving Parent Entity") (x) shall be a corporation organized and validly existing under the laws of the United States or any state thereof or the District of Columbia, and (y) shall expressly assume, by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the obligations of Holdings of the due and punctual payment of the principal of and premium, if any, and interest (including, without limitation, any Additional Interest) on the Notes and all of Holdings' obligations under the Indenture, including its Guarantee; (ii) Holdings or such Surviving Parent Entity, as the case may be, shall not, immediately after giving effect to such transaction or series of transactions be in default in the performance of any covenants or obligations of Holdings or Surviving Parent Entity under the Indenture, including its Guarantee; and (iii) Holdings or such Surviving Parent Entity, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with the applicable provisions of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties and assets of one or more Subsidiaries of Holdings, the Capital Stock of which constitutes all or substantially all of the properties and assets of Holdings, shall be deemed to be the transfer of all or substantially all of the properties and assets of Holdings. Notwithstanding the foregoing, the merger of Holdings with and into Del Monte Corporation shall be permitted without regard to compliance with the covenant described in the second preceding paragraph; provided that such merger shall be permitted pursuant to and shall comply with the covenant described under "-- Merger, Consolidation and Sale of Assets of Del Monte Corporation." 70 77 The Indenture provides that upon any consolidation or merger of Holdings or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of Holdings in accordance with the foregoing in which Holdings is not the continuing corporation, the successor Person formed by such consolidation or into which Holdings is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, Holdings under the Indenture, including its Guarantee, with the same effect as if such Surviving Parent Entity had been named as such; provided, however, that Holdings shall not be released from its obligations under the Indenture, including its Guarantee, in the case of a lease. Limitations on Transactions with Affiliates. (a) Del Monte Corporation will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate Transactions permitted under paragraph (b) below, and (y) Affiliate Transactions on terms that are no less favorable to Del Monte Corporation or the relevant Restricted Subsidiary than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of Del Monte Corporation or such Restricted Subsidiary. All Affiliate Transactions (and each series of related Affiliate Transactions which are part of a common plan) involving aggregate payments or other property with a fair market value in excess of $2 million shall be approved by the Board of Directors of Del Monte Corporation or such Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions. If Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation enters into an Affiliate Transaction (or a series of related Affiliate Transactions related to a common plan) that involves an aggregate fair market value or payments to an Affiliate, as the case may be, of more than $10 million, Del Monte Corporation or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transaction or series of related transactions to Del Monte Corporation or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee. (b) The restrictions set forth in clause (a) shall not apply to: (i) reasonable fees and compensation paid to (including issuances and grant of securities and stock options, employment agreements and stock option and ownership plans for the benefit of), and indemnity provided on behalf of, officers, directors, employees or consultants of Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation as determined in good faith by Del Monte Corporation's Board of Directors or senior management; (ii) transactions between or among Del Monte Corporation and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided that such transactions are not otherwise prohibited by the Indenture; (iii) any agreement as in effect as of the Issue Date or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto or any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date); (iv) payments and investments permitted by the Indenture; (v) the issuance of Qualified Capital Stock of Del Monte Corporation; 71 78 (vi) loans or advances to employees and officers of Del Monte Corporation and its Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of $10 million at any one time outstanding; (vii) transactions permitted by, and complying with, the provisions of the covenants described under "Certain Covenants -- Merger, Consolidation and Sale of Assets of Del Monte Corporation" and "-- Merger, Consolidation and Sale of Assets of Holdings;" (viii) transactions with suppliers or other purchasers or sales of goods or services, in each case in the ordinary course of business (including, without limitation, pursuant to joint venture agreements) and otherwise in compliance with the terms of the Indenture which are fair to Del Monte Corporation in the good faith determination of the Board of Directors of Del Monte Corporation or the senior management thereof and on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; and (ix) Qualified Receivables Transactions. Limitation on Guarantees by Domestic Restricted Subsidiaries. Del Monte Corporation will not permit any of its domestic Restricted Subsidiaries, directly or indirectly, by way of the pledge of any intercompany note or otherwise, to assume, guarantee or in any other manner become liable with respect to any Indebtedness of Del Monte Corporation or any other Restricted Subsidiary (other than Permitted Indebtedness of a Restricted Subsidiary), unless, in any such case, such Restricted Subsidiary simultaneously executes and delivers to the Trustee a supplemental indenture to the Indenture, providing a guarantee of payment of the Notes by such Restricted Subsidiary (a "Guarantee") substantially similar to the Guarantee of Holdings described above under "-- Guarantee" (except that the Guarantee of such Restricted Subsidiary will be a senior subordinated obligation of such Restricted Subsidiary and will be limited in amount as described in the immediately following paragraph), which Guarantee shall be a senior subordinated obligation of such Restricted Subsidiary and shall be subordinated in right of payment to all Guarantor Senior Debt of such Restricted Subsidiary on terms substantially similar to those applicable to Holdings' Guarantee. Neither Del Monte Corporation nor any such Restricted Subsidiary shall be required to make a notation on the Notes to reflect any such subsequent Guarantee. Nothing contained in this paragraph shall be construed to permit any Restricted Subsidiary of Del Monte Corporation to incur Indebtedness otherwise prohibited by the Indenture or the Credit Agreement. Each Guarantee of a Restricted Subsidiary will be limited in amount to an amount not to exceed the maximum amount that can be guaranteed by such Restricted Subsidiary without rendering such Guarantee, as it relates to such Restricted Subsidiary, void or voidable under applicable laws relating to fraudulent conveyance or fraudulent transfer or other similar laws affecting the rights of creditors generally. Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary shall provide by its terms that it shall be automatically and unconditionally released and discharged, without any further action required on the part of the Trustee or any Holder, upon: (i) the unconditional release of such Restricted Subsidiary from its liability in respect of the Indebtedness in connection with which such Guarantee was executed and delivered pursuant to the second preceding paragraph; or (ii) any sale or other disposition (by merger or otherwise) to any Person which is not a Restricted Subsidiary of Del Monte Corporation of all of Del Monte Corporation's Capital Stock in, or all or substantially all of the assets of, such Restricted Subsidiary; provided that (a) such sale or disposition of such Capital Stock or assets is otherwise in compliance with the terms of the Indenture, and (b) such assumption, guarantee or other liability of such Restricted Subsidiary has been released by the holders of the other Indebtedness so guaranteed. 72 79 Reports to Holders. The Indenture provides that so long as the Notes are outstanding Del Monte Corporation will deliver to the Trustee within 15 days after the filing of the same with the Commission, copies of the quarterly and annual reports and of the information, documents and other reports, if any, which Del Monte Corporation is required to file with the Commission, pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further provides that, notwithstanding that Del Monte Corporation may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, so long as the Notes are outstanding Del Monte Corporation will file with the Commission, to the extent permitted, and provide the Trustee and Holders with such annual reports and such information, documents and other reports specified in Sections 13 and 15(d) of the Exchange Act. For purposes of the foregoing provisions of this paragraph, so long as: (1) Holdings owns all of the issued and outstanding Capital Stock of Del Monte Corporation; (2) the aggregate amount of all Investments made by Holdings in any Persons other than Del Monte Corporation and its Restricted Subsidiaries does not in the aggregate exceed $2,500,000 at any time outstanding; and (3) Del Monte Corporation is not required to file separate reports with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; the filing and delivery of reports, information or documents which Holdings is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act in accordance with the foregoing provisions of this paragraph will satisfy Del Monte Corporation's obligations under this paragraph. Del Monte Corporation will also comply with the provisions of Trust Indenture Act Section 314(a). RULE 144A INFORMATION The Indenture provides that, if and to the extent required to permit resales or other transfers of the Notes to be made pursuant to Rule 144A, Del Monte Corporation will prepare and will furnish to any Holder of Notes, any beneficial owner of Notes (including, without limitation, any owner of a beneficial interest in a global Note) and any prospective purchaser or other prospective transferee of Notes designated by a Holder or beneficial owner of Notes, promptly upon request and at the expense of Del Monte Corporation, the financial statements and other information specified in Rule 144A(d)(4) (or any successor provision thereto). Under interpretations by the Commission, Del Monte Corporation is not currently required to provide the information described in the foregoing paragraph. Instead the Commission has taken the position that, because the Notes are guaranteed by Holdings, the informational requirements of Rule 144A are deemed to have been satisfied by Holdings' filing with the Commission of the annual and quarterly reports and other information required by Sections 13 or 15(d) of the Exchange Act. EVENTS OF DEFAULT The following events are defined in the Indenture as "Events of Default:" (i) the failure to pay interest (including, without limitation, any Additional Interest) on any Notes when the same becomes due and payable and the default continues for a period of 30 days (whether or not such payment shall be prohibited by the subordination provisions of the Indenture); or (ii) the failure to pay the principal on any Notes when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether or not such payment shall be prohibited by the subordination provisions of the Indenture); or 73 80 (iii) a default by Del Monte Corporation or Holdings in the observance or performance of any other covenant or agreement contained in the Indenture which default continues for a period of 30 days after written notice specifying the default (and demanding that such default be remedied) is received by Del Monte Corporation from the Trustee or by Del Monte Corporation and the Trustee from the Holders of at least 25% of the outstanding principal amount of the Notes; or (iv) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness for borrowed money of Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation or the acceleration of the final stated maturity of any such Indebtedness, in either case, if the aggregate principal amount of such Indebtedness, together with the aggregate principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated, aggregates $20 million or more at any time; or (v) one or more judgments for the payment of money in an aggregate amount in excess of $20 million (to the extent not covered by insurance) shall have been rendered against Del Monte Corporation or any of its Restricted Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable; or (vi) the failure of a Guarantee of the Notes given by a Guarantor to be in full force and effect (except if such Guarantee shall have been released and discharged pursuant to the provisions set forth in the last paragraph under "-- Certain Covenants -- Limitations on Guarantees by Restricted Subsidiaries" above) or the denial or disaffirmation of such obligations by a Guarantor; or (vii) certain events of bankruptcy affecting Del Monte Corporation or any of its Significant Subsidiaries. If an Event of Default (other than an Event of Default specified in clause (vii) above with respect to Del Monte Corporation) shall occur and be continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal of and accrued and unpaid interest on all the Notes to be due and payable by notice in writing to Del Monte Corporation and the Trustee specifying the respective Event of Default and that it is a "notice of acceleration" (the "Acceleration Notice"), and the same (i) shall become immediately due and payable; or (ii) if there are any amounts outstanding under the Credit Agreement, shall become immediately due and payable upon the first to occur of an acceleration under the Credit Agreement or five Business Days after receipt by Del Monte Corporation and the Representative under the Credit Agreement of such Acceleration Notice, but only if such Event of Default is then continuing. If an Event of Default specified in clause (vii) above with respect to Del Monte Corporation occurs and is continuing, then all unpaid principal of and accrued and unpaid interest on all of the then outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Indenture provides that, at any time after the delivery of an Acceleration Notice with respect to the Notes as described in the preceding paragraph, the Holders of a majority in principal amount of the then outstanding Notes may, on behalf of the Holders of all of the Notes, rescind and cancel such declaration and its consequences: (i) if the rescission would not conflict with any judgment or decree; (ii) if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration; 74 81 (iii) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal which has become due otherwise than by such declaration of acceleration has been paid; (iv) if Del Monte Corporation has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances and any other amounts due the Trustee under the Indenture; and (v) in the event of the cure or waiver of an Event of Default of the type described in clause (vii) of the description above of Events of Default, the Trustee shall have received an Officers' Certificate and an opinion of counsel that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto. The Holders of a majority in principal amount of the then outstanding Notes may waive any existing Default or Event of Default under the Indenture and its consequences, except a default in the payment of the principal of or interest on any Notes. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture and under the Trust Indenture Act. Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable indemnity. Subject to all provisions of the Indenture and applicable law, the Holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. Under the Indenture, Del Monte Corporation is required to provide an Officers' Certificate to the Trustee promptly upon any such officer obtaining knowledge of any Default or Event of Default (provided that such officers shall provide such certification at least annually whether or not they know of any Default or Event of Default) that has occurred and, if applicable, describe such Default or Event of Default and the status thereof. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee or stockholder of Del Monte Corporation, as such, shall have any liability for any obligations of Del Monte Corporation under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The foregoing provisions do not relate to the liability of Holdings as a Guarantor. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Del Monte Corporation may, at its option and at any time, elect to have its obligations discharged with respect to the then outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that Del Monte Corporation shall be deemed to have paid and discharged the entire indebtedness represented by the then outstanding Notes and to have satisfied all of its other obligations under the Notes and the Indentures, and the Holders of the Notes shall cease to be subject to the rights of any holder of Senior Debt under the subordination provisions of the Indenture, provided that the following provisions of the Indenture shall survive unless otherwise terminated pursuant to the Indenture: (i) the rights of Holders to receive payments in respect of the principal of and interest on the Notes when such payments are due; (ii) Del Monte Corporation's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payments; 75 82 (iii) the rights, powers, trust, duties and immunities of the Trustee and Del Monte Corporation's obligations in connection therewith; and (iv) the Legal Defeasance provisions of the Indenture. In addition, Del Monte Corporation may, at its option and at any time, elect to have the obligations of Del Monte Corporation released with respect to the covenants in the Indenture described above under "-- Change of Control" and "-- Certain Covenants" (other than the covenant appearing under "-- Reports to Holders") ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, the events described in clauses (iv) and (v) of the first paragraph under "-- Events of Default" above will no longer constitute Events of Default with respect to the Notes, and the Holders of Notes shall cease to be subject to the rights of any holder of Senior Debt under the subordination provisions of the Indenture. In order to exercise either Legal Defeasance or Covenant Defeasance, (i) Del Monte Corporation must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (ii) in the case of Legal Defeasance, Del Monte Corporation shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) Del Monte Corporation 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 Counsel shall confirm that, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Legal 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 Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, Del Monte Corporation shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders 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 shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default arising under clause (iii) of the definition of that term and resulting solely from the incurrence of Indebtedness the proceeds of which will be used to defease the Notes concurrently with such incurrence) or, insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit (it being understood that this condition shall not be satisfied and such Legal Defeasance or Covenant Defeasance, as the case may be, shall not be effective until expiration of such 91 day period); (v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, the Indenture or any other material agreement or instrument to which Del Monte Corporation or any of its Subsidiaries is a party or by which Del Monte Corporation or any of its Subsidiaries is bound; 76 83 (vi) Del Monte Corporation shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by Del Monte Corporation with the intent of preferring the Holders over any other creditors of Del Monte Corporation or with the intent of defeating, hindering, delaying or defrauding any other creditors of Del Monte Corporation or others; (vii) Del Monte Corporation shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; (viii) Del Monte Corporation shall have delivered to the Trustee an Opinion of Counsel to the effect that (A) the trust funds will not be subject to any rights of holders of Senior Debt, including, without limitation, those arising under the Indenture, and (B) assuming no intervening bankruptcy of Del Monte Corporation between the date of deposit and the 91st day following the deposit and that no Holder is an insider of Del Monte Corporation, after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (ix) if the cash or U.S. Government Obligations or combination thereof, as the case may be, deposited under subparagraph (i) above are sufficient to pay the principal of, premium, if any, and interest on the Notes provided the Notes are redeemed on a particular redemption date, Del Monte Corporation shall have given the Trustee irrevocable instructions to redeem the Notes on that redemption date and to provide notice of that redemption to Holders as provided in the Indenture; and (x) certain other customary conditions precedent are satisfied. If Del Monte Corporation effects Covenant Defeasance and the Notes are declared due and payable because of the occurrence of an Event of Default (other than an Event of Default which has ceased to be applicable because of such Covenant Defeasance or resulting from breach of a covenant as to which there has been Covenant Defeasance), the amount of cash and U.S. Government Obligations deposited to effect Covenant Defeasance may not be sufficient to pay amounts due on the Notes at the time of any acceleration resulting from that Event of Default. However, Del Monte Corporation would remain liable to make payment of those amounts due at the time of acceleration. SATISFACTION AND DISCHARGE The Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding Notes when either: (a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by Del Monte Corporation and thereafter repaid to Del Monte Corporation as provided in the Indenture) have been delivered to the registrar for cancellation, and (i) Del Monte Corporation has paid all sums payable under the Indenture by Del Monte Corporation, and (ii) Del Monte Corporation has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with; or 77 84 (b) Del Monte Corporation shall have given notice of redemption of all of the Notes or all of the Notes shall have otherwise become due and payable, and (i) Del Monte Corporation has irrevocably deposited or caused to be deposited with the Trustee or another trustee funds in an amount sufficient to pay the principal of, premium, if any, and interest on the then outstanding Notes to maturity or redemption, as the case may be, together with irrevocable instructions from Del Monte Corporation directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be (and, upon such deposit and the satisfaction of the other conditions precedent set forth in this subparagraph (b), the funds so deposited shall not be subject to the rights of holders of Senior Debt pursuant to the subordination provisions of the Indenture); (ii) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of or default under any other instrument to which Del Monte Corporation is a party or by which it is bound; (iii) Del Monte Corporation has paid all other sums payable under the Indenture by Del Monte Corporation; and (iv) Del Monte Corporation has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with. MODIFICATION OF THE INDENTURE From time to time, Del Monte Corporation and the Trustee, without the consent of the Holders, may amend the Indenture for certain specified purposes. These specified purposes include the following: (1) to cure ambiguities, correct inconsistencies and add other provisions with respect to matters or questions arising under the Indenture, provided such actions do not adversely affect the interests of the Holders in any material respect; (2) to comply with the provisions described above under "-- Certain Covenants -- Merger, Consolidation and Sale of Assets of Del Monte Corporation" and "-- Merger, Consolidation and Sale of Assets of a Guarantor;" (3) to provide for uncertificated Notes in addition to or in place of certificated Notes; (4) to comply with any requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act; (5) to make any change that would provide any additional benefit or rights to the Holders; (6) to provide for the issuance of the Exchange Notes; (7) to add a Guarantor pursuant to the provisions described above under "-- Certain Covenants -- Limitations on Guarantees By Restricted Subsidiaries;" (8) to evidence and provide for the acceptance of appointment under the Indenture by a successor Trustee; (9) to secure the Notes; (10) to add to the covenants of Del Monte Corporation or any Guarantor for the benefit of the Holders or to surrender any right or power conferred upon Del Monte Corporation or any Guarantor; and (11) to make any other change that does not, in the good faith judgment of the Trustee, adversely affect in any material respect the rights of Holders under the Indenture; 78 85 provided that Del Monte Corporation has delivered to the Trustee an Opinion of Counsel stating that such amendment or supplement complies with the applicable provisions of the Indenture. Other modifications and amendments of the Indenture may be made, and compliance by Del Monte Corporation with any provision of the Indenture or the Notes may be waived, with the consent of the Holders of a majority in principal amount of the then outstanding Notes issued under the Indenture, except that, without the consent of each Holder affected thereby, no amendment may: (i) reduce the amount of Notes whose Holders must consent to an amendment or waiver, including the waiver of Defaults or Events of Default, or to a rescission and cancellation of a declaration of acceleration of the Notes; (ii) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest and Additional Interest, if any, on any Notes; (iii) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption, or reduce the redemption price therefore; (iv) make any Notes payable in money other than that stated in the Notes; (v) make any change in provisions of the Indenture protecting the right of each Holder to receive payment of principal of and interest on such Note on or after the due date thereof or to bring suit to enforce such payment; (vi) change the price payable by Del Monte Corporation for Notes repurchased pursuant to the provisions described above under "-- Change of Control" and "-- Certain Covenants -- Limitation on Asset Sales" or after the occurrence of a Change of Control, modify or change in any material respect the obligation of Del Monte Corporation or Holdings to make and consummate a Change of Control offer or modify any of the provisions or definitions with respect thereto; (vii) modify or change any provision of the Indenture or the related definitions with respect to the subordination of the Notes or the Guarantees in a manner which adversely affects the Holders in any material respect; or (viii) waive a default in the payment of principal of or interest on any Note; provided that this clause (viii) shall not limit the right of the Holders of a majority in aggregate principal amount of the then outstanding Notes to rescind and cancel a declaration of acceleration of the Notes following delivery of an Acceleration Notice as described above under "-- Events of Default." GOVERNING LAW The Indenture provides that it and the Notes are governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. THE TRUSTEE The Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. The Indenture and the provisions of the Trust Indenture Act contain certain limitations on the rights of the Trustee, should it become a creditor of Del Monte Corporation, to obtain payments of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. Subject to the Trust Indenture Act, the Trustee will be permitted to engage in other 79 86 transactions; provided that if the Trustee acquires any conflicting interest as described in the Trust Indenture Act, it must eliminate such conflict or resign. EXCHANGE OFFER; REGISTRATION RIGHTS The Notes are entitled to the benefit of a Registration Rights Agreement (the "Registration Rights Agreement") between Del Monte Corporation, Holdings and the placement agents. The following summary of selected provisions of the Registration Rights Agreement is not complete and is subject to, and qualified in its entirety by reference to, the provisions of the Registration Rights Agreement, including the definitions. A copy of the Registration Rights Agreement is attached hereto as Exhibit 4.4. You should read the Registration Rights Agreement in its entirety. In the Registration Rights Agreement, Del Monte Corporation and Holdings have agreed with the placement agents, for the benefit of the Holders of the Notes, that Del Monte Corporation and Holdings will use their reasonable best efforts, at their cost, to file and cause to become effective a registration statement on an appropriate registration form (the "Exchange Offer Registration Statement") with respect to a registered offer (the "Exchange Offer") to exchange the Outstanding Notes for Exchange Notes of Del Monte Corporation, which Exchange Notes will have terms substantially identical in all material respects to the Outstanding Notes (except that the Exchange Notes will not contain terms with respect to transfer restrictions and will not be subject to the increase in annual interest rate described below). Promptly after the Exchange Offer Registration Statement is declared effective, Del Monte Corporation shall commence the Exchange Offer. The Exchange Offer will remain open for not less than 20 Business Days after the date Del Monte Corporation mails notice of the Exchange Offer to Holders. For each Outstanding Note surrendered to Del Monte Corporation pursuant to the Exchange Offer, the Holder who surrendered that Outstanding Note will receive an Exchange Note having a principal amount equal to that of the surrendered Outstanding Note. Interest on each Exchange Note will accrue from the last interest payment date on which interest was paid on the Outstanding Note surrendered in exchange therefor or, if no interest has been paid on the Outstanding Notes, from the Issue Date. If Del Monte Corporation effects the Exchange Offer, Del Monte Corporation will be entitled to close the Exchange Offer 20 Business Days after the commencement of the Exchange Offer. Notes not tendered in the Exchange Offer will remain outstanding and continue to accrue interest, but will not retain any rights under the Registration Rights Agreement and will remain subject to transfer restrictions. In the event that applicable interpretations of the staff of the Commission do not permit Del Monte Corporation to effect the Exchange Offer, or under certain other circumstances, Del Monte Corporation shall, at its cost, use its reasonable best efforts to cause to become effective a shelf registration statement (the "Shelf Registration Statement") with respect to resales of the Outstanding Notes and to keep such Shelf Registration Statement effective until such time as the Notes are eligible for resale pursuant to Rule 144(k) under the Securities Act or such shorter period that will terminate when all Notes covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement. Del Monte Corporation shall, in the event of such a shelf registration, provide to each Holder copies of the prospectus, notify each Holder when the Shelf Registration Statement for the Outstanding Notes has become effective and take certain other actions as are required to permit resales of the Outstanding Notes. A Holder that sells its Outstanding Notes pursuant to the Shelf Registration Statement generally will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement that are applicable to such a Holder (including certain indemnification obligations). In the event that the Exchange Offer is not consummated or a Shelf Registration Statement is not declared effective on or prior to December 31, 2001, the annual interest rate borne by the Outstanding Notes will be increased by .5% per annum until the Exchange Offer is consummated or the Shelf Registration Statement is declared effective. 80 87 CERTAIN DEFINITIONS Set forth below is a summary of some of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all of those terms, as well as other terms used in this "Description of the Notes" for which no definition is provided. "Acquired Indebtedness" means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of Del Monte Corporation or at the time it merges or consolidates with or into Del Monte Corporation or any of its Restricted Subsidiaries or assumed by Del Monte Corporation or any of its Restricted Subsidiaries in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of Del Monte Corporation or such acquisition, merger or consolidation. "Acquisition Financing Indebtedness" means Indebtedness of Del Monte Corporation incurred in connection with the acquisition of assets or capital stock (by stock purchase, merger or otherwise) of a Person engaged in all material respects solely in the business of food, food distribution and related businesses. "Additional Interest" means additional interest, if any, which may be payable on the Notes as described under "-- Exchange Offer; Registration Rights." "Additional Notes" means Notes, if any, originally issued under the Indenture after the Issue Date, other than Exchange Notes. "Affiliate" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. "Asset Acquisition" means: (a) an Investment by Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation in any other Person pursuant to which such Person shall become a Restricted Subsidiary of Del Monte Corporation, or shall be merged or consolidated with or into Del Monte Corporation or (b) the acquisition by Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation of the assets of any Person (other than a Restricted Subsidiary of Del Monte Corporation) which constitute all or substantially all of the assets of such Person or comprises any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business. "Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by Del Monte Corporation or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than Del Monte Corporation or a Wholly Owned Restricted Subsidiary of Del Monte Corporation of: (a) any Capital Stock of any Restricted Subsidiary of Del Monte Corporation; or (b) any other property or assets of Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation other than in the ordinary course of business; provided, however, that Asset Sales shall not include: (i) a transaction or series of related transactions for which Del Monte Corporation or its Restricted Subsidiaries receive aggregate consideration of less than $1 million; 81 88 (ii) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of Del Monte Corporation as permitted under "-- Certain Covenants -- Merger, Consolidation and Sale of Assets of Del Monte Corporation;" (iii) the grant of Liens permitted by the covenant described under "Certain Covenants -- Limitation on Liens" above; (iv) the sale or transfer of Receivables Related Assets in connection with a Qualified Receivables Transaction; and (v) the sale or transfer of certain assets identified in a schedule to the Indenture as being held for disposition. "Asset Swap" means the execution of a definitive agreement, subject only to customary closing conditions that Del Monte Corporation in good faith believes will be satisfied, for a substantially concurrent purchase and sale, or exchange, of assets (of a kind used or usable by Del Monte Corporation and its Restricted Subsidiaries in their business as it exists on the date thereof, or in businesses that are the same as such business of Del Monte Corporation and its Restricted Subsidiaries on the date thereof or similar or reasonably related thereto) between Del Monte Corporation or any of its Restricted Subsidiaries and another Person or group of affiliated Persons; provided, however, that any amendment to or waiver of any closing condition that individually or in the aggregate is material to the Asset Swap shall be deemed to be a new Asset Swap. "Board of Directors" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof. "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Borrowing Base" means as of any date, an amount, determined on a consolidated basis and in accordance with GAAP, equal to the sum of (i) 60% of the aggregate book value of inventory plus (ii) 85% of the aggregate book value of all accounts receivable (net of bad debt reserves) of Del Monte Corporation and its Restricted Subsidiaries. To the extent that information is not available as to the amount of inventory or accounts receivable as of a specific date, Del Monte Corporation shall use the most recent available information for purposes of calculating the Borrowing Base. "Business Day" means a day that is not a Legal Holiday. "Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. "Capital Stock" means: (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class or series of Common Stock and Preferred Stock of such Person, and (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person. "Cash Equivalents" means: (i) obligations issued by, or unconditionally guaranteed by, the U.S. government or issued by any agency thereof, and in each case backed by the full faith and credit of the United States and maturing within one year from the date of acquisition thereof; 82 89 (ii) obligations issued or fully guaranteed by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Ratings Services ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody's; (iv) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000; (v) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iv) above; and (vi) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (v) above. "Change of Control" means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Del Monte Corporation or Holdings to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates thereof (whether or not otherwise in compliance with the provisions of the Indenture), other than TPG or its Related Parties; (ii) the approval by the holders of Capital Stock of Del Monte Corporation or Holdings, as the case may be, of any plan or proposal for the liquidation or dissolution of Del Monte Corporation or Holdings, as the case may be (whether or not otherwise in compliance with the provisions of the Indenture); (iii) (A) any Person or Group (other than TPG or its Related Parties) shall become the owner, directly or indirectly, beneficially or of record, of shares representing more than 40% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock (the "Voting Stock") of Del Monte Corporation or Holdings and (B) TPG and its Related Parties shall beneficially own, directly or indirectly, in the aggregate a lesser percentage of the Voting Stock of Del Monte Corporation or Holdings, as the case may be, than such other Person or Group; or (iv) the replacement of a majority of the Board of Directors of Del Monte Corporation or Holdings over a two-year period from the directors who constituted the Board of Directors of Del Monte Corporation or Holdings, as the case may be, at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the Board of Directors of Del Monte Corporation or Holdings, as the case may be, then still in office who either were members of such Board of Directors at the beginning of such period or whose election as a member of such Board of Directors was previously so approved or who were nominated by, or designees of, TPG or its Related Parties. "Common Stock" of any Person means any and all shares, interests or other participations in and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. 83 90 "Consolidated EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of: (i) Consolidated Net Income, and (ii) to the extent Consolidated Net Income has been reduced thereby, (A) all income taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period, (B) Consolidated Interest Expense, and (C) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period, all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP. "Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four full fiscal quarters (the "Four Quarter Period") ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction Date") to the Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to: (i) the incurrence or repayment of any Indebtedness of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated EBITDA (including any pro forma expense and cost reductions which, in the reasonable and good faith judgment of Del Monte Corporation's senior management, will result from such Asset Sale or Asset Acquisition) attributable to the assets which are the subject of the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of the "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date, 84 91 (2) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements, (3) interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or if, none, then based upon such optional rate as such Person may designate, and (4) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate implicit in such Capitalized Lease Obligation in accordance with GAAP and as reflected in such Person's financial statements. "Consolidated Fixed Charges" means, with respect to any Person for any period, the sum (without duplication) of: (i) Consolidated Interest Expense (excluding amortization or write-off of deferred financing costs), plus (ii) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person (other than dividends paid in Qualified Capital Stock) paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum (without duplication) of: (i) the aggregate of the interest expense of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including without limitation, (a) any amortization of debt discount and amortization or write-off of deferred financing costs, (b) the net costs under Interest Swap Obligations, (c) all capitalized interest, (d) the interest portion of any deferred payment obligation, (e) dividends paid in respect of Disqualified Capital Stock, (f) net payments (whether positive or negative) pursuant to Interest Swap Obligations; and (ii) the interest component of Capitalized Lease Obligations, in each case paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. Notwithstanding the foregoing, Consolidated Interest Expense of Del Monte Corporation shall include the interest expense of a Person only to the extent that the net income of such Person is included in the Consolidated Net Income of Del Monte Corporation. "Consolidated Net Income" means, with respect to any Person, for any period, the aggregate net income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided that there shall be excluded therefrom: (a) after-tax gains or losses from Asset Sales (without regard to the $1 million limitation set forth in the definition thereof) or abandonments or reserves relating thereto; (b) after-tax items classified as extraordinary or nonrecurring gains or losses; 85 92 (c) the net income of any Person acquired in a "pooling of interests" transaction accrued prior to the date it becomes a Restricted Subsidiary of the referent Person or is merged or consolidated with or into the referent Person or any Restricted Subsidiary of the referent Person; (d) the net income (but not loss) of any Restricted Subsidiary of the referent Person to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of that income is at the time of determination restricted, directly or indirectly, by a contract, operation of law or otherwise; (e) the net income of any Person, other than a Restricted Subsidiary of the referent Person, except to the extent of cash dividends or distributions paid to the referent Person or to a Restricted Subsidiary of the referent Person by such Person; (f) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date; (g) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued); and (h) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets. Notwithstanding the foregoing, "Consolidated Net Income" shall be calculated without giving effect to: (i) any premiums, fees or expenses incurred and amortization of premiums, fees or expenses incurred since March 31, 2001 in connection with the refinancing or the Recapitalization and related financings; and (ii) the amortization, depreciation, or non-cash charge of any amounts required or permitted by Accounting Principles Board Opinion Nos. 16 or 17. "Consolidated Net Tangible Assets" means, as of any date, the total amount of assets of Del Monte Corporation and its Restricted Subsidiaries (less applicable depreciation, amortization and other valuation reserves), net of any write-ups of capital assets, other than write-ups in connection with accounting for acquisitions in conformity with GAAP, after deducting therefrom (i) all current liabilities of Del Monte Corporation and its Restricted Subsidiaries (excluding intercompany items), and (ii) all deferred tax assets, goodwill, trade names, trademarks, copyrights, patents, unamortized debt discount and expense, and all other items which would be treated as intangibles, in each case as shown on a consolidated balance sheet of Del Monte Corporation and its Restricted Subsidiaries prepared in accordance with GAAP. "Consolidated Non-cash Charges" means, with respect to any Person, for any period, the aggregate depreciation, amortization, exchange or translation losses on foreign currencies and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charge which requires an accrual of or a reserve for cash charges for any future period). "Credit Agreement" means the Credit Agreement dated as of the Issue Date among Holdings, the Issuer and the financial institutions named therein, and any related notes, collateral documents, letters of credit and guarantees, including any appendices, exhibits or schedules to any of the foregoing (as the same may be in effect from time to time), in each case, as such agreements may be amended, modified, supplemented or restated from time to time, or refunded, refinanced, restructured, replaced, renewed, 86 93 repaid or extended from time to time (whether with the original agents and lenders or other agents or lenders or otherwise, and whether provided under the original credit agreement or other credit agreements or otherwise) (including, without limitation, increasing the amount of available borrowings or other Indebtedness thereunder (provided that such increase in borrowings is permitted by the covenant described under "Certain Covenants -- Limitation on Incurrence of Additional Indebtedness" above)). "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation against fluctuations in currency values. "Default" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. "Designated Noncash Consideration" means any noncash consideration received by Del Monte Corporation or one of its Restricted Subsidiaries in connection with an Asset Sale that is designated as Designated Noncash Consideration pursuant to an Officers' Certificate executed by the principal executive officer and the principal financial officer of Del Monte Corporation or such Restricted Subsidiary at the time of such Asset Sale. Any particular item of Designated Noncash Consideration will cease to be considered to be outstanding once cash or Cash Equivalents have been received by Del Monte Corporation or a Restricted Subsidiary in exchange therefor as proceeds or payments. Promptly after receipt of any Designated Noncash Consideration, Del Monte Corporation shall deliver such Officers' Certificate to the Trustee, together with a Board Resolution of Del Monte Corporation stating the fair market value of such Designated Noncash Consideration and the basis of such valuation, which shall be a report or opinion of an Independent Financial Advisor with respect to the receipt in one transaction or a series of related transactions of Designated Noncash Consideration with a fair market value in excess of $25 million. "Designated Senior Debt" means: (i) Indebtedness of the Del Monte Corporation under or in respect of the Credit Agreement and (ii) any other Indebtedness of the Del Monte Corporation constituting Senior Debt which, at the time of determination, has an aggregate outstanding principal amount of at least $75 million and is specifically designated by Del Monte Corporation in the instrument evidencing such Senior Debt as "Designated Senior Debt." "Disqualified Capital Stock" means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in each case on or prior to the final maturity date of the Notes, provided, however, that if such Capital Stock is issued to any plan for the benefit of employees of Del Monte Corporation or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by Del Monte Corporation in order to satisfy applicable statutory or regulatory obligations. "Equity Offering" means any sale of Qualified Capital Stock of Holdings or Del Monte Corporation; provided that, in the event of an Equity Offering by Holdings, Holdings contributes to the capital of Del Monte Corporation the portion of the net cash proceeds of such Equity Offering necessary to pay the aggregate redemption price, plus accrued interest to the redemption date, of the Notes to be redeemed as described under "-- Redemption -- Optional Redemption upon Equity Offerings." "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. "fair market value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. 87 94 "Four Quarter Period" has the meaning specified in the definition of "Consolidated Fixed Charge Coverage Ratio" above. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may have been approved by a significant segment of the accounting profession as of the Issue Date. "Guarantee" means, as the context requires, the Guarantee of Holdings described above under "-- Guarantee" or a Guarantee of a Restricted Subsidiary as described above under "-- Certain Covenants -- Limitation on Guarantees by Domestic Restricted Subsidiaries" and shall include, in the case of any Guarantor, any guarantee of such Guarantor which is endorsed on the Notes. "Guarantor" means each of Holdings and any Restricted Subsidiary that executes a Guarantee pursuant to the covenant described under "Certain Covenants -- Limitation on Guarantees by Domestic Restricted Subsidiaries," each until a successor replaces it pursuant to the Indenture and thereafter means such successor. A Restricted Subsidiary whose Guarantee has terminated pursuant to the aforesaid covenant shall cease to be a Guarantor effective as of such termination. "Guarantor Senior Debt" means, with respect to a Guarantor, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a bankruptcy petition at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law and without giving effect to any reduction in the amount of such Indebtedness which is necessary to prevent the obligation of such Guarantor with respect thereto from being rendered void or voidable under applicable law relating to fraudulent conveyance or fraudulent transfer) on any Indebtedness of such Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Guarantee of such Guarantor. Without limiting the generality of the foregoing, "Guarantor Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (x) all monetary obligations (including guarantees thereof), if any, of every nature of such Guarantor under or with respect to the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations (including guarantees thereof), and (z) all obligations (including guarantees thereof) under Currency Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Debt" shall not include: (i) any Indebtedness of such Guarantor to a Subsidiary of such Guarantor; (ii) Indebtedness to, or guaranteed by such Guarantor for the benefit of, any shareholder (other than a parent corporation), director, officer or employee of such Guarantor or any Subsidiary of such Guarantor (including, without limitation, amounts owed for compensation); (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services; (iv) Indebtedness represented by Disqualified Capital Stock; 88 95 (v) any liability for federal, state, local or other taxes owed or owing by such Guarantor; (vi) any Indebtedness incurred in violation of the Indenture; and (vii) any Indebtedness, and any other obligation referred to in clause (x), (y) or (z) of this definition, which in each case is, by its express terms or by the express terms of the instrument or agreement creating or evidencing the same or pursuant to which the same is outstanding, (a) subordinated in right of payment to any other Indebtedness of such Guarantor, in the case of a Restricted Subsidiary, or (b) subordinated in right of payment to or pari passu with the Guarantee of Holdings described above under "-- Guarantee," in the case of Holdings. "Guarantor Designated Senior Debt" means, with respect to any Guarantor: (i) Indebtedness of such Guarantor under or in respect of the Credit Agreement; and (ii) any other Indebtedness of such Guarantor constituting Guarantor Senior Debt of such Guarantor which, at the time of determination, has an aggregate outstanding principal amount of at least $75 million and is specifically designated by such Guarantor in the instrument evidencing such Guarantor Senior Debt as "Guarantor Designated Senior Debt." "Holder" or "Noteholder" means the Person in whose name a Note is registered on the registrar's books. "Holdings" means Del Monte Foods Company, a Delaware corporation, until a successor replaces it pursuant to this Indenture and thereafter means such successor. "Indebtedness" means with respect to any Person, without duplication: (i) all obligations of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all Capitalized Lease Obligations of such Person (but excluding any operating lease obligations); (iv) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more or that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted); (v) all obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction; (vi) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (i) through (v) above and clause (viii) below; (vii) all obligations of any other Person of the type referred to in clauses (i) through (vi) above and clause (viii) below that are secured by any Lien on any property or asset of such Person, the amount of such obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the obligation so secured; (viii) all obligations under Currency Agreements and Interest Swap Obligations of such Person; and (ix) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to its maximum fixed repurchase price (or comparable price that such Person may be required to pay for the acquisition or retirement of such Disqualified Capital Stock), but excluding accrued dividends, if any. 89 96 For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified 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 Disqualified Capital Stock, such fair market value shall be determined in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock. "Independent Financial Advisor" means a firm: (i) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect equity beneficial ownership interest in Del Monte Corporation exceeding 10%; and (ii) which, in the judgment of the Board of Directors of Del Monte Corporation, is otherwise independent and qualified to perform the task for which it is to be engaged. "Interest Swap Obligations" means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements. "Investment" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other Person. In the case of Del Monte Corporation, "Investment" shall exclude extensions of trade credit (including trade receivables) by Del Monte Corporation and its Restricted Subsidiaries on commercially reasonable terms in accordance with normal trade practices of Del Monte Corporation or such Restricted Subsidiary, as the case may be. For the purposes of the covenant described under "Certain Covenants -- Limitation on Restricted Payments," (i) "Investment" shall include and be valued at the portion of the fair market value of the net assets of any Restricted Subsidiary represented by Del Monte Corporation's equity interest in such Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary and shall exclude the fair market value of the net assets of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by Del Monte Corporation or any of its Restricted Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, reduced by the payment of dividends or distributions in connection with such Investment or any other amounts received in respect of such Investment; provided that no such payment of dividends or distributions or receipt of any such other amounts shall reduce the amount of any Investment if such payment of dividends or distributions or receipt of any such amounts would be included in Consolidated Net Income. If Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation sells or otherwise disposes of any Common Stock of any direct or indirect Restricted Subsidiary of Del Monte Corporation such that, after giving effect to any such sale or disposition, Del Monte Corporation no longer owns, directly or indirectly, 80% of the outstanding Common Stock of such Restricted Subsidiary, Del Monte Corporation shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of such Restricted Subsidiary not sold or disposed of. "Issue Date" means the date of original issuance of the Notes. "Legal Holiday" means a Saturday, Sunday or day on which banking institutions in New York, New York are not required to be open except that, when such term is used with respect to a particular place 90 97 where a payment is to be made in respect of the Notes and with respect to the payment to be made on the Notes at such place, such term means a Saturday, Sunday or other day on which banking institutions in such place of payment are not required to be open. "Lien" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest). "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by Del Monte Corporation or any of its Restricted Subsidiaries from such Asset Sale net of: (a) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions); (b) taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements; (c) repayment of Indebtedness that is required to be repaid in connection with such Asset Sale; and (d) appropriate amounts to be provided by Del Monte Corporation or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by Del Monte Corporation or any Restricted 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. "Obligations" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Permitted Indebtedness" means, without duplication, each of the following: (i) Indebtedness under the Notes, excluding any Additional Notes; (ii) Indebtedness incurred pursuant to the Credit Agreement in an aggregate principal amount at any time outstanding not to exceed the greater of (i) the Borrowing Base, or (ii) $840 million less (A) the sum of: (y) the aggregate amount of all scheduled mandatory principal payments in respect of term loans thereunder (excluding any such payments to the extent refinanced at the time of payment under a replacement Credit Agreement) actually made by Del Monte Corporation, plus (z) the aggregate amount of all mandatory principal payments in respect of such term loans thereunder made by reason of or attributable to the receipt of proceeds from Asset Sales; plus (B) in the case of the revolving credit facility thereunder, the aggregate amount of required permanent repayments which are accompanied by a corresponding permanent commitment reduction thereunder made by reason of or attributable to the receipt of proceeds from Asset Sales; plus (C) the amount of the Receivables Program Obligations then outstanding. (iii) other Indebtedness of Del Monte Corporation and its Restricted Subsidiaries outstanding on the Issue Date (excluding any Indebtedness in respect of Del Monte Corporation's 12 1/4% Senior Subordinated Notes Due 2007 which are repurchased or retired by or on behalf of Del Monte 91 98 Corporation as contemplated by the offer to purchase by Del Monte Corporation dated April 16, 2001), reduced by the amount of any scheduled amortization payments or mandatory prepayments when actually paid or permanent reductions thereon; (iv) Interest Swap Obligations of Del Monte Corporation covering Indebtedness of Del Monte Corporation or any of its Restricted Subsidiaries and Interest Swap Obligations of any Restricted Subsidiary of Del Monte Corporation covering Indebtedness of such Restricted Subsidiary; provided, however, that such Interest Swap Obligations are entered into to protect Del Monte Corporation and its Restricted Subsidiaries from fluctuations in interest rates on Indebtedness incurred in accordance with the Indenture to the extent the notional principal amount of such Interest Swap Obligation does not exceed the principal amount of the Indebtedness to which such Interest Swap Obligation relates; (v) Indebtedness under Currency Agreements; provided that in the case of Currency Agreements which relate to Indebtedness, such Currency Agreements do not increase the Indebtedness of Del Monte Corporation and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; (vi) Indebtedness of a Wholly Owned Restricted Subsidiary of Del Monte Corporation to Del Monte Corporation or to another Wholly Owned Restricted Subsidiary of Del Monte Corporation, in either case for so long as such Indebtedness is held by Del Monte Corporation or a Wholly Owned Restricted Subsidiary of Del Monte Corporation, in each case subject to no Lien held by a Person other than Del Monte Corporation or a Wholly Owned Restricted Subsidiary of Del Monte Corporation; provided that if as of any date any Person other than Del Monte Corporation or a Wholly Owned Restricted Subsidiary of Del Monte Corporation owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, there shall be deemed to have occurred on such date the incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer of such Indebtedness; (vii) Indebtedness of Del Monte Corporation to a Wholly Owned Restricted Subsidiary of Del Monte Corporation for so long as such Indebtedness is held by a Wholly Owned Restricted Subsidiary of Del Monte Corporation, in each case subject to no Lien; provided that: (a) any Indebtedness of Del Monte Corporation to a Wholly Owned Restricted Subsidiary of Del Monte Corporation is unsecured and subordinated, pursuant to a written agreement, to Del Monte Corporation's obligations under the Indenture and the Notes and (b) if as of any date any Person other than a Wholly Owned Restricted Subsidiary of Del Monte Corporation owns or holds any such Indebtedness or any Person holds a Lien in respect of such Indebtedness, there shall be deemed to have occurred on such date the incurrence of Indebtedness not constituting Permitted Indebtedness by Del Monte Corporation; (viii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five business days of incurrence; (ix) Indebtedness of Del Monte Corporation or any of its Restricted Subsidiaries in respect of security for workers' compensation claims, payment obligations in connection with self-insurance, performance bonds, surety bonds or similar requirements in the ordinary course of business; (x) Capitalized Lease Obligations and Purchase Money Indebtedness of Del Monte Corporation and its Restricted Subsidiaries incurred in the ordinary course of business and Indebtedness arising from the conversion of the obligations of Del Monte Corporation under or pursuant to the "synthetic lease" transactions to on-balance sheet Indebtedness of Del Monte Corporation in an aggregate amount at any time outstanding not to exceed 10% of the Consolidated Net Tangible Assets of 92 99 Del Monte Corporation as shown on the then most recent consolidated balance sheet of Del Monte Corporation and its Restricted Subsidiaries prepared in accordance with GAAP; (xi) guarantees by Del Monte Corporation and its Wholly Owned Restricted Subsidiaries of each other's Indebtedness; provided that such Indebtedness is permitted to be incurred under the Indenture, including, with respect to guarantees by Wholly Owned Restricted Subsidiaries of Del Monte Corporation, the covenant described under "Certain Covenants -- Limitation of Guarantees by Restricted Subsidiaries;" (xii) Acquired Indebtedness and Acquisition Financing Indebtedness; provided that, if such Indebtedness is incurred after June 30, 2003, immediately after giving effect to the transaction in which such Acquired Indebtedness or Acquisition Financing Indebtedness is incurred, Del Monte Corporation is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the covenant described under "Certain Covenants -- Limitation on Incurrence of Additional Indebtedness;" and provided further, that if such Indebtedness is incurred on or before June 30, 2003, the consolidated Fixed Charge Coverage Ratio of Del Monte Corporation and its Restricted Subsidiaries, after giving effect to the transaction in which such Acquired Indebtedness or Acquisition Financing Indebtedness is incurred (a "pro forma Consolidated Fixed Charge Coverage Ratio") (A) shall be greater than 1.8 to 1.0, and (B) shall be at least equal to the Consolidated Fixed Charge Coverage Ratio at such time without giving effect to the transaction in which such Acquired Indebtedness or Acquisition Financing Indebtedness is incurred; (xiii) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any obligations of Del Monte Corporation or any of its Restricted Subsidiaries pursuant to such agreements, in each case incurred in connection with the disposition of any business, assets or Restricted Subsidiary of Del Monte Corporation (other than guarantees of Indebtedness or other obligations incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary of Del Monte Corporation for the purpose of financing such acquisition) in a principal amount not to exceed the gross proceeds actually received by Del Monte Corporation or any of its Restricted Subsidiaries in connection with such disposition; provided, however, that the principal amount of any Indebtedness incurred pursuant to this clause (xiii), when taken together with all Indebtedness incurred pursuant to this clause (xiii) and then outstanding, shall not exceed $25 million; (xiv) guarantees furnished by Del Monte Corporation or its Restricted Subsidiaries in the ordinary course of business of Indebtedness of another Person in an aggregate amount not to exceed $10 million at any time outstanding; (xv) Refinancing Indebtedness; (xvi) Receivables Program Obligations; (xvii) additional Indebtedness of Del Monte Corporation and its Restricted Subsidiaries in an aggregate principal amount not to exceed $65 million at any one time outstanding (which amount may, but need not, be incurred in whole or in part under the Credit Agreement); (xviii) Indebtedness incurred under commercial letters of credit issued for the account of Del Monte Corporation or any of its Restricted Subsidiaries in the ordinary course of business (and not for the purpose of, directly or indirectly, incurring Indebtedness or providing credit support or a similar arrangement in respect of Indebtedness), provided that any drawing under any such letter of credit is reimbursed in full within seven days; and (xix) Any guarantee by a Restricted Subsidiary of any Indebtedness incurred pursuant to the Credit Agreement. For purposes of determining compliance with the covenant described above under "Certain Covenants -- Limitation on Incurrence of Additional Indebtedness," in the event that an item of 93 100 Indebtedness meets the requirements of one or more of the categories of Permitted Indebtedness set forth in clauses (i) through (xviii) above, Del Monte Corporation shall, in its sole discretion, determine under which such clause such item of Indebtedness shall be classified and, so long as such item of Indebtedness meets the requirements for inclusion as Permitted Indebtedness under such clause, such item of Indebtedness will be treated as having been incurred pursuant to such clause. "Permitted Investments" means: (i) Investments by Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation in any Person that is or will become immediately after such Investment a Restricted Subsidiary of Del Monte Corporation or that will immediately after such Investment merge or consolidate with or into Del Monte Corporation or a Restricted Subsidiary of Del Monte Corporation, or that will immediately after such Investment transfer or convey all of its assets (including such Investment) to Del Monte Corporation or a Restricted Subsidiary of Del Monte Corporation, provided that such Person is engaged, in all material respects, solely in the business of food, food distribution and related businesses; (ii) Investments in Del Monte Corporation by any Restricted Subsidiary of Del Monte Corporation; provided that any Indebtedness evidencing such Investment is unsecured and subordinated, pursuant to a written agreement, to Del Monte Corporation's obligations under the Notes and the Indenture; (iii) Investments in cash and Cash Equivalents; (iv) loans and advances to employees and officers of Del Monte Corporation and its Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of $10 million at any one time outstanding; (v) Currency Agreements and Interest Swap Obligations entered into in the ordinary course of Del Monte Corporation's or its Restricted Subsidiaries' businesses and otherwise in compliance with the Indenture; (vi) additional Investments not to exceed $37.5 million at any one time outstanding; (vii) Investments in securities received in settlement of obligations of trade creditors or customers in the ordinary course of business or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of trade creditors or customers; (viii) Investments made by Del Monte Corporation or its Restricted Subsidiaries as a result of consideration received in connection with an Asset Sale made in compliance with the covenant described under "Certain Covenants -- Limitation on Asset Sales," or not constituting an Asset Sale by reason of the $1 million threshold contained in the definition thereof; (ix) Investments specifically permitted by and made in accordance with the provisions of the covenant described under "Certain Covenants -- Limitation on Transactions with Affiliates;" (x) guarantees permitted by the covenant described under "Certain Covenants -- Limitation of Guarantees by Restricted Subsidiaries;" (xi) Related Business Investments in companies and ventures in which Del Monte Corporation or a Restricted Subsidiary of Del Monte Corporation holds an equity ownership interest of not less than 33 1/3% in an aggregate amount not exceeding the sum of (x) the unutilized portion of the amount of Investments permitted by clause (vi) of this definition, plus 94 101 (y) the proceeds of the sale of certain assets identified in a schedule to the Indenture as being held for disposition, plus (z) $37.5 million; (xii) Investments made in connection with a Qualified Receivables Transaction; and (xiii) any acquisition of assets solely in exchange for the issuance of Qualified Capital Stock of Del Monte Corporation. "Permitted Liens" means the following types of Liens: (i) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent, or (b) being contested in good faith by appropriate proceedings and as to which Del Monte Corporation or any of its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent for a period of more than 60 days or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security or similar obligations, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations,surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (iv) judgment Liens not giving rise to an Event of Default 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 shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (v) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of Del Monte Corporation or any of its Restricted Subsidiaries; (vi) any interest or title of a lessor under any lease, whether or not characterized as capital or operating; provided that such Liens do not extend to any property or assets which is not leased property subject to such lease; (vii) Liens securing Capitalized Lease Obligations and Purchase Money Indebtedness incurred in accordance with the covenant described under "Certain Covenants -- Limitation on Incurrence of Additional Indebtedness;" provided, however, that in the case of Purchase Money Indebtedness (A) the Indebtedness shall not exceed the cost of such property or assets being acquired or constructed and shall not be secured by any property or assets of Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation other than the property and assets being acquired or constructed, and (B) the Lien securing such Indebtedness shall be created within 90 days of such acquisition or construction; 95 102 (viii) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (ix) Liens securing reimbursement obligations with respect to letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; (x) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of Del Monte Corporation or any of its Restricted Subsidiaries, including rights of offset and set-off; (xi) Liens securing Interest Swap Obligations that relate to Indebtedness that is otherwise permitted under the Indenture; (xii) Liens securing Indebtedness under Currency Agreements; (xiii) Liens securing Acquired Indebtedness incurred in accordance with the covenant described under "Certain Covenants -- Limitation on Incurrence of Additional Indebtedness;" provided that (A) such Liens secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by Del Monte Corporation or a Restricted Subsidiary of Del Monte Corporation and were not granted in connection with, or in anticipation of, the incurrence of such Acquired Indebtedness by Del Monte Corporation or a Restricted Subsidiary of Del Monte Corporation, and (B) such Liens do not extend to or cover any property or assets of Del Monte Corporation or of any of its Restricted Subsidiaries other than the property or assets that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of Del Monte Corporation or a Restricted Subsidiary of Del Monte Corporation and are no more favorable to the lienholders than those securing the Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by Del Monte Corporation or a Restricted Subsidiary of Del Monte Corporation; (xiv) leases or subleases granted to others not interfering in any material respect with the business of Del Monte Corporation or its Restricted Subsidiaries; (xv) Liens arising out of consignment or similar arrangements for the sale of goods entered into by Del Monte Corporation or any of its Restricted Subsidiaries in the ordinary course of business; and (xvi) Liens on Receivables Program Assets securing Receivables Program Obligations. "Person" means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. "Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation. "principal" of any Indebtedness (including the Notes) means the outstanding principal amount of such Indebtedness plus the premium, if any, on such indebtedness. For purposes of clarity, it is hereby understood and agreed that references to "principal" shall mean and include "premium, if any" notwithstanding the fact that there may be references in this Description of the Notes to "principal and premium", if any. "pro forma" means, with respect to any calculation made or required to be made pursuant to the terms of the Indenture, a calculation in accordance with Article 11 of Regulation S-X under the Securities Act, except as otherwise specified herein. "Purchase Money Indebtedness" means Indebtedness of Del Monte Corporation or any of its Restricted Subsidiaries incurred in the normal course of business for the purpose of financing all or any 96 103 part of the purchase price, or the cost of installation, construction or improvement, of real or personal property or assets. "Purchase Money Note" means a promissory note evidencing the obligation of a Receivables Subsidiary to pay the purchase price for Receivables or other indebtedness to Del Monte Corporation or to any other Seller in connection with a Qualified Receivables Transaction, which note shall be repaid from cash available to the maker of such note, other than cash required to be held as reserves pursuant to Receivables Documents, amounts paid in respect of interest, principal and other amounts owing under Receivables Documents and amounts paid in connection with the purchase of newly generated Receivables. "Qualified Capital Stock" means any Capital Stock that is not Disqualified Capital Stock. "Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by Del Monte Corporation or any Subsidiary of Del Monte Corporation pursuant to which Del Monte Corporation or any such Subsidiary may sell, convey or otherwise transfer to a Receivables Subsidiary (in the case of a transfer by Del Monte Corporation or any other Seller) and any other person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any Receivables Program Assets (whether existing on the date of the Indenture or arising thereafter); provided that: (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of a Receivables Subsidiary or Special Purpose Vehicle (i) is guaranteed by Del Monte Corporation or any other Seller (excluding guarantees of obligations pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates Del Monte Corporation or any other Seller in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of Del Monte Corporation or any other Seller, directly or indirectly, contingently or otherwise, to the satisfaction of obligations incurred in such transactions, other than pursuant to Standard Securitization Undertakings; (b) neither Del Monte Corporation nor any other Seller has any material contract, agreement, arrangement or understanding with a Receivables Subsidiary or a Special Purpose Vehicle (except in connection with a Purchase Money Note or Qualified Receivables Transaction) other than on terms no less favorable to Del Monte Corporation or such Seller than those that might be obtained at the time from Persons that are not Affiliates of Del Monte Corporation, other than fees payable in the ordinary course of business in connection with servicing accounts receivable; and (c) Del Monte Corporation and the other Sellers do not have any obligation to maintain or preserve the financial condition of a Receivables Subsidiary or a Special Purpose Vehicle or cause such entity to achieve certain levels of operating results. "Recapitalization" means the recapitalization of Holdings pursuant to the Agreement and Plan of Merger dated as of February 21, 1997, as amended and restated as of April 14, 1997, entered into among TPG Partners, TPG Shield Acquisition Corporation and Holdings. "Receivables" means all rights of Del Monte Corporation or any other Seller to payments (whether constituting accounts, chattel paper, instruments, general intangibles or otherwise, and including the right to payment of any interest or finance charges), which rights are identified in the accounting records of Del Monte Corporation or such Seller as accounts receivable. "Receivables Documents" means: (x) a receivables purchase agreement, pooling and servicing agreement, credit agreement, agreements to acquire undivided interests or other agreement to transfer, or create a security interest in, Receivables Program Assets, in each case as amended, modified, supplemented or restated and in 97 104 effect from time to time and entered into by Del Monte Corporation, another Seller and/or a Receivables Subsidiary, and (y) each other instrument, agreement and other document entered into by Del Monte Corporation, any other Seller or a Receivables Subsidiary relating to the transactions contemplated by the agreements referred to in clause (x) above, in each case as amended, modified, supplemented or restated and in effect from time to time. "Receivables Program Assets" means: (a) all Receivables which are described as being transferred by Del Monte Corporation, another Seller or a Receivables Subsidiary pursuant to the Receivables Documents; (b) all Receivables Related Assets; and (c) all collections (including recoveries) and other proceeds of the assets described in the foregoing clauses. "Receivables Program Obligations" means: (a) notes, trust certificates, undivided interests, partnership interests or other interests representing the right to be paid a specified principal amount for the Receivables Program Assets; and (b) related obligations of Del Monte Corporation, a Subsidiary of Del Monte Corporation or a Special Purpose Vehicle (including, without limitation, rights in respect of interest or yield, breach of warranty claims and expense reimbursement and indemnity provisions). "Receivables Related Assets" means: (i) any rights arising under the documentation governing or relating to Receivables (including rights in respect of liens securing such Receivables and other credit support in respect of such Receivables); (ii) any proceeds of such Receivables and any lockboxes or accounts in which such proceeds are deposited; (iii) spread accounts and other similar accounts (and any amounts on deposit therein) established in connection with a Qualified Receivables Transaction; (iv) any warranty, indemnity, dilution and other intercompany claim arising out of Receivables Documents; and (v) other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable. "Receivables Subsidiary" means a special purpose wholly owned subsidiary of Del Monte Corporation created in connection with the transactions contemplated by a Qualified Receivables Transaction, which subsidiary engages in no activities other than those incidental to such Qualified Receivables Transaction and which is designated as a Receivables Subsidiary by Del Monte Corporation's Board of Directors. Any such designation by the Board of Directors shall be evidenced by filing with the Trustee a Board Resolution of Del Monte Corporation giving effect to such designation and an Officers' Certificate certifying, to the best of such officers' knowledge and belief after consulting with counsel, such designation, and the transactions in which the Receivables Subsidiary will engage, comply with the requirements of the definition of Qualified Receivables Transaction. "Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness, in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings. 98 105 "Refinancing Indebtedness" means any Refinancing by Del Monte Corporation or any Restricted Subsidiary of Del Monte Corporation of Indebtedness incurred in accordance with the covenant described under "Certain Covenants -- Limitation on Incurrence of Additional Indebtedness" (other than pursuant to clauses (ii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xiii), (xiv), (xvi), (xvii) or (xviii) of the definition of Permitted Indebtedness), in each case that does not: (1) result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by Del Monte Corporation in connection with such Refinancing); or (2) create Indebtedness with (A) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced, or (B) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; provided that (x) if such Indebtedness being Refinanced is solely Indebtedness of Del Monte Corporation, then such Refinancing Indebtedness shall be Indebtedness solely of Del Monte Corporation; and (y) if such Indebtedness being Refinanced is subordinate or junior to the Notes, then such Refinancing Indebtedness shall be subordinate to the Notes at least to the same extent and in the same manner as the Indebtedness being Refinanced. "Registration Rights Agreement" means the Registration Rights Agreement dated the Issue Date among Del Monte Corporation, Holdings and the placement agents for the benefit of themselves and the Holders, as the same may be amended or modified from time to time in accordance with the terms thereof. "Related Business Investment" means: (i) any Investment by a Person in any other Person a majority of whose revenues are derived from the food, food distribution or related businesses; and (ii) any Investment by such Person in any cooperative or other supplier, including, without limitation, any joint venture which is intended to supply any product or service useful to the business of Del Monte Corporation and its Restricted Subsidiaries. "Related Party" means any Affiliate of TPG. "Representative" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Debt; provided that, if and for so long as any Designated Senior Debt lacks such a representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt. "Restricted Subsidiary" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary. "Rule 144A" means Rule 144A (or any successor thereto) under the Securities Act. "Sale and Leaseback Transaction" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to Del Monte Corporation or a Restricted Subsidiary of Del Monte Corporation of any property, whether owned by Del Monte Corporation or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by Del Monte Corporation or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such Property. 99 106 "Seller" means Del Monte Corporation or any Subsidiary or other Affiliate of Del Monte Corporation (other than a Receivables Subsidiary) which is a party to a Receivables Document. "Senior Debt" means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a bankruptcy petition at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of Del Monte Corporation, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes. Without limiting the generality of the foregoing, "Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of: (x) all monetary obligations (including guarantees thereof) of every nature of Del Monte Corporation under the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities; (y) all Interest Swap Obligations (including guarantees thereof); and (z) all obligations (including guarantees thereof) under Currency Agreements; in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not include: (i) any Indebtedness of Del Monte Corporation to a Subsidiary of Del Monte Corporation; (ii) Indebtedness to, or guaranteed by Del Monte Corporation for the benefit of, any shareholder (other than a parent corporation), director, officer or employee of Del Monte Corporation or any Subsidiary of Del Monte Corporation (including, without limitation, amounts owed for compensation); (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services; (iv) Indebtedness represented by Disqualified Capital Stock; (v) any liability for federal, state, local or other taxes owed or owing by Del Monte Corporation; (vi) any Indebtedness incurred in violation of the Indenture; and (vii) any Indebtedness, and any other obligation referred to in clause (x), (y) or (z) of this definition, which in each case is, by its express terms or by the express terms of the instrument or agreement creating or evidencing the same or pursuant to which the same is outstanding, subordinated in right of payment to any other Indebtedness of Del Monte Corporation. "Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w) of Regulation S-X under the Securities Act as in effect on the Issue Date. "Special Purpose Vehicle" means a trust, partnership or other special purpose Person established by Del Monte Corporation and/or any of its Subsidiaries to implement a Qualified Receivables Transaction. "Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by Del Monte Corporation or any Subsidiary of Del Monte Corporation which, in the good faith judgment of the Board of Directors of the appropriate company, are reasonably customary in an accounts receivable transactions. 100 107 "Subsidiary," with respect to any Person, means: (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time owned, directly or indirectly, by such Person. "Tax Sharing Agreement" means the tax sharing agreement between Del Monte Corporation and Holdings allocating the obligations to contribute amounts for the payment of income taxes and the benefits of any credits or other reductions of tax payments so as to approximate the income taxes that would be payable by Del Monte Corporation and Holdings on a stand-alone basis if no consolidated tax return were filed by such entities. "TPG" means TPG Partners, L.P., a Delaware limited partnership. "U.S. Government Obligations" means direct obligations of, and obligations guaranteed by, the United States for the payment of which the full faith and credit of the United States is pledged. "Unrestricted Subsidiary" of any Person means: (i) any Subsidiary of such Person that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of Del Monte Corporation may designate any Subsidiary of Del Monte Corporation (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, Del Monte Corporation or any other Subsidiary of Del Monte Corporation that is not a Subsidiary of the Subsidiary to be so designated; provided that (x) Del Monte Corporation certifies to the Trustee that such designation complies with the covenant described under "Certain Covenants -- Limitation on Restricted Payments," and (y) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender thereof has recourse to any of the assets of Del Monte Corporation or any of its Restricted Subsidiaries. The Board of Directors of Del Monte Corporation may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if: (x) immediately after giving effect to such designation, Del Monte Corporation is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the covenant described under "Certain Covenants -- Limitation on Incurrence of Additional Indebtedness," and (y) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing. Any such designation by the Board of Directors of Del Monte Corporation shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. 101 108 "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment. "Wholly Owned Restricted Subsidiary" of any Person means any Restricted Subsidiary of such Person of which all the outstanding voting securities (other than, in the case of a foreign Restricted Subsidiary, directors' qualifying shares or an immaterial amount of shares otherwise required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Restricted Subsidiary of such Person. BOOK-ENTRY; DELIVERY AND FORM Outstanding Notes were offered and sold to qualified institutional buyers ("QIBs") in reliance on Rule 144A ("Restricted Global Notes") or, if offered and sold in offshore transactions, in reliance on Regulation S ("Regulation S Global Notes"), in registered, global form, without interest coupons, in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof. The Regulation S Global Notes were deposited with the Trustee as custodian for, and registered in the name of a nominee of, DTC for the accounts of Euroclear and Clearstream. Prior to the 40th day after the Issue Date, beneficial interests in the Regulation S Global Notes may only be held through Euroclear or Clearstream, and any resale or transfer of such interests to U.S. persons shall not be permitted during such period unless such resale or transfer is made pursuant to Rule 144A or Regulation S. The Outstanding Notes were issued in definitive, fully registered form and are subject to certain restrictions on transfer set forth therein. Ownership of beneficial interests in a Restricted Global Note or a Regulation S Global Note is limited to persons who have accounts with DTC ("participants") or persons who hold interests through participants. Ownership of beneficial interests in a Restricted Global Note or a Regulation S Global Note is shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interest of participants) and the records of participants (with respect to interests of persons other than participants). QIBs may hold their interests in a Restricted Global Note directly through DTC if they are participants in such system, or indirectly through organizations which are participants in such system. Investors may hold their interests in a Regulation S Global Note directly through Clearstream or Euroclear, if they are participants in such systems, or indirectly through organizations that are participants in such systems. On or after the 40th day following the Issue Date, investors may also hold such interests through organizations other than Clearstream or Euroclear that are participants in the DTC system. Clearstream and Euroclear will hold interests in the Regulation S Global Notes on behalf of their participants through DTC. Exchange Notes issued in exchange for Outstanding Notes originally offered and sold (1) to QIBs in reliance on Rule 144A under the Securities Act or (2) in reliance on Regulation S under the Securities Act will be represented by a single, permanent Global Note in definitive, fully registered book-entry form (the "Exchange Global Note" and together with the Restricted Global Notes and the Regulation S Global Notes, the "Global Notes"), which will be registered in the name DTC, or its nominee, on behalf of persons who receive Exchange Notes represented thereby for credit to the respective accounts of such persons, or to such other accounts as they may direct at DTC. 102 109 Exchange Notes issued in exchange for Outstanding Notes will be issued, upon request, in fully registered form, but otherwise such holders will only be entitled to registration of their respective Exchange Notes in book-entry form under the Exchange Global Note. So long as DTC, or its nominee, is the registered owner or holder of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Global Note for all purposes under the Indenture and the Notes. No beneficial owner of an interest in a Global Note will be able to transfer that interest except in accordance with DTC's applicable procedures, in addition to those provided for under the Indenture and, if applicable, those of Euroclear and Clearstream. Payments of the principal of, and interest on, a Global Note will be made to DTC or its nominee, as the case may be, as the registered owner thereof. Neither Del Monte Corporation, 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 a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Del Monte Corporation expects that DTC or its nominee, upon receipt of any payment of principal or interest in respect of a Global Note, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note as shown on the records of DTC or its nominee. Del Monte Corporation also expects that payments by participants to owners of beneficial interests in such Global Note held through such participants will be 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 same-day funds. Transfers between participants in Euroclear and Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures. Del Monte Corporation expects that DTC will take any action permitted to be taken by a Holder of Notes (including the presentation of Notes for exchange as described below) only at the direction of one or more participants to whose account the DTC interests in a Global Note is credited and only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the Notes, DTC will exchange the applicable Global Note for Notes in registered form without interest coupons ("Certificated Notes"), which it will distribute to its participants and which may be subject to transfer restrictions. Del Monte Corporation understands that: DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of 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. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies and certain other organizations that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). Although DTC, Euroclear and Clearstream are expected to follow the foregoing procedures in order to facilitate transfers of interests in a Global Note among participants of DTC, Euroclear and Clearstream, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither Del Monte Corporation nor the Trustee will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. 103 110 If DTC is at any time unwilling or unable to continue as a depositary for the Global Notes and a successor depositary is not appointed by Del Monte Corporation within 90 days, Del Monte Corporation will issue Certificated Notes, which may be subject to transfer restrictions, in exchange for the Global Notes. Holders of an interest in a Global Note may receive Certificated Notes, which may be subject to transfer restrictions in accordance with the DTC's rules and procedures in addition to those provided for under the Indenture. DESCRIPTION OF EXISTING INDEBTEDNESS The following is a summary of our existing credit facility and our existing notes. EXISTING CREDIT FACILITY The credit facility consists of a term loan of $415 million and a revolving credit facility of $325 million. The revolving credit facility provides for a letter of credit sublimit of $70 million and a "swingline" sublimit of $25 million (representing funds that DMC may borrow with only limited advance notice). Amounts available under the revolving credit facility are subject to certain borrowing base limitations based upon, among other things, the amounts and applicable advance rates in respect of DMC's eligible accounts receivable and inventory. The credit facility contains a provision pursuant to which DMC may borrow an additional amount not to exceed, in aggregate, $100 million under the term loan or the revolving credit facility from additional commitments from new or existing lenders without any additional approval from the existing lenders. No lender is required to provide all or part of any such increase. Interest Rates; Fees The initial interest rates per annum applicable to amounts outstanding under the revolving credit facility are, at DMC's option, either (i) the base rate as defined in the credit facility plus 1.75% per annum known as the applicable base rate margin, or (ii) the reserve adjusted offshore rate as defined in the credit facility plus 2.75% per annum known as the applicable offshore rate margin. Such applicable base rate margin and applicable offshore rate margin may be adjusted periodically based upon DMC's senior leverage ratio. Initial interest rates on the term loan are, at DMC's option, either (i) the base rate plus 2% per annum, or (ii) the offshore rate plus 3% per annum. The applicable margins may be adjusted periodically based upon DMC's senior leverage ratio. Loans outstanding under the swingline portion of the revolving credit facility bear interest at the base rate plus 1.00% per annum. Interest amounts outstanding during the continuance of events of default under the credit facility accrue at the interest rate otherwise applicable thereto plus 2.00% per annum and are payable on demand. DMC is required to pay the lenders under the revolving credit facility an initial commitment fee equal to .75% per annum, payable quarterly in arrears, on the unused portion of such facility. DMC is also required to pay the lenders under the revolving credit facility initial letter of credit fees of 2.25% per annum for commercial letters of credit and 2.75% per annum for all other letters of credit, as well as an additional fee in the amount of .25% per annum to the bank issuing such letters of credit. The commitment fee and the letter of credit fees may be adjusted periodically based upon DMC's senior leverage ratio. At March 31, 2001, we had $167.5 million outstanding under the previous credit facility. Amortization; Prepayments The term loan will mature seven years after the consummation of the refinancing and will be subject to amortization, commencing in June, 2001, on a quarterly basis of $1,037,500 for the first twenty-four quarters and $97,525,000 for each of the last four quarters. The revolving credit facility will mature six years after the consummation of the refinancing. DMC will be required to make certain prepayments, subject to certain exceptions, of the outstanding amounts under the term loan and the revolving credit 104 111 facility from excess cash flow, asset sales, issuances of debt and equity securities and insurance or condemnation proceeds. Amounts under the credit facility may be prepaid at DMC's option without premium or penalty. Guarantees and Collateral DMFC has guaranteed DMC's obligations under the credit facility. DMC's obligations are secured by substantially all of its assets. DMFC's guarantee is secured by a pledge of DMC's stock. DMC's obligations are also secured by first priority liens on certain of its unencumbered real property fee interests. Covenants Pursuant to the terms of the credit facility, we are required to meet certain financial tests, including a maximum total leverage ratio, a maximum senior leverage ratio, a minimum fixed charge coverage ratio and a minimum interest coverage ratio. In addition, DMC agrees to covenant that, among other things, it will limit the incurrence of additional indebtedness, dividends, transactions with affiliates, asset sales, acquisitions, mergers, prepayment of other indebtedness, liens and encumbrances and other matters customarily restricted in loan agreements. Events of Default The credit facility contains customary events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults, certain events of bankruptcy and insolvency, certain ERISA-related events, judgment defaults, failure of any guaranty or security agreement supporting DMC's obligations under the credit facility to be in full force and effect and a change of control of DMC or DMFC. 105 112 CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following is a general discussion of United States federal income and estate tax consequences associated with the exchange of the outstanding notes for the exchange notes and of the ownership and disposition of the exchange notes by an initial beneficial owner of the notes that, for United States federal income tax purposes, is not a "United States person" (referred to in this section as a "non-U.S. holder"). For purposes of this discussion, a "United States person" means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in the United States or under the laws of the United States or of any political subdivision thereof, an estate whose income is includible in gross income for United States federal income tax purposes regardless of its source or a trust, if a United States court is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. Notwithstanding the previous sentence, to the extent provided in the applicable United States Treasury Regulations, certain trusts in existence before August 20, 1996 and treated as United States persons before such date that elect to be so treated shall also be considered United States persons. "United States" refers to the United States of America (including the States and the District of Columbia) and its possessions, which include, as of the date of this prospectus, Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island, and Northern Mariana Islands. The discussion below is based upon current provisions of the Internal Revenue Code of 1986, referred to in this section as the "Code", applicable United States Treasury Regulations, judicial authority and administrative rulings and practice, any of which may be altered with retroactive effect thereby changing the federal tax consequences discussed below. The tax treatment of the holders of the notes may vary depending upon their particular situations. United States persons acquiring the notes are subject to different rules than those discussed below. In addition, certain other holders (including insurance companies, tax exempt organizations, financial institutions and broker-dealers) may be subject to special rules not discussed below. We will not seek a ruling from the Internal Revenue Service, or the IRS, with respect to any of the matters discussed in this prospectus and there can be no assurance that the IRS will not challenge one or more of the tax consequences described below. Prospective investors are urged to consult their tax advisors regarding the United States federal income tax consequences of acquiring, holding and disposing of notes, as well as any tax consequences that may arise under the laws of any foreign, state, local or other taxing jurisdiction. THE EXCHANGE OFFER The exchange of outstanding notes for exchange notes pursuant to this exchange offer should not be treated as an "exchange" for United States federal income tax purposes because the exchange notes will not be considered to differ materially in kind or extent from the outstanding notes. Rather, any exchange notes received by you should be treated as a continuation of your investment in the outstanding notes. As a result, there should be no United States federal income tax consequences to you resulting from the exchange offer. In addition, you should have the same adjusted issue price, adjusted basis, and holding period in the exchange notes as you had in the outstanding notes immediately prior to the exchange. UNITED STATES FEDERAL WITHHOLDING TAX The 30% United States federal withholding tax will not apply to any payment of principal, interest or premium made to non-U.S. holders provided that: - you do not actually (or constructively) own 10% or more of the total combined voting power of all classes of our voting stock within the meaning of the Code and the United States Treasury regulations; - you are not a controlled foreign corporation that is related to us through stock ownership; - you are not a bank whose receipt of interest on the notes is pursuant to a loan agreement entered into in the ordinary course of business; and 106 113 - you provide your name and address on an IRS Form W-8BEN (or successor form), and certify, under penalty of perjury, that you are not a U.S. person, or - a financial institution holding the notes on your behalf either (1) certifies, under penalty of perjury, that it has received an IRS Form W-8BEN (or successor form) from the beneficial owner and provides us with a copy or (2) complies with one of the alternatives set forth in recently finalized Treasury Regulations for "qualified intermediaries." If you cannot satisfy the requirements described above, payments of interest made to you will be subject to the 30% United States federal withholding tax, unless you provide us with a properly executed (1) IRS Form W-8BEN (or successor form) claiming an exemption from (or a reduction of) withholding under the benefit of a tax treaty or (2) IRS Form W-8ECI (or successor form) stating that interest paid on the note is not subject to withholding tax because it is effectively connected with your conduct of a trade or business in the United States. The 30% United States federal withholding tax will generally not apply to any gain that you realize on the sale, exchange, or other disposition of the notes. UNITED STATES FEDERAL ESTATE TAX Your estate will not be subject to United States federal estate tax on notes beneficially owned by you at the time of your death, provided that (1) you do not own 10% or more of the total combined voting power of all classes of our voting stock (within the meaning of the Code and the United States Treasury Regulations) and (2) interest on that note would not have been, if received at the time of your death, effectively connected with the conduct by you of a trade or business in the United States. UNITED STATES FEDERAL INCOME TAX If you are engaged in a trade or business in the United States and interest on the notes is effectively connected with the conduct of that trade or business, you will be subject to United States federal income tax on the interest on a net income basis (although exempt from the 30% withholding tax) in the same manner as if you were a United States person as defined under the Code. In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% (or lower applicable treaty rate) of your earnings and profits for the taxable year that are effectively connected with the conduct by you of a trade or business in the United States. For this purpose, interest on notes will be included in earnings and profits if so effectively connected. Any gain realized on the sale, exchange, or redemption of notes generally will not be subject to United States federal income tax unless: - that gain or income is effectively connected with the conduct of a trade or business in the United States by you, or - you are an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met. INFORMATION REPORTING AND BACKUP WITHHOLDING We will, when required, report to the IRS and to each non-U.S. holder the amount of any interest paid on the notes in each calendar year, and the amount of tax withheld, if any, with respect to the payments. In general, you will not be subject to information reporting and backup withholding with respect to payments that we make to you provided that we do not have actual knowledge that you are a U.S. person and we have received from you the statement described above under "United States Federal Withholding Tax." 107 114 In addition, you will not be subject to backup withholding and information reporting with respect to the proceeds of the sale of a note within the United States or conducted through certain U.S.-related financial intermediaries, if the payor receives the statement described above and does not have actual knowledge that you are a U.S. person, as defined under the Code, or you otherwise establish an exemption. Any amounts withheld under the backup withholding rules will be allowed as a refund or credit against your United States federal income tax liability provided the required information is furnished to the IRS. THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS. LEGAL MATTERS The validity of the notes offered hereby will be passed upon for us by Gibson, Dunn & Crutcher LLP, San Francisco, California. EXPERTS The consolidated financial statements of DMFC as of June 30, 2000 and 1999, and for each of the years in the three-year period ended June 30, 2000, have been incorporated by reference herein and in the registration statement in reliance upon the report of KPMG LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. 108 115 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. With certain limitations, Sections 721 through 726 of the Business Corporation Law of the State of New York permit a corporation to indemnify any of its directors or officers made, or threatened to be made, a party to an action or proceeding by reason of the fact that such person was a director or officer of such corporation unless a judgment or other final adjudication adverse to the director or officer establishes that his or her acts were committed in bad faith or were the result of active and deliberative dishonesty and were material to the cause of action so adjudicated, or that he or she personally gained in fact financial profit or other advantage to which he or she was not legally entitled. Section 402(b) of the Business Corporation Law of the State of New York permits New York corporations to eliminate or limit the personal liability of directors to the corporation or its shareholders for damages for any breach of duty in such capacity except liability (i) of a director (a) whose acts or omissions were in bad faith, involved intentional misconduct or a knowing violation of law, (b) who personally gained a financial profit or other advantage to which he or she was not legally entitled or (c) whose acts violated certain other provisions of New York law or (ii) for acts or omissions prior to May 4, 1988. The Certificate of Incorporation of Registrant provides that Registrant shall indemnify any person made, or threatened to be made, a party to an action or proceeding (other than one by or in the right of Registrant to procure judgment in its favor), whether civil or criminal , including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of Registrant served in any capacity at the request of Registrant, by reason of the fact that he, his testator or interstate, was a director or officer of Registrant, or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service of any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of Registrant and, in criminal actions or proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful. Registrant shall indemnify any person made, or threatened to be made, a party to an action by or in the right of Registrant to procure a judgment in its favor by reason of the fact that he, his testator or interstate, is or was a director or officer of Registrant, or is or was serving at the request of Registrant as a director or officer of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, against amounts paid in settlement and reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense or settlement of such action, or in connection with an appeal therein, if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service of any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of Registrant, except that no indemnification shall be made in respect of (1) a threatened action, or a pending action which is settled or otherwise disposed of, or (2) any claim, issue or matter as to which such person shall have been adjudged to be liable to Registrant, unless and only to the extent that the court in which the action was brought, or, if no action was brought, any court of competent jurisdiction, determines upon application that, in view of all circumstances of the case, the person is fairly and reasonably entitled to indemnity for such portion of the settlement amount and expenses as the court deems proper. The Guarantor is incorporated under the laws of the State of Delaware. Section 145 of the General Corporation Law of the State of Delaware provides for the indemnification of officers and directors under 109 116 certain circumstances against expenses incurred in successfully defending against a claim and authorizes Delaware corporations to indemnify their officers and directors under certain circumstances against expenses and liabilities incurred in legal proceedings involving such persons because of their being or having been an officer or director. Article X of the Guarantor's Certificate of Incorporation provides that all persons whom the Guarantor is empowered to indemnify pursuant to Delaware General Corporation Law (or any applicable law at the time in effect), shall be indemnified and held harmless by the Guarantor to the full extent permitted thereby. The foregoing right of indemnification shall not be deemed to be exclusive of any other rights to which those seeking indemnification may acquire under any statute, provision of the Certificate of Incorporation, By-law, agreement, vote of stockholders or disinterested directors or otherwise. Section 102(b) of the Delaware General Corporation Law permits a corporation, by so providing in its certificate of incorporation, to eliminate or limit director's liability to the corporation and its stockholders for monetary damages arising out of certain alleged breaches of their fiduciary duty. Section 102(b)(7) provides that no such limitation of liability may affect a director's liability with respect to any of the following: (i) breaches of the director's duty of loyalty to the corporation or its stockholders; (ii) acts or omissions not made in good faith or which involve intentional misconduct of knowing violations of law; (iii) liability for dividends paid or stock repurchased or redeemed in violation of the Delaware General Corporation law; or (iv) any transaction from which the director derived an improper personal benefit. Section 102(b)(7) does not authorize any limitation on the ability of the corporation or its stockholders to obtain injunction relief, specific performance or other equitable relief against directors. All of Guarantor's directors and officers will be covered by insurance policies maintained by Guarantor against certain liabilities for actions taken in their capacities as such, including liabilities under the Securities Act of 1933, as amended. Reference is made to the Placement Agreement, which is filed as Exhibit 1.1, pursuant to which the underwriters agree to indemnify the directors and certain officers of the Registrant and certain other persons in certain circumstances. ITEM 21. EXHIBITS. (a) Exhibits
EXHIBIT NUMBER DESCRIPTION ------- ----------- 1.1 Placement Agreement dated May 3, 2001 by and among Del Monte Corporation, Del Monte Foods Company, Morgan Stanley & Co. Incorporated, Banc of American Securities LLC, Deutsche Banc Alex Brown, Inc., Chase Securities, Inc., ABN AMRO Incorporated, BMO Nesbitt Burns Corp. 3.1 Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-4 filed on June 12, 1997, File No. 333-29079 (the "DMC Registration Statement")). 3.2 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the DMC Registration Statement). 3.3 Amendment to the Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to the DMC Registration Statement). 3.4 Certificate of Incorporation of the Guarantor (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Registration Statement on Form S-1, File No. 333-48235, filed on May 18, 1998). 3.5 Amended and Restated Bylaws of the Guarantor (incorporated by reference to Exhibit 3(iii) to the Quarterly Report on Form 10Q for the period ended March 31, 1999). 4.1 Indenture dated as of May 15, 2001 among Del Monte Corporation, as issuer of 9 1/4% Senior Subordinated Notes due 2011, Del Monte Foods Company, as guarantor, and Bankers Trust Company, a New York banking corporation, as Trustee.
110 117
EXHIBIT NUMBER DESCRIPTION ------- ----------- 4.2 Specimen form of Series B Global Note. 4.3 Specimen form of Series B Regulation S Note. 4.4 Registration Rights Agreement dated May 15, 2001 by and among Del Monte Corporation, Del Monte Foods Company, Morgan Stanley & Co. Incorporated, Banc of American Securities LLC, Deutsche Banc Alex Brown, Inc., Chase Securities, Inc., ABN AMRO Incorporated, BMO Nesbitt Burns Corp. +5.1 Opinion of Gibson, Dunn & Crutcher LLP. **10.1 Third Amended and Restated Credit Agreement dated as of May 15, 2001, by and among Del Monte Corporation, Del Monte Foods Company, the Lenders named therein, Bank of America, N.A., as administrative agent, the Chase Manhattan Bank, as syndication agent, and Bankers Trust Company, as documentation agent. 10.2 Del Monte Foods Company 1998 Stock Incentive Plan (as amended through November 15, 2000) (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-8 filed on December 20, 2000, File No. 333-52226). 10.3 Del Monte Foods Company Non-Employee Director and Independent Contractor 1997 Stock Incentive Plan (as amended through November 15, 2000) (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-8 filed on December 20, 2000, File No. 333-52226). 10.4 Retention Plan (adopted October 24, 2000) (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Del Monte Foods Company for the period ended December 31, 2000). 10.5 Second Amended and Restated Credit Agreement, dated as of January 14, 2000, among Del Monte Corporation, Bank of America, N.A., as Administrative Agent, and the other financial institutions parties thereto (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Del Monte Foods Company for the period ended December 31, 1999 (the "December 1999 10-Q"). 10.6 Amended and Restated Parent Guaranty, dated December 17, 1997, executed by Del Monte Foods Company, with respect to the obligations under the Amended Credit Agreement (the "Restated Parent Guaranty") (incorporated by reference to Exhibit 4.5 to the Registration Statement of Del Monte Foods Company on Form S-4 filed on March 4, 1998, File No. 333-47289 (the "Exchange Offer Registration Statement")). 10.7 Security Agreement, dated April 18, 1997, between Del Monte Corporation and Del Monte Foods Company and Bank of America National Trust and Savings Association (incorporated by reference to Exhibit 4.6 to the DMC Registration Statement). 10.8 Pledge Agreement, dated April 18, 1997, between Del Monte Corporation and Bank of America National Trust and Savings Association (incorporated by reference to Exhibit 4.7 to the DMC Registration Statement). 10.9 Parent Pledge Agreement, dated April 18, 1997, between Del Monte Foods Company and Bank of America National Trust and Savings Association (incorporated by reference to Exhibit 4.8 to the DMC Registration Statement). 10.10 Asset Purchase Agreement, dated as of November 12, 1997, among Nestle USA, Inc., Contadina Services, Inc., Del Monte Corporation and Del Monte Foods Company (incorporated by reference to Exhibit 10.1 to the Current Report by Del Monte Foods Company on Form 8-K, filed January 5, 1998, File No. 33-36374-01). 10.11 Transaction Advisory Agreement, dated as of April 18, 1997, between Del Monte Corporation and TPG Partners, L.P. (incorporated by reference to Exhibit 10.1 to the DMC Registration Statement). 10.12 Management Advisory Agreement, dated as of April 18, 1997, between Del Monte Corporation and TPG Partners, L.P. (incorporated by reference to Exhibit 10.2 to the DMC Registration Statement).
111 118
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.13 Retention Agreement between Del Monte Corporation and David L. Meyers, dated November 1, 1991 (incorporated by reference to Exhibit 10.3 to the DMC Registration Statement). 10.14 Retention Agreement between Del Monte Corporation and Irvin R. Holmes, dated January 1, 1992 (incorporated by reference to Exhibit 10.30 to the Annual Report of Del Monte Foods Company on Form 10-K for the year ended June 30, 2000, File No. 001-14335 (the "2000 Form 10-K")). 10.15 Del Monte Foods Annual Incentive Award Plan, as amended (incorporated by reference to Exhibit 10.8 to the DMC Registration Statement). 10.16 Del Monte Foods Additional Benefits Plan of Del Monte Corporation, as amended and restated effective January 1, 1996 (incorporated by reference to Exhibit 10.9 to the DMC Registration Statement). 10.17 Supplemental Benefits Plan of Del Monte Corporation, effective as of January 1, 1990, as amended as of January 1, 1992 and May 30, 1996 (incorporated by reference to Exhibit 10.10 to the DMC Registration Statement). 10.18 Del Monte Foods Company Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-8 filed on November 24, 1997, File No. 333-40867). 10.19 Del Monte Foods Company 1997 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.2 to the December 1999 10-Q). 10.20 Agreement for Information Technology Services between Del Monte Corporation and Electronic Data Systems Corporation, dated November 1, 1992, as amended (incorporated by reference to Exhibit 10.11 to the DMC Registration Statement). 10.21 Supply Agreement between Del Monte Corporation and Silgan Containers Corporation, dated as of September 3, 1993, as amended (incorporated by reference to Exhibit 10.12 to the DMC Registration Statement). 10.22 Del Monte Foods Company Non-Employee Directors and Independent Contractors 1997 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.4 to the December 1999 10-Q). 10.23 Del Monte Foods Company 1998 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.3 to the December 1999 10-Q). 10.24 Employment Agreement and Promissory Note of Richard Wolford (incorporated by reference to Exhibit 10.25 to the Annual Report of Del Monte Foods Company on Form 10-K for the year ended June 30, 1998, File No. 001-14335 (the "1998 Form 10-K")). 10.25 Employment Agreement and Promissory Note of Wesley Smith (incorporated by reference to Exhibit 10.26 to the 1998 Form 10-K). 10.26 Amendment and Waiver, dated as of April 16, 1998, to the Amended Credit Agreement and the Restated Parent Guaranty, by Del Monte Corporation and the financial institutions party thereto (incorporated by reference to Exhibit 10.27 to the Registration Statement on Form S-1 filed on July 28, 1998, File No. 333-48235). 10.27 Del Monte Corporation AIAP Deferred Compensation Plan dated October 14, 1999, effective July 1, 2000 (incorporated by reference to Exhibit 10.30 to the 2000 Form 10-K). 10.28 Office Lease, dated October 7, 1999 between TMG/One Market, L.P. and Crossmarket, LLC (Landlord) and Del Monte Corporation (Tenant) (incorporated by reference to Exhibit 10.5 to the December 1999 10-Q). 13.1 Annual Report of Del Monte Foods Company on Form 10-K filed September 8, 2000 (incorporated herein by reference). 13.2 Quarterly Report of Del Monte Foods Company on Form 10-Q filed May 15, 2001 (incorporated herein by reference). 21.1 Subsidiaries of the Registrant.
112 119
EXHIBIT NUMBER DESCRIPTION ------- ----------- +23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1). 23.2 Consent of KPMG LLP. 24.1 Power of Attorney (see signature page on page 114). 25.1 Form T-1 Statement of Eligibility and Qualification of Bankers Trust Company as Trustee. +99.1 Form of Letter of Transmittal. +99.2 Form of Notice of Guaranteed Delivery.
- ------------------------- + To be filed by amendment. ** Confidential treatment has been requested as to certain portions of exhibit. ITEM 22. UNDERTAKINGS. (i) The Registrant and Guarantor hereby undertake to the placement agents at the closing specified in the placement agreement to provide certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. (ii) Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act") may be permitted to directors, officers and controlling persons of the Registrant and Guarantor, pursuant to applicable law, the Registrant's Certificate of Incorporation, the Registrant's Bylaws, or otherwise, the Registrant and Guarantor have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant or Guarantor of expenses incurred or paid by a director, officer or controlling person of the Registrant or Guarantor 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 or Guarantor 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 Securities Act and will be governed by the final adjudication of such issue. (iii) For purposes of determining any liability under the Securities Act, 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 Act is part of this Registration Statement as of the time it was declared effective. (iv) 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 for the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 113 120 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Del Monte Foods Company has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, as of July 10, 2001. DEL MONTE FOODS COMPANY By: /s/ RICHARD G. WOLFORD ------------------------------------ Richard G. Wolford Chairman, President and Chief Executive Officer POWER OF ATTORNEY Each person whose signature appears below on this Registration Statement hereby constitutes and appoints Richard G. Wolford, David L. Meyers and Wesley J. Smith, and each of them, with full power to act without the other, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities (unless revoked in writing) to sign any and all amendments (including post-effective amendments thereto) to this Registration Statement to which this power of attorney is attached, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated as of July 10, 2001.
SIGNATURE TITLE --------- ----- /s/ RICHARD G. WOLFORD Chairman, President and Chief Executive - ------------------------------------------ Officer (Principal Executive Officer) Richard G. Wolford /s/ DAVID L. MEYERS Executive Vice President, Administration - ------------------------------------------ and Chief Financial Officer David L. Meyers (Principal Financial Officer) /s/ RICHARD L. FRENCH Senior Vice President and Chief Accounting - ------------------------------------------ Officer (Principal Accounting Officer) Richard L. French /s/ RICHARD W. BOYCE Director - ------------------------------------------ Richard W. Boyce /s/ TIMOTHY G. BRUER Director - ------------------------------------------ Timothy G. Bruer Director - ------------------------------------------ Al Carey /s/ PATRICK FOLEY Director - ------------------------------------------ Patrick Foley /s/ BRIAN E. HAYCOX Director - ------------------------------------------ Brian E. Haycox
114 121
SIGNATURE TITLE --------- ----- /s/ DENISE M. O'LEARY Director - ------------------------------------------ Denise M. O'Leary /s/ WILLIAM S. PRICE, III Director - ------------------------------------------ William S. Price, III /s/ JEFFREY A. SHAW Director - ------------------------------------------ Jeffrey A. Shaw /s/ WESLEY J. SMITH Director - ------------------------------------------ Wesley J. Smith
115 122 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION ------- ----------- 1.1 Placement Agreement dated May 3, 2001 by and among Del Monte Corporation, Del Monte Foods Company, Morgan Stanley & Co. Incorporated, Banc of American Securities LLC, Deutsche Banc Alex Brown, Inc., Chase Securities, Inc., ABN AMRO Incorporated, BMO Nesbitt Burns Corp. 3.1 Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-4 filed on June 12, 1997, File No. 333-29079 (the "DMC Registration Statement")). 3.2 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the DMC Registration Statement). 3.3 Amendment to the Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to the DMC Registration Statement). 3.4 Certificate of Incorporation of the Guarantor (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Registration Statement on Form S-1, File No. 333-48235, filed on May 18, 1998). 3.5 Amended and Restated Bylaws of the Guarantor (incorporated by reference to Exhibit 3(iii) to the Quarterly Report on Form 10Q for the period ended March 31, 1999). 4.1 Indenture dated as of May 15, 2001 among Del Monte Corporation, as issuer of 9 1/4% Senior Subordinated Notes due 2011, Del Monte Foods Company, as guarantor, and Bankers Trust Company, a New York banking corporation, as Trustee. 4.2 Specimen form of Series B Global Note. 4.3 Specimen form of Series B Regulation S Note. 4.4 Registration Rights Agreement dated May 15, 2001 by and among Del Monte Corporation, Del Monte Foods Company, Morgan Stanley & Co. Incorporated, Banc of American Securities LLC, Deutsche Banc Alex Brown, Inc., Chase Securities, Inc., ABN AMRO Incorporated, BMO Nesbitt Burns Corp. +5.1 Opinion of Gibson, Dunn & Crutcher LLP. **10.1 Third Amended and Restated Credit Agreement dated as of May 15, 2001, by and among Del Monte Corporation, Del Monte Foods Company, the Lenders named therein, Bank of America, N.A., as administrative agent, the Chase Manhattan Bank, as syndication agent, and Bankers Trust Company, as documentation agent. 10.2 Del Monte Foods Company 1998 Stock Incentive Plan (as amended through November 15, 2000) (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-8 filed on December 20, 2000, File No. 333-52226). 10.3 Del Monte Foods Company Non-Employee Director and Independent Contractor 1997 Stock Incentive Plan (as amended through November 15, 2000) (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-8 filed on December 20, 2000, File No. 333-52226). 10.4 Retention Plan (adopted October 24, 2000) (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of Del Monte Foods Company for the period ended December 31, 2000). 10.5 Second Amended and Restated Credit Agreement, dated as of January 14, 2000, among Del Monte Corporation, Bank of America, N.A., as Administrative Agent, and the other financial institutions parties thereto (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of Del Monte Foods Company for the period ended December 31, 1999 (the "December 1999 10-Q").
123
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.6 Amended and Restated Parent Guaranty, dated December 17, 1997, executed by Del Monte Foods Company, with respect to the obligations under the Amended Credit Agreement (the "Restated Parent Guaranty") (incorporated by reference to Exhibit 4.5 to the Registration Statement of Del Monte Foods Company on Form S-4 filed on March 4, 1998, File No. 333-47289 (the "Exchange Offer Registration Statement")). 10.7 Security Agreement, dated April 18, 1997, between Del Monte Corporation and Del Monte Foods Company and Bank of America National Trust and Savings Association (incorporated by reference to Exhibit 4.6 to the DMC Registration Statement). 10.8 Pledge Agreement, dated April 18, 1997, between Del Monte Corporation and Bank of America National Trust and Savings Association (incorporated by reference to Exhibit 4.7 to the DMC Registration Statement). 10.9 Parent Pledge Agreement, dated April 18, 1997, between Del Monte Foods Company and Bank of America National Trust and Savings Association (incorporated by reference to Exhibit 4.8 to the DMC Registration Statement). 10.10 Asset Purchase Agreement, dated as of November 12, 1997, among Nestle USA, Inc., Contadina Services, Inc., Del Monte Corporation and Del Monte Foods Company (incorporated by reference to Exhibit 10.1 to the Current Report by Del Monte Foods Company on Form 8-K, filed January 5, 1998, File No. 33-36374-01). 10.11 Transaction Advisory Agreement, dated as of April 18, 1997, between Del Monte Corporation and TPG Partners, L.P. (incorporated by reference to Exhibit 10.1 to the DMC Registration Statement). 10.12 Management Advisory Agreement, dated as of April 18, 1997, between Del Monte Corporation and TPG Partners, L.P. (incorporated by reference to Exhibit 10.2 to the DMC Registration Statement). 10.13 Retention Agreement between Del Monte Corporation and David L. Meyers, dated November 1, 1991 (incorporated by reference to Exhibit 10.3 to the DMC Registration Statement). 10.14 Retention Agreement between Del Monte Corporation and Irvin R. Holmes, dated January 1, 1992 (incorporated by reference to Exhibit 10.30 to the Annual Report of Del Monte Foods Company on Form 10-K for the year ended June 30, 2000, File No. 001-14335 (the "2000 Form 10-K")). 10.15 Del Monte Foods Annual Incentive Award Plan, as amended (incorporated by reference to Exhibit 10.8 to the DMC Registration Statement). 10.16 Del Monte Foods Additional Benefits Plan of Del Monte Corporation, as amended and restated effective January 1, 1996 (incorporated by reference to Exhibit 10.9 to the DMC Registration Statement). 10.17 Supplemental Benefits Plan of Del Monte Corporation, effective as of January 1, 1990, as amended as of January 1, 1992 and May 30, 1996 (incorporated by reference to Exhibit 10.10 to the DMC Registration Statement). 10.18 Del Monte Foods Company Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-8 filed on November 24, 1997, File No. 333-40867). 10.19 Del Monte Foods Company 1997 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.2 to the December 1999 10-Q). 10.20 Agreement for Information Technology Services between Del Monte Corporation and Electronic Data Systems Corporation, dated November 1, 1992, as amended (incorporated by reference to Exhibit 10.11 to the DMC Registration Statement). 10.21 Supply Agreement between Del Monte Corporation and Silgan Containers Corporation, dated as of September 3, 1993, as amended (incorporated by reference to Exhibit 10.12 to the DMC Registration Statement).
124
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.22 Del Monte Foods Company Non-Employee Directors and Independent Contractors 1997 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.4 to the December 1999 10-Q). 10.23 Del Monte Foods Company 1998 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.3 to the December 1999 10-Q). 10.24 Employment Agreement and Promissory Note of Richard Wolford (incorporated by reference to Exhibit 10.25 to the Annual Report of Del Monte Foods Company on Form 10-K for the year ended June 30, 1998, File No. 001-14335 (the "1998 Form 10-K")). 10.25 Employment Agreement and Promissory Note of Wesley Smith (incorporated by reference to Exhibit 10.26 to the 1998 Form 10-K). 10.26 Amendment and Waiver, dated as of April 16, 1998, to the Amended Credit Agreement and the Restated Parent Guaranty, by Del Monte Corporation and the financial institutions party thereto (incorporated by reference to Exhibit 10.27 to the Registration Statement on Form S-1 filed on July 28, 1998, File No. 333-48235). 10.27 Del Monte Corporation AIAP Deferred Compensation Plan dated October 14, 1999, effective July 1, 2000 (incorporated by reference to Exhibit 10.30 to the 2000 Form 10-K). 10.28 Office Lease, dated October 7, 1999 between TMG/One Market, L.P. and Crossmarket, LLC (Landlord) and Del Monte Corporation (Tenant) (incorporated by reference to Exhibit 10.5 to the December 1999 10-Q). 13.1 Annual Report of Del Monte Foods Company on Form 10-K filed September 8, 2000 (incorporated herein by reference). 13.2 Quarterly Report of Del Monte Foods Company on Form 10-Q filed May 15, 2001 (incorporated herein by reference). 21.1 Subsidiaries of the Registrant. +23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1). 23.2 Consent of KPMG LLP. 24.1 Power of Attorney (see signature page on page 114). 25.1 Form T-1 Statement of Eligibility and Qualification of Bankers Trust Company as Trustee. +99.1 Form of Letter of Transmittal. +99.2 Form of Notice of Guaranteed Delivery.
- ------------------------- + To be filed by amendment. ** Confidential treatment has been requested as to certain portions of exhibit. EX-1.1 2 f73660ex1-1.txt PLACEMENT AGREEMENT 1 EXHIBIT 1.1 $300,000,000 DEL MONTE CORPORATION 9 1/4% SENIOR SUBORDINATED NOTES DUE 2011 PLACEMENT AGREEMENT May 3, 2001 2 May 3, 2001 Morgan Stanley & Co. Incorporated Banc of America Securities LLC Deutsche Banc Alex. Brown Inc. Chase Securities Inc. ABN AMRO Incorporated BMO Nesbitt Burns Corp. c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Dear Sirs and Mesdames: DEL MONTE CORPORATION, a New York corporation (the "COMPANY"), proposes to issue and sell to the several purchasers named in Schedule I hereto (the "PLACEMENT AGENTS") $300,000,000 principal amount of its 9 1/4% Senior Subordinated Notes due 2011 (the "SECURITIES") to be issued pursuant to the provisions of an Indenture (the "INDENTURE") among the Company, Del Monte Foods Company, a Delaware corporation ("HOLDINGS"), and Bankers Trust Company, as Trustee (the "TRUSTEE"). In connection with the issuance of the Securities, the Company and Holdings will enter into a Registration Rights Agreement (the "Registration Rights Agreement") with the Placement Agents. The Securities will be guaranteed by Holdings pursuant to guarantees (the "GUARANTEES") endorsed on the Securities. The Securities will be offered without being registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"), to qualified institutional buyers in compliance with the exemption from registration provided by Rule 144A under the Securities Act and in offshore transactions in reliance on Regulation S under the Securities Act ("REGULATION S"). In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum (the "PRELIMINARY MEMORANDUM") and will prepare a final offering memorandum (the "FINAL MEMORANDUM" and the Preliminary Memorandum, each a "MEMORANDUM") including or incorporating by reference a description of the terms of the Securities, the terms of the offering and a description of the Company and Holdings. As used herein, the term "Memorandum" shall include in each case the documents incorporated by reference therein. The terms "SUPPLEMENT," "AMENDMENT" and "AMEND" as used herein with respect to a Memorandum shall include all documents deemed to be incorporated by reference in the Preliminary Memorandum or Final Memorandum, as the case may be, that are filed subsequent to the date of such Memorandum with the Securities and Exchange Commission (the "COMMISSION") pursuant to the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"). 1. Representations and Warranties. The Company and Holdings, jointly and severally, represent and warrant to, and agree with, you that: 3 (a) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated or deemed to be incorporated by reference in either Memorandum complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and regulations of the Commission thereunder and (ii) the Preliminary Memorandum does not contain, and the Final Memorandum, in the form used by the Placement Agents to confirm sales and on the Closing Date (as defined in Section 4), will not contain, any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in either Memorandum based upon information relating to any Placement Agent furnished to the Company in writing by such Placement Agent through you expressly for use therein. (b) Each of the Company and Holdings has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in each Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on Holdings, the Company and the Company's subsidiaries (the "Subsidiaries"), taken together as a whole. Holdings does not have any subsidiaries other than the Company. (c) Each Subsidiary has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in each Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on Holdings, the Company and the Subsidiaries, taken together as a whole; all of the issued shares of capital stock of the Company and each Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly by the Company or Holdings, as the case may be, free and clear of all liens, encumbrances, equities or claims, except that the shares of capital stock of the Company secure the obligations of Holdings under its existing credit facility. (d) This Agreement has been duly authorized, executed and delivered by the Company and Holdings. (e) The Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Placement Agents in accordance with the terms of this Agreement, will be valid and binding obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity, and will be entitled to the benefits of the Indenture; and the Guarantees have been duly authorized and, when the Guarantees and 3 4 the Securities have been executed and the Securities have been authenticated, all in accordance with the provisions of the Indenture, and the Securities have been delivered to and paid for by the Placement Agents in accordance with the terms of this Agreement, the Guarantees will be valid and binding obligations of Holdings, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity and will be entitled to the benefits of the Indenture. (f) The Indenture has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company and Holdings, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity; and the Registration Rights Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity. (g) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, the Indenture, the Registration Rights Agreement and the Securities and the execution and delivery by Holdings of, and the performance by Holdings of its obligations under, this Agreement, the Indenture, the Registration Rights Agreement and the Guarantees will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or Holdings or any agreement or other instrument binding upon the Company or Holdings or any of the Subsidiaries that is material to Holdings or the Company and the Subsidiaries, taken together as a whole, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over Holdings or the Company or any of the Subsidiaries, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, the Indenture, the Registration Rights Agreement or the Securities or for the performance by Holdings of its obligations under this Agreement, the Indenture, the Registration Rights Agreement and the Guarantees, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Securities and except such as may be required under the Securities Act in connection with the performance by the Company and Holdings of their obligations under the Registration Rights Agreement. (h) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of Holdings, the Company and the Subsidiaries, taken together as a whole from that set forth in the Final Memorandum. (i) There are no legal or governmental proceedings pending or threatened to which the Company or Holdings or any of the Subsidiaries is a party or to which any of the properties of the Company or Holdings or any of the Subsidiaries is subject, other than proceedings accurately described in all material respects in each Memorandum and proceedings that would not have a material adverse effect on (i) Holdings, the Company 4 5 and the Subsidiaries, taken together as a whole, (ii) the power or ability of the Company to perform its obligations under this Agreement, the Indenture, the Registration Rights Agreement or the Securities or to consummate the transactions contemplated by the Final Memorandum, or (iii) on the power or ability of Holdings to perform its obligations under this Agreement, the Indenture, the Registration Rights Agreement or the Guarantees. (j) The Company, Holdings and the Subsidiaries (i) are in compliance with all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on Holdings, the Company and the Subsidiaries, taken together as a whole. (k) There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a material adverse effect on Holdings, the Company and the Subsidiaries, taken together as a whole. (l) Neither the Company nor Holdings is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Final Memorandum, neither the Company nor Holdings will be required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. (m) Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D under the Securities Act, an "Affiliate," which term includes, without limitation, Holdings) of the Company has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) that is or will be integrated with the sale of the Securities or the Guarantees in a manner that would require the registration under the Securities Act of the Securities or the Guarantees, or (ii) engaged in any form of general solicitation or general advertising (as those forms are used in Regulation D under the Securities Act) in connection with the offering of the Securities or the Guarantees or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. (n) None of the Company, its Affiliates or any person acting on its or their behalf has engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities or the Guarantees and the Company and its 5 6 Affiliates and any person acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S. (o) Assuming the accuracy of the representations and warranties and the performance of the agreements of the Placement Agents contained in Section 7 of this Agreement, it is not necessary in connection with the offer, sale and delivery of the Securities or the Guarantees to the Placement Agents in the manner contemplated by this Agreement to register the Securities or the Guarantees under the Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"). (p) Assuming the accuracy of the representations and warranties and the performance of the agreements of the Placement Agents contained in Section 7 of this Agreement, the Securities and the Guarantees satisfy the requirements set forth in Rule 144A(d)(3) under the Securities Act. (q) Subsequent to the respective dates as of which information is given in the Memorandum, (1) Holdings, the Company nor the Subsidiaries have incurred any material liability or obligation, direct or contingent, or entered into any material transaction not in the ordinary course of business; (2) neither the Company nor Holdings has purchased any of its outstanding capital stock, or declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (3) there has not been any material adverse change in the capital stock, short-term debt or long-term debt of the Holdings, the Company and the Subsidiaries, except in each case as described in the Memorandum. (r) Holdings, the Company and the Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them that is material to the business of Holdings, the Company and the Subsidiaries, taken together as a whole, in each case free and clear of all liens, encumbrances and defects except such as are described in the Memorandum or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by Holdings, the Company and the Subsidiaries; and any real property and buildings held under lease by Holdings, the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by Holdings, the Company and the Subsidiaries, in each case except as described in the Memorandum. (s) Holdings, the Company and the Subsidiaries own or possess, or can acquire on reasonable terms, all material 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 and trade names currently employed by them in connection with the business now operated by them, and none of Holdings, the Company or any of the Subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, 6 7 ruling or finding, would result in any material adverse change in the condition, financial or otherwise, or in the earnings, business or operations of Holdings, the Company and the Subsidiaries, taken together as a whole. (t) No material labor dispute with the employees of Holdings, the Company or any of the Subsidiaries exists, except as described in the Memorandum, or, to the knowledge of Holdings, the Company or any of the Subsidiaries, is imminent; and none of Holdings, the Company or any of the Subsidiaries is aware of any existing, threatened or imminent labor disturbance by the employees of any of its or their principal suppliers, manufacturers or contractors that could result in any material adverse change in the condition, financial or otherwise, or in the earnings, business or operations of Holdings, the Company and the Subsidiaries, taken together as a whole. (u) Holdings, the Company and each of the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged; none Holdings, the Company or any of the Subsidiaries has been refused any insurance coverage sought or applied for; and none of Holdings, the Company or any of the Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of Holdings, the Company and the Subsidiaries, taken together as a whole, except as described in the Memorandum. (v) Holdings, the Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state or foreign authorities necessary to conduct their respective businesses, and none of Holdings, the Company or any of the Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a material adverse change in the condition, financial or otherwise, or in the earnings, business or operations of Holdings, the Company and the Subsidiaries, taken together as a whole, except as described in the Memorandum. (w) Holdings, the Company and each of the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (1) transactions are executed in accordance with management's general or specific authorizations; (2) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (3) access to assets is permitted only in accordance with management's general or specific authorization; and (4) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 2. Agreements to Sell and Purchase. The Company hereby agrees to sell to the several Placement Agents, and each Placement Agent, upon the basis of the representations and 7 8 warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Company the respective principal amount of Securities set forth in Schedule I hereto opposite its name at a purchase price of 97.25% of the principal amount thereof (the "PURCHASE PRICE"). The Company and Holdings hereby agree that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the Placement Agents, they will not, during the period beginning on the date hereof and continuing through and including the Closing Date, offer, sell, contract to sell or otherwise dispose of any debt securities of the Company or Holdings or warrants to purchase debt securities of the Company or Holdings substantially similar to the Securities (other than the sale of the Securities under this Agreement). 3. Terms of Offering. You have advised the Company that the Placement Agents will make an offering of the Securities purchased by the Placement Agents hereunder on the terms to be set forth in the Final Memorandum, as soon as practicable after this Agreement is entered into as in your judgment is advisable. 4. Payment and Delivery. Payment for the Securities shall be made to the Company in Federal or other funds immediately available in New York City against delivery of such Securities for the respective accounts of the several Placement Agents at 10:00 a.m., New York City time, on May 15, 2001, or at such other time on the same or such other date, not later than May 22, 2001, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the "CLOSING DATE." Certificates for the Securities shall be in definitive form or global form, as specified by you, and registered in such names and in such denominations as you shall request in writing not later than one full business day prior to the Closing Date. The certificates evidencing the Securities shall be delivered to you on the Closing Date for the respective accounts of the several Placement Agents, with any transfer taxes payable in connection with the transfer of the Securities to the Placement Agents duly paid, against payment of the Purchase Price therefor. 5. Conditions to the Placement Agents' Obligations. The several obligations of the Placement Agents to purchase and pay for the Securities on the Closing Date are subject to the following conditions: (a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date: (i) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded the Company or Holdings or any of the Company's or Holdings' securities by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the 8 9 earnings, business or operations of Holdings, the Company and the Subsidiaries, taken together as a whole, from that set forth in the Final Memorandum (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement) that, in your judgment, is material and adverse and that makes it, in your judgment, impracticable to market the Securities on the terms and in the manner contemplated in the Final Memorandum. (b) The Placement Agents shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Company, to the effect set forth in Section 5(a)(i) and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date. The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened. (c) The Placement Agents shall have received on the Closing Date an opinion of Gibson, Dunn & Crutcher LLP, outside counsel for the Company, dated the Closing Date, to the effect set forth in Exhibit A. Such opinion shall be rendered to the Placement Agents at the request of the Company and shall so state therein. (d) The Placement Agents shall have received on the Closing Date an opinion of Scott T. Rickman, Associate General Counsel of Holdings, dated the Closing Date, to the effect set forth in Exhibit B. Such opinion shall be rendered to the Placement Agents at the request of the Company and shall so state therein. (e) The Placement Agents shall have received on the Closing Date an opinion of Brown & Wood LLP, counsel for the Placement Agents, dated the Closing Date, to the effect set forth in Exhibit C. (f) The Placement Agents shall have received on each of the date hereof and the Closing Date a letter, dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Placement Agents, from KPMG LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in or incorporated by reference into the Final Memorandum; provided that the letter delivered on the Closing Date shall use a "cut-off date" not earlier than the date hereof. (g) The Placement Agents shall have received on each of the date hereof and the Closing Date a certificate, dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Placement Agents, from the Company, signed by the principal financial or accounting officer of the Company, to the effect that the signer of such certificate has performed ( or members of his staff acting under his supervision have performed) certain specified procedures as a result of which such signer has determined that certain numerical and statistical information set forth in the Final 9 10 Memorandum, specified by the Placement Agents, has been derived from, and agrees with, the records of the Company. (h) Prior to the Closing Date, Holdings and the Company will have duly authorized and executed, and the other parties thereto will have executed, the Credit Agreement (as defined in the Indenture); on the Closing Date, the Credit Agreement will have been duly delivered by the parties thereto, Holdings and the Company will have satisfied all conditions to closing under the Credit Agreement, the existing credit facility described in the Final Memorandum under "Description of Existing Indebtedness -- The Existing Credit Facility" will be terminated, and the Credit Agreement will be a valid and binding agreement of Holdings and the Company, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity. 6. Covenants of the Company and Holdings. In further consideration of the agreements of the Placement Agents contained in this Agreement, the Company and Holdings covenant with each Placement Agent as follows: (a) To furnish to you in New York City, without charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of this Agreement and during the period mentioned in Section 6(c), as many copies of the Final Memorandum, any documents incorporated by reference therein and any supplements and amendments thereto as you may reasonably request. (b) Before amending or supplementing either Memorandum, to furnish to you a copy of each such proposed amendment or supplement and not to use any such proposed amendment or supplement to which you reasonably object. (c) If, during such period after the date hereof and prior to the date on which all of the Securities shall have been sold by the Placement Agents, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Final Memorandum in order to make the statements therein, in the light of the circumstances when the Final Memorandum is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Placement Agents, it is necessary to amend or supplement the Final Memorandum to comply with applicable law, forthwith to prepare and furnish to the Placement Agents, either amendments or supplements to the Final Memorandum so that the statements in the Final Memorandum as so amended or supplemented will not, in the light of the circumstances when the Final Memorandum is delivered to a purchaser, be misleading or so that the Final Memorandum, as amended or supplemented, will comply with applicable law. If, in accordance with the preceding sentence, it shall be necessary to amend or supplement the Final Memorandum at any time prior to the expiration of nine months after the date hereof, the Company shall prepare, file and furnish such amendment or supplement at its own expense. Thereafter, the Placement Agents shall bear the expense of preparing, filing and furnishing any such amendment or supplement. 10 11 (d) To endeavor to qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request. (e) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and expenses of the Company's and Holdings' counsel and the Company's and Holdings' accountants in connection with the issuance and sale of the Securities and all other fees or expenses in connection with the preparation of each Memorandum and all amendments and supplements thereto, including all printing costs associated therewith, and the delivering of copies thereof to the Placement Agents, in the quantities herein above specified, (ii) all costs and expenses related to the transfer and delivery of the Securities to the Placement Agents, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or legal investment memorandum in connection with the offer and sale of the Securities under state securities laws and all expenses in connection with the qualification of the Securities for offer and sale under state securities laws as provided in Section 6(d) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Placement Agents in connection with such qualification and in connection with the Blue Sky or legal investment memorandum, (iv) any fees charged by rating agencies for the rating of the Securities, (v) the fees and expenses, if any, incurred in connection with the admission of the Securities for trading in PORTAL or any appropriate market system, (vi) the costs and charges of the Trustee and any transfer agent, registrar or depositary, (vii) the cost of the preparation, issuance and delivery of the Securities, (viii) the costs and expenses of the Company and Holdings relating to investor presentations on any "road show" undertaken in connection with the marketing of the offering of the Securities, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and Holdings and any such consultants, and the cost of any aircraft chartered in connection with the road show, and (ix) all other cost and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section. It is understood, however, that except as provided in this Section, Section 8, and the last paragraph of Section 10, the Placement Agents will pay all of their costs and expenses, including fees and disbursements of their counsel, transfer taxes payable on resale of any of the Securities by them and any advertising expenses connected with any offers they may make. (f) Neither the Company nor any Affiliate will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) which could be integrated with the sale of the Securities or the Guarantees in a manner which would require the registration under the Securities Act of the Securities or the Guarantees. (g) Not to solicit any offer to buy or offer or sell the Securities or the Guarantees by means of any form of general solicitation or general advertising (as those terms are 11 12 used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. (h) While any of the Securities or the Guarantees endorsed thereon remain "restricted securities" within the meaning of the Securities Act, to make available, upon request, to any seller or holder of such Securities or any prospective purchaser designated by such seller or holder, the information specified in Rule 144A(d)(4) under the Securities Act, unless Holdings is then subject to Section 13 or 15(d) of the Exchange Act. (i) If requested by you, to use its reasonable best efforts to permit the Securities to be designated PORTAL securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. relating to trading in the PORTAL Market. (j) None of the Company, its Affiliates or any person acting on its or their behalf will engage in any directed selling efforts (as that term is defined in Regulation S) with respect to the Securities or the Guarantees, and the Company and its Affiliates and each person acting on its or their behalf will comply with the offering restrictions requirement of Regulation S. (k) During the period of two years after the Closing Date, the Company and Holdings will not, and will not permit any of their respective "affiliates" (as defined in Rule 144 under the Securities Act) to resell any of the Securities which constitute "restricted securities" under Rule 144 that have been reacquired by any of them. 7. Offering of Securities; Restrictions on Transfer. (a) Each Placement Agent, severally and not jointly, represents and warrants that such Placement Agent is a qualified institutional buyer as defined in Rule 144A under the Securities Act (a "QIB"). Each Placement Agent, severally and not jointly, agrees with the Company that (i) it will not solicit offers for, or offer or sell, Securities or Guarantees by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act and (ii) it will solicit offers for Securities only from, and will offer Securities only to, persons that it reasonably believes to be (A) in the case of offers inside the United States, QIBs and (B) in the case of offers outside the United States, to persons other than U.S. persons ("FOREIGN PURCHASERS," which term shall include dealers or other professional fiduciaries organized in the United States acting on a discretionary basis for foreign beneficial owners (other than an estate or trust)) in reliance upon Regulation S under the Securities Act that, in each case, in purchasing such Securities are deemed to have represented and agreed as provided in the Final Memorandum under the caption "Transfer Restrictions." As used in this Section 7(a), the terms "UNITED STATES" and "U.S. PERSON" have the meanings set forth in Regulation S under the Securities Act. (b) Each Placement Agent, severally and not jointly, represents, warrants, and agrees with respect to offers and sales outside the United States that: 12 13 (i) such Placement Agent understands that no action has been or will be taken in any jurisdiction by the Company that would permit a public offering of the Securities or the Guarantees, or possession or distribution of either Memorandum or any other offering or publicity material relating to the Securities or the Guarantees, in any country or jurisdiction where action for that purpose is required; (ii) such Placement Agent will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Securities or Guarantees or has in its possession or distributes either Memorandum or any such other material, in all cases at its own expense; (iii) the Securities and the Guarantees have not been registered under 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 except in accordance with Rule 144A or Regulation S under the Securities Act or pursuant to another exemption from the registration requirements of the Securities Act; (iv) such Placement Agent has offered the Securities and the Guarantees and will offer and sell the Securities and the Guarantees (A) as part of their distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 903 of Regulation S or as otherwise permitted in Section 7(a); accordingly, neither such Placement Agent, its Affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities or the Guarantees, and any such Placement Agent, its Affiliates and any such persons have complied and will comply with the offering restrictions requirement of Regulation S; (v) such Placement Agent has (A) not offered or sold and, [prior to the date six months after the Closing Date,] will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, as amended; (B) complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom, and (C) only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996, as amended, or is a person to whom such document may otherwise lawfully be issued or passed on; 13 14 (vi) such Placement Agent understands that the Securities and the Guarantees have not been and will not be registered under the Securities and Exchange Law of Japan, and represents that it has not offered or sold, and agrees not to offer or sell, directly or indirectly, any Securities or Guarantees in Japan or for the account of any resident thereof except pursuant to any exemption from the registration requirements of the Securities and Exchange Law of Japan and otherwise in compliance with applicable provisions of Japanese law; and (vii) such Placement Agent agrees that, at or prior to confirmation of sales of the Securities, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the restricted period a confirmation or notice to substantially the following effect: "The securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered and 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 or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meaning given to them by Regulation S." Except when the context otherwise requires, terms used in this Section 7(b) have the meanings given to them by Regulation S. 8. Indemnity and Contribution. (a) The Company and Holdings, jointly and severally, agree to indemnify and hold harmless each Placement Agent and each person, if any, who controls any Placement Agent within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in either Memorandum (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Placement Agent furnished to the Company in writing by such Placement Agent through you expressly for use therein. (b) Each Placement Agent agrees, severally and not jointly, to indemnify and hold harmless the Company and Holdings, their respective directors and officers and each person, if any, who controls the Company or Holdings within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company and Holdings to such Placement Agent, but only with reference to information relating to such Placement Agent furnished to the 14 15 Company in writing by such Placement Agent through you expressly for use in either Memorandum or any amendments or supplements thereto. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the "INDEMNIFIED PARTY") shall promptly notify the person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case of parties indemnified pursuant to Section 8(a), and by the Company, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 90 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) To the extent the indemnification provided for in Section 8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to 15 16 the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and Holdings on the one hand and the Placement Agents on the other hand from the offering of the Securities or (ii) if the allocation provided by clause 8(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Company and Holdings on the one hand and of the Placement Agents on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and Holdings on the one hand and the Placement Agents on the other hand in connection with the offering of the Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Securities (before deducting expenses) received by the Company and the total discounts and commissions received by the Placement Agents, in each case as set forth in the Final Memorandum, bear to the aggregate offering price of the Securities. The relative fault of the Company and Holdings on the one hand and of the Placement Agents on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and Holdings or by the Placement Agents and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Placement Agents' respective obligations to contribute pursuant to this Section 8 are several in proportion to the respective principal amount of Securities they have purchased hereunder, and not joint. (e) The parties agree that it would not be just or equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Placement Agents were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 8(d) shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, no Placement Agent shall be required to contribute any amount in excess of the amount by which the total price at which the Securities resold by it in the initial placement of such Securities were offered to investors exceeds the amount of any damages that such Placement Agent 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 Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. (f) The indemnity and contribution provisions contained in this Section 8 and the representations, warranties and other statements of the Company and Holdings contained in this Agreement shall remain operative and in full force and effect regardless of (i) any 16 17 termination of this Agreement, (ii) any investigation made by or on behalf of any Placement Agent or any person controlling any Placement Agent or by or on behalf of the Company, Holdings, their respective officers or directors or any person controlling the Company or Holdings and (iii) acceptance of and payment for any of the Securities. 9. Termination. This Agreement shall be subject to termination by notice given by you to the Company and Holdings, if (a) after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any securities of the Company or Holdings shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities in New York shall have been declared by either Federal or New York State authorities or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in your judgment, is material and adverse and (b) in the case of any of the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or together with any other such event, makes it, in your judgment, impracticable to market the Securities on the terms and in the manner contemplated in the Final Memorandum. 10. Effectiveness; Defaulting Placement Agents. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto. If, on the Closing Date, any one or more of the Placement Agents shall fail or refuse to purchase Securities that it or they have agreed to purchase hereunder on such date, and the aggregate principal amount of Securities which such defaulting Placement Agent or Placement Agents agreed but failed or refused to purchase is not more than one-tenth of the aggregate principal amount of Securities to be purchased on such date, the other Placement Agents shall be obligated severally in the proportions that the principal amount of Securities set forth opposite their respective names in Schedule I bears to the aggregate principal amount of Securities set forth opposite the names of all such non-defaulting Placement Agents, or in such other proportions as you may specify, to purchase the Securities which such defaulting Placement Agent or Placement Agents agreed but failed or refused to purchase on such date; provided that in no event shall the principal amount of Securities that any Placement Agent has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 10 by an amount in excess of one-ninth of such principal amount of Securities without the written consent of such Placement Agent. If, on the Closing Date, any Placement Agent or Placement Agents shall fail or refuse to purchase Securities which it or they have agreed to purchase hereunder on such date and the aggregate principal amount of Securities with respect to which such default occurs is more than one-tenth of the aggregate principal amount of Securities to be purchased on such date, and arrangements satisfactory to you and the Company for the purchase of such Securities are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Placement Agent or of the Company. In any such case either you or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Final Memorandum or in any other documents or arrangements may be effected. Any action taken under this paragraph shall 17 18 not relieve any defaulting Placement Agent from liability in respect of any default of such Placement Agent under this Agreement. If this Agreement shall be terminated by the Placement Agents, or any of them, because of any failure or refusal on the part of the Company or Holdings to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company or Holdings shall be unable to perform their respective obligations under this Agreement, the Company and Holdings will reimburse the Placement Agents or such Placement Agents as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the reasonable fees and disbursements of their counsel) reasonably incurred by such Placement Agents in connection with this Agreement or the offering contemplated hereunder. 18 19 11. Counterparts. This Agreement may be signed in any number of counterparts, which may be delivered by facsimile, each of which shall be an original, with the same effect as if the actual signatures thereto and hereto were upon the same instrument. 12. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. 13. Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement. Very truly yours, DEL MONTE CORPORATION By: /s/ Thomas E. Gibbons ------------------------------- Name: Thomas E. Gibbons Title: Senior Vice President and Treasurer DEL MONTE FOODS COMPANY By: /s/ Thomas E. Gibbons ------------------------------- Name: Thomas E. Gibbons Title: Senior Vice President and Treasurer Accepted as of the date hereof Morgan Stanley & Co. Incorporated Banc of America Securities LLC Deutsche Banc Alex. Brown Inc. Chase Securities Inc. ABN AMRO Incorporated BMO Nesbitt Burns Corp. Acting severally on behalf of themselves and the several Placement Agents named in Schedule I hereto. By: Morgan Stanley & Co. Incorporated By: /s/ Bryan W. Andrzejewski --------------------------------- Name: Bryan W. Andrzejewski Title: Principal 19 20 SCHEDULE I
PRINCIPAL AMOUNT OF PLACEMENT AGENT SECURITIES TO BE PURCHASED -------------------------- -------------------------- Morgan Stanley & Co. Incorporated............................. Banc of America Securities LLC................................ Deutsche Banc Alex. Brown Inc. ............................... Chase Securities Inc. ........................................ ABN AMRO Incorporated......................................... BMO Nesbitt Burns Corp. ...................................... Total:................................................
21 EXHIBIT A OPINION OF OUTSIDE COUNSEL FOR THE COMPANY The opinion of the outside counsel for the Company, to be delivered pursuant to Section 5(a) of the Placement Agreement shall be to the effect that: A. Each of the Company and Holdings has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own its property and to conduct its business as described in the Final Memorandum. B. The Placement Agreement has been duly authorized, executed and delivered by the Company and Holdings. C. The Securities have been duly authorized by the Company and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Placement Agents in accordance with the terms of the Placement Agreement, will be valid and binding obligations of the Company, enforceable in accordance with their terms, and will be entitled to the benefits of the Indenture; and the Guarantees have been duly authorized and, when the Guarantees and the Securities have been executed and the Securities have been authenticated, all in accordance with the provisions of the Indenture, and the Securities have been delivered to and paid for by the Placement Agents in accordance with the terms of the Placement Agreement, the Guarantees will be valid and binding obligations of Holdings, enforceable in accordance with their terms. D. The Indenture has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company and Holdings, enforceable in accordance with its terms; and the Registration Rights Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company and Holdings, enforceable in accordance with its terms. E. The execution and delivery by the Company of, and the performance by the Company of its obligations under, the Placement Agreement, the Indenture, the Registration Rights Agreement and the Securities and the execution and delivery by Holdings of, and the performance by Holdings of its obligations under, the Placement Agreement, the Indenture, the Registration Rights Agreement and the Guarantees will not contravene any provision of California, New York or United States federal law or the Delaware General Corporation Law known by us to be applicable to the Company or Holdings and implicated in similar transactions, or the certificate of incorporation or by-laws of the Company or Holdings or the amended and restated credit facility, and to our knowledge no consent, approval, authorization or order of, or qualification with, any California, New York, Delaware or United States federal governmental body or agency is required for the performance by the Company of its obligations under the Placement Agreement, the Indenture, the Registration Rights Agreement or the Securities or for the performance by Holdings of its obligations under the Placement Agreement, the Indenture, the Registration Rights Agreement or the Guarantees, except such as may be required by the A-1 22 securities or Blue Sky laws of the various states in connection with the offer and sale of the Securities and the Guarantees and such as may be required under the Securities Act in connection with the performance by the Company and Holdings of their obligations under the Registration Rights Agreement. F. Neither the Company nor Holdings is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Final Memorandum, neither the Company nor Holdings will be required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. G. The statements in the Final Memorandum under the captions "Description of Amended and Restated Credit Facility," "Description of Existing Indebtedness", "Description of the Notes" and "Transfer Restrictions", in each case, insofar as such statements constitute summaries of the Indenture, the Securities, the Guarantees, the Registration Rights Agreement, or of the other documents, legal matters or proceedings referred to therein, fairly summarize the matters referred to therein in all material respects. H. The statements in the Final Memorandum under the caption "Certain Federal Income Tax Considerations," insofar as such statements constitute a summary of the United States federal tax laws referred to therein, are accurate and fairly summarize in all material respects the United States federal tax laws referred to therein. I. Assuming the accuracy of the representations and warranties and the performance of the obligations of the Company, Holdings and the Placement Agents contained in the Placement Agreement and of each of the persons to whom the Placement Agents initially resells the Securities as specified in the Final Memorandum, it is not necessary in connection with the offer, sale and delivery of the Securities to the Placement Agents under the Placement Agreement or in connection with the initial resale of such Securities by the Placement Agents in accordance with the Placement Agreement to register the Securities or the Guarantees under the Securities Act or to qualify the Indenture under the Trust Indenture Act, it being understood that no opinion is expressed as to any subsequent resale or other transfer of any Security. During the course of preparing the Final Memorandum, we participated in conferences with representatives of the Company and their independent accountants and your representatives and your counsel, at which conferences the contents of the Final Memorandum and related matters were discussed and have read each document filed under the Exchange Act and incorporated by reference in the Final Memorandum. Because the purpose of our professional engagement was not to establish or confirm factual matters and because the scope of our examination of the affairs of Holdings and the Company did not permit us to verify the accuracy, completeness or fairness of the statements set forth in the Final Memorandum, except as specifically noted herein, we are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Final Memorandum and we make no representation, express or implied, that we have independently verified the accuracy, completeness or fairness of such statements. However, based on and subject to the foregoing, (i) nothing has come to our attention that would lead us to believe that the Final Memorandum, on May 3, 2001 or on the date hereof, contained or contains any untrue statement of a material A-2 23 fact or omitted or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) we believe that the documents incorporated by reference in the Final Memorandum, as of the date hereof, complied as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission; provided, however, that, with respect to clauses (i) and (ii), we express no opinion or belief as to the financial statements, schedules or other financial or statistical data contained in or omitted from the Final Memorandum. A-3 24 EXHIBIT B OPINION OF INTERNAL COUNSEL The opinion of the Internal Counsel of the Company, to be delivered pursuant to Section 5(d) of the Placement Agreement shall be to the effect that: A. Each of the Company and Holdings is duly qualified to transact business and is in good standing in the State of California and each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or in good standing would not have a material adverse effect on Holdings and the Company and its subsidiaries, taken together as a whole. B. Each subsidiary of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Final Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or in good standing would not have a material adverse effect on Holdings and the Company and its subsidiaries, taken together as a whole; all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable, and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except as described in the Final Memorandum. C. The execution and delivery by the Company of, and the performance by the Company of its obligations under, the Placement Agreement, the Indenture, the Registration Rights Agreement and the Securities and the execution and delivery by Holdings of, and the performance by Holdings of its obligations under, the Placement Agreement, the Indenture, the Registration Rights Agreement and the Guarantees will not contravene any provision of California or federal law or the Delaware General Corporation Law known by such counsel to be applicable to Holdings or the Company or the certificate of incorporation or by-laws of the Company or Holdings or, to the best of such counsel's knowledge, any agreement or other instrument binding upon the Company or Holdings or any of the subsidiaries of the Company that is material to Holdings and the Company and its subsidiaries, taken together as a whole, or, to the best of such counsel's knowledge, any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or Holdings or any of the subsidiaries of the Company, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under the Placement Agreement, the Indenture, the Registration Rights Agreement or the Securities or for the performance by Holdings of its obligations under the Placement Agreement, the Indenture, the Registration Rights Agreement and the Guarantees, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Securities and such as may be required under the Securities Act in connection with the performance by the Company and Holdings of their respective obligations under the Registration Rights Agreement. B-1 25 D. After due inquiry, such counsel does not know of any legal or governmental proceedings pending or threatened to which the Company or Holdings or any of the subsidiaries of the Company is a party or to which any of the properties of the Company or Holdings or any of the subsidiaries of the Company is subject, other than proceedings fairly summarized in all material respects in the Final Memorandum and proceedings which such counsel believes are not likely to have a material adverse effect on Holdings and the Company and its subsidiaries, taken together as a whole, or on the power or ability of the Company to perform its obligations under the Placement Agreement, the Indenture, the Registration Rights Agreement or the Securities or to consummate the transactions contemplated by the Final Memorandum or on the power or ability of Holdings to perform its obligations under the Placement Agreement, the Indenture, the Registration Rights Agreement and the Guarantees. E. The Company and Holdings and the subsidiaries of the Company (i) are in compliance with any and all applicable Environmental Laws, (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on Holdings and the Company and its subsidiaries, taken together as a whole. B-2 26 EXHIBIT C OPINION OF BROWN & WOOD LLP The opinion of Brown & Wood LLP to be delivered pursuant to Section 5(e) of the Placement Agreement shall be to the effect set forth in paragraphs (B), (C), (D) and (I) and the last paragraph of Exhibit A to the Placement Agreement and to the further effect that the statements in the Final Memorandum under the captions "Description of the Notes" and "Transfer Restrictions," insofar as such statements constitute summaries of the provisions of the Indenture, Securities, Guarantees or Registration Rights Agreement or of the legal matters referred to therein, fairly summarize the matters referred to therein in all material respects. With respect to the matters set forth in the last paragraph of Exhibit A to the Placement Agreement, Brown & Wood LLP may state that their belief is based upon their participation in the preparation of the Final Memorandum (and any amendments or supplements thereto) and review and discussion of the contents thereof (including the review of, but not participation in the preparation of, the documents incorporated or deemed to be incorporated by reference therein), but are without independent check or verification except as specified. C-1 EX-4.1 3 f73660ex4-1.txt INDENTURE 1 EXHIBIT 4.1 DEL MONTE CORPORATION, as Issuer DEL MONTE FOODS COMPANY, as Guarantor and BANKERS TRUST COMPANY as Trustee ------------ INDENTURE Dated as of May 15, 2001 ------------ $300,000,000 9 1/4% Senior Subordinated Notes due 2011 2 CROSS-REFERENCE TABLE
TIA Indenture Section Section - ------- --------- 310 (a)(1)............................................................... 7.10 (a)(2)............................................................... 7.10 (a)(3)............................................................... N.A. (a)(4)............................................................... N.A. (a)(5)............................................................... 7.08; 7.10 (b).................................................................. 7.08; 7.10; 13.02 (c).................................................................. N.A. 311 (a).................................................................. 7.11 (b).................................................................. 7.11 (c).................................................................. N.A. 312 (a).................................................................. 2.05 (b).................................................................. 13.03 (c).................................................................. 13.03 313 (a).................................................................. 7.06 (b)(1)............................................................... N.A. (b)(2)............................................................... 7.06 (c).................................................................. 7.06; 13.02 (d).................................................................. 7.06 314 (a).................................................................. 4.07; 4.08; 13.02 (b).................................................................. N.A. (c)(1)............................................................... 13.04 (c)(2)............................................................... 13.04 (c)(3)............................................................... N.A. (d).................................................................. N.A. (e).................................................................. 13.05 (f).................................................................. N.A. 315 (a).................................................................. 7.01(b) (b).................................................................. 7.05; 13.02 (c).................................................................. 7.01(a) (d).................................................................. 7.01(c) (e).................................................................. 6.11 316 (a)(last sentence)................................................... 2.09 (a)(1)(A)............................................................ 6.05 (a)(1)(B)............................................................ 6.04 (a)(2)............................................................... N.A. (b).................................................................. 6.07 (c).................................................................. 9.05 317 (a)(1)............................................................... 6.08 (a)(2)............................................................... 6.09 (b).................................................................. 2.04 318 (a).................................................................. 13.01 (c).................................................................. 13.01
- ------------------ N.A. means Not Applicable. NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture. 3 Table of Contents
Page ---- ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions................................................................ 1 SECTION 1.02. Incorporation by Reference of TIA.......................................... 32 SECTION 1.03. Rules of Construction...................................................... 32 ARTICLE TWO THE NOTES SECTION 2.01. Form and Dating............................................................ 32 SECTION 2.02. Execution and Authentication; Aggregate Principal Amount................... 33 SECTION 2.03. Registrar and Paying Agent................................................. 35 SECTION 2.04. Paying Agent To Hold Assets in Trust....................................... 35 SECTION 2.05. Noteholder Lists........................................................... 36 SECTION 2.06. Transfer and Exchange...................................................... 36 SECTION 2.07. Replacement Notes.......................................................... 37 SECTION 2.08. Outstanding Notes.......................................................... 37 SECTION 2.09. Treasury Notes............................................................. 37 SECTION 2.10. Temporary Notes............................................................ 38 SECTION 2.11. Cancellation............................................................... 38 SECTION 2.12. Defaulted Interest......................................................... 38 SECTION 2.13. CUSIP Numbers.............................................................. 38 SECTION 2.14. Deposit of Money........................................................... 39 SECTION 2.15. Restrictive Legends........................................................ 39 SECTION 2.16. Book-Entry Provisions for Global Notes..................................... 40 SECTION 2.17. Special Transfer Provisions................................................ 42 SECTION 2.18. Issuance of Additional Notes............................................... 43 ARTICLE THREE REDEMPTION SECTION 3.01. Notices to Trustee......................................................... 44 SECTION 3.02. Selection of Notes To Be Redeemed.......................................... 44 SECTION 3.03. Notice of Redemption....................................................... 44 SECTION 3.04. Effect of Notice of Redemption............................................. 45 SECTION 3.05. Deposit of Redemption Price................................................ 45 SECTION 3.06. Notes Redeemed in Part..................................................... 46
i 4 ARTICLE FOUR COVENANTS SECTION 4.01. Payment of Notes........................................................... 46 SECTION 4.02. Maintenance of Office or Agency............................................ 46 SECTION 4.03. Corporate Existence........................................................ 47 SECTION 4.04. Payment of Taxes and Other Claims.......................................... 47 SECTION 4.05. Maintenance of Properties and Insurance.................................... 47 SECTION 4.06. Compliance Certificate; Notice of Default.................................. 48 SECTION 4.07. Compliance with Laws....................................................... 48 SECTION 4.08. SEC Reports................................................................ 49 SECTION 4.09. Waiver of Stay, Extension or Usury Laws.................................... 49 SECTION 4.10. Limitation on Restricted Payments.......................................... 49 SECTION 4.11. Limitation on Transactions with Affiliates................................. 53 SECTION 4.12. Limitation on Incurrence of Additional Indebtedness........................ 54 SECTION 4.13. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries..................................................... 55 SECTION 4.14. Prohibition on Incurrence of Senior Subordinated Debt...................... 56 SECTION 4.15. Change of Control.......................................................... 56 SECTION 4.16. Limitation on Asset Sales.................................................. 58 SECTION 4.17. Limitation on Preferred Stock of Restricted Subsidiaries................... 63 SECTION 4.18. Limitation on Liens........................................................ 63 SECTION 4.19. Limitation on Guarantees by Domestic Restricted Subsidiaries............................................................... 64 SECTION 4.20. Restriction of Lines of Business to Food, Food Distribution and Related Businesses........................................ 65 SECTION 4.21. Rule 144A Information...................................................... 65 ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01. Merger, Consolidation and Sale of Assets of the Company.................... 65 SECTION 5.02. Successor Corporation Substituted for the Company.......................... 66 SECTION 5.03. Merger, Consolidation and Sale of Assets of Holdings....................... 66 SECTION 5.04. Successor Corporation Substituted for Holdings............................. 67 ARTICLE SIX DEFAULT AND REMEDIES SECTION 6.01. Events of Default.......................................................... 68 SECTION 6.02. Acceleration............................................................... 69 SECTION 6.03. Other Remedies............................................................. 70 SECTION 6.04. Waiver of Past Defaults.................................................... 70 SECTION 6.05. Control by Majority........................................................ 70 SECTION 6.06. Limitation on Suits........................................................ 70 SECTION 6.07. Rights of Holders To Receive Payment....................................... 71
ii 5 SECTION 6.08. Collection Suit by Trustee................................................. 71 SECTION 6.09. Trustee May File Proofs of Claim........................................... 71 SECTION 6.10. Priorities................................................................. 72 SECTION 6.11. Undertaking for Costs...................................................... 72 ARTICLE SEVEN TRUSTEE SECTION 7.01. Duties of Trustee.......................................................... 72 SECTION 7.02. Rights of Trustee.......................................................... 73 SECTION 7.03. Individual Rights of Trustee............................................... 74 SECTION 7.04. Trustee's Disclaimer....................................................... 74 SECTION 7.05. Notice of Default.......................................................... 75 SECTION 7.06. Reports by Trustee to Holders.............................................. 75 SECTION 7.07. Compensation and Indemnity................................................. 75 SECTION 7.08. Replacement of Trustee..................................................... 76 SECTION 7.09. Successor Trustee by Merger, Etc........................................... 77 SECTION 7.10. Eligibility; Disqualification.............................................. 77 SECTION 7.11. Preferential Collection of Claims Against Company.......................... 77 ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. Termination of the Company's Obligations................................... 78 SECTION 8.02. Legal Defeasance and Covenant Defeasance................................... 79 SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance...................... 80 SECTION 8.04. Application of Trust Money................................................. 81 SECTION 8.05. Repayment to the Company................................................... 82 SECTION 8.06. Reinstatement.............................................................. 82 ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.01. Without Consent of Holders................................................. 82 SECTION 9.02. With Consent of Holders.................................................... 83 SECTION 9.03. Effect on Senior Debt...................................................... 85 SECTION 9.04. Compliance with TIA........................................................ 85 SECTION 9.05. Revocation and Effect of Consents.......................................... 85 SECTION 9.06. Notation on or Exchange of Notes........................................... 85 SECTION 9.07. Trustee To Sign Amendments, Etc............................................ 86 SECTION 9.08. Effect of Supplemental Indentures.......................................... 86
iii 6 ARTICLE TEN SUBORDINATION SECTION 10.01. Notes Subordinated to Senior Debt......................................... 86 SECTION 10.02. No Payment on Notes in Certain Circumstances.............................. 86 SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc............................ 87 SECTION 10.04. Payments May Be Paid Prior to Dissolution................................. 88 SECTION 10.05. Subrogation............................................................... 89 SECTION 10.06. Obligations of the Company Unconditional.................................. 89 SECTION 10.07. Notice to Trustee and Paying Agents....................................... 89 SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating Agent.................................................................. 90 SECTION 10.09. Trustee's Relation to Senior Debt......................................... 90 SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt............................... 91 SECTION 10.11. Noteholders Authorize Trustee and Paying Agent To Effectuate Subordination of Notes...................................... 91 SECTION 10.12. This Article Ten Not To Prevent Events of Default......................... 92 SECTION 10.13. Trustee's Compensation Not Prejudiced..................................... 92 ARTICLE ELEVEN GUARANTEE OF HOLDINGS SECTION 11.01. Unconditional Guarantee................................................... 92 SECTION 11.02. Subordination of Guarantee................................................ 93 SECTION 11.03. Severability.............................................................. 93 SECTION 11.04. Release of Guarantee...................................................... 93 SECTION 11.05. Waiver of Subrogation..................................................... 93 SECTION 11.06. Execution of Guarantee.................................................... 94 SECTION 11.07. Waiver of Stay, Extension or Usury Laws................................... 94 ARTICLE TWELVE SUBORDINATION OF GUARANTEE OBLIGATIONS SECTION 12.01. Guarantee Obligations Subordinated to Guarantor Senior Debt of Holdings.......................................................... 94 SECTION 12.02. No Payment on Notes in Certain Circumstances.............................. 95 SECTION 12.03. Payment Over of Proceeds upon Dissolution, Etc............................ 96 SECTION 12.04. Payments May Be Paid Prior to Dissolution................................. 97 SECTION 12.05. Subrogation............................................................... 97 SECTION 12.06. Obligations of Holdings Unconditional..................................... 98 SECTION 12.07. Notice to Trustee and Paying Agents....................................... 98 SECTION 12.08. Reliance on Judicial Order or Certificate of Liquidating Agent..................................................................... 99 SECTION 12.09. Trustee's Relation to Guarantor Senior Debt of Holdings................... 99 SECTION 12.10. Subordination Rights Not Impaired by Acts or Omissions of Holdings or Holders of Guarantor Senior Debt of Holdings.................................................................. 99
iv 7 SECTION 12.11. Noteholders Authorize Trustee and Paying Agent To Effectuate Subordination of Notes......................................... 100 SECTION 12.12. This Article Twelve Not To Prevent Events of Default...................... 100 ARTICLE THIRTEEN MISCELLANEOUS SECTION 13.01. TIA Controls.............................................................. 101 SECTION 13.02. Notices................................................................... 101 SECTION 13.03. Communications by Holders with Other Holders.............................. 102 SECTION 13.04. Certificate and Opinion as to Conditions Precedent........................ 103 SECTION 13.05. Statements Required in Certificate or Opinion............................. 103 SECTION 13.06. Rules by Trustee, Paying Agent, Registrar................................. 103 SECTION 13.07. Legal Holidays............................................................ 103 SECTION 13.08. Governing Law............................................................. 104 SECTION 13.09. No Adverse Interpretation of Other Agreements............................. 104 SECTION 13.10. No Recourse Against Others................................................ 104 SECTION 13.11. Successors................................................................ 104 SECTION 13.12. Duplicate Originals....................................................... 104 SECTION 13.13. Severability.............................................................. 104 Signatures .............................................................................. 105 Exhibit A -- Form of Initial Note and Guarantee.......................................... A-1 Exhibit B -- Form of Exchange Note and Guarantee......................................... B-1 Exhibit C -- Form of Certificate......................................................... C-1 Exhibit D -- Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S.......................................... D-1 Schedule 1 -- Assets Being Held for Disposition
Note: This Table of Contents shall not, for any purpose, be deemed to be part of the Indenture. v 8 INDENTURE, dated as of May 15, 2001, among DEL MONTE CORPORATION, a New York corporation (the "Company"), DEL MONTE FOODS COMPANY, a Delaware corporation ("Holdings") and BANKERS TRUST COMPANY, a New York banking and trust corporation, as Trustee (the "Trustee"). The Company has duly authorized the creation of an issue of 9-1/4% Senior Subordinated Notes due 2011 (the "Initial Notes") and Series B 9-1/4% Senior Subordinated Notes due 2011 (the "Exchange Notes") and, to provide therefor, the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Notes, when duly issued and executed by the Company, and authenticated and delivered hereunder, the valid obligations of the Company, and to make this Indenture a valid and binding agreement of the Company, have been done. Holdings has agreed to guarantee the Notes on a subordinated basis. Each party hereto agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Notes. ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions. "Acceleration Notice" has the meaning provided in Section 6.02(a). "Acquired Indebtedness" means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or consolidates with or into the Company or any of its Restricted Subsidiaries or assumed by the Company or any of its Restricted Subsidiaries in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the Company or such acquisition, merger or consolidation. "Acquisition Financing Indebtedness" means Indebtedness of the Company incurred in connection with the acquisition of assets or capital stock (by stock purchase, merger or otherwise) of a Person engaged in all material respects solely in the business of food, food distribution and related businesses. "Additional Interest" means additional interest, if any, which may be payable on the Notes as described in Section 4.01. "Additional Notes" means Notes, if any, originally issued under this Indenture after the Issue Date, other than Exchange Notes. "Affiliate" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or 9 indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. "Affiliate Transaction" has the meaning provided in Section 4.11. "Agent" means any Registrar, Paying Agent or co-Registrar. "Agent Members" has the meaning provided in Section 2.16. "Applicable Premium" has the meaning set forth in Section 6(c) of Exhibit A hereto. "Asset Acquisition" means: (a) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company, or shall be merged or consolidated with or into the Company or (b) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted Subsidiary of the Company) which constitute all or substantially all of the assets of such Person or comprises any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business. "Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company of: (a) any Capital Stock of any Restricted Subsidiary of the Company, or (b) any other property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; provided, however, that Asset Sales shall not include: (i) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $1 million; (ii) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted under Section 5.01; (iii) the grant of Liens permitted by Section 4.18; (iv) the sale or transfer of Receivables Related Assets in connection with a Qualified Receivables Transaction; and 2 10 (v) the sale or transfer of certain assets identified in Schedule 1 to this Indenture as being held for disposition. "Asset Swap" means the execution of a definitive agreement, subject only to customary closing conditions that the Company in good faith believes will be satisfied, for a substantially concurrent purchase and sale, or exchange, of assets (of a kind used or usable by the Company and its Restricted Subsidiaries in their business as it exists on the date thereof, or in businesses that are the same as such business of the Company and its Restricted Subsidiaries on the date thereof or similar or reasonably related thereto) between the Company or any of its Restricted Subsidiaries and another Person or group of affiliated Persons; provided, however, that any amendment to or waiver of any closing condition that individually or in the aggregate is material to the Asset Swap shall be deemed to be a new Asset Swap. "Authenticating Agent" has the meaning provided in Section 2.02. "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state or foreign law for the relief of debtors. "Blockage Period" has the meaning provided in Section 10.02. "Board of Directors" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof. "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Borrowing Base" means as of any date, an amount, determined on a consolidated basis and in accordance with GAAP, equal to the sum of (i) 60% of the aggregate book value of inventory plus (ii) 85% of the aggregate book value of all accounts receivable (net of bad debt reserves) of the Company and its Restricted Subsidiaries. To the extent that information is not available as to the amount of inventory or accounts receivable as of a specific date, the Company shall use the most recent available information for purposes of calculating the Borrowing Base. "Business Day" means a day that is not a Legal Holiday. "Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. "Capital Stock" means: (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class or series of Common Stock and Preferred Stock of such Person and 3 11 (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person. "Cash Equivalents" means: (i) obligations issued by, or unconditionally guaranteed by, the U.S. government or issued by any agency thereof, and in each case backed by the full faith and credit of the United States and maturing within one year from the date of acquisition thereof; (ii) obligations issued or fully guaranteed by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Ratings Service ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody's; (iv) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000; (v) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iv) above; and (vi) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (v) above. "Change of Control" means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company or Holdings to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates thereof (whether or not otherwise in compliance with the provisions of this Indenture), other than to TPG or its Related Parties; (ii) the approval by the holders of Capital Stock of the Company or Holdings, as the case may be, of any plan or proposal for the liquidation or dissolution of the Company or Holdings, as the case may be (whether or not otherwise in compliance with the provisions of this Indenture); (iii) (A) any Person or Group (other than TPG or its Related Parties) shall become the owner, directly or indirectly, beneficially or of record, of shares representing more than 40% of the aggregate ordinary voting power represented by the issued and 4 12 outstanding Capital Stock (the "Voting Stock") of the Company or Holdings and (B) TPG and its Related Parties shall beneficially own, directly or indirectly, in the aggregate a lesser percentage of the Voting Stock of the Company or Holdings, as the case may be, than such other Person or Group; or (iv) the replacement of a majority of the Board of Directors of the Company or Holdings over a two-year period from the directors who constituted the Board of Directors of the Company or Holdings, as the case may be, at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the Board of Directors of the Company or Holdings, as the case may be, then still in office who either were members of such Board of Directors at the beginning of such period or whose election as a member of such Board of Directors was previously so approved or who were nominated by, or designees of, TPG or its Related Parties. "Change of Control Date" has the meaning provided in Section 4.15. "Change of Control Offer" has the meaning provided in Section 4.15. "Change of Control Payment Date" has the meaning provided in Section 4.15. "Change of Control Redemption Date" has the meaning provided in Section 4.15. "Common Stock" of any Person means any and all shares, interests or other participations in and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes without limitation, all series and classes of such common stock. "Company" means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means such successor. "Consolidated EBITDA" means, with respect to any Person, for any period, the sum (without duplication) of: (i) Consolidated Net Income, and (ii) to the extent Consolidated Net Income has been reduced thereby, (A) all income taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period, (B) Consolidated Interest Expense, and (C) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period, all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP. "Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four full fiscal quarters (the "Four Quarter 5 13 Period") ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction Date") to the Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to: (i) the incurrence or repayment of any Indebtedness of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated EBITDA (including any pro forma expense and cost reductions which, in the reasonable and good faith judgment of the Company's senior management, will result from such Asset Sale or Asset Acquisition) attributable to the assets which are the subject of the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of the "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date, (2) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements, 6 14 (3) interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or if none, then based upon such optional rate as such Person may designate, and (4) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate implicit in such Capitalized Lease Obligation in accordance with GAAP and as reflected in such Person's financial statements. "Consolidated Fixed Charges" means, with respect to any Person for any period, the sum (without duplication) of: (i) Consolidated Interest Expense (excluding amortization or write-off of deferred financing costs), plus (ii) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person (other than dividends paid in Qualified Capital Stock) paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum (without duplication) of: (i) the aggregate of the interest expense of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including, without limitation, (a) any amortization of debt discount and amortization or write-off of deferred financing costs, (b) the net costs under Interest Swap Obligations, (c) all capitalized interest, (d) the interest portion of any deferred payment obligation, (e) dividends paid in respect of Disqualified Capital Stock, (f) net payments (whether positive or negative) pursuant to Interest Swap Obligations, and (ii) the interest component of Capitalized Lease Obligations, in each case paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. Notwithstanding the foregoing, Consolidated Interest Expense of the Company shall include the interest expense of a Person only to the extent that the net income of such Person is included in the Consolidated Net Income of the Company. 7 15 "Consolidated Net Income" means, with respect to any Person, for any period, the aggregate net income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided that there shall be excluded therefrom: (a) after-tax gains or losses from Asset Sales (without regard to the $1 million limitation set forth in the definition thereof) or abandonments or reserves relating thereto; (b) after-tax items classified as extraordinary or nonrecurring gains or losses; (c) the net income of any Person acquired in a "pooling of interests" transaction accrued prior to the date it becomes a Restricted Subsidiary of the referent Person or is merged or consolidated with or into the referent Person or any Restricted Subsidiary of the referent Person; (d) the net income (but not loss) of any Restricted Subsidiary of the referent Person to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of that income is at the time of determination restricted, directly or indirectly, by a contract, operation of law or otherwise; (e) the net income of any Person, other than a Restricted Subsidiary of the referent Person, except to the extent of cash dividends or distributions paid to the referent Person or to a Restricted Subsidiary of the referent Person by such Person; (f) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date; (g) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued); and (h) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets. Notwithstanding the foregoing, "Consolidated Net Income" shall be calculated without giving effect to: (i) any premiums, fees or expenses incurred and amortization of premiums, fees or expenses incurred since March 31, 2001 in connection with the refinancing or the Recapitalization and related financings; and (ii) the amortization, depreciation, or non-cash charge of any amounts required or permitted by Accounting Principles Board Opinion Nos. 16 or 17. "Consolidated Net Tangible Assets" means, as of any date, the total amount of assets of the Company and its Restricted Subsidiaries (less applicable depreciation, amortization and other 8 16 valuation reserves), net of any write-ups of capital assets, other than write-ups in connection with accounting for acquisitions in conformity with GAAP, after deducting therefrom (i) all current liabilities of the Company and its Restricted Subsidiaries (excluding intercompany items), and (ii) all deferred tax assets, goodwill, trade names, trademarks, copyrights, patents, unamortized debt discount and expense, and all other items which would be treated as intangibles, in each case as shown on a consolidated balance sheet of the Company and its Restricted Subsidiaries prepared in accordance with GAAP. "Consolidated Non-Cash Charges" means, with respect to any Person, for any period, the aggregate depreciation, amortization, exchange or translation losses on foreign currencies and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charge which requires an accrual of or a reserve for cash charges for any future period). "Covenant Defeasance" has the meaning provided in Section 8.02. "Credit Agreement" means the Credit Agreement dated as of the Issue Date among Holdings, the Company and the financial institutions named therein, and any related notes, collateral documents, letters of credit and guarantees, including any appendices, exhibits or schedules to any of the foregoing (as the same may be in effect from time to time), in each case, as such agreements may be amended, modified, supplemented or restated from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid or extended from time to time (whether with the original agents and lenders or other agents or lenders or otherwise, and whether provided under the original credit agreement or other credit agreements or otherwise) (including, without limitation, increasing the amount of available borrowings or other Indebtedness thereunder (provided that such increase in borrowings is permitted by the covenant described in Section 4.12)). "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in currency values. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any applicable Bankruptcy Law. "Default" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. "Default Notice" has the meaning provided in Section 10.02. "Depository" means The Depository Trust Company and its successors. 9 17 "Designated Noncash Consideration" means any noncash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is designated as Designated Noncash Consideration pursuant to an Officers' Certificate executed by the principal executive officer and the principal financial officer of the Company or such Restricted Subsidiary at the time of such Asset Sale. Any particular item of Designated Noncash Consideration will cease to be considered to be outstanding once cash or Cash Equivalents have been received by the Company or a Restricted Subsidiary in exchange therefor as proceeds or payments. Promptly after receipt of any Designated Noncash Consideration, the Company shall deliver such Officers' Certificate to the Trustee, together with a Board Resolution of the Company stating the fair market value of such Designated Noncash Consideration and the basis of such valuation, which shall be a report or opinion of an Independent Financial Advisor with respect to the receipt in one transaction or a series of related transactions of Designated Noncash Consideration with a fair market value in excess of $25 million. "Designated Senior Debt" means: (i) Indebtedness of the Company under or in respect of the Credit Agreement and (ii) any other Indebtedness of the Company constituting Senior Debt which, at the time of determination, has an aggregate outstanding principal amount of at least $75 million and is specifically designated by the Company in the instrument evidencing such Senior Debt as "Designated Senior Debt." "Disqualified Capital Stock" means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in each case on or prior to the final maturity date of the Notes, provided, however, that if such Capital Stock is issued to any plan for the benefit of employees of the Company or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations. "Equity Offering" means any sale of Qualified Capital Stock of Holdings or the Company; provided that, in the event of an Equity Offering by Holdings, Holdings contributes to the capital of the Company the portion of the net cash proceeds of such Equity Offering necessary to pay the aggregate redemption price, plus accrued interest to the redemption date, of the Notes to be redeemed as described under Section 6(b) of Exhibit A hereto. "Event of Default" has the meaning provided in Section 6.01. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. "Exchange Notes" has the meaning provided in the preamble to this Indenture. "Exchange Offer" means the registration by the Company under the Securities Act pursuant to a registration statement of the offer by the Company to each Holder of the Initial 10 18 Notes and each Holder of Additional Notes, if any, to exchange all the Initial Notes and Additional Notes held by such Holder for Exchange Notes in an aggregate principal amount equal to the aggregate principal amount of the Initial Notes and Additional Notes held by such Holder, all in accordance with the terms and conditions of the Registration Rights Agreement. "fair market value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. "Four Quarter Period" has the meaning specified in the definition of "Consolidated Fixed Charge Coverage Ratio" above. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may have been approved by a significant segment of the accounting profession as of the Issue Date. "Global Notes" has the meaning provided in Section 2.01. "Guarantee" means, as the context requires, the Guarantee of Holdings set forth in Article Eleven or a Guarantee of a Restricted Subsidiary described in Section 4.19 and shall include, in the case of any Guarantor, any guarantee of such Guarantor which is endorsed on the Notes. "Guarantee Obligations" has the meaning provided in Section 12.01. "Guarantor Designated Senior Debt" means, with respect to any Guarantor: (i) Indebtedness of such Guarantor under or in respect of the Credit Agreement; and (ii) any other Indebtedness of such Guarantor constituting Guarantor Senior Debt of such Guarantor which, at the time of determination, has an aggregate outstanding principal amount of at least $75 million and is specifically designated by such Guarantor in the instrument evidencing such Guarantor Senior Debt as "Guarantor Designated Senior Debt." "Guarantor" means each of Holdings and any Restricted Subsidiary that executes a Guarantee pursuant to Section 4.19, each until a successor replaces it pursuant to this Indenture and thereafter means such successor. A Restricted Subsidiary whose Guarantee has terminated pursuant to Section 4.19 shall cease to be a Guarantor effective as of such termination. "Guarantor Blockage Period" has the meaning provided in Section 12.02. "Guarantor Default Notice" has the meaning provided in Section 12.02. "Guarantor Senior Debt" means, with respect to a Guarantor, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a bankruptcy 11 19 petition at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law and without giving effect to any reduction in the amount of such Indebtedness which is necessary to prevent the obligation of such Guarantor with respect thereto from being rendered void or voidable under applicable law relating to fraudulent conveyance or fraudulent transfer) on any Indebtedness of such Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Guarantee of such Guarantor. Without limiting the generality of the foregoing, "Guarantor Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (x) all monetary obligations (including guarantees thereof), if any, of every nature of such Guarantor under or with respect to the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations (including guarantees thereof) and (z) all obligations (including guarantees thereof) under Currency Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Debt" shall not include: (i) any Indebtedness of such Guarantor to a Subsidiary of such Guarantor; (ii) Indebtedness to, or guaranteed by such Guarantor for the benefit of, any shareholder (other than a parent corporation), director, officer or employee of such Guarantor or any Subsidiary of such Guarantor (including, without limitation, amounts owed for compensation); (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services; (iv) Indebtedness represented by Disqualified Capital Stock; (v) any liability for federal, state, local or other taxes owed or owing by such Guarantor; (vi) any Indebtedness incurred in violation of the Indenture; and (vii) any Indebtedness, and any other obligation referred to in clause (x), (y) or (z) of this definition, which in each case is, by its express terms or by the express terms of the instrument or agreement creating or evidencing the same or pursuant to which the same is outstanding, (a) subordinated in right of payment to any other Indebtedness of such Guarantor, in the case of a Restricted Subsidiary, or (b) subordinated in right of 12 20 payment to or pari passu with the Guarantee of Holdings described above under Article Eleven in the case of Holdings. "Holder" or "Noteholder" means the Person in whose name a Note is registered on the Registrar's books. "Holdings" means Del Monte Foods Company, a Delaware corporation, until a successor replaces it pursuant to this Indenture and thereafter means such successor. "incur" has the meaning provided in Section 4.12. "Indebtedness" means with respect to any Person, without duplication, (i) all obligations of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all Capitalized Lease Obligations of such Person (but excluding any operating lease obligations); (iv) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more or that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted); (v) all obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction; (vi) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (i) through (v) above and clause (viii) below; (vii) all obligations of any other Person of the type referred to in clauses (i) through (vi) above and clause (viii) below that are secured by any Lien on any property or asset of such Person, the amount of such obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the obligation so secured; (viii) all obligations under Currency Agreements and Interest Swap Obligations of such Person; and (ix) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to its maximum fixed repurchase price (or comparable price that such Person may be required to pay for the acquisition or retirement of such Disqualified Capital Stock), but excluding accrued dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of 13 21 such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock. "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "Independent Financial Advisor" means a firm: (i) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect equity beneficial ownership interest in the Company exceeding 10%; and (ii) which, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged. "Initial Notes" has the meaning provided in the preamble to this Indenture. "interest" on the Notes shall include Additional Interest, if any, unless otherwise expressly stated or the context otherwise requires. For purposes of clarity, it is hereby understood and agreed that references to "interest" on the Notes shall mean and include "Additional Interest" notwithstanding the fact that there may be references in this Indenture to "interest and Additional Interest." "Interest Payment Date" means the stated maturity of an installment of interest on the Notes. "Interest Swap Obligations" means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements. "Internal Revenue Code" means the Internal Revenue Code of 1986. "Investment" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other Person. In the case of the Company, "Investment" shall exclude extensions of trade credit (including trade receivables) by the Company and its Restricted Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be. For the purposes of Section 4.10, 14 22 (i) "Investment" shall include and be valued at the portion of the fair market value of the net assets of any Restricted Subsidiary represented by the Company's equity interest in such Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary and shall exclude the fair market value of the net assets of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by the Company or any of its Restricted Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, reduced by the payment of dividends or distributions in connection with such Investment or any other amounts received in respect of such Investment; provided that no such payment of dividends or distributions or receipt of any such other amounts shall reduce the amount of any Investment if such payment of dividends or distributions or receipt of any such amounts would be included in Consolidated Net Income. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Common Stock of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, the Company no longer owns, directly or indirectly, 80% of the outstanding Common Stock of such Restricted Subsidiary, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock of such Restricted Subsidiary not sold or disposed of. "Issue Date" means May 15, 2001. "Legal Defeasance" has the meaning provided in Section 8.02. "Legal Holiday" has the meaning provided in Section 13.07. "Lien" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest). "Maturity Date" means May 15, 2011. "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of: (a) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions); (b) taxes paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements; 15 23 (c) repayment of Indebtedness that is required to be repaid in connection with such Asset Sale; and (d) appropriate amounts to be provided by the Company or any Restricted 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 Restricted 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. "Net Proceeds Offer" has the meaning provided in Section 4.16. "Net Proceeds Offer Amount" has the meaning provided in Section 4.16. "Net Proceeds Offer Payment Date" has the meaning provided in Section 4.16. "Net Proceeds Offer Trigger Date" has the meaning provided in Section 4.16. "Non-U.S. Person" means a Person who is not a U.S. person, as such term is defined in Regulation S. "Notes" means the Initial Notes, Additional Notes and the Exchange Notes, treated as a single class of securities, as amended or supplemented from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture. For purposes of this Indenture, all Notes shall vote together as one class of securities under this Indenture. "Obligations" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Offering Memorandum" means the Offering Memorandum dated May 3, 2001, pursuant to which the Initial Notes were offered, and any supplement thereto. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, the Controller, the General Counsel, or the Secretary of such Person, or any other officer designated by the Board of Directors serving in a similar capacity. "Officers' Certificate" means, with respect to any Person, a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of such Person and otherwise complying with the applicable requirements of this Indenture, as they relate to the making of an Officers' Certificate. "Offshore Global Notes" has the meaning provided in Section 2.01. "Offshore Physical Notes" has the meaning provided in Section 2.01. "Opinion of Counsel" means a written opinion from legal counsel, who may be internal counsel for the Company, or who is otherwise reasonably acceptable to the Trustee complying 16 24 with the requirements of Sections 13.04 and 13.05, as they relate to the giving of an Opinion of Counsel. "Pari Passu Indebtedness" has the meaning provided in Section 4.16. "Paying Agent" has the meaning provided in Section 2.03. "Permitted Indebtedness" means, without duplication, each of the following: (i) Indebtedness under the Notes, excluding any Additional Notes; (ii) Indebtedness incurred pursuant to the Credit Agreement in an aggregate principal amount at any time outstanding not to exceed the greater of (i) the Borrowing Base, or (ii) $840 million less (A) the sum of: (y) the aggregate amount of all scheduled mandatory principal payments in respect of term loans thereunder (excluding any such payments to the extent refinanced at the time of payment under a replacement Credit Agreement) actually made by the Company, plus (z) the aggregate amount of all mandatory principal payments in respect of such term loans thereunder made by reason of or attributable to the receipt of proceeds from Asset Sales; plus (B) in the case of the revolving credit facility thereunder, the aggregate amount of required permanent repayments which are accompanied by a corresponding permanent commitment reduction thereunder made by reason of or attributable to the receipt of proceeds from Asset Sales; plus (C) the amount of the Receivables Program Obligations then outstanding. (iii) other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date (excluding any Indebtedness in respect of the Company's 12-1/4 Senior Subordinated Notes due 2007 which are repurchased or retired by or on behalf of the Company as contemplated by the offer to purchase by the Company dated April 16, 2001), reduced by the amount of any scheduled amortization payments or mandatory prepayments when actually paid or permanent reductions thereon; (iv) Interest Swap Obligations of the Company covering Indebtedness of the Company or any of its Restricted Subsidiaries and Interest Swap Obligations of any Restricted Subsidiary of the Company covering Indebtedness of such Restricted Subsidiary; provided, however, that such Interest Swap Obligations are entered into to protect the Company and its Restricted Subsidiaries from fluctuations in interest rates on Indebtedness incurred in accordance with this Indenture to the extent the notional principal amount of such Interest Swap Obligation does not exceed the principal amount of the Indebtedness to which such Interest Swap Obligation relates; 17 25 (v) Indebtedness under Currency Agreements; provided that in the case of Currency Agreements which relate to Indebtedness, such Currency Agreements do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; (vi) Indebtedness of a Wholly Owned Restricted Subsidiary of the Company to the Company or to another Wholly Owned Restricted Subsidiary of the Company, in either case for so long as such Indebtedness is held by the Company or a Wholly Owned Restricted Subsidiary of the Company, in each case subject to no Lien held by a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company; provided that if as of any date any Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, there shall be deemed to have occurred on such date the incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer of such Indebtedness; (vii) Indebtedness of the Company to a Wholly Owned Restricted Subsidiary of the Company for so long as such Indebtedness is held by a Wholly Owned Restricted Subsidiary of the Company, in each case subject to no Lien; provided that: (a) any Indebtedness of the Company to a Wholly Owned Restricted Subsidiary of the Company is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under this Indenture and the Notes and (b) if as of any date any Person other than a Wholly Owned Restricted Subsidiary of the Company owns or holds any such Indebtedness or any Person holds a Lien in respect of such Indebtedness, there shall be deemed to have occurred on such date the incurrence of Indebtedness not constituting Permitted Indebtedness by the Company; (viii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five business days of incurrence; (ix) Indebtedness of the Company or any of its Restricted Subsidiaries in respect of security for workers' compensation claims, payment obligations in connection with self-insurance, performance bonds, surety bonds or similar requirements in the ordinary course of business; (x) Capitalized Lease Obligations and Purchase Money Indebtedness of the Company and its Restricted Subsidiaries incurred in the ordinary course of business and Indebtedness arising from the conversion of the obligations of the Company under or pursuant to the "synthetic lease" transactions to on-balance sheet Indebtedness of the Company in an aggregate amount at any time outstanding not to exceed 10% of the Consolidated Net Tangible Assets of the Company as shown on the then most recent 18 26 consolidated balance sheet of the Company and its Restricted Subsidiaries prepared in accordance with GAAP; (xi) guarantees by the Company and its Wholly Owned Restricted Subsidiaries of each other's Indebtedness; provided that such Indebtedness is permitted to be incurred under this Indenture, including, with respect to guarantees by Wholly Owned Restricted Subsidiaries of the Company, the provisions of Section 4.19; (xii) Acquired Indebtedness and Acquisition Financing Indebtedness; provided that, if such Indebtedness is incurred after June 30, 2003, immediately after giving effect to the transaction in which such Acquired Indebtedness or Acquisition Financing Indebtedness is incurred, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12; and provided further, that if such Indebtedness is incurred on or before June 30, 2003, the Consolidated Fixed Charge Coverage Ratio of the Company and its Restricted Subsidiaries, after giving effect to the transaction in which such Acquired Indebtedness or Acquisition Financing Indebtedness is incurred (a "pro forma Consolidated Fixed Charge Coverage Ratio") (A) shall be greater than 1.8 to 1.0, and (B) shall be at least equal to the Consolidated Fixed Charge Coverage Ratio at such time without giving effect to the transaction in which such Acquired Indebtedness or Acquisition Financing Indebtedness is incurred; (xiii) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Restricted Subsidiaries pursuant to such agreements, in each case incurred in connection with the disposition of any business, assets or Restricted Subsidiary of the Company (other than guarantees of Indebtedness or other obligations incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary of the Company for the purpose of financing such acquisition) in a principal amount not to exceed the gross proceeds actually received by the Company or any of its Restricted Subsidiaries in connection with such disposition; provided, however, that the principal amount of any Indebtedness incurred pursuant to this clause (xiii), when taken together with all Indebtedness incurred pursuant to this clause (xiii) and then outstanding, shall not exceed $25 million; (xiv) guarantees furnished by the Company or its Restricted Subsidiaries in the ordinary course of business of Indebtedness of another Person in an aggregate amount not to exceed $10 million at any time outstanding; (xv) Refinancing Indebtedness; (xvi) Receivables Program Obligations; (xvii) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount not to exceed $65 million at any one time outstanding (which amount may, but need not, be incurred in whole or in part under the Credit Agreement); 19 27 (xviii) Indebtedness incurred under commercial letters of credit issued for the account of the Company or any of its Restricted Subsidiaries in the ordinary course of business (and not for the purpose of, directly or indirectly, incurring Indebtedness or providing credit support or a similar arrangement in respect of Indebtedness), provided that any drawing under any such letter of credit is reimbursed in full within seven days; and (xix) any guarantee by a Restricted Subsidiary of any Indebtedness incurred pursuant to the Credit Agreement. For purposes of determining compliance with Section 4.12, in the event that an item of Indebtedness meets the requirements of one or more of the categories of Permitted Indebtedness set forth in clauses (i) through (xviii) above, the Company shall, in its sole discretion, determine under which such clause such item of Indebtedness shall be classified and, so long as such item of Indebtedness meets the requirements for inclusion as Permitted Indebtedness under such clause, such item of Indebtedness will be treated as having been incurred pursuant to such clause. "Permitted Investments" means: (i) Investments by the Company or any Restricted Subsidiary of the Company in any Person that is or will become immediately after such Investment a Restricted Subsidiary of the Company or that will immediately after such Investment merge or consolidate with or into the Company or a Restricted Subsidiary of the Company, or that will immediately after such Investment transfer or convey all of its assets (including such Investment) to the Company or a Restricted Subsidiary of the Company, provided that such Person is engaged, in all material respects, solely in the business of food, food distribution and related businesses; (ii) Investments in the Company by any Restricted Subsidiary of the Company; provided that any Indebtedness evidencing such Investment is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under the Notes and this Indenture; (iii) Investments in cash and Cash Equivalents; (iv) loans and advances to employees and officers of the Company and its Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of $10 million at any one time outstanding; (v) Currency Agreements and Interest Swap Obligations entered into in the ordinary course of the Company's or its Restricted Subsidiaries' businesses and otherwise in compliance with this Indenture; (vi) additional Investments not to exceed $37.5 million at any one time outstanding; (vii) Investments in securities received in settlement of obligations of trade creditors or customers in the ordinary course of business or in satisfaction of judgements 20 28 or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (viii) Investments made by the Company or its Restricted Subsidiaries as a result of consideration received in connection with an Asset Sale made in compliance with Section 4.16, or not constituting an Asset Sale by reason of the $1 million threshold contained in the definition thereof; (ix) Investments specifically permitted by and made in accordance with the provisions of Section 4.11; (x) guarantees permitted by Section 4.19; (xi) Related Business Investments in companies and ventures in which the Company or a Restricted Subsidiary of the Company holds an equity ownership interest of not less than 33.3% in an aggregate amount not exceeding the sum of (x) the unutilized portion of the amount of Investments permitted by clause (vi) of this definition, plus (y) the proceeds of the sale of certain assets identified in Schedule 1 to this Indenture as being held for disposition, plus (z) $37.5 million; (xii) Investments made in connection with a Qualified Receivables Transaction; and (xiii) any acquisition of assets solely in exchange for the issuance of Qualified Capital Stock of the Company. "Permitted Liens" means the following types of Liens: (i) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent, or (b) being contested in good faith by appropriate proceedings and as to which the Company or any of its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent for a period of more than 60 days or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security or similar obligations, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, 21 29 bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (iv) judgment Liens not giving rise to an Event of Default 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 shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (v) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; (vi) any interest or title of a lessor under any lease, whether or not characterized as capital or operating; provided that such Liens do not extend to any property or assets which is not leased property subject to such lease; (vii) Liens securing Capitalized Lease Obligations and Purchase Money Indebtedness incurred in accordance with Section 4.12; provided, however, that in the case of Purchase Money Indebtedness (A) the Indebtedness shall not exceed the cost of such property or assets being acquired or constructed and shall not be secured by any property or assets of the Company or any Restricted Subsidiary of the Company other than the property and assets being acquired or constructed, and (B) the Lien securing such Indebtedness shall be created within 90 days of such acquisition or construction; (viii) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (ix) Liens securing reimbursement obligations with respect to letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; (x) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off; (xi) Liens securing Interest Swap Obligations that relate to Indebtedness that is otherwise permitted under this Indenture; (xii) Liens securing Indebtedness under Currency Agreements; (xiii) Liens securing Acquired Indebtedness incurred in accordance with Section 4.12; provided that 22 30 (A) such Liens secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company and were not granted in connection with, or in anticipation of, the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company, and (B) such Liens do not extend to or cover any property or assets of the Company or of any of its Restricted Subsidiaries other than the property or assets that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Restricted Subsidiary of the Company and are no more favorable to the lienholders than those securing the Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company; (xiv) leases or subleases granted to others not interfering in any material respect with the business of the Company or its Restricted Subsidiaries; (xv) Liens arising out of consignment or similar arrangements for the sale of goods entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business; and (xvi) Liens on Receivables Program Assets securing Receivables Program Obligations. "Person" means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. "Physical Notes" has the meaning provided in Section 2.01. "Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation. "principal" of any Indebtedness (including the Notes) means the outstanding principal amount of such Indebtedness plus the premium, if any, on such indebtedness. For purposes of clarity, it is hereby understood and agreed that references to "principal" shall mean and include "premium, if any" notwithstanding the fact that there may be references in this Indenture or the Notes to "principal and premium", if any. "Private Placement Legend" has the meaning provided in Section 2.15. "Proceeds Purchase Date" has the meaning provided in Section 4.16. "pro forma" means, with respect to any calculation made or required to be made pursuant to the terms of this Indenture, a calculation in accordance with Article 11 of Regulation S-X under the Securities Act, except as otherwise specified herein. 23 31 "Purchase Money Indebtedness" means Indebtedness of the Company or any of its Restricted Subsidiaries incurred in the normal course of business for the purpose of financing all or any part of the purchase price, or the cost of installation, construction or improvement, of real or personal property or assets. "Purchase Money Note" means a promissory note evidencing the obligation of a Receivables Subsidiary to pay the purchase price for Receivables or other indebtedness to the Company or to any other Seller in connection with a Qualified Receivables Transaction, which note shall be repaid from cash available to the maker of such note, other than cash required to be held as reserves pursuant to Receivables Documents, amounts paid in respect of interest, principal and other amounts owing under Receivables Documents and amounts paid in connection with the purchase of newly generated Receivables. "Qualified Capital Stock" means any Capital Stock that is not Disqualified Capital Stock. "Qualified Institutional Buyer" or "QIB" shall have the meaning specified in Rule 144A under the Securities Act. "Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by the Company or any Subsidiary of the Company pursuant to which the Company or any such Subsidiary may sell, convey or otherwise transfer to a Receivables Subsidiary (in the case of a transfer by the Company or any other Seller) and any other person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any Receivables Program Assets (whether existing on the date of this Indenture or arising thereafter); provided that: (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of a Receivables Subsidiary or Special Purpose Vehicle (i) is guaranteed by the Company or any other Seller (excluding guarantees of obligations pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Company or any other Seller in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Company or any other Seller, directly or indirectly, contingently or otherwise, to the satisfaction of obligations incurred in such transactions, other than pursuant to Standard Securitization Undertakings; (b) neither the Company or any other Seller has any material contract, agreement, arrangement or understanding with a Receivables Subsidiary or a Special Purpose Vehicle (except in connection with a Purchase Money Note or Qualified Receivables Transaction) other than on terms no less favorable to the Company or such Seller than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing accounts receivable; and 24 32 (c) the Company and the other Sellers do not have any obligation to maintain or preserve the financial condition of a Receivables Subsidiary or a Special Purpose Vehicle or cause such entity to achieve certain levels of operating results. "Recapitalization" means the recapitalization of Holdings pursuant to the Agreement and Plan of Merger dated as of February 21, 1997, as amended and restated as of April 14, 1997, entered into among TPG, TPG Shield Acquisition Corporation and Holdings. "Receivables" means all rights of the Company or any other Seller to payments (whether constituting accounts, chattel paper, instruments, general intangibles or otherwise, and including the right to payment of any interest or finance charges), which rights are identified in the accounting records of the Company or such Seller as accounts receivable. "Receivables Documents" means: (x) a receivables purchase agreement, pooling and servicing agreement, credit agreement, agreements to acquire undivided interests or other agreement to transfer, or create a security interest in, Receivables Program Assets, in each case as amended, modified, supplemented or restated and in effect from time to time and entered into by the Company, another Seller and/or a Receivables Subsidiary, and (y) each other instrument, agreement and other document entered into by the Company, any other Seller or a Receivables Subsidiary relating to the transactions contemplated by the agreements referred to in clause (x) above, in each case as amended, modified, supplemented or restated and in effect from time to time. "Receivables Program Assets" means: (a) all Receivables which are described as being transferred by the Company, another Seller or a Receivables Subsidiary pursuant to the Receivables Documents; (b) all Receivables Related Assets; and (c) all collections (including recoveries) and other proceeds of the assets described in the foregoing clauses. "Receivables Program Obligations" means: (a) notes, trust certificates, undivided interests, partnership interests or other interests representing the right to be paid a specified principal amount for the Receivables Program Assets, and (b) related obligations of the Company, a Subsidiary of the Company or a Special Purpose Vehicle (including, without limitation, rights in respect of interest or yield, breach of warranty claims and expense reimbursement and indemnity provisions). 25 33 "Receivables Related Assets" means: (i) any rights arising under the documentation governing or relating to Receivables (including rights in respect of liens securing such Receivables and other credit support in respect of such Receivables); (ii) any proceeds of such Receivables and any lockboxes or accounts in which such proceeds are deposited; (iii) spread accounts and other similar accounts (and any amounts on deposit therein) established in connection with a Qualified Receivables Transaction; (iv) any warranty, indemnity, dilution and other intercompany claim arising out of Receivables Documents; and (v) other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable. "Receivables Subsidiary" means a special purpose wholly owned subsidiary of the Company created in connection with the transactions contemplated by a Qualified Receivables Transaction, which subsidiary engages in no activities other than those incidental to such Qualified Receivables Transaction and which is designated as a Receivables Subsidiary by the Company's Board of Directors. Any such designation by the Board of Directors shall be evidenced by filing with the Trustee a Board Resolution of the Company giving effect to such designation and an Officers' Certificate certifying, to the best of such officers' knowledge and belief after consulting with counsel, such designation, and the transactions in which the Receivables Subsidiary will engage, comply with the requirements of the definition of Qualified Receivables Transaction. "Record Date" means each of the dates designated as such in the Notes, whether or not a Legal Holiday. "Redemption Date," when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Indenture and the Notes. "Redemption Price," when used with respect to any Note to be redeemed, means the price fixed for such redemption pursuant to this Indenture and the Notes. "Reference Date" has the meaning provided in Section 4.10. "Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness, in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings. "Refinancing Indebtedness" means any Refinancing by the Company or any Restricted Subsidiary of the Company of Indebtedness incurred in accordance with Section 4.12 (other than 26 34 pursuant to clauses (ii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xiii), (xiv), (xvi), (xvii) or (xviii) of the definition of Permitted Indebtedness), in each case that does not: (1) result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company in connection with such Refinancing); or (2) create Indebtedness with (A) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced, or (B) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; provided that (x) if such Indebtedness being Refinanced is solely Indebtedness of the Company, then such Refinancing Indebtedness shall be Indebtedness solely of the Company, and (y) if such Indebtedness being Refinanced is subordinate or junior to the Notes, then such Refinancing Indebtedness shall be subordinate to the Notes at least to the same extent and in the same manner as the Indebtedness being Refinanced. "Registrar" has the meaning provided in Section 2.03. "Registration Rights Agreement" means the Registration Rights Agreement dated May 15, 2001 among the Company, Holdings and the placement agents for the benefit of themselves and the Holders, as the same may be amended or modified from time to time in accordance with the terms thereof. "Regulation S" means Regulation S under the Securities Act. "Related Business Investment" means: (i) any Investment by a Person in any other Person a majority of whose revenues are derived from the food, food distribution or related businesses; and (ii) any Investment by such Person in any cooperative or other supplier, including, without limitation, any joint venture which is intended to supply any product or service useful to the business of the Company and its Restricted Subsidiaries. "Related Party" means any Affiliate of TPG. "Replacement Assets" has the meaning provided in Section 4.16. "Representative" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Debt; provided that, if and for so long as any Designated 27 35 Senior Debt lacks such a representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt. "Restricted Payment" has the meaning provided in Section 4.10. "Restricted Subsidiary" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary. "Rule 144A" means Rule 144A (or any successor thereto) under the Securities Act. "Sale and Leaseback Transaction" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary of the Company of any property, whether owned by the Company or any Restricted Subsidiary at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such Property. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, or any successor statute or statutes thereto. "Seller" means the Company or any Subsidiary or other Affiliate of the Company (other than a Receivables Subsidiary) which is a party to a Receivables Document. "Senior Debt" means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a bankruptcy petition at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Company, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes. Without limiting the generality of the foregoing, "Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of: (x) all monetary obligations (including guarantees thereof) of every nature of the Company under the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities; (y) all Interest Swap Obligations (including guarantees thereof); and (z) all obligations (including guarantees thereof) under Currency Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. 28 36 Notwithstanding the foregoing, Senior Debt shall not include: (i) any Indebtedness of the Company to a Subsidiary of the Company; (ii) Indebtedness to, or guaranteed by the Company for the benefit of, any shareholder (other than a parent corporation), director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation); (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services; (iv) Indebtedness represented by Disqualified Capital Stock; (v)any liability for federal, state, local or other taxes owed or owing by the Company; (vi) any Indebtedness incurred in violation of the provisions of this Indenture; and (vii) any Indebtedness, and any other obligation referred to in clause (x), (y) or (z) of this definition, which in each case is, by its express terms or by the express terms of the instrument or agreement creating or evidencing the same or pursuant to which the same is outstanding, subordinated in right of payment to any other Indebtedness of the Company. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. "Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w) of Regulation S-X under the Securities Act as in effect on the Issue Date. "Special Purpose Vehicle" means a trust, partnership or other special purpose Person established by the Company and/or any of its Subsidiaries to implement a Qualified Receivables Transaction. "Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company which, in the good faith judgement of the Board of Directors of the appropriate company, are reasonably customary in an accounts receivable transaction. "Subsidiary," with respect to any Person, means: (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time owned, directly or indirectly, by such Person. 29 37 "Surviving Entity" has the meaning provided in Section 5.01. "Surviving Parent Entity" has the meaning provided in Section 5.03. "Tax Sharing Agreement" means the tax sharing agreement between the Company and Holdings allocating the obligations to contribute amounts for the payment of income taxes and the benefits of any credits or other reductions of tax payments so as to approximate the income taxes that would be payable by the Company and Holdings on a stand-alone basis if no consolidated tax return were filed by such entities. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as otherwise provided in Section 9.04. "TPG" means TPG Partners, L.P., a Delaware limited partnership. "Treasury Rate" has the meaning set forth in Section 6(c) of Exhibit A hereto. "Trustee" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor. "Trust Officer" means, with respect to the Trustee, any Vice President, any Assistant Vice President, any Managing Director, any Assistant Secretary, any Assistant Treasurer, any Senior Trust Officer, any Assistant Trust Officer, any Trust Officer or any other officer associated with the corporate trust department of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also, means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Unrestricted Subsidiary" of any Person means: (i) any Subsidiary of such Person that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The 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 unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided that (x) the Company certifies to the Trustee that such designation complies with Section 4.10, and (y) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender thereof has recourse to any of the assets of the Company or any of its Restricted Subsidiaries. 30 38 The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if: (x) immediately after giving effect to such designation, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12, and (y) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. "U.S. Government Obligations" means direct obligations of, and obligations guaranteed by, the United States for the payment of which the full faith and credit of the United States is pledged. "U.S. Legal Tender" means such coin or currency of the United States as at the time of payment shall be legal tender for the payment of public and private debts. "U.S. Global Notes" has the meaning provided in Section 2.01. "U.S. Physical Notes" has the meaning provided in Section 2.01. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment. "Wholly Owned Restricted Subsidiary" of any Person means any Restricted Subsidiary of such Person of which all the outstanding voting securities (other than, in the case of a foreign Restricted Subsidiary, directors' qualifying shares or an immaterial amount of shares otherwise required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Restricted Subsidiary of such Person. 31 39 SECTION 1.02. Incorporation by Reference of TIA. Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in, and made a part of, this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes. "indenture security holder" means a Holder or a Noteholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company or any other obligor on the Notes. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.03. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; and (5) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. ARTICLE TWO THE NOTES SECTION 2.01. Form and Dating. The Initial Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Exchange Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit B hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or depository rule or usage. The Company and the Trustee shall approve the form of the Notes and any notation, legend or endorsement on 32 40 them. Each Note shall be dated the date of its issuance and shall show the date of its authentication. The terms and provisions contained in the forms of the Notes annexed hereto as Exhibits A and B, shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the parties hereto, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. Notes offered and sold in reliance on Rule 144A shall be issued initially in the form of one or more permanent global Notes in registered form, substantially in the form set forth in Exhibit A (the "U.S. Global Notes"), registered in the name of the nominee of the Depository, deposited with the Registrar as custodian for the Depository, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the U.S. Global Notes may from time to time be increased or decreased by adjustments made on the records of the Registrar, as custodian for the Depository, as hereinafter provided. Notes offered and sold in offshore transactions in reliance on Regulation S shall be issued initially in the form of one or more permanent global Notes in registered form, substantially in the form set forth in Exhibit A (the "Offshore Global Notes"), registered in the name of the nominee of the Depository, deposited with the Registrar as custodian for the Depository, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Offshore Global Notes may from time to time be increased or decreased by adjustments made on the records of the Registrar, as custodian for the Depository, as hereinafter provided. Notes issued pursuant to Section 2.16 in exchange for interests in the Offshore Global Notes or U.S. Global Notes shall be in the form of permanent certificated Notes in registered form, substantially in the form set forth in Exhibit A ("Offshore Physical Notes" and "U.S. Physical Notes," respectively). The Offshore Physical Notes and the U.S. Physical Notes are sometimes collectively herein referred to as the "Physical Notes." The U.S. Global Notes and the Offshore Global Notes are sometimes referred to herein as the "Global Notes." SECTION 2.02. Execution and Authentication; Aggregate Principal Amount. Two Officers, or an Officer and an Assistant Secretary, shall sign, or one Officer shall sign and one Officer or an Assistant Secretary (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to, the Notes for the Company by manual or facsimile signature. If an Officer or Assistant Secretary whose signature is on a Note was an Officer or Assistant Secretary at the time of such execution but no longer holds that office or position at the time the Trustee authenticates the Note, the Note shall nevertheless be valid. A Note shall not be valid until an authorized signatory of the Trustee or the Authenticating Agent manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. 33 41 The Trustee shall authenticate (i) Initial Notes for original issue in the aggregate principal amount not to exceed $300,000,000, (ii) subject to Section 2.18, Additional Notes, and (iii) Exchange Notes from time to time for issue only in exchange for a like principal amount of Initial Notes or Additional Notes, in each case upon written orders of the Company in the form of an Officers' Certificate. The Officers' Certificate shall specify the amount of Notes to be authenticated, the date on which the Notes are to be authenticated and the aggregate principal amount of Notes outstanding on the date of authentication, whether the Notes are to be Initial Notes or Additional Notes or Exchange Notes, and shall further specify the amount of such Notes to be issued as U.S. Global Notes, Offshore Global Notes, U.S. Physical Notes or Offshore Physical Notes. The aggregate principal amount of Notes outstanding at any time may not exceed $300,000,000 plus, if any Additional Notes are issued, the aggregate principal amount of such Additional Notes, except as provided in Section 2.07. The Trustee shall not be required to authenticate Notes if the issuance of such Notes pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Notes and this Indenture in a manner which is not reasonably acceptable to the Trustee. The Trustee may appoint an Authenticating Agent (the "Authenticating Agent") reasonably acceptable to the Company to authenticate Notes. Unless otherwise provided in the appointment, an Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such Authenticating Agent. An Authenticating Agent has the same rights as an Agent to deal with the Company and Affiliates of the Company. Any Person into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate agency business of any Authenticating Agent, shall continue to be the Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. Any Authenticating Agent may at any time resign by giving at least 30 days' advance written notice of resignation to the Trustee and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Company, and upon such a termination, the Trustee may appoint a successor Authenticating Agent, shall give written notice of such appointment to the Company and shall mail notice of such appointment (at the Company's expense) to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent. Any such Authenticating Agent shall be entitled to reasonable compensation for its services and, if paid by the Trustee, it shall be a reimbursable expense pursuant to Section 7.07. The Notes shall be issuable in fully registered form only, without coupons, in denominations of $1,000 and any integral multiple thereof. 34 42 SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency (which shall be located in the Borough of Manhattan in the City of New York, State of New York) where (a) Notes may be presented or surrendered for registration of transfer or for exchange (the "Registrar"), (b) Notes may be presented or surrendered for payment (the "Paying Agent") and (c) notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company, upon prior written notice to the Trustee, may have one or more co-Registrars and one or more additional paying agents reasonably acceptable to the Trustee. The term "Paying Agent" includes any additional Paying Agent. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which agreement shall incorporate the provisions of the TIA and implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee, in advance, of the name and address of any such Agent. If the Company fails to maintain a Registrar, Paying Agent and/or agent for service of notices and demands, or fails to give the foregoing notice, the Trustee shall act as such. The Paying Agent or Registrar may resign upon 30 days written notice to the Company and the Trustee, provided that a replacement Paying Agent or Registrar, as the case may be, has been duly appointed and has agreed to act as such, or that the Trustee has assumed the duties of the Paying Agent or the Registrar, as the case may be. The Company may remove any Agent upon written notice to such Agent and the Trustee; provided that no such removal shall become effective until (i) the acceptance of an appointment by a successor Agent to such Agent as evidenced by an appropriate agency agreement entered into by the Company and such successor Agent and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as such Agent until the appointment of a successor Agent in accordance with clause (i) of this proviso. Upon the occurrence of an Event of Default described in Section 6.01(6) or (7), the Trustee shall, or upon the occurrence of any other Event of Default by notice to the Company, the Registrar and the Paying Agent, the Trustee may, assume the duties and obligations of the Registrar and the Paying Agent hereunder. SECTION 2.04. Paying Agent To Hold Assets in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that each Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all assets held by the Paying Agent for the payment of principal of, or interest on, the Notes (whether such assets have been distributed to it by the Company or any other obligor on the Notes), and the Company and the Paying Agent shall notify the Trustee of any Default by the Company (or any other obligor on the Notes) in making any such payment. The Company at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may at any time during the continuance of any payment Default or Event of Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Company to the Paying Agent, the Paying Agent shall have no further liability for such assets. 35 43 SECTION 2.05. Noteholder Lists. The Registrar shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders. If the Trustee or any Paying Agent is not the Registrar, the Company shall furnish or cause the Registrar to furnish to the Trustee or any such Paying Agent on or before the third Business Day preceding each Record Date and at such other times as the Trustee or any such Paying Agent may request in writing a list as of such date and in such form as the Trustee may reasonably require of the names and addresses of the Holders, which list may be conclusively relied upon by the Trustee or any such Paying Agent. SECTION 2.06. Transfer and Exchange. Subject to the provisions of Sections 2.16 and 2.17, when Notes are presented to the Registrar or a co-Registrar with a request to register the transfer of such Notes or to exchange such Notes for an equal principal amount of Notes of other authorized denominations, the Registrar or co-Registrar shall register the transfer or make the exchange as requested if the requirements for such transaction are met; provided, however, that the Notes presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar or co-Registrar, duly executed by the Holder thereof or his or her attorney duly authorized in writing. To permit registrations of transfer and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar's or co-Registrar's request. No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchanges or transfers pursuant to Sections 2.10, 3.06, 4.15, 4.16 or 9.06 or exchanges pursuant to the next succeeding paragraph, in each of which events the Company shall be responsible for the payment of such taxes). In the event that the Company delivers to the Trustee a copy of an Officers' Certificate certifying that a registration statement under the Securities Act with respect to the Exchange Offer has been declared effective by the SEC and that the Company has offered Exchange Notes registered with the SEC to the Holders in accordance with the Exchange Offer, the Registrar shall exchange, upon request of any Holder, such Holder's Initial Notes or Additional Notes for Exchange Notes registered with the SEC upon the terms set forth in the Exchange Offer and in accordance with this Section 2.06 hereof, provided that the Initial Notes or Additional Notes so surrendered for exchange are duly endorsed and accompanied by a letter of transmittal or written instrument of transfer in form satisfactory to the Company and the Registrar, in addition to any certifications and representations required by the provisions of the Registration Rights Agreement, and duly executed by the Holder thereof or such Holder's attorney who shall be duly authorized in writing to execute such document on behalf of such Holder. The Registrar or co-Registrar shall not be required to register the transfer of or exchange of any Note (i) during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of Notes and ending at the close of business on the day of such mailing and (ii) selected for redemption in whole or in, part pursuant to Article Three, except the unredeemed portion of any Note being redeemed in part. 36 44 Any Holder of an interest in any Global Note shall, by acceptance of such interest, agree that transfers of beneficial interests in such Global Note may be effected only through a book-entry system maintained by the Holder of such Global Note (or its agent), and that ownership of a beneficial interest in the Global Note shall be required to be reflected in a book-entry system. SECTION 2.07. Replacement Notes. If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee or any Authenticating Agent of the Trustee shall authenticate a replacement Note if the Registrar's requirements are met. If required by the Registrar or the Company, such Holder must provide an affidavit of lost certificate and an indemnity bond or other indemnity, sufficient, in the judgment of both the Company and the Registrar, to protect the Company, the Trustee and any Agent from any loss which any of them may suffer if a Note is replaced. The Company may charge such Holder for its reasonable, out-of-pocket expenses in replacing a Note, including reasonable fees and expenses of counsel. Every replacement Note shall constitute an additional obligation of the Company. SECTION 2.08. Outstanding Notes. Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those cancelled by the Registrar, those delivered to the Registrar for cancellation and those described in this Section as not outstanding. Subject to the provisions of Section 2.09, a Note does not cease to be outstanding because the Company or any of its Affiliates holds the Note. If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Registrar receives an Opinion of Counsel that the replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.07. If on a Redemption Date or the Maturity Date the Paying Agent (other than the Company or one of its Affiliates) holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the principal and interest due on the Notes payable on that date and is not prohibited from paying such money to the Holders thereof pursuant to the terms of this Indenture, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue. SECTION 2.09. Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver, consent or notice, Notes owned by the Company or any of its Affiliates shall be considered as though they are not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer of the Trustee actually knows are so owned shall be so considered. The Company shall notify the Trustee, in writing, when it or any of its Affiliates repurchases or otherwise acquires Notes, of the aggregate principal amount of such Notes so repurchased or otherwise acquired. If the Company or any of its Affiliates acquire any Initial Notes or Additional Notes, the Company will not resell or transfer, and will cause its Affiliate not to resell or transfer, any such Notes. 37 45 SECTION 2.10. Temporary Notes. Until definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes upon receipt of a written order of the Company in the form of an Officers' Certificate. The Officers' Certificate shall specify the amount of temporary Notes to be authenticated and the date on which the temporary Notes are to be authenticated. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate upon receipt of a written order of the Company pursuant to Section 2.02 definitive Notes in exchange for temporary Notes. SECTION 2.11. Cancellation. The Company at any time may deliver Notes to the Registrar for cancellation. The Paying Agent shall forward to the Registrar any Notes surrendered to it for registration of transfer, exchange, purchase or payment. The Registrar shall cancel and, at the written direction of the Company, shall dispose of all Notes surrendered for registration of transfer, exchange, purchase, payment or cancellation. Subject to Section 2.07, the Company may not issue new Notes to replace Notes that it has paid or delivered to the Registrar for cancellation. If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Registrar for cancellation pursuant to this Section 2.11. SECTION 2.12. Defaulted Interest. If the Company defaults in a payment of interest (including, without limitation, Additional Interest) on the Notes, it shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest to the Persons who are Holders on a subsequent special record date, which date shall be the fifteenth day next preceding the date fixed by the Company for the payment of defaulted interest or the next succeeding Business Day if such date is not a Business Day. At least 15 days before the subsequent special record date, the Company shall mail to each Person who was a Holder as of a recent date selected by the Company, with a copy to the Trustee and the Paying Agent, a notice that states the subsequent special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid. SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may use "CUSIP" or "ISIN" numbers, and if so, the Trustee shall use the CUSIP or ISIN numbers in notices of redemption or exchange as a convenience to Holders; provided that no representation is hereby deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP or ISIN numbers printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee and the Registrar of any change in the CUSIP or ISIN numbers. 38 46 SECTION 2.14. Deposit of Money. Prior to 11:00 a.m. New York City time on each Interest Payment Date and on the Maturity Date, any Redemption Date, Change of Control Payment Date, or Net Proceeds Offer Payment Date or any offer date for any payment on the Notes, the Company shall have deposited with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such date, in a timely manner which permits the Paying Agent to remit payment to the Holders on such date. SECTION 2.15. Restrictive Legends. Unless and until a Note is exchanged for an Exchange Note or sold in connection with an effective Registration Statement pursuant to the Registration Rights Agreement, (i) the U.S. Global Notes and U.S. Physical Notes shall bear the legend set forth below (the "Private Placement Legend") on the face thereof and (ii) the Offshore Physical Notes and Offshore Global Notes shall bear the Private Placement Legend on the face thereof until at least the 41st day after the Issue Date and receipt by the Company and the Trustee of a certificate substantially in the form of Exhibit C hereto. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(K) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(K) UNDER THE SECURITIES ACT AFTER THE ORIGINAL ISSUANCE OF THE NOTES, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES," AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION, OF THE FOREGOING RESTRICTIONS; and 39 47 Each Global Note shall also bear the following legend on the face thereof: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 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 SECTION 2.17 OF THE INDENTURE. SECTION 2.16. Book-Entry Provisions for Global Notes. (a) The U.S. Global Notes and Offshore Global Notes initially shall (i) be registered in the name of the Depository or the nominee of such Depository, (ii) be delivered to the Registrar as custodian for such Depository and (iii) bear legends as set forth in Section 2.15. Members of, or participants in, the Depository ("Agent Members") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository, or the Registrar as its custodian, or under the Global Note, and the Depository may be treated by the Company, the Trustee, each Agent and any agent of the Company, the Trustee or any Agent as the absolute owner of the Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, each Agent or any agent of the Company, the Trustee or any Agent from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Note. (b) Transfers of the Global Note shall be limited to transfers in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in the Global Notes may be transferred or exchanged for Physical Notes in accordance with the rules and procedures of the Depository and the provisions of Section 2.17. In addition, U.S. Physical Notes and Offshore Physical Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in the U.S. Global Notes or the Offshore Physical Notes, 40 48 as the case may be, if (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for the U.S. Global Notes or the Offshore Physical Notes, as the case may be, and a successor depositary is not appointed by the Company within 90 days of such notice, (ii) an Event of Default has occurred and is continuing and the Registrar has received a written request from the Depository to issue Physical Notes or (iii) in accordance with the rules and procedures of the Depository and the provisions of Section 2.17. (c) Any beneficial interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in another Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in such other Global Note and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. (d) In connection with any transfer or exchange of a portion of the beneficial interest in a Global Note to beneficial owners pursuant to paragraph (b), the Registrar shall (if one or more Physical Notes are to be issued) reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in such Global Note to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more U.S. Physical Notes or Offshore Physical Notes, as the case may be, of like tenor and amount. (e) In connection with the transfer of the U.S. Global Notes or the Offshore Global Notes, in whole, to beneficial owners pursuant to paragraph (b), the U.S. Global Notes or Offshore Global Notes, as the case may be, shall be deemed to be surrendered to the Registrar for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depository in exchange for its beneficial interest in the U.S. Global Notes or Offshore Global Notes, as the case may be, an equal aggregate principal amount of U.S. Physical Notes or Offshore Physical Notes, as the case may be, of authorized denominations. (f) Any U.S. Physical Note delivered in exchange for an interest in the U.S. Global Notes pursuant to paragraph (b), (d) or (e) shall, except as otherwise provided by paragraph (d) of Section 2.17, bear the legend regarding transfer restrictions applicable to the U.S. Physical Notes set forth in Section 2.15. (g) Any Offshore Physical Note delivered in exchange for an interest in the Offshore Global Notes pursuant to paragraph (b), (d) or (e) shall, except as otherwise provided by paragraph (d) of Section 2.17, bear the legend regarding transfer restrictions applicable to the Offshore Physical Note set forth in Section 2.15. (h) The Holder of a Global Note 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 Notes. 41 49 SECTION 2.17. Special Transfer Provisions. Unless and until a Note is exchanged for an Exchange Note or sold in connection with an effective Registration Statement pursuant to the Registration Rights Agreement, the following provisions shall apply: (a) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of a Note to a QIB (excluding transfers to Non-U.S. Persons): (i) If the Note to be transferred consists of (x) either Offshore Physical Notes prior to the removal of the Private Placement Legend or U.S. Physical Notes, the 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 Note stating, or has otherwise advised the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that it is purchasing the Note 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 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 or (y) an interest in the U.S. Global Notes, the transfer of such interest may be effected only through the book entry system maintained by the Depository. (ii) If the proposed transferee is an Agent Member, and the Note to be transferred consists of U.S. Physical Notes, upon receipt by the Registrar of the documents referred to in paragraph (i) above and instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of U.S. Global Notes in an amount equal to the principal amount of the U.S. Physical Notes to be transferred, and the Registrar shall cancel the U.S. Physical Notes so transferred. (b) Transfers of Interests in the Offshore Global Notes or Offshore Physical Notes. The following provisions shall apply with respect to any transfer of interests in Offshore Global Notes or Offshore Physical Notes: (i) prior to the removal of the Private Placement Legend from the Offshore Global Notes or Offshore Physical Notes pursuant to Section 2.15, the Registrar shall refuse to register such transfer unless such transfer complies with Section 2.17(a), and (ii) after such removal, the Registrar shall register the transfer of any such Note without requiring any additional certification. (c) Transfers to Non-U.S. Persons at Any Time. The following provisions shall apply with respect to any transfer of a Note to a Non-U.S. Person: 42 50 (i) The Registrar shall register any proposed transfer to any Non-U.S. Person if the Note to be transferred is a U.S. Physical Note or an interest in U.S. Global Notes, upon receipt of a certificate substantially in the form of Exhibit D hereto from the proposed transferor. (ii) (a) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Notes, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (ii) and (y) instructions in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the U.S. Global Notes in an amount equal to the principal amount of the beneficial interest in the U.S. Global Notes to be transferred, and (b) if the proposed transferee is an Agent Member, upon receipt by the Registrar of instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Notes in an amount equal to the principal amount of the U.S. Physical Notes or the U.S. Global Notes, as the case may be, to be transferred, and the Trustee shall cancel the Physical Note, if any, so transferred or decrease the amount of the U.S. Global Notes. (d) Private Placement Legend. Upon the registration of transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the registration of transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend unless (i) the Private Placement Legend is no longer required by Section 2.15 or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Registrar 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. (e) General. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.16 or this Section 2.17. 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 Registrar. SECTION 2.18. Issuance of Additional Notes. The Company may, subject to compliance with Article Four of this Indenture and applicable law, issue Additional Notes under this Indenture in an unlimited principal amount. The Notes issued on the Issue Date and any Additional Notes subsequently issued shall be treated as a single class of securities for all purposes under this Indenture. 43 51 ARTICLE THREE REDEMPTION SECTION 3.01. Notices to Trustee. If the Company elects to redeem Notes pursuant to Section 6 of the Notes, it shall notify the Trustee and the Paying Agent in writing of the Redemption Date and the principal amount of the Notes to be redeemed. The Company shall give each notice provided for in this Section 3.01 at least 30 days but not more than 60 days before the Redemption Date (unless a shorter notice period shall be satisfactory to the Trustee and the Paying Agent, as evidenced in a writing signed on behalf of the Trustee and the Paying Agent), together with an Officers' Certificate stating that such redemption shall comply with the conditions contained herein and in the Notes. SECTION 3.02. Selection of Notes To Be Redeemed. If fewer than all of the Notes are to be redeemed, selection of the Notes to be redeemed will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or in such other fair and reasonable manner chosen at the discretion of the Trustee; provided, however, that if a partial redemption is made with the proceeds of a Equity Offering, selection of the Notes or portion thereof for redemption shall be made by the Trustee only on a pro rata basis, or on as nearly a pro rata basis as is practicable (subject to applicable procedures of the Depository), unless such method is otherwise prohibited. The Company shall promptly notify the Trustee and the Paying Agent in writing of the date of listing and the name of the securities exchange if and when the Notes are listed on a principal national securities exchange. The Trustee shall make the selection from the Notes outstanding and not previously called for redemption and shall promptly notify the Company and the Paying Agent in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes in denominations of $1,000 may be redeemed only in whole. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Notes that have denominations larger than $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. SECTION 3.03. Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail or cause to be mailed a notice of redemption by first class mail, postage prepaid, to each Holder whose Notes are to be redeemed at its registered address, with a copy to the Trustee and any Paying Agent. At the Company's written request, the Paying Agent shall give the notice of redemption in the Company's name and at the Company's expense. Each notice for redemption shall identify the Notes to be redeemed and shall state: (1) the Redemption Date; 44 52 (2) the Redemption Price and the amount of premium and accrued interest, if any, to be paid; (3) the name and address of the Paying Agent; (4) the subparagraph of the Notes pursuant to which such redemption is being made; (5) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest, if any, and that interest on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment. (6) that, unless the Company defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price plus accrued interest, if any, upon surrender to the Paying Agent of the Notes redeemed; (7) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date, and upon surrender of such Note, a new Note or Notes in the aggregate principal amount equal to the unredeemed portion thereof will be issued; and (8) if fewer than all the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption. SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03, Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price plus accrued interest, if any. Upon surrender to the Paying Agent, such Notes called for redemption shall be paid at the Redemption Price (which shall include accrued interest thereon to the Redemption Date), but installments of interest which are due and payable on dates falling on or prior to the Redemption Date, shall be payable to Holders of record at the close of business on the relevant Record Dates referred to in the Notes. SECTION 3.05. Deposit of Redemption Price. On or before 11:00 a.m. New York City time on the Redemption Date, the Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus accrued interest, if any, of all Notes to be redeemed on that date. The Paying Agent shall promptly return to the Company any U.S. Legal Tender so deposited which is not required for that purpose, except with respect to monies owed as obligations to the Trustee pursuant to Article Seven. 45 53 If the Company complies with the preceding paragraph, then, unless the Company defaults in the payment of such Redemption Price plus accrued interest, if any, interest on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment. SECTION 3.06. Notes Redeemed in Part. Upon surrender of a Note that is to be redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder a new Note or Notes equal in principal amount to the unredeemed portion of the Note surrendered. ARTICLE FOUR COVENANTS SECTION 4.01. Payment of Notes. The Company shall pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. An installment of principal of or interest on the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds on that date U.S. Legal Tender designated for and sufficient to pay the installment in full and is not prohibited from paying such money to the Holders pursuant to the terms of this Indenture. In the event that the Exchange Offer is not consummated or a Shelf Registration Statement is not declared effective on or prior to December 31, 2001, the annual interest rate borne by the Notes will be increased by .5% per annum until the Exchange Offer is consummated or the Shelf Registration Statement is declared effective. Such .5% increase in the per annum rate of interest is referred to herein as "Additional Interest." The Company shall pay, to the extent such payments are lawful, interest on overdue principal and on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the rate borne by the Notes plus 2% per annum. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States from principal or interest payments hereunder. SECTION 4.02. Maintenance of Office or Agency. The Company shall maintain the office or agency required under Section 2.03. The Company shall give prior written notice to the Trustee and the Paying Agent of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee and the Paying Agent with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 13.02. 46 54 The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 4.03. Corporate Existence. Except as otherwise permitted by Article Four, Article Five and Section 4.16, the Company shall do or cause to be done, at its own cost and expense, all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Restricted Subsidiaries in accordance with the respective organizational documents of each such Restricted Subsidiary and the material rights (charter and statutory) and franchises of the Company and each such Restricted Subsidiary. SECTION 4.04. Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon it or any of its Subsidiaries or properties of it or any of its Subsidiaries and (ii) all lawful claims for labor, materials and supplies that, if unpaid, might by law become a Lien upon the property of it or any of its Subsidiaries; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings properly instituted and diligently conducted for which adequate reserves, to the extent required under GAAP, have been taken. SECTION 4.05. Maintenance of Properties and Insurance. (a) The Company shall, and shall cause each of its Restricted Subsidiaries to, maintain its material properties in good working order and condition (subject to ordinary wear and tear) and make all necessary repairs, renewals, replacements, additions, betterments and improvements thereto and actively conduct and carry on its business; provided, however, that nothing in this Section 4.05 shall prevent the Company or any of its Restricted Subsidiaries from discontinuing the operation and maintenance of any of its properties, if such discontinuance is, in the good faith judgment of the Board of Directors of the Company or the Restricted Subsidiary, as the case may be, desirable in the conduct of their respective businesses and is not disadvantageous in any material respect to the Holders. (b) The Company shall provide or cause to be provided, for itself and each of its Restricted Subsidiaries, insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the good faith judgment of the Board of Directors of the Company, are adequate and appropriate for the conduct of the business of the Company and such Restricted Subsidiaries in a prudent manner, with reputable insurers or with the government of the United States or an agency or instrumentality thereof, in such amounts, with such deductibles, and by 47 55 such methods as shall be customary, in the good faith judgment of the Board of Directors of the Company, for companies similarly situated in the industry. SECTION 4.06. Compliance Certificate; Notice of Default. (a) The Company and each Guarantor shall deliver to the Trustee, within 90 days after the end of the Company's fiscal year, an Officers' Certificate stating that a review of its activities and the activities of its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company or such Guarantor, as the case may be, has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such Officer signing such certificate, that to the best of such Officer's knowledge the Company or such Guarantor, as the case may be, during such preceding fiscal year has kept, observed, performed and fulfilled each and every such covenant and no Default or Event of Default occurred during such year and at the date of such certificate there is no Default or Event of Default that has occurred and is continuing or, if such signers do know of such Default or Event of Default, the certificate shall describe the Default or Event of Default and its status with particularity. The Officers' Certificate of the Company shall also notify the Trustee should the Company elect to change the manner in which it fixes its fiscal year end. (b) The annual financial statements delivered pursuant to Section 4.08 shall be accompanied by a written report of the Company's independent accountants (who shall be a firm of established national reputation) that in conducting their audit of such financial statements nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article Four, Five or Six of this Indenture insofar as they relate to accounting matters or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) (i) If any Default or Event of Default has occurred and is continuing or (ii) if any Holder seeks to exercise any remedy hereunder with respect to a claimed Default under this Indenture or the Notes, the Company shall deliver to the Trustee, at its address set forth in Section 13.02 hereof, by registered or certified mail or by telegram or facsimile transmission followed by hard copy by registered or certified mail an Officers' Certificate specifying such event, notice or other action within five Business Days of its becoming aware of such occurrence. The Trustee shall not be deemed to have notice of any Default or Event of Default unless one of its Trust Officers receives written notice thereof from the Company or any of the Holders. SECTION 4.07. Compliance with Laws. The Company shall comply, and shall cause each of its Restricted Subsidiaries to comply, with all applicable statutes, rules, regulations, orders and restrictions of the United States, all states and municipalities thereof, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their respective businesses and the ownership of their respective properties, except for such noncompliances as are not in the aggregate reasonably likely to have a material adverse effect on the financial condition or results of operations of the Company and its Restricted Subsidiaries, taken as a whole. 48 56 SECTION 4.08. SEC Reports. (a) So long as the Notes are outstanding the Company will deliver to the Trustee within 15 days after the filing of the same with the SEC, copies of the quarterly and annual reports and of the information, documents and other reports, if any, which the Company is required to file with the SEC, pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, so long as the Notes are outstanding the Company will file with the SEC, to the extent permitted, and provide the Trustee and Holders with such annual reports and such information, documents and other reports specified in Sections 13 and 15(d) of the Exchange Act. For purposes of the foregoing provisions of this paragraph, so long as: (1) Holdings owns all of the issued and outstanding Capital Stock of the Company; (2) the aggregate amount of all Investments made by Holdings in any Persons other than the Company and its Restricted Subsidiaries does not in the aggregate exceed $2,500,000 at any time outstanding; and (3) the Company is not required to file separate reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act; the filing and delivery of reports, information or documents which Holdings is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act in accordance with the provisions of this paragraph will satisfy the Company's obligations under this paragraph. The Company will also comply with the provisions of TIA Section 314(a). SECTION 4.09. Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company 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 4.10. Limitation on Restricted Payments. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of the Company or in options, warrants or other rights to purchase such Qualified Capital Stock) on or in respect of shares of the Company's Capital Stock to holders of such Capital Stock, 49 57 (b) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock (in each case other than in exchange for Qualified Capital Stock of the Company or options, warrants or other rights to purchase such Qualified Capital Stock), (c) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes, or (d) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted Payment"), if at the time of such Restricted Payment or immediately after giving effect thereto, (i) a Default or an Event of Default shall have occurred and be continuing or (ii) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12 or (iii) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the fair market value of such property as determined reasonably and in good faith by the Board of Directors of the Company) shall exceed the sum of: (v) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company earned subsequent to March 31, 2001 and on or prior to the date on which the Restricted Payment occurs or is to occur (the "Reference Date") (treating such period as a single accounting period); plus (w) 100% of the aggregate net cash proceeds received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of the Company (including by conversion of Indebtedness into Qualified Capital Stock) and 100% of the fair market value of non-cash consideration received in any such issuance and sale (provided that, as further provided in clause (7) of the immediately succeeding paragraph, to the extent that the Company does not realize cash from the proceeds of the payment, sale or disposition of any such non-cash consideration, the only Restricted Payments which shall be permitted by reason of such non-cash consideration shall be Restricted Payments which are made in kind of the non-cash consideration so received); plus 50 58 (x) without duplication of any amounts included in clause (iii) (w) above, 100% of the aggregate net cash proceeds of any equity contribution received by the Company subsequent to the Issue Date and on or prior to such Reference Date from a holder of the Company's Capital Stock and 100% of the fair market value of non-cash consideration of any such equity contribution received by the Company from a holder of the Company's Capital Stock (provided that, as further provided in clause (7) of the immediately succeeding paragraph, to the extent that the Company does not realize cash from the proceeds of the payment, sale or disposition of any such non-cash consideration, the only Restricted Payments which shall be permitted by reason of such non-cash consideration shall be Restricted Payments which are made in kind of the non-cash consideration so received); plus (y) without duplication, the sum of (1) the aggregate amount returned in cash subsequent to the Issue Date on or with respect to Investments (other than Permitted Investments), whether through interest payments, principal payments, dividends or other distributions or payments, (2) the net cash proceeds received by the Company or any Restricted Subsidiary subsequent to the Issue Date from the disposition of all or any portion of Investments (other than Permitted Investments) (other than any disposition to a Subsidiary of the Company) and 100% of the fair market value of non-cash consideration received in any such disposition (provided that, as further provided in clause (7) of the immediately succeeding paragraph, to the extent that the Company does not realize cash from the proceeds of the payment, sale or disposition of any such non-cash consideration, the only Restricted Payments which shall be permitted by reason of such non-cash consideration shall be Restricted Payments which are made in kind of the non-cash consideration so received), and (3) upon redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of such Subsidiary; plus (z) $50 million; provided, however, that with respect to all Investments made in any Unrestricted Subsidiary or joint venture, the sum of clauses (1), (2) and (3) above with respect to such Investment shall not exceed the aggregate amount of all such Investments made subsequent to the Issue Date in such Unrestricted Subsidiary or joint venture. Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph do not prohibit: 51 59 (1) the payment of any dividend within 60 days after the date of declaration of such dividend if the dividend would have been permitted on the date of declaration; (2) the acquisition of any shares of Capital Stock of the Company either: (i) solely in exchange for shares of Qualified Capital Stock of the Company or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company; (3) if no Default or Event of Default shall have occurred and be continuing, the acquisition of any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes either: (i) solely in exchange for shares of Qualified Capital Stock of the Company or Refinancing Indebtedness of the Company, or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of: (A) shares of Qualified Capital Stock of the Company or Holdings, provided that, in the case of Qualified Capital Stock of Holdings, Holdings contributes to the capital of the Company all or a portion of the net cash proceeds from the sale of such Qualified Capital Stock in at least the amount necessary to pay the aggregate acquisition cost of such Indebtedness, or (B) Refinancing Indebtedness; (4) so long as no Default or Event of Default shall have occurred and be continuing, payments for the purpose of and in an amount equal to the amount required to permit Holdings to redeem or repurchase Common Stock of Holdings or options in respect thereof from employees or officers of Holdings or any of its Subsidiaries or their estates or authorized representatives upon the death, disability or termination of employment of such employees or officers in an aggregate amount not to exceed $10 million; (5) the making of distributions, loans or advances in an amount not to exceed $1 million per annum sufficient to permit Holdings to pay the ordinary operating expenses of Holdings related to Holdings' ownership of Capital Stock of the Company; (6) the payment of any amounts pursuant to the Tax Sharing Agreement; and (7) in the event that the Company has not realized cash from the proceeds of the payment, sale or disposition of any non-cash consideration referred to in clause (iii) (w), (iii) (x) and (iii) (y) (2) of the immediately preceding paragraph, Restricted Payments permitted by reason of such non-cash consideration; provided, that such Restricted Payments may be made only in kind of the non-cash consideration so received. 52 60 In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the immediately preceding paragraph, amounts expended pursuant to clauses (1), (4) and (7) shall be included in such calculation and amounts expended pursuant to clauses (2), (3), (5) and (6) shall be excluded from such calculation. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment complies with this Indenture and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company's or Holdings' latest available internal quarterly financial statements. The Trustee shall have no duty or obligation to recalculate or otherwise verify the accuracy of the calculations set forth in any such Officers' Certificate. SECTION 4.11. Limitation on Transactions with Affiliates. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate Transactions permitted under paragraph (b) below, and (y) Affiliate Transactions on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary. All Affiliate Transactions (and each series of related Affiliate Transactions which are part of a common plan) involving aggregate payments or other property with a fair market value in excess of $2 million shall be approved by the Board of Directors of the Company or such Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions. If the Company or any Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a series of related Affiliate Transactions related to a common plan) that involves an aggregate fair market value or payments to an Affiliate, as the case may be, of more than $10 million, the Company or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee. (b) The restrictions set forth in clause (a) shall not apply to: (i) reasonable fees and compensation paid to (including issuances and grant of securities and stock options, employment agreements and stock option and ownership plans for the benefit of), and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted 53 61 Subsidiary of the Company as determined in good faith by the Company's Board of Directors or senior management; (ii) transactions between or among the Company and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided that such transactions are not otherwise prohibited by this Indenture; (iii) any agreement as in effect as of the Issue Date or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto or any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date); (iv) payments and investments permitted by this Indenture; (v)the issuance of Qualified Capital Stock of the Company; (vi) loans or advances to employees and officers of the Company and its Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of $10 million at any one time outstanding; (vii) transactions permitted by, and complying with, the provisions of the covenants described under Sections 5.01 and 5.03; and (viii) transactions with suppliers or other purchasers or sales of goods or services, in each case in the ordinary course of business (including, without limitation, pursuant to joint venture agreements) and otherwise in compliance with the terms of the Indenture which are fair to the Company in the good faith determination of the Board of Directors of the Company or the senior management thereof and on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; and (ix) Qualified Receivables Transactions. SECTION 4.12. Limitation on Incurrence of Additional Indebtedness. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur") any Indebtedness (other than Permitted Indebtedness); provided, however, that if no Default or Event of Default shall have occurred and be continuing at the time or as a consequence of the incurrence of any such Indebtedness, the Company or its Restricted Subsidiaries may incur Indebtedness (including, without limitation, Acquired Indebtedness) if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.0 to 1.0. 54 62 SECTION 4.13. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary of the Company to: (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or (c) transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of: (1) applicable law; (2) this Indenture, including any Guarantee; (3) customary non-assignment provisions of any contract or lease governing a leasehold or ownership interest of any Restricted Subsidiary of the Company; (4) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired; (5) agreements existing on the Issue Date (including, without limitation, the Credit Agreement) to the extent and in the manner such agreements are in effect on the Issue Date; (6) secured Indebtedness otherwise permitted to be incurred pursuant to the provisions of Sections 4.12 and 4.18 that limit the right of the debtor to dispose of the assets securing such Indebtedness; (7) customary net worth or non-assignment provisions contained in leases and other agreements entered into by a Restricted Subsidiary in the ordinary course of business; (8) customary restrictions with respect to a Restricted Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock of such Restricted Subsidiary; (9) customary provisions in joint venture agreements and other similar agreements relating solely to the securities, assets and revenues of such joint venture or other business venture; 55 63 (10) an agreement governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clause (2), (4), (5) or (6) above; provided, however, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are not, in the aggregate, materially less favorable to the Company as determined by the Board of Directors of the Company in its reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clause (2), (4), (5) or (6); and (11) Standard Securitization Undertakings relating to a Receivables Subsidiary or Special Purpose Vehicle. SECTION 4.14. Prohibition on Incurrence of Senior Subordinated Debt. The Company will not incur or suffer to exist any Indebtedness that is senior in right of payment to the Notes and subordinate in right of payment to any other Indebtedness of the Company. The Company will not cause or permit any Restricted Subsidiary which is a Guarantor to incur or suffer to exist any Indebtedness (including any guarantee) that is senior in right of payment to the Guarantee of such Guarantor and subordinate in right of payment to any other Indebtedness (including any other guarantee) of such Guarantor. SECTION 4.15. Change of Control. (a) At any time on or prior to May 15, 2006, the Company may, at its option, redeem the Notes, in whole, upon the occurrence of a Change of Control, upon not less than 30 nor more than 60 days prior notice (but in no event more than 90 days after the occurrence of such Change of Control) at a Redemption Price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the date fixed for such redemption (the "Change of Control Redemption Date"), except that installments of interest which are due and payable on dates falling on or prior to the applicable Change of Control Redemption Date will be payable to the Persons who were the Holders of record at the close of business on the relevant Record Dates. (b) Upon the occurrence of a Change of Control, if the Company does not redeem the Notes as provided in Section 4.15(a) of this Indenture, the Company or Holdings shall make the "Change of Control Offer," and each Holder will have the right to require that the Company or Holdings, as applicable, purchase all or a portion of such Holder's Notes pursuant to such Change of Control Offer, at a purchase price equal to 101% of the principal amount thereof plus accrued interest, if any, to the date of purchase. Prior to the mailing of the notice referred to below, but in any event within 60 days following any Change of Control, the Company and Holdings shall (i) repay in full and terminate all commitments under all Indebtedness under the Credit Agreement, all other Senior Debt and all Guarantor Senior Debt of any Guarantor the terms of which require repayment upon a Change of Control or offer to repay in full and terminate all commitments under all Indebtedness under the Credit Agreement and all other such Senior Debt and Guarantor Senior Debt and to repay the Indebtedness owed to each lender which has accepted such offer in full or 56 64 (ii) obtain the requisite consents under the Credit Agreement, all other Senior Debt and all Guarantor Senior Debt of any Guarantor to permit the repurchase of the Notes as provided below. The Company and Holdings shall first comply with the covenant in the immediately preceding sentence before the Company shall be required to repurchase Notes pursuant to the provisions described below. The failure by the Company or Holdings to comply with the second preceding sentence shall constitute an Event of Default under Section 6.01(3) and not under Section 6.01(2). (c) Within 60 days following the date upon which the Change of Control occurred (the "Change of Control Date"), unless the Company has mailed a notice with respect to a redemption pursuant to Section 4.15(a) with respect to all the Notes in connection with a Change of Control occurring on or prior to May 15, 2006, the Company must send, by first class mail, a notice to each Holder, with a copy to the Trustee and each Paying Agent, which notice shall govern the terms of the Change of Control Offer. The notice to the Holders shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Change of Control Offer. Such notice shall state: (1) that the Change of Control Offer is being made pursuant to this Section 4.15 and that all Notes tendered and not withdrawn will be accepted for payment; (2) the purchase price (including the amount of accrued interest) and the purchase date (which shall be no earlier than 30 days nor later than 45 days from the date such notice is mailed, other than as may be required by law) (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in making payment therefor, any Note accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Change of Control Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than five Business Days prior to the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased; (7) that Holders whose Notes are purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each new Note issued shall be in an original principal amount of $1,000 or integral multiples thereof; and 57 65 (8) the circumstances and relevant facts regarding such Change of Control. On or before the Change of Control Payment Date, the Company shall (i) accept for payment Notes or portions thereof tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the purchase price plus accrued interest, if any, of all Notes so tendered and (iii) deliver to the Registrar Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued interest, if any, and the Trustee shall promptly authenticate and mail to such Holders new Notes equal in principal amount to any unpurchased portion of the Notes surrendered. Any Notes not so accepted shall be promptly mailed by the Company to the Holder thereof. Any amounts remaining after the purchase of Notes pursuant to a Change of Control Offer shall be returned by the Paying Agent to the Company. Neither the Company nor Holdings will be required to make a Change of Control Offer upon a Change of Control if a third party makes a Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company or Holdings and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer at the price, including accrued and unpaid interest, if any, at the times and in the manner specified in this Indenture. The Company or Holdings, as the case may be, will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Change of Control" provisions of this Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Change of Control" provisions of this Indenture by virtue thereof. SECTION 4.16. Limitation on Asset Sales. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) The Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (in each case as determined in good faith by the Company's Board of Directors), 58 66 (ii) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents and shall be received at the time of such disposition; provided that (A) the amount of any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets, (B) the fair market value of any marketable securities received by the Company or a Restricted Subsidiary in exchange for any such assets that are converted into cash within 90 days after such Asset Sale, and (C) any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale having an aggregate fair market value, when taken together with all other Designated Noncash Consideration received pursuant to this clause (C) since the Issue Date that is at that time outstanding, not to exceed 10% of the Consolidated Net Tangible Assets of the Company based on its most recent consolidated balance sheet at the time of the receipt of such Designated Noncash Consideration from such Asset Sale (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value) shall be deemed to be cash for purposes of this provision; and provided, further, that the Company and its Restricted Subsidiaries may make Asset Sales not exceeding $5 million in the aggregate in each year for non-cash consideration; and (iii) in the event and to the extent that the Net Cash Proceeds received by the Company or any of its Restricted Subsidiaries from one or more Asset Sales occurring on or after the Issue Date in any period of 12 consecutive months exceed 10% of Consolidated Net Tangible Assets (determined as of the date closest to the commencement of such 12-month period for which a consolidated balance sheet of the Company and its Subsidiaries has been prepared), then the Company shall or shall cause the relevant Restricted Subsidiary, within 360 days after the date Net Cash Proceeds so received exceed 10% of Consolidated Net Tangible Assets, to apply such excess Net Cash Proceeds: (A) to prepay any Senior Debt and, in the case of any prepaid Senior Debt under any revolving credit facility, effect a permanent reduction in the availability under such revolving credit facility, or to so prepay any Indebtedness of a Wholly Owned Restricted Subsidiary, (B) to make an Investment (or enter into a definitive agreement committing to so invest within 360 days after the date of such agreement and to make such Investment as provided in such agreement) in properties and assets that replace the properties and assets that were the subject of such Asset Sale or in 59 67 properties and assets that will be used in the business of the Company and its Restricted Subsidiaries as it exists on the date of such Asset Sale or in businesses that are the same as such business of the Company and its Restricted Subsidiaries on the date of such Asset Sale or similar or reasonably related thereto ("Replacement Assets"), or (C) a combination of prepayment and investment permitted by the foregoing clauses (iii) (A) and (iii) (B). Pending the final application of such Net Cash Proceeds, the Company may temporarily reduce borrowings under the Credit Agreement or any other revolving credit facility, if any, or otherwise invest such Net Cash Proceeds in Cash Equivalents, in each case in a manner not prohibited by this Indenture. Subject to the last sentence of this paragraph, on the 361st day after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clause (iii) (A), (iii) (B) or (iii) (C) of the second preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied (or committed to be applied pursuant to a definitive agreement as described above) on or before such Net Proceeds Offer Trigger Date as permitted in clauses (iii) (A), (iii) (B) and (iii) (C) of the second preceding sentence (each a "Net Proceeds Offer Amount") shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 60 days following the applicable Net Proceeds Offer Trigger Date, from all Holders (and, if required by the terms of any other Indebtedness of the Company ranking pari passu with the Notes in right of payment and which has similar provisions requiring the Company either to make an offer to repurchase or to otherwise repurchase, redeem or repay such Indebtedness with the proceeds from Asset Sales (the "Pari Passu Indebtedness"), from the holders of such Pari Passu Indebtedness) on a pro rata basis (in proportion to the respective principal amounts or accreted value, as the case may be, of the Notes and any such Pari Passu Indebtedness) an aggregate principal amount of Notes (plus, if applicable, an aggregate principal amount or accreted value, as the case may be, of Pari Passu Indebtedness) equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Notes (or 100% of the principal amount or accreted value, as the case may be, of such Pari Passu Indebtedness), plus accrued and unpaid interest thereon, if any, to the date of purchase; provided, however, that if at any time any non-cash consideration (including any Designated Noncash Consideration) received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this covenant. The Company may defer the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $10 million resulting from one or more Asset Sales (at which time the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $10 million, shall be applied as required pursuant to this paragraph, and in which case the Net Proceeds Offer Trigger Date shall be deemed to be the earliest date that the Net Proceeds Offer Amount is equal to or in excess of $10 million). In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted under the covenant described under Section 5.01, the successor corporation shall be deemed to 60 68 have sold the properties and assets of the Company and its Restricted Subsidiaries not so transferred for purposes of this covenant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it were an Asset Sale. In addition, the fair market value of such properties and assets of the Company or its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant. Each Net Proceeds Offer will be mailed to the record Holders as shown on the register of Holders within 25 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in this Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent that the aggregate principal amount of Notes (plus, if applicable, the aggregate principal amount or accreted value, as the case may be, of Pari Passu Indebtedness) validly tendered by the holders thereof and not withdrawn exceeds the Net Proceeds Offer Amount, Notes of tendering Holders (and, if applicable, Pari Passu Indebtedness tendered by the holders thereof) will be purchased on a pro rata basis (based on the principal amount of the Notes and, if applicable, the principal amount or accreted value, as the case may be, of any such Pari Passu Indebtedness tendered and not withdrawn). To the extent that the aggregate amount of the Notes (plus, if applicable, the aggregate principal amount or accreted value, as the case may be, of any Pari Passu Indebtedness) tendered pursuant to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, the Company may use such excess Net Proceeds Offer Amount for general corporate purposes or for any other purpose not prohibited by the Indenture. Upon completion of any such Net Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero. A Net Proceeds Offer shall remain open for a period of 20 Business Days or such longer period as may be required by law. (b) Each notice of a Net Proceeds Offer pursuant to this Section 4.16 shall be mailed by first class mail, by the Company within 25 days following the Net Proceeds Offer Trigger Date to all Holders at their last registered addresses as of a date within 15 days of the mailing of such notice, with a copy to the Trustee and each Paying Agent. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Net Proceeds Offer and shall state the following terms: (i) that the Net Proceeds Offer is being made pursuant to Section 4.16 and that all Notes tendered will be accepted for payment; provided however, that if the aggregate principal amount of Notes tendered in a Net Proceeds Offer exceeds the aggregate amount of the Net Proceeds Offer, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000 or multiples thereof shall be purchased); (ii) the purchase price (including the amount of accrued interest) and the purchase date (which shall be 20 Business Days from the date of mailing of notice of such Net Proceeds Offer, or such longer period as required by law) (the "Proceeds Purchase Date"); (iii) that any Note not tendered will continue to accrue interest; 61 69 (iv) that, unless the Company defaults in making payment therefor, any Note accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest after the Proceeds Purchase Date; (v) that Holders electing to have a Note purchased pursuant to a Net Proceeds Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Proceeds Purchase Date; (vi) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than five Business Days prior to the Proceeds Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; and (vii) that Holders whose Notes are purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each new Note issued shall be in an original principal amount of $1,000 or integral multiples thereof; On or before the Proceeds Purchase Date, the Company shall (i) accept for payment Notes or portions thereof tendered pursuant to the Net Proceeds Offer which are to be purchased in accordance with item (b)(i) above, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the purchase price plus accrued interest, if any, of all Notes to be purchased and (iii) deliver to the Paying Agent Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued interest, if any. The Company or the applicable Restricted Subsidiary, as the case may be, will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.16, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.16 by virtue thereof. Notwithstanding the foregoing, the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Swap if: (i) at the time of entering into such Asset Swap or immediately after giving effect to such Asset Swap, no Default or Event of Default shall have occurred or be continuing or would occur as a consequence thereof, and (ii) in the event that such Asset Swap involves an aggregate amount in excess of $10 million, the terms of such Asset Swap have been approved by a majority of the members of the Board of Directors of the Company. 62 70 SECTION 4.17. Limitation on Preferred Stock of Restricted Subsidiaries. The Company shall not permit any of its Restricted Subsidiaries (other than a Receivables Subsidiary or a Special Purpose Vehicle) to issue any Preferred Stock (other than to the Company or to a Wholly Owned Restricted Subsidiary of the Company) or permit any Person (other than the Company or a Wholly Owned Restricted Subsidiary of the Company) to own any Preferred Stock of any Restricted Subsidiary of the Company (other than a Receivables Subsidiary or a Special Purpose Vehicle). SECTION 4.18. Limitation on Liens. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom for purposes of security unless: (i) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes, the Notes are secured by a Lien on such property, assets or proceeds or such right to receive income or profits, as the case may be, that is senior in priority to such Liens and (ii) in all other cases, the Notes are equally and ratably secured, except for (A) Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date; (B) Liens securing Senior Debt and Liens on assets of Restricted Subsidiaries securing guarantees of Senior Debt; (C) Liens securing the Notes; (D) Liens of the Company or a Wholly Owned Restricted Subsidiary of the Company on assets of any Restricted Subsidiary of the Company; (E) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness which has been secured by a Lien permitted under this Indenture and which has been incurred in accordance with the provisions of this Indenture; provided, however, that such Liens (1) are not materially less favorable to the Holders and are not materially more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced and (2) do not extend to or cover any property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so Refinanced; and (F) Permitted Liens. 63 71 SECTION 4.19. Limitation on Guarantees by Domestic Restricted Subsidiaries. The Company will not permit any of its domestic Restricted Subsidiaries, directly or indirectly, by way of the pledge of any intercompany note or otherwise, to assume, guarantee or in any other manner become liable with respect to any Indebtedness of the Company or any other Restricted Subsidiary (other than Permitted Indebtedness of a Restricted Subsidiary), unless, in any such case, such Restricted Subsidiary simultaneously executes and delivers to the Trustee a supplemental indenture to this Indenture, providing a guarantee of payment of the Notes by such Restricted Subsidiary (a "Guarantee") substantially similar to the Guarantee of Holdings contained in Article Eleven (except that the Guarantee of such Restricted Subsidiary will be a senior subordinated obligation of such Restricted Subsidiary and will be limited in amount as described in the immediately following paragraph), which Guarantee shall be a senior subordinated obligation of such Restricted Subsidiary and shall be subordinated in right of payment to all Guarantor Senior Debt of such Restricted Subsidiary on terms substantially similar to those applicable to Holdings' Guarantee. Neither the Company nor any such Restricted Subsidiary shall be required to make a notation on the Notes to reflect any such subsequent Guarantee. Nothing contained in this paragraph shall be construed to permit any Restricted Subsidiary of the Company to incur Indebtedness otherwise prohibited by the Indenture or the Credit Agreement. Each Guarantee of a Restricted Subsidiary will be limited in amount to an amount not to exceed the maximum amount that can be guaranteed by such Restricted Subsidiary without rendering such Guarantee, as it relates to such Restricted Subsidiary, void or voidable under applicable laws relating to fraudulent conveyance or fraudulent transfer or other similar laws affecting the rights of creditors generally. Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary shall provide by its terms that it shall be automatically and unconditionally released and discharged, without any further action required on the part of the Trustee or any Holder, upon: (i) the unconditional release of such Restricted Subsidiary from its liability in respect of the Indebtedness in connection with which such Guarantee was executed and delivered pursuant to the second preceding paragraph; or (ii) any sale or other disposition (by merger or otherwise) to any Person which is not a Restricted Subsidiary of the Company, of all of the Company's Capital Stock in, or all or substantially all of the assets of, such Restricted Subsidiary; provided that (a) such sale or disposition of such Capital Stock or assets is otherwise in compliance with the terms of this Indenture, and (b) such assumption, guarantee or other liability of such Restricted Subsidiary has been released by the holders of the other Indebtedness so guaranteed. 64 72 SECTION 4.20. Restriction of Lines of Business to Food, Food Distribution and Related Businesses. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any material business activity except for food, food distribution and related businesses. SECTION 4.21. Rule 144A Information. If and to the extent required to permit resales or other transfers of the Notes to be made pursuant to Rule 144A, the Company will prepare and will furnish to any Holder of Notes, any beneficial owner of Notes (including, without limitation, any owner of a beneficial interest in a Global Note) and any prospective purchaser or other prospective transferee of Notes designated by a Holder or beneficial owner of Notes, promptly upon request and at the expense of the Company, the financial statements and other information specified in Rule 144A(d)(4) (or any successor provision thereto). ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01. Merger, Consolidation and Sale of Assets of the Company. (a) The Company will not, in a single transaction or a series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and its Restricted Subsidiaries), whether as an entirety or substantially as an entirety, to any Person unless: (1) either: (A) the Company shall be the surviving or 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, transfer, lease, conveyance or other disposition the properties and assets of the Company and its Restricted Subsidiaries as an entirety or substantially as an entirety (the "Surviving Entity") (x) shall be a corporation organized and validly existing under the laws of the United States or any state thereof or the District of Columbia and (y) shall expressly assume, by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of and premium, if any, and interest (including, without limitation, any Additional Interest) on all of the Notes and the performance of every covenant of the Notes, this Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction and the assumption contemplated by clause (1)(B)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), the Company or such Surviving Entity, as the case may be, 65 73 shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12; (3) immediately before and immediately after giving effect to such transaction and the assumption contemplated by clause (1)(B)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of such transaction), no Default or Event of Default shall have occurred and be continuing; and (4) the Company or the Surviving Entity, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with the applicable provisions of this Indenture and that all conditions precedent in this Indenture relating to such transaction have been satisfied. (b) For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. (c) Notwithstanding the foregoing, the merger of the Company with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction shall be permitted without regard to Section 5.01(a)(2) hereof. SECTION 5.02. Successor Corporation Substituted for the Company. Upon any consolidation or merger of the Company or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with the foregoing in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the Notes with the same effect as if such Surviving Entity had been named as such; provided, however, that the Company shall not be released from its obligations under this Indenture or the Notes in the case of a lease. SECTION 5.03. Merger, Consolidation and Sale of Assets of Holdings. (a) Holdings will not, in a single transaction or a series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Subsidiary of Holdings to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of Holdings' assets (determined on a consolidated basis for Holdings and its Subsidiaries), whether as an entirety or substantially as an entirety, to any Person unless: 66 74 (1) either: (A) Holdings shall be the surviving or continuing corporation or (B) the Person (if other than Holdings) formed by such consolidation or into which Holdings is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of Holdings as an entirety or substantially as an entirety (the "Surviving Parent Entity") (x) shall be a corporation organized and validly existing under the laws of the United States or any state thereof or the District of Columbia and (y) shall expressly assume, by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the obligations of Holdings of the due and punctual payment of the principal of and premium, if any, and interest (including, without limitation, any Additional Interest) on the Notes and all of Holdings' obligations under this Indenture, including its Guarantee; (2) Holdings or such Surviving Parent Entity, as the case may be, shall not, immediately after giving effect to such transaction or series of transactions be in default in the performance of any covenants or obligations of Holdings or Surviving Parent Entity under this Indenture, including its Guarantee; and (3) Holdings or such Surviving Parent Entity, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with the applicable provisions of this Indenture and that all conditions precedent in this Indenture relating to such transaction have been satisfied. (b) For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties and assets of one or more Subsidiaries of Holdings, the Capital Stock of which constitutes all or substantially all of the properties and assets of Holdings, shall be deemed to be the transfer of all or substantially all of the properties and assets of Holdings. (c) Notwithstanding the foregoing, the merger of Holdings with and into the Company shall be permitted without regard to compliance with the covenant described in the second preceding paragraph; provided that such merger shall be permitted pursuant to and shall comply with the requirements of Section 5.01 and 5.02. SECTION 5.04. Successor Corporation Substituted for Holdings. Upon any consolidation or merger of Holdings or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of Holdings in accordance with the foregoing in which Holdings is not the continuing corporation, the successor Person formed by such consolidation or into which Holdings is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, Holdings under this Indenture, including its Guarantee, with the same effect as if such Surviving Parent Entity had been named as such; provided, however, that Holdings shall not be released from its obligations under this Indenture, including its Guarantee, in the case of a lease. 67 75 ARTICLE SIX DEFAULT AND REMEDIES SECTION 6.01. Events of Default. The following events are "Events of Default": (1) the failure to pay interest (including, without limitation, any Additional Interest) on any Notes when the same becomes due and payable and the Default continues for a period of 30 days (whether or not such payment shall be prohibited by Article Ten of this Indenture); or (2) the failure to pay the principal on any Notes when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether or not such payment shall be prohibited by Article Ten); or (3) a default by the Company or Holdings in the observance or performance of any other covenant or agreement contained in this Indenture and which default continues for a period of 30 days after written notice specifying the default (and demanding that such default be remedied) is received by the Company from the Trustee or by the Company and the Trustee from the Holders of at least 25% of the outstanding principal amount of the Notes; or (4) the failure to pay at final stated maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness for borrowed money of the Company or any Restricted Subsidiary of the Company or the acceleration of the final stated maturity of any such Indebtedness, in either case, if the aggregate principal amount of such Indebtedness, together with the aggregate principal amount of any other such Indebtedness in default for failure to pay principal at final stated maturity or which has been accelerated, aggregates $20 million or more at any time; or (5) one or more judgments for the payment of money in an aggregate amount in excess of $20 million (to the extent not covered by insurance) shall have been rendered against the Company or any of its Restricted Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable; or (6) the Company or any Significant Subsidiary of the Company (A) commences a voluntary case or proceeding under any Bankruptcy Law with respect to itself, (B) consents to the entry of a judgment, decree or order for relief against it in an involuntary case or proceeding under any Bankruptcy Law, (C) consents to the appointment of a Custodian of it or for substantially all of its property, (D) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it, (E) makes a general assignment for the benefit of its creditors, or (F) takes any corporate action to authorize or effect any of the foregoing; or (7) a court of competent jurisdiction enters a judgment, decree or order for relief in respect of the Company or any Significant Subsidiary of the Company in an involuntary case or proceeding under any Bankruptcy Law, which shall (A) approve as properly filed a petition seeking reorganization, arrangement, adjustment or composition in respect of the Company or 68 76 any such Significant Subsidiary, (B) appoint a Custodian of the Company or any such Significant Subsidiary or for substantially all of its property or (C) order the winding-up or liquidation of its affairs; and such judgment, decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (8) the failure of a Guarantee of the Notes given by a Guarantor to be in full force and effect (except if such Guarantee shall have been released and discharged pursuant to the provisions set forth in the last paragraph of Section 4.19) or the denial or disaffirmation of such obligations by a Guarantor. SECTION 6.02. Acceleration. (a) If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7) with respect to the Company) occurs and is continuing and has not been waived pursuant to Section 6.04, then the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may declare the principal of and accrued interest on all the Notes to be due and payable by notice in writing to the Company and the Trustee specifying the respective Event of Default and that it is a "notice of acceleration" (the "Acceleration Notice"), and the same (i) shall become immediately due and payable; or (ii) if there are any amounts outstanding under the Credit Agreement, shall become immediately due and payable upon the first to occur of an acceleration under the Credit Agreement or five Business Days after receipt by the Company and the Representative under the Credit Agreement of such Acceleration Notice, but only if such Event of Default is then continuing. Upon any such declaration, but subject to the immediately preceding sentence, such amount shall be immediately due and payable. (b) If an Event of Default specified in Section 6.01(6) or (7) occurs and is continuing with respect to the Company, all unpaid principal of and premium, if any, and accrued and unpaid interest on all of the outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. (c) At any time after the delivery of an Acceleration Notice with respect to the Notes in accordance with Section 6.02(a), the Holders of a majority in principal amount of the outstanding Notes may, on behalf of the Holders of all of the Notes, rescind and cancel such declaration and its consequences: (i) if the rescission would not conflict with any judgment or decree; (ii) if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration; (iii) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal which has become due otherwise than by such declaration of acceleration, has been paid; (iv) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances and any other amounts due the Trustee under this Indenture; and (v) in the event of the cure or waiver of an Event of Default of the type described in Section 6.01(6) or (7), the Trustee shall have received an Officers' Certificate and an Opinion of Counsel that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto. 69 77 SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. SECTION 6.04. Waiver of Past Defaults. Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in principal amount of the outstanding Notes by notice to the Trustee may waive an existing Default or Event of Default and its consequences, except a Default in the payment of principal of or interest on any Note as specified in clauses (1) and (2) of Section 6.01. When a Default or Event of Default is waived, it is cured and ceases. SECTION 6.05. Control by Majority. Subject to all provisions of this Indenture and applicable law, the Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it, including, without limitation, any remedies provided for in Section 6.03. Subject to Section 7.01, however, the Trustee may refuse to follow any direction that the Trustee reasonably believes conflicts with any law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder, or that may involve the Trustee in personal liability; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and provided further that this provision shall not affect the rights of the Trustee set forth in Section 7.01(d). SECTION 6.06. Limitation on Suits. A Holder may not pursue any remedy with respect to this Indenture or the Notes unless: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) Holders of at least 25% in principal amount of the outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holders offer to the Trustee indemnity in its sole discretion satisfactory to the Trustee against any loss, liability or expense to be incurred in compliance with such request; (4) the Trustee does not comply with the request within 45 days after receipt of the request and the offer of satisfactory indemnity; and 70 78 (5) during such 45-day period the Holders of a majority in principal amount of the outstanding Notes do not give the Trustee a direction which, in the opinion of the Trustee, is inconsistent with the request. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder. SECTION 6.07. Rights of Holders To Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. Collection Suit by Trustee. If an Event of Default in payment of principal or interest specified in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Notes for the whole amount of principal and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest at the rate set forth in Section 4.01 and 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 its counsel, and any other amounts due the Trustee under Section 7.07. SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable expenses and disbursements of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07) and the Holders allowed in any judicial proceedings relating to the Company or any other obligor upon the Notes, any of their respective creditors or any of their respective property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable expenses and disbursements of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07. The Company's payment obligations under this Section 6.09 shall be secured in accordance with the provisions of Section 7.07 hereunder. 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 Notes 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. 71 79 SECTION 6.10. Priorities. If the Trustee collects any money or property pursuant to this Article Six, it shall pay out the money in the following order: First: to the Trustee for any and all amounts due and owing under Section 7.07; Second: to Holders for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; Third: if the Holders are forced to proceed against the Company directly without the Trustee, to Holders for their collection costs; and Fourth: to the Company or any other obligor on the Notes, as their interests may appear, or as a court of competent jurisdiction may direct. The Trustee, upon prior notice to the Company, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in principal amount of the outstanding Notes. ARTICLE SEVEN TRUSTEE SECTION 7.01. Duties of Trustee. (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. (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 against the Trustee. 72 80 (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) Notwithstanding anything to the contrary herein contained, 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 paragraph does not limit the effect of paragraph (b) of this Section 7.01. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02, 6.04 or 6.05. (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 herein expressly provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01. (f) The Trustee shall not be liable for interest on any money or assets received by it except as the Trustee may agree in writing with the Company. Assets held in trust by the Trustee need not be segregated from other assets except to the extent required by law. SECTION 7.02. Rights of Trustee. Subject to Section 7.01: (a) The Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may consult with counsel and the advice or any opinion of counsel shall be full and complete authorization and protection with respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or opinion of counsel and may require an Officers' Certificate, an Opinion of Counsel or both, which shall conform to Sections 13.04 and 73 81 13.05. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. (c) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or indirectly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for the misconduct or negligence of any agent, attorney, custodian or nominee appointed with due care. (d) The Trustee shall not be liable for any action that it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers. (e) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, upon reasonable notice to the Company and to the extent reasonably related to such facts or matters to examine the books, records, and premises of the Company, personally or by agent or attorney and to consult with the officers and representatives of the Company, including the Company's accountants and attorneys. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee in its sole discretion against the costs, expenses and liabilities which may be incurred by it in compliance with such request, order or direction. (g) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder. SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any Subsidiary of the Company or their respective Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. Trustee's Disclaimer. The recitals contained herein and in the Notes shall be taken as statements of the Company and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Notes, and it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or the Notes other than the Trustee's certificate of authentication. 74 82 SECTION 7.05. Notice of Default. If a Default or an Event of Default occurs and is continuing and if it is actually known to a Trust Officer of the Trustee, the Trustee shall mail to each Holder notice of the uncured Default or Event of Default within 90 days after such Default or Event of Default occurs. Except in the case of a Default or an Event of Default in payment of principal of, or interest on, any Note, including an accelerated payment and the failure to make payment on the Change of Control Payment Date pursuant to a Change of Control Offer or on the Proceeds Purchase Date pursuant to a Net Proceeds Offer and, except in the case of a failure to comply with Article Five hereof, the Trustee may withhold such notice if and so long as its Board of Directors, the executive committee of its Board of Directors or a committee of its directors and/or Trust Officers in good faith determines that withholding the notice is in the interest of the Holders. SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each May 15, the Trustee shall, to the extent that any of the events described in TIA Section 313(a) occurred within the previous twelve months, but not otherwise, mail to each Holder a brief report dated as of such date that complies with TIA Section 313(a). The Trustee also shall comply with TIA Sections 313(b), (c) and (d). A copy of each report at the time of its mailing to Holders shall be mailed to the Company and filed with the SEC and each stock exchange, if any, on which the Notes are listed. The Company shall promptly notify the Trustee in writing if the Notes become listed on any stock exchange and the Trustee shall comply with TIA Section 313(d). SECTION 7.07. Compensation and Indemnity. The Company shall pay to the Trustee and each Agent from time to time reasonable compensation for their respective services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable fees and expenses, including reasonable and documented out-of-pocket expenses incurred or made by it in connection with the performance of its duties under this Indenture. Such expenses shall include the reasonable fees and expenses of the Trustee's and such Agent's agents, consultants and counsel. The Company shall indemnify the Trustee and each Agent and their respective agents, employees, stockholders and directors and officers for, and hold them harmless against, any loss, liability or expense incurred by them except for such actions to the extent caused by any negligence, bad faith or willful misconduct on their part, arising out of or in connection with the administration of this trust including the reasonable costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of their rights, powers or duties hereunder. The Trustee and each Agent shall notify the Company as soon as practicable of any claim asserted against the Trustee or such Agent for which it may seek indemnity. At the Trustee's or such Agent's, as the case may be, sole discretion, the Company shall defend the claim and the Trustee or such Agent, as the case may be, shall cooperate and may participate in the defense; provided that any settlement of a claim shall be approved in writing by the Trustee or such Agent, as the case may be. Alternatively, the Trustee or such Agent, as the case may be, may at its option have separate counsel of its own choosing and the 75 83 Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its written consent. The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct. To secure the Company's payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Notes on all assets or money held or collected by the Trustee, in its capacity as Trustee, except assets or money held in trust to pay principal of or interest on particular Notes. The Trustee's right to receive payment of any amounts due under this Section 7.07 shall not be subordinate to any other liability or indebtedness of the Company (even though the Notes may be subordinate to such other liability or indebtedness). When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) shall have occurred, such expenses and the compensation for such services are intended to constitute expenses of administration under any Bankruptcy Law; provided, however, that this shall not affect the Trustee's rights as set forth in the preceding paragraph or Section 6.10. The Company's obligations under this Section 7.07 and any lien arising hereunder shall survive the resignation or removal of the Trustee, the discharge of the Company's obligations pursuant to Article Eight or other termination of this Indenture and any rejection or termination of this Indenture under any Bankruptcy Law. SECTION 7.08. Replacement of Trustee. The Trustee may resign by so notifying the Company. The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by so notifying the Company and the Trustee in writing and may appoint a successor Trustee reasonably acceptable to the Company. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall notify each Holder of such event and shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Notes may appoint a successor Trustee reasonably acceptable to the Company to replace the successor Trustee appointed by the Company. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately thereafter, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided in Section 7.07, the resignation or removal of the retiring Trustee shall become effective, and the 76 84 successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee; provided that such corporation shall be otherwise qualified and eligible under this Article Seven. SECTION 7.10. Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirement of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the case of a corporation included in a bank holding company system, the related bank holding company) shall have a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA Section 310(a)(2). The Trustee shall comply with TIA Section 310(b); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA Section 310 shall apply to the Company, as obligor of the Notes. SECTION 7.11. Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. The provisions of TIA Section 311 shall apply to the Company, as obligor on the Notes. 77 85 ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. Termination of the Company's Obligations. The Company may terminate its obligations under the Notes and this Indenture, except those obligations referred to in the penultimate paragraph of this Section 8.01, if all Notes previously authenticated and delivered (other than destroyed, lost or stolen Notes which have been replaced or paid or Notes for whose payment U.S. Legal Tender has theretofore been deposited with the Trustee or the Paying Agent in trust or segregated and held in trust by the Company and thereafter repaid to the Company, as provided in Section 8.05) have been delivered to the Registrar for cancellation and the Company has paid all sums payable by it hereunder, or if: (a) either (i) pursuant to Article Three, the Company shall have given notice to the Trustee and each Paying Agent and mailed a notice of redemption to each Holder of the redemption of all of the Notes under arrangements satisfactory to the Trustee for the giving of such notice or (ii) all Notes have otherwise become due and payable hereunder; (b) the Company shall have irrevocably deposited or caused to be deposited with the Trustee or a trustee satisfactory to the Trustee, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, as trust funds in trust solely for the benefit of the Holders for that purpose, U.S. Legal Tender in such amount as is sufficient without consideration of reinvestment of any interest thereon, to pay principal of, premium, if any, and interest on the outstanding Notes to maturity or redemption; provided that the Trustee shall have been irrevocably instructed to apply such U.S. Legal Tender to the payment of said principal, premium, if any, and interest with respect to the Notes and; provided, further, that from and after the time of deposit, the money deposited shall not be subject to the rights of holders of Senior Debt pursuant to the provisions of Article Ten; (c) no Default or Event of Default with respect to this Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company is a party or by which it is bound; (d) the Company shall have paid all other sums payable by it hereunder; and (e) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent providing for or relating to the termination of the Company's obligations under the Notes and this Indenture have been complied with. Such Opinion of Counsel shall also state that such satisfaction and discharge does not result in a default under the Credit Agreement (if then in effect) or any other agreement or instrument then known to such counsel that binds or affects the Company. 78 86 Notwithstanding the foregoing paragraph, the Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.05 and 8.06 shall survive until the Notes are no longer outstanding pursuant to the last paragraph of Section 2.08. After the Notes are no longer outstanding, the Company's obligations in Sections 7.07, 8.05 and 8.06 shall survive. After such delivery or irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Notes and this Indenture except for those surviving obligations specified above. SECTION 8.02. Legal Defeasance and Covenant Defeasance. (a) The Company may, at its option by Board Resolution, at any time, elect to have either paragraph (b) or (c) below be applied to all outstanding Notes upon compliance with the conditions set forth in Section 8.03. (b) Upon the Company's exercise under paragraph (a) hereof of the option applicable to this paragraph (b), the Company shall, subject to the satisfaction of the conditions set forth in Section 8.03, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.04 hereof and the other Sections of this Indenture referred to in (i) and (ii) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), and Holders of the Notes and any amounts deposited under Section 8.03 hereof shall cease to be subject to any obligations to, or the rights of, any holder of Senior Debt under Article Ten or otherwise, except for the following provisions, which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of and interest on such Notes when such payments are due, (ii) the Company's obligations with respect to such Notes under Article Two and Section 4.02 hereof, (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (iv) this Article Eight. Subject to compliance with this Article Eight, the Company may exercise its option under this paragraph (b) notwithstanding the prior exercise of its option under paragraph (c) hereof. (c) Upon the Company's exercise under paragraph (a) hereof of the option applicable to this paragraph (c), the Company shall, subject to the satisfaction of the conditions set forth in Section 8.03 hereof, be released from its obligations under the covenants contained in Sections 4.10 through 4.20 and Article Five hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed 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 (it being understood that such Notes shall not be deemed outstanding for accounting purposes) and Holders of the Notes and any amounts deposited under Section 8.03 hereof shall cease to be subject to any obligations to, or the rights of, any holder of Senior Debt under Article Ten or otherwise. For this purpose, such Covenant Defeasance means that, with respect to the 79 87 outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event or Default under Section 6.01(3) hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under paragraph (a) hereof of the option applicable to this paragraph (c), subject to the satisfaction of the conditions set forth in Section 8.03 hereof, Sections 6.01(4) and 6.01(5) shall not constitute Events of Default. SECTION 8.03. Conditions to Legal Defeasance or Covenant Defeasance. The following shall be the conditions to the application of either Section 8.02(b) or 8.02(c) hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, U.S. Legal Tender, non-callable U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the applicable Redemption Date, as the case may be; (b) in the case of an election under Section 8.02(b) hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming 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 this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal 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 Legal Defeasance had not occurred; (c) in the case of an election under Section 8.02(c) hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the 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; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which will be used to defease the Notes pursuant to this Article Eight concurrently with such incurrence) or insofar as Sections 6.01(6) and 6.01(7) hereof are concerned, at any time in the period ending on the 91st day after the date of such deposit (it being understood that this 80 88 condition shall not be satisfied and such Legal Defeasance or Covenant Defeasance, as the case may be, shall not be effective until expiration of such 91-day period); (e) such Legal Defeasance or Covenant Defeasance shall 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 of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) 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 over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; (g) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and (h) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that (i) the trust funds will not be subject to any rights of any holders of Senior Debt, including, without limitation, those arising under this Indenture, and (ii) assuming no intervening bankruptcy or insolvency of the Company between the date of deposit and the 91st day following the deposit and that no Holder is an insider of the Company, after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable Bankruptcy Law; and (i) if the cash or U.S. Government Obligations or combination thereof, as the case may be, deposited under subparagraph (a) above are sufficient to pay the principal of, premium, if any, and interest on the Notes provided the Notes are redeemed on a particular Redemption Date, the Company shall have given the Trustee irrevocable instructions to redeem the Notes on that Redemption Date and to provide notice of that redemption to Holders as provided in this Indenture. SECTION 8.04. Application of Trust Money. The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or U.S. Government Obligations deposited with it pursuant to Article Eight, and shall apply the deposited U.S. Legal Tender and the proceeds from U.S. Government Obligations in accordance with this Indenture to the payment of principal of, premium, if any, and interest on the Notes. The Trustee shall be under no obligation to invest said U.S. Legal Tender or U.S. Government Obligations except as it may agree with the Company. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Legal Tender or U.S. Government Obligations deposited pursuant to Section 8.03 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. 81 89 Anything in this Article Eight to the contrary notwithstanding, the Trustee shall, or shall request the Paying Agent to, deliver or pay to the Company from time to time upon the Company's request any U.S. Legal Tender or U.S. Government Obligations held by it as provided in Section 8.03 hereof 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 that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.05. Repayment to the Company. Subject to this Section 8.05 and the other provisions of this Article Eight, the Trustee and the Paying Agent shall promptly pay to the Company upon written request any excess U.S. Legal Tender or U.S. Government Obligations held by them at any time and thereupon shall be relieved from all liability with respect thereto. The Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal or interest that remains unclaimed for two years; provided that the Trustee or such Paying Agent, before being required to make any payment, may at the expense of the Company cause to be published once in a newspaper of general circulation in the City of New York or mail to each Holder entitled to such money notice that such money remains unclaimed and that after a date specified therein which shall be at least 30 days from the date of such publication or mailing any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Holders entitled to such money must look to the Company for payment as general creditors unless an applicable law designates another Person to whom such Holders may look. SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S. Government Obligations in accordance with Article Eight by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Article Eight until such time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in accordance with Article Eight; provided that if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the U.S. Legal Tender or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.01. Without Consent of Holders. The Company, when authorized by a Board Resolution, and the Trustee may amend or supplement this Indenture or the Notes without notice to or consent of any Holder: 82 90 (1) to cure any ambiguity herein, or to correct or supplement any provision hereof which may be inconsistent with any other provision hereof or to add any other provisions with respect to matters or questions arising under this Indenture; provided that such actions shall not adversely affect the interests of the Holders of Notes in any material respect; (2) to comply with Article Five and Article Six; (3) to provide for uncertificated Notes in addition to or in place of certificated Notes; (4) to comply with any requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; (5) to make any change that would provide any additional benefit or rights to the Holders; (6) to provide for issuance of the Exchange Notes, which will have terms substantially identical in all material respects to the Initial Notes (except that the transfer restrictions contained in the Initial Notes will be modified or eliminated, as appropriate), and which will be treated together with any outstanding Initial Notes, as a single issue of securities; (7) to add a Guarantor pursuant to Section 4.19; (8) to secure the Notes; (9) to add to the covenants of the Company or any Guarantor for the benefit of the Holders or to surrender any right or power conferred upon the Company or any Guarantor; (10) to evidence and provide for the acceptance of appointment under this Indenture by a successor Trustee; and (11) to make any other change that does not, in the good faith judgment of the Trustee, adversely affect in any material respect the rights of any Holders hereunder; provided that the Company has delivered to the Trustee an Opinion of Counsel stating that such amendment or supplement complies with the provisions of this Section 9.01. SECTION 9.02. With Consent of Holders. Subject to Section 6.07, the Company, when authorized by a Board Resolution, and the Trustee, upon receipt of the written consent of the Holder or Holders of at least a majority of the aggregate outstanding principal amount of the Notes, may amend or supplement this Indenture or the Notes, without notice to any other Holders. Subject to Section 6.07, the Holder or Holders of a majority in aggregate outstanding principal amount of the Notes may waive compliance by the Company with any provision of this Indenture or the Notes without notice to any other Holder. Notwithstanding the forgoing, no amendment, supplement or waiver, including a waiver pursuant to Section 6.04, shall, without the consent of each Holder of each Note affected thereby: 83 91 (1) reduce the amount of Notes whose Holders must consent to an amendment or waiver, including the waiver of Defaults or Events of Default, or to a rescission and cancellation of a declaration of acceleration of the Notes; (2) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest and Additional Interest, if any, on any Notes; (3) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption, or reduce the redemption price therefor; (4) make any Notes payable in a currency other than that stated in the Notes; (5) make any change in provisions of this Indenture protecting the right of each Holder to receive payment of principal of and interest on such Note on or after the due date thereof or to bring suit to enforce such payment; (6) amend, modify, change or waive any provision of this Section 9.02; (7) change the price payable by the Company for Notes repurchased pursuant to Section 4.15 or 4.16 or after the occurrence of a Change of Control, modify or change in any material respect the obligation of the Company or Holdings to make and consummate a Change of Control Offer or modify any of the provisions or definitions with respect thereto; (8) modify or change any provision of this Indenture or the related definitions with respect to the subordination of the Notes or the Guarantees in a manner which adversely affects the Holders in any material respect; or (9) waive a default in the payment of principal of or interest on any Note; provided that this clause (9) shall not limit the right of the Holders of a majority in aggregate principal amount of the outstanding Notes to rescind and cancel a declaration of acceleration of the Notes following delivery of an Acceleration Notice as provided in Section 6.02(c). It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. 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. 84 92 SECTION 9.03. Effect on Senior Debt. No amendment of this Indenture shall adversely affect the rights of any holder of Designated Senior Debt under Article Ten of this Indenture or any holder of Guarantor Designated Senior Debt under Article Twelve of this Indenture without the consent of such holder. SECTION 9.04. Compliance with TIA. Every amendment, waiver or supplement of this Indenture or the Notes shall comply with the TIA as then in effect. SECTION 9.05. Revocation and Effect of Consents. Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. Subject to the following paragraph, any such Holder or subsequent Holder may revoke the consent as to such Holder's Note or portion of such Note by written notice to the Trustee or the Company received before the date on which the Trustee receives an Officers' Certificate certifying that the Holders of the requisite principal amount of Notes have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver, which record date shall be at least 10 days prior to the first solicitation of such consent. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (1) through (9) of Section 9.02, in which case the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note; provided that any such waiver shall not impair or affect the right of any Holder to receive payment of principal of and interest on a Note on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates without the consent of such Holder. SECTION 9.06. Notation on or Exchange of Notes. If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder of such Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Any such notation or exchange shall be made at the sole cost and expense of the Company. 85 93 SECTION 9.07. Trustee To Sign Amendments, Etc. The Trustee shall execute any amendment, supplement or waiver authorized pursuant to this Article Nine; provided that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel and an Officers' Certificate each complying with Section 13.04 and 13.05 and stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture. Such Opinion of Counsel shall not be an expense of the Trustee. SECTION 9.08. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article Nine, 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 Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. ARTICLE TEN SUBORDINATION SECTION 10.01. Notes Subordinated to Senior Debt. The Company covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, that all Notes shall be issued subject to the provisions of this Article Ten; and each Person holding any Note, whether upon original issue or upon registration of transfer, assignment or exchange thereof, accepts and agrees that the payment of all Obligations on the Notes by the Company shall, to the extent and in the manner herein set forth, be subordinated and junior in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations on or in respect of Senior Debt; that the subordination is for the benefit of, and shall be enforceable directly by, the holders of Senior Debt, and that each holder of Senior Debt whether now outstanding or hereafter created, incurred, assumed or guaranteed shall be deemed to have acquired Senior Debt in reliance upon the covenants and provisions contained in this Indenture and the Notes. SECTION 10.02. No Payment on Notes in Certain Circumstances. (a) If any default occurs and is continuing in the payment when due, whether at maturity, upon redemption, by declaration or otherwise, of any principal of, interest on, unpaid drawings for letters of credit issued in respect of, or regularly accruing fees with respect to, any Designated Senior Debt, no payment of any kind or character shall be made by, or on behalf of, the Company or any other Person on its or their behalf with respect to any Obligations on the Notes, or to acquire any of the Notes for cash or property or otherwise. In addition, if any other event of default occurs and is continuing with respect to any Designated Senior Debt, as such event of default is defined in the instrument creating or evidencing such Designated Senior Debt, permitting the holders of such Designated Senior Debt then outstanding to accelerate the maturity thereof and if the Representative for the respective issue of Designated Senior Debt 86 94 gives written notice of such event of default to the Trustee (a "Default Notice"), then, unless and until all such events of default have been cured or waived or have ceased to exist or the Trustee receives notice thereof from the Representative for the respective issue of Designated Senior Debt terminating the Blockage Period (as defined below), during the 179 days after the delivery of such Default Notice (the "Blockage Period"), neither the Company nor any other Person on its behalf shall (x) make any payment of any kind or character with respect to any Obligations on the Notes (other than payment of amounts already deposited in accordance with the defeasance and satisfaction and discharge provisions of this Indenture) or (y) acquire any of the Notes for cash or property or otherwise. Notwithstanding anything herein to the contrary, in no event will a Blockage Period extend beyond 180 days from the date the payment on the Notes was due and only one such Blockage Period may be commenced within any 360 consecutive days. No event of default which existed or was continuing on the date of the commencement of any Blockage Period with respect to the Designated Senior Debt shall be, or be made, the basis for the commencement of a second Blockage Period by the Representative of such Designated Senior Debt whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action or any breach of any financial covenants for a period commencing after the date of commencement of such Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose). (b) In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee, any Paying Agent or any Holder when such payment is prohibited by Section 10.02(a), such payment shall be held in trust for the benefit of, and shall be forthwith paid over or delivered to, the holders of Senior Debt (pro rata to such holders on the basis of the respective amount of Senior Debt held by such holders) or their respective Representatives, as their respective interests may appear for application to the payment of such Senior Debt until all such Senior Debt shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Debt. The Trustee and each Paying Agent shall be entitled to rely on information regarding amounts then due and owing on the Senior Debt, if any, received from the holders of Senior Debt (or their Representatives) or, if such information is not received from such holders or their Representatives, from the Company and only amounts included in the information provided to the Trustee or any Paying Agent shall be paid to the holders of Senior Debt. Nothing contained in this Article Ten shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder; provided that all Senior Debt thereafter due or declared to be due shall first be paid in full in cash or Cash Equivalents before the Holders are entitled to receive any payment of any kind or character with respect to Obligations on the Notes. SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc. (a) Upon any payment or distribution of assets of the Company of any kind or character to creditors, whether in cash, property or securities upon any total or partial liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Company or its property, whether voluntary or involuntary, all Obligations due or to become due upon all Senior Debt shall first be paid in full in cash or Cash 87 95 Equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, before any payment or distribution of any kind or character is made on account of any Obligations on the Notes, or for the acquisition of any of the Notes for cash or property or otherwise. Upon any such dissolution, winding-up, liquidation, reorganization, receivership or similar proceeding, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Notes would be entitled, except for the provisions hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders if received by them, directly to the holders of Senior Debt (pro rata to such holders on the basis of the respective amounts of Senior Debt held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or Cash Equivalents after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of Senior Debt. (b) To the extent any payment of Senior Debt (whether by or on behalf of the Company, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then, if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. (c) In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, shall be received by any Holder when such payment or distribution is prohibited by this Section 10.03, such payment or distribution shall be held in trust for the benefit of, and shall be forthwith paid over or delivered to, the holders of Senior Debt (pro rata to such holders on the basis of the respective amount of Senior Debt held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or Cash Equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Debt. (d) The consolidation of the Company with, or the merger of the Company with or into, another Person or the liquidation or dissolution of the Company following the conveyance or transfer of all or substantially all of its assets, to another Person upon the terms and conditions provided in Article Five hereof shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 10.03 if such other Person shall, as a part of such consolidation, merger, conveyance or transfer, assume the Company's obligations hereunder in accordance with Article Five hereof. SECTION 10.04. Payments May Be Paid Prior to Dissolution. Nothing contained in this Article Ten or elsewhere in this Indenture shall prevent (i) the Company, except under the conditions described in Sections 10.02 and 10.03, from making 88 96 payments at any time in respect of principal of and interest on the Notes, or from depositing with the Trustee any moneys for such payments, or (ii) in the absence of actual knowledge by the Trustee that a given payment would be prohibited by Section 10.02 or 10.03, the application by the Trustee of any moneys deposited with it for the purpose of making such payments of principal of, and interest on, the Notes to the Holders entitled thereto unless at least two Business Days prior to the date upon which such payment would otherwise become due and payable a Trust Officer shall have actually received the written notice provided for in the second sentence of Section 10.02(a) or in Section 10.07 (provided that, notwithstanding the foregoing, such application shall otherwise be subject to the provisions of the first sentence of Section 10.02(a) and Section 10.03). The Company shall give prompt written notice to the Trustee of any dissolution, winding-up, liquidation or reorganization of the Company. SECTION 10.05. Subrogation. Subject to the payment in full in cash or Cash Equivalents of all Senior Debt, the Holders of the Notes shall be subrogated to the rights of the holders of Senior Debt to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Debt until the Notes shall be paid in full; and, for the purposes of such subrogation, no such payments or distributions to the holders of the Senior Debt by or on behalf of the Company or by or on behalf of the Holders by virtue of this Article Ten which otherwise would have been made to the Holders shall, as between the Company and the Holders of the Notes, be deemed to be a payment by the Company to or on account of the Senior Debt, it being understood that the provisions of this Article Ten are and are intended solely for the purpose of defining the relative rights of the Holders of the Notes, on the one hand, and the holders of the Senior Debt, on the other hand. SECTION 10.06. Obligations of the Company Unconditional. Nothing contained in this Article Ten or elsewhere in this Indenture or in the Notes is intended to or shall impair, as among the Company, its creditors other than the holders of Senior Debt, and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and any interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Debt, nor shall anything herein or therein prevent the Holder of any Note or the Trustee on its behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, in respect of cash, property or securities of the Company received upon the exercise of any such remedy. SECTION 10.07. Notice to Trustee and Paying Agents. The Company shall give prompt written notice to the Trustee and each Paying Agent of any fact known to the Company which would prohibit the making of any payment to or by the Trustee or any Paying Agent in respect of the Notes pursuant to the provisions of this Article Ten. Regardless of anything to the contrary contained in this Article Ten or elsewhere in this Indenture, neither the Trustee nor any Paying Agent shall be charged with knowledge of the existence of any default or event of default with respect to any Senior Debt or of any other facts which would prohibit the making of any payment to or by the Trustee or any Paying Agent unless and until the Trustee or such Paying Agent, as the case may be, shall have received notice in writing from the Company, or from a holder of Senior Debt or a Representative therefor, 89 97 together with proof satisfactory to the Trustee or such Paying Agent, as the case may be, of such holding of Senior Debt or of the authority of such Representative, and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume (in the absence of actual knowledge to the contrary) that no such facts exist. In the event that the Trustee or any Paying Agent determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article Ten, the Trustee or such Paying Agent, as the case may be, may request such Person to furnish evidence to the reasonable satisfaction of the Trustee or such Paying Agent, as the case may be, as to the amounts of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Ten, and if such evidence is not furnished the Trustee or such Paying Agent, as the case may be, may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article Ten, the Trustee, subject to the provisions of Article Seven hereof, each Paying Agent and the Holders of the Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization or similar case or proceeding is pending, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or the Holders of the Notes, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Ten provided that such court, trustee, assignee, agent or other Person has been made aware of this Article Ten. SECTION 10.09. Trustee's Relation to Senior Debt. The Trustee, each Agent and any agent of the Company, of the Trustee or any Agent shall be entitled to all the rights set forth in this Article Ten with respect to any Senior Debt which may at any time be held by it in its individual or any other capacity to the same extent as any other holder of Senior Debt and nothing in this Indenture shall deprive the Trustee, any Agent or any such agent of any of its rights as such a holder. With respect to the holders of Senior Debt, the Trustee and each Agent undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Ten, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture against the Trustee or any Agent. Neither the Trustee nor any Agent shall be deemed to owe any fiduciary duty to the holders of Senior Debt. Whenever a distribution is to be made or a notice is to be given to holders or owners of Senior Debt, the distribution may be made and the notice may be given to their Representatives, if any. 90 98 SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt. No right of any present or future holders of any Senior Debt to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Debt may, at any time and from time to time, without the consent of or notice to the Trustee, without incurring responsibility to the Trustee or the Holders of the Notes and without impairing or releasing the subordination provided in this Article Ten or the obligations hereunder of the Holders of the Notes to the holders of the Senior Debt do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt, or any instrument evidencing the same or any agreement under which Senior Debt is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person liable in any manner for the payment or collection of Senior Debt; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 10.11. Noteholders Authorize Trustee and Paying Agent To Effectuate Subordination of Notes. Each Holder of Notes by its acceptance of them authorizes and expressly directs the Trustee and each Paying Agent on its behalf to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Debt and the Holders of Notes, the subordination provided in this Article Ten, and appoints the Trustee and each Paying Agent its attorney-in-fact for such purposes, including, in the event of any dissolution, winding-up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, the filing of a claim for the unpaid balance of its Notes and accrued interest in the form required in those proceedings. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of the Senior Debt or their Representatives are hereby authorized to have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of said Notes. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Senior Debt or their Representatives to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of Senior Debt or their Representatives to vote in respect of the claim of any Holder in any such proceeding. 91 99 SECTION 10.12. This Article Ten Not To Prevent Events of Default. The failure to make a payment on account of principal of or interest on the Notes by reason of any provision of this Article Ten will not be construed as preventing the occurrence of an Event of Default. SECTION 10.13. Trustee's Compensation Not Prejudiced. Nothing in this Article Ten will apply to amounts due to the Trustee pursuant to other sections in this Indenture. ARTICLE ELEVEN GUARANTEE OF HOLDINGS SECTION 11.01. Unconditional Guarantee. Holdings hereby unconditionally guarantees (such guarantee to be referred to herein as the "Guarantee") to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns on behalf of such Holder, the Notes and the Obligations of the Company hereunder and thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration or otherwise and, to the extent lawful, interest on the overdue principal of and interest on the Notes and all other Obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or of any such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise. Holdings hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Holdings hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guarantee will not be discharged except by complete performance of the obligations contained in the Notes, this Indenture and in this Guarantee. If any Noteholder, the Trustee or any Paying Agent is required by any court or otherwise to return to the Company, Holdings, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or Holdings, any amount paid by the Company or Holdings to the Trustee or such Paying Agent or Noteholder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Holdings further agrees that, as between Holdings, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in 92 100 Article Six, such obligations (whether or not due and payable) shall forthwith become due and payable by Holdings for the purpose of this Guarantee. SECTION 11.02. Subordination of Guarantee. The obligations of Holdings to the Holders of the Notes and to the Trustee on behalf of the Holders pursuant to the Guarantee and this Indenture are expressly subordinate and subject in right of payment to the prior payment in full of all Guarantor Senior Debt of Holdings, to the extent and in the manner provided in Article Twelve. SECTION 11.03. Severability. In case any provision of this Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.04. Release of Guarantee. Upon the release by the lenders under the Credit Agreement and future refinancings thereof of all guarantees of Holdings of or relating to the Credit Agreement and all Indebtedness thereunder, Holdings shall be deemed released from all obligations under this Article Eleven without any further action required on the part of the Trustee or any Holder; provided, however, that any such release shall occur only to the extent that all obligations of Holdings under all of its guarantees of or relating to the Credit Agreement (including any future refinancings thereof) and all Indebtedness thereunder shall also be released and if any payment is made by the Company or Holdings to the lenders under the Credit Agreement in connection with any such release, a pro rata payment shall be made to the Holders based on the ratio of the outstanding principal amount of the Notes to the maximum amount which could be borrowed under the Credit Agreement. The Trustee shall deliver an appropriate instrument evidencing such release upon receipt of a request by the Company accompanied by an Officers' Certificate certifying as to the compliance with this Section 11.04. SECTION 11.05. Waiver of Subrogation. Until payment in full is made of the Notes and all other obligations of the Company to the Holders or the Trustee on behalf of the Holders hereunder and under the Notes, Holdings hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of Holdings' obligations under the Guarantee of this Indenture, including without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any Holder of Notes against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other property or by set-off or any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to Holdings in violation of the preceding sentence and the Notes shall not have been paid in full, such amount shall have been deemed to have been paid to Holdings for the benefit of, and held in trust for the benefit of, the Holders of the Notes, and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied upon 93 101 the Notes, whether matured or unmatured, in accordance with the terms of this Indenture. Holdings acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 11.05 is knowingly made in contemplation of such benefits. SECTION 11.06. Execution of Guarantee. To evidence its guarantee to the Noteholders set forth in this Article Eleven, Holdings hereby agrees to execute the Guarantee in substantially the form included in Exhibits A and Exhibit B, which shall be endorsed on such Note ordered to be authenticated and delivered by the Trustee. Holdings hereby agrees that its Guarantee set forth in this Article Eleven shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guarantee. Each such Guarantee shall be signed on behalf of Holdings by two Officers, or an Officer and an Assistant Secretary prior to the authentication of the Note on which it is endorsed, and the delivery of such Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of such Guarantee on behalf of Holdings. Such signatures upon the Guarantee may be by manual or facsimile signature of such officers and may be imprinted or otherwise reproduced on the Guarantee, and in case any such officer who shall have signed the Guarantee shall cease to be such officer before the Note on which such Guarantee is endorsed shall have been authenticated and delivered by the Trustee or disposed of by the Company, such Note nevertheless may be authenticated and delivered or disposed of as though the person who signed the Guarantee had not ceased to be such officer of Holdings. SECTION 11.07. Waiver of Stay, Extension or Usury Laws. Holdings covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive Holdings from performing its Guarantee as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) Holdings 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. ARTICLE TWELVE SUBORDINATION OF GUARANTEE OBLIGATIONS SECTION 12.01. Guarantee Obligations Subordinated to Guarantor Senior Debt of Holdings. Holdings covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, that any payment of obligations by Holdings in respect of its Guarantee (its "Guarantee Obligations") shall be made subject to the provisions of this Article Twelve; and each Person holding any Note, whether upon original issue or upon registration of transfer, assignment or exchange thereof, accepts and agrees that the payment of all Guarantee Obligations by Holdings shall, to the extent and in the manner herein set forth, be subordinated 94 102 and junior in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations on the Guarantor Senior Debt of Holdings, that the subordination is for the benefit of, and shall be enforceable directly by, the holders of Guarantor Senior Debt of Holdings, and that each holder of Guarantor Senior Debt of Holdings whether now outstanding or hereafter created, incurred, assumed or guaranteed shall be deemed to have acquired Guarantor Senior Debt of Holdings in reliance upon the covenants and provisions contained in this Indenture and the Notes. SECTION 12.02. No Payment on Notes in Certain Circumstances. (a) If any default occurs and is continuing in the payment when due, whether at maturity, upon redemption, by declaration or otherwise, of any principal of, interest on, unpaid drawings for letters of credit issued in respect of, or regularly accruing fees with respect to, any Guarantor Designated Senior Debt of Holdings, no payment of any kind or character shall be made by, or on behalf of, Holdings or any other Person on its or their behalf with respect to any Guarantee Obligations, or to acquire any of the Notes for cash or property or otherwise. In addition, if any other event of default occurs and is continuing with respect to any Guarantor Senior Debt of Holdings, as such event of default is defined in the instrument creating or evidencing such Guarantor Senior Debt of Holdings, permitting the holders of such Guarantor Senior Debt of Holdings then outstanding to accelerate the maturity thereof and if the Representative for the respective issue of Guarantor Senior Debt of Holdings gives notice of the event of default to the Trustee (a "Guarantor Default Notice"), then, unless and until all events of default have been cured or waived or have ceased to exist or the Trustee receives notice thereof from the Representative for the respective issue of Guarantor Senior Debt of Holdings terminating the Guarantor Blockage Period (as defined below), during the 179 days after the delivery of such Guarantor Default Notice (the "Guarantor Blockage Period"), neither Holdings nor any other Person on its behalf shall (x) make any payment of any kind or character with respect to any Guarantee Obligations or (y) acquire any of the Notes for cash or property or otherwise. Notwithstanding anything herein to the contrary, in no event will a Guarantor Blockage Period extend beyond 180 days from the date the payment on the Notes was due and only one such Guarantor Blockage Period may be commenced within any 360 consecutive days. No event of default which existed or was continuing on the date of the commencement of any Guarantor Blockage Period with respect to the Guarantor Senior Debt of Holdings shall be, or be made, the basis for the commencement of a second Guarantor Blockage Period by the Representative of such Guarantor Senior Debt of Holdings whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action or any breach of any financial covenants for a period commencing after the date of commencement of such Guarantor Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose). (b) In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee, any Paying Agent or any Holder when such payment is prohibited by Section 12.02(a), such payment shall be held in trust for the benefit of, and shall be forthwith paid over or delivered to, the holders of Guarantor Senior Debt of Holdings (pro rata to such holders on the basis of the respective amount of Guarantor Senior Debt of Holdings held by such holders) or their respective Representatives, as their respective interests may appear for application to the payment of such Senior Debt until all such Senior Debt shall have been paid in 95 103 full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Debt. The Trustee and each Paying Agent shall be entitled to rely on information regarding amounts then due and owing on the Guarantor Senior Debt of Holdings, if any, received from the holders of such Guarantor Senior Debt (or their Representatives) or, if such information is not received from such holders or their Representatives, from Holdings and only amounts included in the information provided to the Trustee and each Paying Agent shall be paid to the holders of Guarantor Senior Debt of Holdings. Nothing contained in this Article Twelve shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder; provided that all Guarantor Senior Debt of Holdings thereafter due or declared to be due shall first be paid in full in cash or Cash Equivalents before the Holders are entitled to receive any payment of any kind or character with respect to Guarantee Obligations. SECTION 12.03. Payment Over of Proceeds upon Dissolution, Etc. (a) Upon any payment or distribution of assets of Holdings of any kind or character to creditors, whether in cash, property or securities, upon any total or partial liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of Holdings or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to Holdings or its property, whether voluntary or involuntary, all Obligations due or to become due upon all Guarantor Senior Debt of Holdings shall first be paid in full in cash or Cash Equivalents, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Debt of Holdings, before any payment or distribution of any kind or character is made on account of any Guarantee Obligations, or for the acquisition of any of the Notes for cash or property or otherwise. Upon any such dissolution, winding-up, liquidation, reorganization, receivership or similar proceeding, any payment or distribution of assets of Holdings of any kind or character, whether in cash, property or securities, to which the Holders of the Notes would be entitled, except for the provisions hereof, shall be paid by Holdings or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders if received by them, directly to the holders of Guarantor Senior Debt of Holdings (pro rata to such holders on the basis of the respective amounts of Guarantor Senior Debt of Holdings held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Guarantor Senior Debt of Holdings may have been issued, as their respective interests may appear, for application to the payment of Guarantor Senior Debt of Holdings remaining unpaid until all such Guarantor Senior Debt of Holdings has been paid in full in cash or Cash Equivalents after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of Guarantor Senior Debt of Holdings. (b) To the extent any payment of Guarantor Senior Debt of Holdings (whether by or on behalf of Holdings, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Guarantor Senior Debt of Holdings or part thereof originally intended to 96 104 be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. (c) In the event that, notwithstanding the foregoing, any payment or distribution of assets of Holdings of any kind or character, whether in cash, property or securities, shall be received by any Holder when such payment or distribution is prohibited by this Section 12.03, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Guarantor Senior Debt of Holdings (pro rata to such holders on the basis of the respective amount of Guarantor Senior Debt of Holdings held by such holders) or their respective Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Guarantor Senior Debt of Holdings may have been issued, as their respective interests may appear, for application to the payment of Guarantor Senior Debt of Holdings remaining unpaid until all such Guarantor Senior Debt of Holdings has been paid in full in cash or Cash Equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Guarantor Senior Debt of Holdings. (d) The consolidation of Holdings with, or the merger of Holdings with or into, another Person or the liquidation or dissolution of Holdings following the conveyance or transfer of all or substantially all of its assets, to another Person upon the terms and conditions provided in Article Five hereof shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 12.03 if such other Person shall, as a part of such consolidation, merger, conveyance or transfer, assume Holdings' obligations hereunder in accordance with Article Five hereof. SECTION 12.04. Payments May Be Paid Prior to Dissolution. Nothing contained in this Article Twelve or elsewhere in this Indenture shall prevent (i) Holdings, except under the conditions described in Sections 12.02 and 12.03, from making payments at any time in respect of Guarantee Obligations, or from depositing with the Trustee any moneys for such payments, or (ii) in the absence of actual knowledge by the Trustee that a given payment would be prohibited by Section 12.02 or 12.03, the, application by the Trustee of any moneys deposited with it for the purpose of making such payments of principal of, and interest on, Guarantee Obligations to the Holders entitled thereto unless at least two Business Days prior to the date upon which such payment would otherwise become due and payable a Trust Officer shall have actually received the written notice provided for in the second sentence of Section 12.02(a) or in Section 12.07 (provided that, notwithstanding the foregoing, such application shall otherwise be subject to the provisions of the first sentence of Section 12.02(a) and Section 12.03). Holdings shall give prompt written notice to the Trustee of any dissolution, winding-up, liquidation or reorganization of Holdings. SECTION 12.05. Subrogation. Subject to the payment in full in cash or Cash Equivalents of all Guarantor Senior Debt of Holdings, the Holders of the Guarantee Obligations shall be subrogated to the rights of the holders of Guarantor Senior Debt of Holdings to receive payments or distributions of cash, property or securities of Holdings applicable to the Guarantor Senior Debt of Holdings until the Guarantee Obligations shall be paid in full; and, for the purposes of such subrogation, no such payments or distributions to the holders of the Guarantor Senior Debt of Holdings by or on behalf of Holdings or by or on behalf of the Holders by virtue of this Article Twelve which 97 105 otherwise would have been made to the Holders shall, as between Holdings and the Holders of the Guarantee Obligations, be deemed to be a payment by Holdings to or on account of the Guarantor Senior Debt of Holdings, it being understood that the provisions of this Article Twelve are and are intended solely for the purpose of defining the relative rights of the Holders of the Guarantee Obligations, on the one hand, and the holders of the Guarantor Senior Debt of Holdings, on the other hand. SECTION 12.06. Obligations of Holdings Unconditional. Nothing contained in this Article Twelve or elsewhere in this Indenture or in the Notes is intended to or shall impair, as among Holdings, its creditors other than the holders of Guarantor Senior Debt of Holdings, and the Holders, the obligation of Holdings, which is absolute and unconditional, to pay the Guarantee Obligations to the Holders as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of Holdings other than the holders of the Guarantor Senior Debt of Holdings, nor shall anything herein or therein prevent the Holder of any Note or the Trustee on its behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, in respect of cash, property or securities of Holdings received upon the exercise of any such remedy. SECTION 12.07. Notice to Trustee and Paying Agents. Holdings shall give prompt written notice to the Trustee and each Paying Agent of any fact known to Holdings which would prohibit the making of any payment to or by the Trustee in respect of the Notes pursuant to the provisions of this Article Twelve. Regardless of anything to the contrary contained in this Article Twelve or elsewhere in this Indenture, neither the Trustee nor any Paying Agent shall be charged with knowledge of the existence of any default or event of default with respect to any Guarantor Senior Debt of Holdings or of any other facts which would prohibit the making of any payment to or by the Trustee or any Paying Agent unless and until the Trustee or such Paying Agent, as the case may be, shall have received notice in writing from Holdings, or from a holder of Guarantor Senior Debt of Holdings or a Representative therefor, together with proof satisfactory to the Trustee or such Paying Agent, as the case may be, of such holding of Guarantor Senior Debt of Holdings or of the authority of such Representative, and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume (in the absence of actual knowledge to the contrary) that no such facts exist. In the event that the Trustee or any Paying Agent determines in good faith that any evidence is required with respect to the right of any Person as a holder of Guarantor Senior Debt of Holdings to participate in any payment or distribution pursuant to this Article Twelve, the Trustee or such Paying Agent, as the case may be, may request such Person to furnish evidence to the reasonable satisfaction of the Trustee or such Paying Agent, as the case may be, as to the amounts of Guarantor Senior Debt of Holdings held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Twelve, and if such evidence is not furnished, the Trustee or such Paying Agent, as the case may be, may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. 98 106 SECTION 12.08. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of Holdings referred to in this Article Twelve, the Trustee, subject to the provisions of Article Seven hereof, such Paying Agent and the Holders of the Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization or similar case or proceeding is pending, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or the Holders of the Notes, for the purpose of ascertaining the persons entitled to participate in such payment or distribution, the holders of the Guarantor Senior Debt of Holdings and other Indebtedness of Holdings, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Twelve; provided that such court, receiver, trustee, assignee, agent or other Person has been made aware of this Article Twelve. SECTION 12.09. Trustee's Relation to Guarantor Senior Debt of Holdings The Trustee, each Agent and any agent of Holdings, the Trustee or any Agent shall be entitled to all the rights set forth in this Article Twelve with respect to any Guarantor Senior Debt of Holdings which may at any time be held by it in its individual or any other capacity to the same extent as any other holder of Guarantor Senior Debt of Holdings and nothing in this Indenture shall deprive the Trustee, any Agent or any such agent of any of its rights as such a holder. With respect to the holders of Guarantor Senior Debt of Holdings, the Trustee and each Agent undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Twelve, and no implied covenants or obligations with respect to the holders of Guarantor Senior Debt of Holdings shall be read into this Indenture against the Trustee. Neither the Trustee nor any Agent shall be deemed to owe any fiduciary duty to the holders of Guarantor Senior Debt of Holdings. Whenever a distribution is to be made or a notice is to be given to holders or owners of Guarantor Senior Debt of Holdings, the distribution may be made and the notice may be given to their Representatives, if any. SECTION 12.10. Subordination Rights Not Impaired by Acts or Omissions of Holdings or Holders of Guarantor Senior Debt of Holdings. No right of any present or future holders of any Guarantor Senior Debt of Holdings to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of Holdings or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by Holdings with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Guarantor Senior Debt of Holdings may, at any time and from time to time, without the consent of or notice to the Trustee, without incurring responsibility to the Trustee or the Holders of the Notes and without impairing or releasing the subordination provided in this Article Twelve or the 99 107 obligations hereunder of the Holders of the Notes to the holders of the Guarantor Senior Debt of Holdings, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Guarantor Senior Debt of Holdings, or otherwise amend or supplement in any manner Guarantor Senior Debt of Holdings, or any instrument evidencing the same or any agreement under which Guarantor Senior Debt of Holdings is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Guarantor Senior Debt of Holdings; (iii) release any Person liable in any manner for the payment or collection of Guarantor Senior Debt of Holdings; and (iv) exercise or refrain from exercising any rights against Holdings and any other Person. SECTION 12.11. Noteholders Authorize Trustee and Paying Agent To Effectuate Subordination of Notes. Each Holder of Notes by its acceptance of them authorizes and expressly directs the Trustee and each Paying Agent on its behalf to take such action as may be necessary or appropriate to effectuate, as between the holders of Guarantor Senior Debt of Holdings and the Holders of Notes, the subordination provided in this Article Twelve, and appoints the Trustee and each Paying Agent its attorney-in-fact for such purposes, including, in the event of any dissolution, winding-up, liquidation or reorganization of Holdings (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of Holdings, the filing of a claim for the unpaid balance of its Notes and accrued interest in the form required in those proceedings. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of the Guarantor Senior Debt of Holdings or their Representatives are hereby authorized to have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of said Notes. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Guarantor Senior Debt of Holdings or their Representatives to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of Guarantor Senior Debt of Holdings or their Representatives to vote in respect of the claim of any Holder in any such proceeding. SECTION 12.12. This Article Twelve Not To Prevent Events of Default. The failure to make a payment on account of Guarantee Obligations by reason of any provision of this Article Twelve will not be construed as preventing the occurrence of an Event of Default. 100 108 ARTICLE THIRTEEN MISCELLANEOUS SECTION 13.01. TIA Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 13.02. Notices. Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by commercial courier service, by telecopier or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Company or Holdings: Del Monte Corporation and Del Monte Foods Company One Market Street @ The Landmark San Francisco, California 94105 Attn: Thomas E. Gibbons Senior Vice President and Treasurer Telephone No.: (415) 247-3336 Facsimile No.: (415) 247-3339 with a copy to: Del Monte Corporation and Del Monte Foods Company One Market Street @ The Landmark San Francisco, California 94105 Attn: General Counsel Telephone No.: (415) 247-3262 Facsimile No.: (415) 247-3263 and a copy to: Gibson, Dunn & Crutcher LLP One Montgomery Street San Francisco, CA 94104 Attn: Douglas Smith Telephone No.: (415) 393-8200 Facsimile No.: (415) 986-5309 101 109 if to the Trustee: Bankers Trust Company 4th Floor 4 Albany Street New York, New York 10006 Attn: Corporate Trust and Agency Services Telephone No.: (212) 250-6161 Facsimile No.: (212) 250-6961 if to the Paying Agent or Registrar: Bankers Trust Company 4th Floor 4 Albany Street New York, New York 10006 Attn: Corporate Trust and Agency Services Telephone No.: (212) 250-6161 Facsimile No.: (212) 250-6961 Each of the Company, Holdings, the Trustee and the Paying Agent by written notice to each other such Person may designate additional or different addresses for notices to such Person. Any notice or communication to the Company, Holdings, the Trustee and the Paying Agent shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is confirmed if delivered by commercial courier service; when receipt is acknowledged, if faxed; and five (5) calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). In the event any additional Guarantors are added pursuant to Section 4.19, this Section 13.02 shall be supplemented to provide for delivery of any notices or communications described herein to each such Guarantor. Any notice or communication mailed to a Holder shall be mailed to him by first class mail or other equivalent means at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 13.03. Communications by Holders with Other Holders. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and any other Person shall have the protection of TIA Section 312(c). 102 110 SECTION 13.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company or Holdings to the Trustee to take any action under this Indenture, the Company or Holdings, as the case may be, shall furnish to the Trustee: (1) an Officers' Certificate, in form and substance reasonably satisfactory to the Trustee, stating that, in the opinion of the signers, all conditions precedent to be performed by the Company, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent to be performed by the Company, if any, provided for in this Indenture relating to the proposed action have been complied with. SECTION 13.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture, other than the Officers' Certificate required by Section 4.06, shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition and the definitions relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is reasonably necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with. SECTION 13.06. Rules by Trustee, Paying Agent, Registrar. The Trustee may make reasonable rules in accordance with the Trustee's customary practices for action by or at a meeting of Holders. Each of the Paying Agent or Registrar may make reasonable rules in accordance with customary practices for its functions. SECTION 13.07. Legal Holidays. A "Legal Holiday" means a Saturday, Sunday or day on which banking institutions in New York, New York are not required to be open except that, when such term is used with respect to a particular place where a payment is to be made in respect of the Notes and with respect to the payment to be made on the Notes at such place, such term means a Saturday, Sunday or other day on which banking institutions in such place of payment are not required to be open. 103 111 If a payment date is a Legal Holiday at such place, payment may be made at such place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. SECTION 13.08. Governing Law. THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE. SECTION 13.09. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 13.10. No Recourse Against Others. A director, officer, employee, stockholder or incorporator, as such, of the Company or of the Trustee shall not have any liability for any obligations of the Company under the Notes or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes. The foregoing provisions do not relate to the liability of Holdings as a Guarantor. SECTION 13.11. Successors. All agreements of the Company and Holdings in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 13.12. Duplicate Originals. All parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement. SECTION 13.13. Severability. In case any one or more of the provisions in this Indenture or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. 104 112 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. Issuer: DEL MONTE CORPORATION By: /s/ Thomas E. Gibbons ----------------------------------------- Name: Thomas E. Gibbons Title: Senior Vice President and Treasurer Guarantor: DEL MONTE FOODS COMPANY By: /s/ Thomas E. Gibbons ----------------------------------------- Name: Thomas E. Gibbons Title: Senior Vice President and Treasurer Trustee: BANKERS TRUST COMPANY, as Trustee By: /s/ Tracy Saltzmann ----------------------------------------- Name: Tracy Saltzmann Title: Associate 105 113 EXHIBIT A UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 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 SECTION 2.17 OF THE INDENTURE. CUSIP No.: ISIN No.: DEL MONTE CORPORATION 9 1/4% SENIOR SUBORDINATED NOTE DUE 2011 No. $ THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(K) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO DEL MONTE CORPORATION OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 A-1 114 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(K) UNDER THE SECURITIES ACT AFTER THE ORIGINAL ISSUANCE OF THE NOTES, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES," AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS. DEL MONTE CORPORATION, a New York corporation (the "Company," which term includes any successor entity), for value received promises to pay to __________ or registered assigns, the principal sum of ____________ Dollars, on May 15, 2011. Interest Payment Dates: May 15 and November 15 Record Dates: April 30 and October 31 Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. DEL MONTE CORPORATION By: ----------------------------------- Name: Title: By: ----------------------------------- Name: Title: Dated: ___________, Certificate of Authentication This is one of the 9 1/4% Senior Subordinated Notes due 2011 referred to in the within-mentioned Indenture. A-2 115 By: BANKERS TRUST COMPANY, as Trustee By: ----------------------------------- Authorized Signatory A-3 116 (REVERSE OF SECURITY) 9 1/4% SENIOR SUBORDINATED NOTE DUE 2011 1. Interest. DEL MONTE CORPORATION, a New York corporation (the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from May 15, 2001. The Company will pay interest semi-annually in arrears in cash on each Interest Payment Date, commencing November 15, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and on overdue installments of interest from time to time on demand at the rate borne by the Notes plus 2% per annum and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. 2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and interest by its check payable in such U.S. Legal Tender, or, at the Company's option, by wire transfer to an account maintained by the payee with a bank located in the United States. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. 4. Indenture and Guarantee. The Company issued the Notes under an Indenture, dated as of May 15, 2001 (as amended and supplemented from time to time, the "Indenture"), among the Company, Del Monte Foods Company ("Holdings") and Bankers Trust Company, as Trustee (the "Trustee," which term includes any successor Trustee under the Indenture). This Note is one of a duly authorized issue of initial Notes of the Company designated as its 9 1/4% Senior Subordinated Notes due 2011 (the "Initial Notes"). The Initial Notes are limited in aggregate principal amount to $300,000,000. Subject to compliance with the covenants in the Indenture and to applicable law, the Company may issue additional notes (the "Additional Notes") under the Indenture. The Notes include the Initial Notes, the Additional Notes and the Exchange Notes, as defined below, issued in exchange for Notes pursuant to the Indenture. The Initial Notes, Additional Notes and the Exchange Notes are treated as a single class of securities under the Indenture. Terms herein are used as defined in the Indenture unless otherwise defined herein. 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 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and said Act for a A-4 117 statement of such terms, including the respective rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the Notes and the terms upon which the Notes are, and are to be, authenticated and delivered. The Notes are general unsecured obligations of the Company. Payment on each Note is guaranteed on a senior subordinated basis by Holdings pursuant to Article Eleven of the Indenture. 5. Subordination. The Notes are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full in cash or Cash Equivalents of all Senior Debt of the Company, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound by such provisions and authorizes and expressly directs the Trustee and the Paying Agent, on his behalf, to take such action as may be necessary or appropriate to effectuate the subordination provided for in the Indenture and appoints the Trustee his attorney-in-fact for such purposes. 6. Redemption. (a) Optional Redemption. The Notes will be redeemable, at the Company's option, in whole at any time or in part from time to time, on and after May 15, 2006, upon not less than 30 nor more than 60 days' notice, at the following Redemption Prices (expressed as percentages of the principal amount of the Notes to be redeemed) if redeemed during the twelve-month period commencing on May 15 of the years set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the Redemption Date, except that installments of interest which are due and payable on dates falling on or prior to the applicable Redemption Date will be payable to the persons who were the Holders of record at the close of business on the relevant Record Dates.
Year Percentage - ---- ---------- 2006...................................................................... 104.625% 2007...................................................................... 103.083% 2008...................................................................... 101.542% 2009 and thereafter....................................................... 100.000%
(b) Optional Redemption Upon Equity Offerings. At any time, or from time to time, on or prior to May 15, 2004, the Company may, at its option, use the net cash proceeds (but only to the extent such proceeds consist of cash or Cash Equivalents, as such terms are defined in the Indenture) of one or more Equity Offerings (as defined in the Indenture) to redeem Notes in an aggregate principal amount equal to up to 35% of the aggregate principal amount of Notes (including any Additional Notes but excluding the Exchange Notes) originally issued at a Redemption Price equal to 109.250% of the principal amount of the Notes to be redeemed plus accrued interest thereon, if any, to the Redemption Date, except that installments of interest which are due and payable on dates falling on or prior to the applicable Redemption Date will be payable to the persons who were the Holders of record at the close of business on the relevant Record Dates; provided that Notes in aggregate principal amount equal to at least 65% of the principal amount of Notes (excluding any Additional Notes and also excluding the Exchange Notes) originally issued remains outstanding immediately after any such redemption. A-5 118 In order to effect the foregoing redemption with the proceeds of any Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Equity Offering. (c) Optional Redemption Upon Change of Control. At any time, on or prior to May 15, 2006, the Company may, at its option, redeem the Notes, in whole, upon the occurrence of a Change of Control (as defined in the Indenture), upon not less than 30 nor more than 60 days prior notice (but in no event more than 90 days after the occurrence of such Change of Control) mailed by first-class mail to each Holder's registered address, at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed plus the Applicable Premium (as defined below) as of, and accrued and unpaid interest, if any, to the date of redemption (the "Change of Control Redemption Date"), except that installments of interest which are due and payable on dates falling on or prior to the applicable Redemption Date will be payable to the persons who were the Holders of record at the close of business on the relevant Record Dates. "Applicable Premium" means, with respect to a Note at any Change of Control Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such time of (1) the Redemption Price of such Note at May 15, 2006, determined in accordance with Paragraph 6(a) above, plus (2) all required interest payments due on such Note through May 15, 2006, computed using a discount rate equal to the Treasury Rate plus .5% per annum, over (B) the principal amount of such Note. "Treasury Rate" means the yield to maturity at the time of computation of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Release H.15 (519) which has become publicly available at least two Business Days prior to the Change of Control Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) closest to the period from the Change of Control Redemption Date to May 15, 2006; provided, however, that if the period from the Change of Control Redemption Date to May 15, 2006, is not equal to the constant maturity of a U.S. Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of one year) from the weekly average yields of U.S. Treasury securities for which such yields are given, except that if the period from the Change of Control Redemption Date to May 15, 2006, is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year shall be used. 7. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder's registered address. Notes in denominations larger than $1,000 may be redeemed in part. Except as set forth in the Indenture, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date, then, unless the Company defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, the Notes called for redemption will cease to bear interest from and after such Redemption Date and the only right of the Holders of such Notes will be to receive payment of the Redemption Price plus accrued and unpaid interest, if any. A-6 119 8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide that, after certain Asset Sales (as defined in the Indenture) and upon the occurrence of a Change of Control (as defined in the Indenture), and subject to further limitations contained therein, the Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture. 9. Registration Rights. Pursuant to the Registration Rights Agreement (as defined in the Indenture), the Company will be obligated to consummate an exchange offer pursuant to which the Holder of this Note shall have the right to exchange this Note for the Company's Series B 9_% Senior Subordinated Notes due 2011 (the "Exchange Notes"), which have been registered under the Securities Act, in like principal amount and having terms identical in all material respects to the Initial Notes. The Holders of the Initial Notes and Additional Notes shall be entitled to receive certain Additional Interest (as defined in the Indenture) in the event such exchange offer is not consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement. 10. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder shall register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption. 11. Persons Deemed Owners. The registered Holder of a Note shall be treated as the owner of it for all purposes. 12. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease. 13. Discharge Prior to Redemption or Maturity. If the Company at any time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of and interest on the Notes). 14. Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or comply with Article Five or Six of the Indenture or make any other change that does not adversely affect in any material respect the rights of any Holder of a Note. A-7 120 15. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, incur additional Indebtedness, make payments in respect of its Capital Stock or certain Indebtedness, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Subsidiaries, merge or consolidate with any other Person, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation. Such limitations are subject to a number of important qualifications and exceptions. The Company and Holdings must annually report to the Trustee on compliance with such limitations. 16. Successors. When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. 17. Defaults and Remedies. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes then outstanding may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest. 18. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee. 19. No Recourse Against Others. No stockholder, director, officer, employee or incorporator, as such, of the Company shall have any liability for any obligation of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 20. Authentication. This Note shall not be valid until the Trustee or an Authenticating Agent manually signs the certificate of authentication on this Note. 21. Governing Law. The Laws of the State of New York shall govern this Note and the Indenture, without regard to principles of conflict of laws. 22. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and UIGIMIA (= Uniform Gifts to Minors Act). 23. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as A-8 121 to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 24. Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time. The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture, which has the text of this Note in larger type. Requests may be made to: Vice President, Legal Affairs and Secretary, Del Monte Corporation, One Market Street @ The Landmark, San Francisco, California 94105. A-9 122 [FORM OF NOTATION ON NOTE RELATING TO GUARANTEE] GUARANTEE Del Monte Foods Company ("Holdings") has unconditionally guaranteed on a subordinated basis (such guarantee by Holdings being referred to herein as the "Guarantee") (i) the due and punctual payment of the principal of and interest on the Notes, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal and interest, if any, on the Notes, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article Eleven of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of Holdings to the Holders of Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly subordinated in right of payment to the prior payment in full of all Guarantor Senior Debt (as defined in the Indenture) of Holdings, to the extent and in the manner provided, in Articles Eleven and Twelve of the Indenture, and reference is hereby made to such Indenture for the precise terms of the Guarantee therein made. No stockholder, officer, director or incorporator, as such, past, present or future, of Holdings shall have any liability under the Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the Guarantee is noted shall have been executed by the Trustee or an Authenticating Agent under the Indenture by the manual signature of one of its authorized officers. DEL MONTE FOODS COMPANY By: ----------------------------------- Name: By: ----------------------------------- Name: A-10 123 ASSIGNMENT FORM If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Note to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint __________, agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: Signed: --------------------------- ------------------------------ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ------------------- In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date of the declaration by the SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) the end of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Note is being transferred: A-11 124 [Check One] (1) ___ pursuant to and in compliance with Rule 144A under the Securities Act; or (2) ___ other than in accordance with (1) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. If neither of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Note 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 2.17 of the Indenture shall have been satisfied. Date: Signed: --------------------------- ------------------------------ (Sign exactly as your name appears on the other side of this Security) Signature Guarantee: ----------------------------------------------------------- TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note 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 and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: --------------------------- ------------------------------------- NOTICE: To be executed by an executive officer A-12 125 [OPTION OF HOLDER TO ELECT PURCHASE] If you want to elect to have this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate box: Section 4.15 [ ] Section 4.16 [ ] If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the amount you elect to have purchased: $ -------------------------------------- Dated: --------------------------- ------------------------------------- NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever and be guaranteed by the endorser's bank or broker. Signature Guarantee: ---------------------- A-13 126 EXHIBIT B UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 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 SECTION 2.17 OF THE INDENTURE. CUSIP No.: ISIN No.: DEL MONTE CORPORATION SERIES B 9-1/4% SENIOR SUBORDINATED NOTE DUE 2011 No. $ DEL MONTE CORPORATION, a New York corporation (the "Company," which term includes any successor entity), for value received promises to pay to __________ or registered assigns, the principal sum of ______________ Dollars, on May 15, 2011. Interest Payment Dates: May 15 and November 15, Record Dates: April 30 and October 31 Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. B-1 127 DEL MONTE CORPORATION By: ----------------------------------- Name: Title: By: ----------------------------------- Name: Title: Dated: Certificate of Authentication This is one of the Series B 9-1/4% Senior Subordinated Notes due 2011 referred to in the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: ------------------------------------- Authorized Signatory B-2 128 (REVERSE OF SECURITY) SERIES B 9 1/4% SENIOR SUBORDINATED NOTE DUE 2011 1. Interest. DEL MONTE CORPORATION, a New York corporation (the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from May 15, 2001. The Company will pay interest semi-annually in arrears in cash on each Interest Payment Date, commencing November 15, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and on overdue installments of interest from time to time on demand at the rate borne by the Notes plus 2% per annum and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. 2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and interest by its check payable in such U.S. Legal Tender, or, at the Company's option, by wire transfer to an account maintained by the payee with a bank located in the United States. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. 4. Indenture and Guarantee. The Company issued the Notes under an Indenture, dated as of May 15, 2001 (as amended and supplemented from time to time, the "Indenture"), among the Company, Del Monte Foods Company ("Holdings") and Bankers Trust Company, as Trustee (the "Trustee," which term includes any successor Trustee under the Indenture). This Note is one of a duly authorized issue of securities of the Company designated as its Series B 9 1/4% Senior Subordinated Notes due 2011 (the "Initial Notes"). The Initial Notes are limited in aggregate principal amount to $300,000,000. Subject to compliance with the covenants in the Indenture and to applicable law, the Company may issue additional securities (the "Additional Notes") under the Indenture. The Notes include the Initial Notes and the Additional Notes. The Initial Notes and Additional Notes are treated as a single class of securities under the Indenture. Terms herein are used as defined in the Indenture unless otherwise defined herein. 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 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and said Act for a statement of such terms, including the respective rights, duties and immunities thereunder of the Company, B-3 129 the Guarantor, the Trustee and the Holders of the Notes and the terms upon which the Notes are, and are to be, authenticated and delivered. The Notes are general unsecured obligations of the Company. Payment on each Note is guaranteed on a senior subordinated basis by Holdings pursuant to Article Eleven of the Indenture. 5. Subordination. The Notes are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full in cash or Cash Equivalents of all Senior Debt of the Company, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound by such provisions and authorizes and expressly directs the Trustee and the Paying Agent, on his behalf, to take such action as may be necessary or appropriate to effectuate the subordination provided for in the Indenture and appoints the Trustee his attorney-in-fact for such purposes. 6. Redemption. (a) Optional Redemption. The Notes will be redeemable, at the Company's option, in whole at any time or in part from time to time, on and after May 15, 2006, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount of the Notes to be redeemed) if redeemed during the twelve-month period commencing on May 15 of the years set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption, except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates.
Year Percentage - ---- ---------- 2006...................................................................... 104.625% 2007...................................................................... 103.083% 2008...................................................................... 101.542% 2009 and thereafter....................................................... 100.000%
(b) Optional Redemption Upon Equity Offerings. At any time, or from time to time, on or prior to May 15, 2004, the Company may, at its option, use the net cash proceeds (but only to the extent such proceeds consist of cash or Cash Equivalents, as such terms are defined in the Indenture) of one or more Equity Offerings (as defined in the Indenture) to redeem Notes in an aggregate principal amount equal to up to 35% of the aggregate principal amount of Notes (including any Additional Notes) originally issued at a redemption price equal to 109.250% of the principal amount of the Notes to be redeemed plus accrued interest thereon, if any, to the date of redemption, except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates; provided that Notes in aggregate principal amount equal to at least 65% of the principal amount of Notes (excluding any Additional Notes) originally issued remains outstanding immediately after any such redemption. In order to effect the foregoing redemption with the proceeds of any Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Equity Offering. B-4 130 (c) Optional Redemption Upon Change of Control. At any time, on or prior to May 15, 2006, the Company may, at its option, redeem the Notes, in whole, upon the occurrence of a Change of Control (as defined in the Indenture), upon not less than 30 nor more than 60 days prior notice (but in no event more than 90 days after the occurrence of such Change of Control) mailed by first-class mail to each Holder's registered address, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus the Applicable Premium (as defined below) as of, and accrued and unpaid interest, if any, to the date of redemption (the "Change of Control Redemption Date"), except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates. "Applicable Premium" means, with respect to a Note at any Change of Control Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Note at May 15, 2006, determined in accordance with Paragraph 6(a) above, plus (2) all required interest payments due on such Note through May 15, 2006, computed using a discount rate equal to the Treasury Rate plus .5% per annum, over (B) the principal amount of such Note. "Treasury Rate" means the yield to maturity at the time of computation of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Release H.15 (519) which has become publicly available at least two Business Days prior to the Change of Control Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) closest to the period from the Change of Control Redemption Date to May 15, 2006; provided, however, that if the period from the Change of Control Redemption Date to May 15, 2006, is not equal to the constant maturity of a U.S. Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of one year) from the weekly average yields of U.S. Treasury securities for which such yields are given, except that if the period from the Change of Control Redemption Date to May 15, 2006, is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year shall be used. 7. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder's registered address. Notes in denominations larger than $1,000 may be redeemed in part. Except as set forth in the Indenture, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date, then, unless the Company defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, the Notes called for redemption will cease to bear interest from and after such Redemption Date and the only right of the Holders of such Notes will be to receive payment of the Redemption Price plus accrued and unpaid interest, if any. 8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide that, after certain Asset Sales (as defined in the Indenture) and upon the occurrence of a Change of Control (as defined in the Indenture), and subject to further limitations contained therein, the Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture. B-5 131 9. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder shall register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption. 10. Persons Deemed Owners. The registered Holder of a Note shall be treated as the owner of it for all purposes. 11. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease. 12. Discharge Prior to Redemption or Maturity. If the Company at any time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of and interest on the Notes). 13. Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or comply with Article Five or Six of the Indenture or make any other change that does not adversely affect in any material respect the rights of any Holder of a Note. 14. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, incur additional Indebtedness, make payments in respect of its Capital Stock or certain Indebtedness, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Subsidiaries, merge or consolidate with any other Person, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation. Such limitations are subject to a number of important qualifications and exceptions. The Company and Holdings must annually report to the Trustee on compliance with such limitations. 15. Successors. When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. 16. Defaults and Remedies. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes then outstanding B-6 132 may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest. 17. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee. 18. No Recourse Against Others. No stockholder, director, officer, employee or incorporator, as such, of the Company shall have any liability for any obligation of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 19. Authentication. This Note shall not be valid until the Trustee or an Authenticating Agent manually signs the certificate of authentication on this Note. 20. Governing Law. The Laws of the State of New York shall govern this Note and the Indenture, without regard to principles of conflict of laws. 21. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and UIGIMIA (= Uniform Gifts to Minors Act). 22. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 23. Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time. The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture, which has the text of this Note in larger type. Requests may be made to: Vice President, Legal Affairs and Secretary, Del Monte Corporation, One Market Street @ The Landmark, San Francisco, California 94105. B-7 133 [FORM OF NOTATION ON NOTE RELATING TO GUARANTEE] GUARANTEE Del Monte Foods Company ("Holdings") has unconditionally guaranteed on a senior subordinated basis (such guarantee by Holdings being referred to herein as the "Guarantee") (i) the due and punctual payment of the principal of and interest on the Notes, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal and interest, if any, on the Notes, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article Eleven of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of Holdings to the Holders of Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly subordinated in right of payment to the prior payment in full of all Guarantor Senior Debt (as defined in the Indenture) of Holdings, to the extent and in the manner provided, in Articles Eleven and Twelve of the Indenture, and reference is hereby made to such Indenture for the precise terms of the Guarantee therein made. No stockholder, officer, director or incorporator, as such, past, present or future, of Holdings shall have any liability under the Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the Guarantee is noted shall have been executed by the Trustee or an Authenticating Agent under the Indenture by the manual signature of one of its authorized officers. DEL MONTE FOODS COMPANY By: ----------------------------------- Name: By: ----------------------------------- Name: B-8 134 ASSIGNMENT FORM If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Note to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint __________, agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: Signed: -------------------------- ---------------------------------- (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ------------------- B-9 135 [OPTION OF HOLDER TO ELECT PURCHASE] If you want to elect to have this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate box: Section 4.15 [ ] Section 4.16 [ ] If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the amount you elect to have purchased: $ ----------------------------------- Dated: ------------------------------- ---------------------------------- NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever and be guaranteed by the endorser's bank or broker. Signature Guarantee: --------------------- B-10 136 Exhibit C Form of Certificate ----------,---- Bankers Trust Company [Address] Attention: [Corporate Trust Department] Re: Del Monte Corporation (the "Company") 9 1/4% Senior Subordinated Notes due 2011 (the "Notes") Dear Sirs: This letter relates to U.S. $ principal amount of Notes represented by a Note (the "Legended Note") which bears a legend outlining restrictions upon transfer of such Legended Note. Pursuant to Section 2.15 of the Indenture dated as of May 15, 2001 (the "Indenture") relating to the Notes, we hereby certify that we are (or we will hold such securities on behalf of) a person outside the United States to whom the Notes could be transferred in accordance with Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933. Accordingly, you are hereby requested to exchange the legended certificate for an unlegended certificate representing an identical principal amount of Notes, all in the manner provided for in 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 C-1 137 Exhibit D Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S -----------, ---- Bankers Trust Company - ------------------------ - ------------------------ Attention: -------------- Re: Del Monte Corporation (the "Company") 9 1/4% Senior Subordinated Notes due 2011 (the "Notes") Ladies and Gentlemen: In connection with our proposed sale of $_________ aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: (1) the offer of the Notes was not made to a person in the United States; (2) either (a) at the time the buy offer 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; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) we have advised the transferee of the transfer restrictions applicable to the Notes. D-1 138 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 Signature Guarantee: -------------------- D-2 139 SCHEDULE 1 TO INDENTURE Assets Held for Disposition
APPROXIMATE LOCATION SIZE - -------- ----------- Woodland, CA 481k sq. ft Plant #23 40.2 acres Stockton, CA 446k sq. ft Plant #33 31.0 acres LaGrande, OR 23k sq. ft Plant #181 3.7 acres Walnut Creek Research Center 95k sq. ft Any one of the Company's other production facilities Range: (excluding the Modesto, CA and Hanford, CA facilities) 135k sq. ft to 359k sq. ft
D-3 EX-4.2 4 f73660ex4-2.txt SPECIMEN FORM OF SERIES B GLOBAL NOTE 1 EXHIBIT 4.2 UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 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 SECTION 2.17 OF THE INDENTURE. CUSIP No.: DEL MONTE CORPORATION SERIES B 9-1/4% SENIOR SUBORDINATED NOTE DUE 2011 No. $ DEL MONTE CORPORATION, a New York corporation (the "Company," which term includes any successor entity), for value received promises to pay to __________ or registered assigns, the principal sum of ______________ Dollars, on May 15, 2011. Interest Payment Dates: May 15 and November 15, Record Dates: April 30 and October 31 Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. 2 DEL MONTE CORPORATION By: -------------------------------- Name: Title: By: -------------------------------- Name: Title: Dated: Certificate of Authentication This is one of the Series B 9-1/4% Senior Subordinated Notes due 2011 referred to in the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: ------------------------------------- Authorized Signatory 2 3 (REVERSE OF SECURITY) SERIES B 9-1/4% SENIOR SUBORDINATED NOTE DUE 2011 1. Interest. DEL MONTE CORPORATION, a New York corporation (the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from May 15, 2001. The Company will pay interest semi-annually in arrears in cash on each Interest Payment Date, commencing November 15, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and on overdue installments of interest from time to time on demand at the rate borne by the Notes plus 2% per annum and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. 2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and interest by its check payable in such U.S. Legal Tender, or, at the Company's option, by wire transfer to an account maintained by the payee with a bank located in the United States. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. 4. Indenture and Guarantee. The Company issued the Notes under an Indenture, dated as of May 15, 2001 (as amended and supplemented from time to time, the "Indenture"), among the Company, Del Monte Foods Company ("Holdings") and Bankers Trust Company, as Trustee (the "Trustee," which term includes any successor Trustee under the Indenture). This Note is one of a duly authorized issue of securities of the Company designated as its Series B 9-1/4% Senior Subordinated Notes due 2011 (the "Initial Notes"). The Initial Notes are limited in aggregate principal amount to $300,000,000. Subject to compliance with the covenants in the Indenture and to applicable law, the Company may issue additional securities (the "Additional Notes") under the Indenture. The Notes include the Initial Notes and the Additional Notes. The Initial Notes and Additional Notes are treated as a single class of securities under the Indenture. Terms herein are used as defined in the Indenture unless otherwise defined herein. 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 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject 3 4 to all such terms, and Holders of Notes are referred to the Indenture and said Act for a statement of such terms, including the respective rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the Notes and the terms upon which the Notes are, and are to be, authenticated and delivered. The Notes are general unsecured obligations of the Company. Payment on each Note is guaranteed on a senior subordinated basis by Holdings pursuant to Article Eleven of the Indenture. 5. Subordination. The Notes are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full in cash or Cash Equivalents of all Senior Debt of the Company, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound by such provisions and authorizes and expressly directs the Trustee and the Paying Agent, on his behalf, to take such action as may be necessary or appropriate to effectuate the subordination provided for in the Indenture and appoints the Trustee his attorney-in-fact for such purposes. 6. Redemption. (a) Optional Redemption. The Notes will be redeemable, at the Company's option, in whole at any time or in part from time to time, on and after May 15, 2006, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount of the Notes to be redeemed) if redeemed during the twelve-month period commencing on May 15 of the years set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption, except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates.
Year Percentage - ---- ---------- 2006...................................................... 104.625% 2007...................................................... 103.083% 2008...................................................... 101.542% 2009 and thereafter....................................... 100.000%
(b) Optional Redemption Upon Equity Offerings. At any time, or from time to time, on or prior to May 15, 2004, the Company may, at its option, use the net cash proceeds (but only to the extent such proceeds consist of cash or Cash Equivalents, as such terms are defined in the Indenture) of one or more Equity Offerings (as defined in the Indenture) to redeem Notes in an aggregate principal amount equal to up to 35% of the aggregate principal amount of Notes (including any Additional Notes) originally issued at a redemption price equal to 109.250% of the principal amount of the Notes to be redeemed plus accrued interest thereon, if any, to the date of redemption, except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates; provided that Notes in aggregate principal amount equal to at least 65% of the principal amount of Notes (excluding any Additional Notes) originally issued remains outstanding immediately after any such redemption. 4 5 In order to effect the foregoing redemption with the proceeds of any Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Equity Offering. (c) Optional Redemption Upon Change of Control. At any time, on or prior to May 15, 2006, the Company may, at its option, redeem the Notes, in whole, upon the occurrence of a Change of Control (as defined in the Indenture), upon not less than 30 nor more than 60 days prior notice (but in no event more than 90 days after the occurrence of such Change of Control) mailed by first-class mail to each Holder's registered address, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus the Applicable Premium (as defined below) as of, and accrued and unpaid interest, if any, to the date of redemption (the "Change of Control Redemption Date"), except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates. "Applicable Premium" means, with respect to a Note at any Change of Control Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Note at May 15, 2006, determined in accordance with Paragraph 6(a) above, plus (2) all required interest payments due on such Note through May 15, 2006, computed using a discount rate equal to the Treasury Rate plus .5% per annum, over (B) the principal amount of such Note. "Treasury Rate" means the yield to maturity at the time of computation of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Release H.15 (519) which has become publicly available at least two Business Days prior to the Change of Control Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) closest to the period from the Change of Control Redemption Date to May 15, 2006; provided, however, that if the period from the Change of Control Redemption Date to May 15, 2006, is not equal to the constant maturity of a U.S. Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of one year) from the weekly average yields of U.S. Treasury securities for which such yields are given, except that if the period from the Change of Control Redemption Date to May 15, 2006, is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year shall be used. 7. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder's registered address. Notes in denominations larger than $1,000 may be redeemed in part. Except as set forth in the Indenture, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date, then, unless the Company defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, the Notes called for redemption will cease to bear interest from and after such Redemption Date and the only right of the Holders of such Notes will be to receive payment of the Redemption Price plus accrued and unpaid interest, if any. 5 6 8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide that, after certain Asset Sales (as defined in the Indenture) and upon the occurrence of a Change of Control (as defined in the Indenture), and subject to further limitations contained therein, the Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture. 9. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder shall register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption. 10. Persons Deemed Owners. The registered Holder of a Note shall be treated as the owner of it for all purposes. 11. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease. 12. Discharge Prior to Redemption or Maturity. If the Company at any time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of and interest on the Notes). 13. Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or comply with Article Five or Six of the Indenture or make any other change that does not adversely affect in any material respect the rights of any Holder of a Note. 14. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, incur additional Indebtedness, make payments in respect of its Capital Stock or certain Indebtedness, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Subsidiaries, merge or consolidate with any other Person, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation. Such limitations are 6 7 subject to a number of important qualifications and exceptions. The Company and Holdings must annually report to the Trustee on compliance with such limitations. 15. Successors. When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. 16. Defaults and Remedies. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes then outstanding may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest. 17. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee. 18. No Recourse Against Others. No stockholder, director, officer, employee or incorporator, as such, of the Company shall have any liability for any obligation of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 19. Authentication. This Note shall not be valid until the Trustee or an Authenticating Agent manually signs the certificate of authentication on this Note. 20. Governing Law. The Laws of the State of New York shall govern this Note and the Indenture, without regard to principles of conflict of laws. 21. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and UIGIMIA (= Uniform Gifts to Minors Act). 22. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 23. Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time. 7 8 The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture, which has the text of this Note in larger type. Requests may be made to: Vice President, Legal Affairs and Secretary, Del Monte Corporation, One Market Street @ The Landmark, San Francisco, California 94105. 8 9 [FORM OF NOTATION ON NOTE RELATING TO GUARANTEE] GUARANTEE Del Monte Foods Company ("Holdings") has unconditionally guaranteed on a senior subordinated basis (such guarantee by Holdings being referred to herein as the "Guarantee") (i) the due and punctual payment of the principal of and interest on the Notes, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal and interest, if any, on the Notes, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article Eleven of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of Holdings to the Holders of Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly subordinated in right of payment to the prior payment in full of all Guarantor Senior Debt (as defined in the Indenture) of Holdings, to the extent and in the manner provided, in Articles Eleven and Twelve of the Indenture, and reference is hereby made to such Indenture for the precise terms of the Guarantee therein made. No stockholder, officer, director or incorporator, as such, past, present or future, of Holdings shall have any liability under the Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the Guarantee is noted shall have been executed by the Trustee or an Authenticating Agent under the Indenture by the manual signature of one of its authorized officers. DEL MONTE FOODS COMPANY By: -------------------------------- Name: By: -------------------------------- Name: 9 10 ASSIGNMENT FORM If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Note to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint __________, agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: Signed: -------------------------------- ---------------------------- (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ------------------ 10 11 [OPTION OF HOLDER TO ELECT PURCHASE] If you want to elect to have this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate box: Section 4.15 [ ] Section 4.16 [ ] If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the amount you elect to have purchased: $ -------------------------------- Dated: --------------------------- ---------------------------------------- NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever and be guaranteed by the endorser's bank or broker. Signature Guarantee: -------------------- 11 EX-4.3 5 f73660ex4-3.txt SPECIMEN FORM OF SERIES B REGULATION S NOTE 1 EXHIBIT 4.3 UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 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 SECTION 2.17 OF THE INDENTURE. ISIN No.: DEL MONTE CORPORATION SERIES B 9-1/4% SENIOR SUBORDINATED NOTE DUE 2011 No. $ DEL MONTE CORPORATION, a New York corporation (the "Company," which term includes any successor entity), for value received promises to pay to __________ or registered assigns, the principal sum of ______________ Dollars, on May 15, 2011. Interest Payment Dates: May 15 and November 15, Record Dates: April 30 and October 31 Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. 2 DEL MONTE CORPORATION By: --------------------------------- Name: Title: By: --------------------------------- Name: Title: Dated: Certificate of Authentication This is one of the Series B 9-1/4% Senior Subordinated Notes due 2011 referred to in the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: -------------------------------- Authorized Signatory 2 3 (REVERSE OF SECURITY) SERIES B 9-1/4% SENIOR SUBORDINATED NOTE DUE 2011 1. Interest. DEL MONTE CORPORATION, a New York corporation (the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from May 15, 2001. The Company will pay interest semi-annually in arrears in cash on each Interest Payment Date, commencing November 15, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal and on overdue installments of interest from time to time on demand at the rate borne by the Notes plus 2% per annum and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. 2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and interest by its check payable in such U.S. Legal Tender, or, at the Company's option, by wire transfer to an account maintained by the payee with a bank located in the United States. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. 4. Indenture and Guarantee. The Company issued the Notes under an Indenture, dated as of May 15, 2001 (as amended and supplemented from time to time, the "Indenture"), among the Company, Del Monte Foods Company ("Holdings") and Bankers Trust Company, as Trustee (the "Trustee," which term includes any successor Trustee under the Indenture). This Note is one of a duly authorized issue of securities of the Company designated as its Series B 9-1/4% Senior Subordinated Notes due 2011 (the "Initial Notes"). The Initial Notes are limited in aggregate principal amount to $300,000,000. Subject to compliance with the covenants in the Indenture and to applicable law, the Company may issue additional securities (the "Additional Notes") under the Indenture. The Notes include the Initial Notes and the Additional Notes. The Initial Notes and Additional Notes are treated as a single class of securities under the Indenture. Terms herein are used as defined in the Indenture unless otherwise defined herein. 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 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject 3 4 to all such terms, and Holders of Notes are referred to the Indenture and said Act for a statement of such terms, including the respective rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the Notes and the terms upon which the Notes are, and are to be, authenticated and delivered. The Notes are general unsecured obligations of the Company. Payment on each Note is guaranteed on a senior subordinated basis by Holdings pursuant to Article Eleven of the Indenture. 5. Subordination. The Notes are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full in cash or Cash Equivalents of all Senior Debt of the Company, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound by such provisions and authorizes and expressly directs the Trustee and the Paying Agent, on his behalf, to take such action as may be necessary or appropriate to effectuate the subordination provided for in the Indenture and appoints the Trustee his attorney-in-fact for such purposes. 6. Redemption. (a) Optional Redemption. The Notes will be redeemable, at the Company's option, in whole at any time or in part from time to time, on and after May 15, 2006, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount of the Notes to be redeemed) if redeemed during the twelve-month period commencing on May 15 of the years set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption, except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates.
Year Percentage - ---- ---------- 2006...................................................................... 104.625% 2007...................................................................... 103.083% 2008...................................................................... 101.542% 2009 and thereafter....................................................... 100.000%
(b) Optional Redemption Upon Equity Offerings. At any time, or from time to time, on or prior to May 15, 2004, the Company may, at its option, use the net cash proceeds (but only to the extent such proceeds consist of cash or Cash Equivalents, as such terms are defined in the Indenture) of one or more Equity Offerings (as defined in the Indenture) to redeem Notes in an aggregate principal amount equal to up to 35% of the aggregate principal amount of Notes (including any Additional Notes) originally issued at a redemption price equal to 109.250% of the principal amount of the Notes to be redeemed plus accrued interest thereon, if any, to the date of redemption, except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates; provided that Notes in aggregate principal amount equal to at least 65% of the principal amount of Notes (excluding any Additional Notes) originally issued remains outstanding immediately after any such redemption. 4 5 In order to effect the foregoing redemption with the proceeds of any Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Equity Offering. (c) Optional Redemption Upon Change of Control. At any time, on or prior to May 15, 2006, the Company may, at its option, redeem the Notes, in whole, upon the occurrence of a Change of Control (as defined in the Indenture), upon not less than 30 nor more than 60 days prior notice (but in no event more than 90 days after the occurrence of such Change of Control) mailed by first-class mail to each Holder's registered address, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus the Applicable Premium (as defined below) as of, and accrued and unpaid interest, if any, to the date of redemption (the "Change of Control Redemption Date"), except that installments of interest which are due and payable on dates falling on or prior to the applicable redemption date will be payable to the persons who were the Holders of record at the close of business on the relevant record dates. "Applicable Premium" means, with respect to a Note at any Change of Control Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Note at May 15, 2006, determined in accordance with Paragraph 6(a) above, plus (2) all required interest payments due on such Note through May 15, 2006, computed using a discount rate equal to the Treasury Rate plus .5% per annum, over (B) the principal amount of such Note. "Treasury Rate" means the yield to maturity at the time of computation of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Release H.15 (519) which has become publicly available at least two Business Days prior to the Change of Control Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) closest to the period from the Change of Control Redemption Date to May 15, 2006; provided, however, that if the period from the Change of Control Redemption Date to May 15, 2006, is not equal to the constant maturity of a U.S. Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of one year) from the weekly average yields of U.S. Treasury securities for which such yields are given, except that if the period from the Change of Control Redemption Date to May 15, 2006, is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year shall be used. 7. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at such Holder's registered address. Notes in denominations larger than $1,000 may be redeemed in part. Except as set forth in the Indenture, if monies for the redemption of the Notes called for redemption shall have been deposited with the Paying Agent for redemption on such Redemption Date, then, unless the Company defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, the Notes called for redemption will cease to bear interest from and after such Redemption Date and the only right of the Holders of such Notes will be to receive payment of the Redemption Price plus accrued and unpaid interest, if any. 5 6 8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide that, after certain Asset Sales (as defined in the Indenture) and upon the occurrence of a Change of Control (as defined in the Indenture), and subject to further limitations contained therein, the Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture. 9. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder shall register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption. 10. Persons Deemed Owners. The registered Holder of a Note shall be treated as the owner of it for all purposes. 11. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease. 12. Discharge Prior to Redemption or Maturity. If the Company at any time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of and interest on the Notes). 13. Amendment; Supplement; Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any existing Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or comply with Article Five or Six of the Indenture or make any other change that does not adversely affect in any material respect the rights of any Holder of a Note. 14. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, incur additional Indebtedness, make payments in respect of its Capital Stock or certain Indebtedness, enter into transactions with Affiliates, create dividend or other payment restrictions affecting Subsidiaries, merge or consolidate with any other Person, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets or adopt a plan of liquidation. Such limitations are 6 7 subject to a number of important qualifications and exceptions. The Company and Holdings must annually report to the Trustee on compliance with such limitations. 15. Successors. When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor will be released from those obligations. 16. Defaults and Remedies. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes then outstanding may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest) if it determines that withholding notice is in their interest. 17. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee. 18. No Recourse Against Others. No stockholder, director, officer, employee or incorporator, as such, of the Company shall have any liability for any obligation of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 19. Authentication. This Note shall not be valid until the Trustee or an Authenticating Agent manually signs the certificate of authentication on this Note. 20. Governing Law. The Laws of the State of New York shall govern this Note and the Indenture, without regard to principles of conflict of laws. 21. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and UIGIMIA (= Uniform Gifts to Minors Act). 22. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 23. Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time. 7 8 The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture, which has the text of this Note in larger type. Requests may be made to: Vice President, Legal Affairs and Secretary, Del Monte Corporation, One Market Street @ The Landmark, San Francisco, California 94105. 8 9 [FORM OF NOTATION ON NOTE RELATING TO GUARANTEE] GUARANTEE Del Monte Foods Company ("Holdings") has unconditionally guaranteed on a senior subordinated basis (such guarantee by Holdings being referred to herein as the "Guarantee") (i) the due and punctual payment of the principal of and interest on the Notes, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal and interest, if any, on the Notes, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article Eleven of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of Holdings to the Holders of Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly subordinated in right of payment to the prior payment in full of all Guarantor Senior Debt (as defined in the Indenture) of Holdings, to the extent and in the manner provided, in Articles Eleven and Twelve of the Indenture, and reference is hereby made to such Indenture for the precise terms of the Guarantee therein made. No stockholder, officer, director or incorporator, as such, past, present or future, of Holdings shall have any liability under the Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the Guarantee is noted shall have been executed by the Trustee or an Authenticating Agent under the Indenture by the manual signature of one of its authorized officers. DEL MONTE FOODS COMPANY By: --------------------------------- Name: By: --------------------------------- Name: 9 10 ASSIGNMENT FORM If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Note to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint __________, agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date:_________________________ Signed:_______________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee:___________________ 10 11 [OPTION OF HOLDER TO ELECT PURCHASE] If you want to elect to have this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate box: Section 4.15 [ ] Section 4.16 [ ] If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the amount you elect to have purchased: $____________________________ Dated:_______________________ ______________________________ NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever and be guaranteed by the endorser's bank or broker. Signature Guarantee: __________________________ 40138686_1.DOC 11 EX-4.4 6 f73660ex4-4.txt REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 4.4 - -------------------------------------------------------------------------------- REGISTRATION RIGHTS AGREEMENT Dated May 15, 2001 between DEL MONTE CORPORATION and MORGAN STANLEY & CO. INCORPORATED BANC OF AMERICA SECURITIES LLC DEUTSCHE BANC ALEX. BROWN, INC. CHASE SECURITIES INC. ABN AMRO INCORPORATED BMO NESBITT BURNS CORP. - -------------------------------------------------------------------------------- 2 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered into on May 15, 2001, between DEL MONTE CORPORATION, a New York corporation (the "Company"), and DEL MONTE FOODS COMPANY, a Delaware corporation ("Holdings"), on the one hand, and MORGAN STANLEY & CO. INCORPORATED, BANC OF AMERICA SECURITIES LLC, DEUTSCHE BANC ALEX. BROWN, INC., CHASE SECURITIES INC., ABN AMRO INCORPORATED, AND BMO NESBITT BURNS CORP. (the "Placement Agents"), on the other hand. This Agreement is made pursuant to the Placement Agreement dated May 3, 2001, between the Company, Holdings and the Placement Agents (the "Placement Agreement"), which provides for the sale by the Company to the Placement Agents of an aggregate of $300,000,000 principal amount of the Company's 9 1/4% Senior Subordinated Notes Due 2011, guaranteed by Holdings. In order to induce the Placement Agents to enter into the Placement Agreement, the Company and Holdings have agreed to provide to the Placement Agents and their respective 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 Placement 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. "Additional Notes" shall mean notes, if any, issued under Section 2.18 of the Indenture. "Closing Date" shall mean the Closing Date as defined in the Placement Agreement. "Company" shall have the meaning set forth in the preamble and shall also include the Company's successors. "Exchange Dates" shall have the meaning set forth in Section 2(a). "Exchange Offer" shall mean the exchange offer by the Company of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof. "Exchange Offer Registration" shall mean a registration under the 1933 Act effected pursuant to Section 2(a) hereof. 3 "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 material incorporated by reference therein. "Exchange Securities" shall mean securities issued by the Company and Holdings under the Indenture containing terms identical to the Securities (except that (i) interest thereon shall accrue from the last date on which interest was paid on the Securities or, if no such interest has been paid, from May 15, 2001 and (ii) the Exchange Securities will not contain restrictions on transfer) and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer. "Holder" shall mean the Placement Agents, for so long as they own any Registrable Securities, and each of their respective successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indenture; provided, however, that for purposes of Sections 4 and 5 of this Agreement, the term "Holder" shall include Participating Broker-Dealers. "Holdings" shall have the meaning set forth in the preamble and shall also include Holdings' successors. "Indenture" shall mean the Indenture relating to the Securities dated May 15, 2001 between the Company, Holdings and Bankers Trust Company, as trustee, and as the same may be amended from time to time in accordance with the terms thereof. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of outstanding 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 shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount. "Participating Broker-Dealer" shall have the meaning specified in Section 4(a) hereafter. "Person" shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization or other entity, or a government or agency or political subdivision thereof. "Placement Agents" shall have the meaning set forth in the preamble to this Agreement and shall also include their respective successors. "Placement Agreement" shall have the meaning set forth in the preamble to this Agreement. "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 a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, 2 4 and by all other amendments and supplements to such prospectus, and in each case including all material incorporated or deemed to be incorporated by reference therein. "Registrable Securities" shall mean the Securities; provided, however, that the Securities shall cease to be Registrable Securities (i) when 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) when such Securities have been sold to the public pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the 1933 Act, or (iii) when such Securities shall have ceased to be outstanding. "Registration Expenses" shall mean any and all expenses incident to performance of or compliance by the Company and Holdings with this Agreement, including, without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or "blue sky" laws (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), (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 rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vi) the fees and disbursements of the Trustee and its counsel and of any depositary for book-entry Securities, (vii) the fees and disbursements of counsel for the Company and Holdings and, in the case of a Shelf Registration Statement, the fees and disbursements of one counsel for the Holders (which counsel shall be selected by the Majority Holders and which counsel may also be counsel for the Placement Agents), and (viii) the fees and disbursements of the independent public accountants of the Company and Holdings, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, but excluding fees and expenses of counsel to the underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and 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 and Holdings that 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 or deemed to be incorporated by reference therein. "SEC" shall mean the Securities and Exchange Commission. "Securities" shall mean the $300,000,000 principal amount of 9-1/4% Senior Subordinated Notes due 2011 of the Company and any Additional Notes, as defined herein. "Shelf Registration" shall mean a registration effected pursuant to Section 2(b) hereof. 3 5 "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company and Holdings pursuant to the provisions of Section 2(b) of this Agreement which covers all of the Registrable Securities (but no other securities unless approved by the Majority Holders whose Registrable Securities are covered by such Shelf Registration Statement) 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 or deemed to be incorporated by reference therein. "Staff" shall have the meaning set forth in Section 4 hereof. "Trustee" shall mean the trustee with respect to the Securities under the Indenture. "Underwriter" shall have the meaning set forth in Section 3 hereof. "Underwritten Registration" or "Underwritten Offering" shall mean a registration in which Registrable Securities are sold to an Underwriter for reoffering to the public. 2. REGISTRATION UNDER THE 1933 ACT. (a) To the extent not prohibited by any applicable law or applicable interpretation of the Staff of the SEC, the Company and Holdings shall use their reasonable best efforts to cause to be filed as promptly as practicable an Exchange Offer Registration Statement covering the offer by the Company and Holdings to the Holders to exchange all of the Registrable Securities for Exchange Securities and to have such Exchange Offer Registration Statement declared effective as promptly as practicable and remain effective until the closing of the Exchange Offer. The Company and Holdings shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement has been declared effective by the SEC and use their reasonable best efforts to have the Exchange Offer consummated not later than 60 days after such effective date. The Company and Holdings shall commence the Exchange Offer by mailing the related exchange offer Prospectus and accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law: (i) that the Exchange Offer is being made pursuant to this Registration Rights Agreement and that all Registrable Securities validly tendered will be accepted for exchange; (ii) the dates of acceptance for exchange (which shall be a period of at least 20 business days from the date such notice is mailed) (the "Exchange Dates"); (iii) that any Registrable Security not tendered will remain outstanding and continue to accrue interest, but will not retain any rights under this Registration Rights Agreement; (iv) that Holders electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to surrender such Registrable Security, together with the enclosed letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice prior to the close 4 6 of business on the last Exchange Date, provided, however, that, if any of the Registrable Securities are in book-entry form, such Prospectus and accompanying documents shall also specify how such surrender is to be effected in accordance with applicable book-entry procedures; and (v) that Holders will be entitled to withdraw their election, not later than the close of business on the last Exchange Date, by sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) 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. As soon as practicable after the last Exchange Date, the Company and Holdings shall: (i) accept for exchange Registrable Securities or portions thereof tendered and not validly withdrawn pursuant to the Exchange Offer; and (ii) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and Holdings and issue, and cause the Trustee to promptly authenticate and mail to each Holder, an Exchange Security equal in principal amount to the principal amount of the Registrable Securities surrendered by such Holder. The Company and Holdings shall use their reasonable best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the 1933 Act, the 1934 Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate applicable law or any applicable interpretation of the Staff of the SEC. The Company and Holdings shall inform the Placement Agents of the names and addresses of the Holders to whom the Exchange Offer is made, and the Placement Agents shall have the right, subject to applicable law, to contact such Holders and otherwise facilitate the tender of Registrable Securities in the Exchange Offer. (b) In the event that (i) the Company and Holdings determine that the Exchange Offer Registration provided for in Section 2(a) above is not available or may not be consummated as soon as practicable after the last Exchange Date because it would violate applicable law or the applicable interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any other reason consummated by December 31, 2001, or (iii) the Exchange Offer has been completed and in the opinion of counsel for the Placement Agents a Registration Statement must be filed by the Placement Agents and a Prospectus must be delivered by the Placement Agents in connection with any offering or sale of Registrable Securities, the Company and Holdings shall use their reasonable best efforts to cause to be filed as soon as practicable after such determination, date or notice of such opinion of counsel is given to the Company and Holdings, as the case may be, a Shelf Registration Statement providing for the sale by the Holders of all of the Registrable Securities and to have such Shelf Registration Statement declared effective by the SEC as promptly as practicable. In the event that the Company and Holdings are required to file a Shelf Registration Statement solely as a result of the matters referred to in clause (iii) of the preceding 5 7 sentence, the Company and Holdings shall use their reasonable best efforts to file and have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Initial Purchasers after completion of the Exchange Offer. The Company and Holdings agree to use their reasonable best efforts to keep the Shelf Registration Statement continuously effective until the expiration of the period referred to in Rule 144(k) under the 1933 Act with respect to the Registrable Securities or such shorter period that will terminate when all of the Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement. The Company and Holdings further agree to supplement or amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company and Holdings for such Shelf Registration Statement or by the 1933 Act or by any other rules and regulations thereunder for shelf registration or if reasonably requested by a Holder with respect to information relating to such Holder, and to use their reasonable best efforts to cause any such amendment to become effective and such Shelf Registration Statement to become usable as soon thereafter as is practicable. The Company and Holdings agree to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. (c) The Company and Holdings shall pay all Registration Expenses in connection with the registration pursuant to Section 2(a) and Section 2(b). Each Holder shall pay all 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. (d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) 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 Shelf 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 interference until the offering of Registrable Securities pursuant to such Registration Statement may legally resume. In the event the Exchange Offer is not consummated and the Shelf Registration Statement is not declared effective on or prior to December 31, 2001, the interest rate on the Securities will be increased by 0.5% per annum until the Exchange Offer is consummated or the Shelf Registration Statement is declared effective by the SEC. (e) Without limiting the remedies available to the Placement Agents and the Holders, the Company and Holdings acknowledge that any failure by the Company and Holdings to comply with their respective obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Placement Agents or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Placement Agents or any Holder may obtain such relief as may be required to specifically enforce the obligations of the Company and Holdings under Section 2(a) and Section 2(b) hereof. 6 8 (f) In the event that the Exchange Offer has been completed but (i) at any time before or after completion of the Exchange Offer, any Securities shall have been sold or otherwise transferred pursuant to an effective Shelf Registration Statement or to the public pursuant to Rule 144 (or any similar rule then in force, but not Rule 144A) under the 1933 Act and, as a result, shall have ceased to be Registrable Securities, or (ii) any Securities not exchanged in the Exchange Offer shall otherwise have ceased to be Registrable Securities, the Company and Holdings will make available to the Holders the opportunity to exchange such Securities for identical Securities of like tenor and principal amount at maturity but bearing the same CUSIP number as the Exchange Securities. 3. REGISTRATION PROCEDURES. In connection with the obligations of the Company and Holdings with respect to the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the Company and Holdings shall as expeditiously as possible: (a) prepare and file with the SEC a Registration Statement on the appropriate form under the 1933 Act, which form (x) shall be selected by the Company and Holdings and (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof and (z) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and use their reasonable 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 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; to keep each Prospectus current during the period described under Section 4(3) and Rule 174 under the 1933 Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or Exchange Securities; (c) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, to counsel for the Placement Agents, to counsel for the Holders 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, in order to facilitate the public sale or other disposition of the Registrable Securities; and the Company and Holdings consent to the use of such Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the selling Holders of Registrable Securities and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus or any amendment or supplement thereto in accordance with applicable law; 7 9 (d) use their reasonable 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 shall reasonably request in writing by the time the applicable Registration Statement is declared effective by the SEC, to cooperate with such Holders in connection with any filings required to be made with the National Association of Securities Dealers, Inc. and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided, however, that neither the Company nor Holdings shall be required to (i) qualify 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), (ii) file any general consent to service of process, or (iii) subject itself to taxation in any such jurisdiction if it is not so subject; (e) in the case of a Shelf Registration, notify each Holder of Registrable Securities, counsel for the Holders and counsel for the Placement Agents promptly and, if requested by any such Holder or counsel, confirm such advice in writing (i) when a Registration Statement has become effective and when any post-effective amendment thereto has been filed and becomes effective, (ii) of any request by the SEC or any state securities authority for 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) 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 or Holdings 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 or if the Company or Holdings receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (v) of the happening of any event 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 any determination by the Company or Holdings that a post-effective amendment to a Registration Statement would be appropriate; (f) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment and provide immediate notice to each Holder of the withdrawal of any such order; (g) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto (without documents incorporated therein by reference or exhibits thereto, unless requested); 8 10 (h) 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 may reasonably request at least one business day prior to the closing of any sale of Registrable Securities; (i) in the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 3(e)(v) hereof, use their reasonable best efforts to prepare and file with the SEC as promptly as practicable a supplement or post-effective amendment to a 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, such Prospectus will not contain 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. The Company and Holdings agree to notify the Holders to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and the Holders hereby agree to suspend use of the Prospectus until the Company and Holdings have amended or supplemented the Prospectus to correct such misstatement or omission; (j) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or any document which is to be incorporated or deemed to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement, provide copies of such document to the Placement Agents and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their counsel) and make such of the representatives of the Company and Holdings as shall be reasonably requested by the Placement Agents or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) available for discussion of such document, and shall not at any time file or make any amendment to the Registration Statement, any Prospectus or any amendment of or supplement to a Registration Statement or a Prospectus or any document which is to be incorporated or deemed to be incorporated by reference into a Registration Statement or a Prospectus, of which the Placement Agents and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their counsel) shall not have previously been advised and furnished a copy or to which the Placement Agents or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) shall object; (k) obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a Registration Statement; (l) 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, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so 9 11 qualified in accordance with the terms of the TIA and execute, and use their reasonable 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; (m) in the case of a Shelf Registration, make available for inspection by a representative of the Holders of the Registrable Securities, any Underwriter participating in any Underwritten Offering pursuant to such Shelf Registration Statement, and attorneys and accountants designated by the Holders, at reasonable times and in a reasonable manner, all financial and other records, pertinent documents and properties of the Company and Holdings, and cause the respective officers, directors and employees of the Company and Holdings to supply all information reasonably requested by any such representative, Underwriter, attorney or accountant in connection with a Shelf Registration Statement; (n) in the case of a Shelf Registration, use their reasonable best efforts to cause all Registrable Securities to be listed on any securities exchange or any automated quotation system on which similar securities issued by the Company or Holdings are then listed if requested by the Majority Holders, to the extent such Registrable Securities satisfy applicable listing requirements; (o) use their reasonable best efforts to cause the Exchange Securities or Registrable Securities, as the case may be, to be rated by two nationally recognized statistical rating organizations (as such term is defined in Rule 436(g)(2) under the 1933 Act); (p) if reasonably requested by any Holder of Registrable Securities covered by a Registration Statement, (i) promptly incorporate in a Prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein, and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as the Company and Holdings have received notification of the matters to be incorporated in such filing; and (q) in the case of a Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith (including those requested by the Holders of a majority of the aggregate principal amount of the Registrable Securities being sold) in order to expedite or facilitate the disposition of such Registrable Securities, including, but not limited to, an Underwritten Offering and in such connection, (i) to the extent possible, make such representations and warranties to the Holders and any Underwriters of such Registrable Securities with respect to the business of the Company and its subsidiaries, and Holdings and its subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (ii) obtain opinions of counsel to the Company and Holdings (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders and such Underwriters and their respective counsel) addressed to each selling 10 12 Holder and Underwriter of Registrable Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (iii) obtain "cold comfort" letters from the independent certified public accountants of the Company and Holdings (and, if necessary, any other certified public accountant of any subsidiary of the Company or Holdings, or of any business acquired by the Company or Holdings for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each selling Holder and Underwriter of Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings, and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Securities being sold or the Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company and Holdings made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in an underwriting agreement. In the case of a Shelf Registration Statement, the Company and Holdings may require each Holder of Registrable Securities to furnish to the Company and Holdings such information regarding the Holder and the proposed distribution by such Holder of such Registrable Securities as the Company and Holdings may from time to time reasonably request in writing. In the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any notice from the Company and Holdings of the happening of any event of the kind described in Section 3(e)(v) 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(i) hereof, and, if so directed by the Company and Holdings, such Holder will deliver to the Company and Holdings (at its expense) all copies in its 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 and Holdings shall give any such notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company and Holdings shall extend the period during which the 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. The Company and Holdings may give any such notice only twice during any 365-day period and any such suspensions may not exceed 30 days for each suspension and there may not be more than two suspensions in effect during any 365-day period. The Holders of Registrable Securities covered by a Shelf Registration Statement who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers (the "Underwriters") that will administer the offering will be selected by the Majority Holders of the Registrable Securities included in such offering. 11 13 4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER. (a) The staff of the SEC (the "Staff") has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a "Participating Broker-Dealer") may be deemed to be an "underwriter" within the meaning of the 1933 Act and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities. The Company and Holdings understand that it is the Staff's position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligation under the 1933 Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the 1933 Act. (b) In light of the above, notwithstanding the other provisions of this Agreement, the Company and Holdings agree that the provisions of this Agreement as they relate to a Shelf Registration shall also apply to an Exchange Offer Registration to the extent, and with such reasonable modifications thereto as may be, reasonably requested by the Placement Agents or by one or more Participating Broker-Dealers, in each case as provided in clause (ii) below, in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff of the SEC recited in Section 4(a) above; provided, however, that: (i) the Company and Holdings shall not be required to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement, as would otherwise be contemplated by Section 3(i), for a period exceeding 180 days after the last Exchange Date (as such period may be extended pursuant to the penultimate paragraph of Section 3 of this Agreement) and Participating Broker-Dealers shall not be authorized by the Company or Holdings to deliver and shall not deliver such Prospectus after such period in connection with the resales contemplated by this Section 4; and (ii) the application of the Shelf Registration procedures set forth in Section 3 of this Agreement to an Exchange Offer Registration, to the extent not required by the positions of the Staff of the SEC or the 1933 Act and the rules and regulations thereunder, will be in conformity with the reasonable request to the Company and Holdings by the Placement Agents or with the reasonable request in writing to the Company and Holdings by one or more broker-dealers who certify to the Placement Agents, on the one hand, and the Company and Holdings, on the other hand, in writing that they anticipate that they will be Participating Broker-Dealers; and, provided further, that, in connection with such application of the Shelf Registration procedures set forth in Section 3 to an Exchange Offer Registration, the Company and Holdings shall be obligated (x) to deal only with one entity representing the Participating Broker-Dealers, which shall be Morgan Stanley & Co. Incorporated unless it elects not to act as such 12 14 representative, (y) to pay the fees and expenses of only one counsel representing the Participating Broker-Dealers, which shall be counsel to the Placement Agents unless such counsel elects not to so act, and (z) to cause to be delivered only one, if any, "cold comfort" letter with respect to the Prospectus in the form existing on the last Exchange Date and with respect to each subsequent amendment or supplement, if any, effected during the period specified in clause (i) above. (c) The Placement Agents shall have no liability to the Company, Holdings or any Holder with respect to any request that it may make pursuant to Section 4(b) above. 5. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and Holdings, jointly and severally, agree to indemnify and hold harmless the Placement Agents, each Holder and each Person, if any, who controls any Placement Agent or any Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under common control with, or is controlled by, any Placement Agent or any Holder, from and against all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by the Placement Agent, any Holder or any such controlling or affiliated Person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) pursuant to which Exchange Securities or Registrable Securities were registered under the 1933 Act, including all documents incorporated therein by reference, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or caused by any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (as amended or supplemented if the Company or Holdings shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in light of the circumstances under which they were made not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to the Placement Agents or any Holder furnished to the Company and Holdings in writing by Morgan Stanley & Co. Incorporated or any selling Holder expressly for use therein. In connection with any Underwritten Offering permitted by Section 3, the Company and Holdings, jointly and severally, will also indemnify the Underwriters, if any, selling brokers, dealers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the 1933 Act and the 1934 Act) to the same extent as provided above with respect to the indemnification of the Holders, if requested in connection with any Registration Statement. (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, Holdings, the Placement Agents and the other selling Holders, and each of their respective directors, officers who sign the Registration Statement and each Person, if any, who controls the Company, Holdings, any Placement Agent and any other selling Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from the Company and Holdings to the Placement Agents and the Holders, but only with reference to information relating to such Holder furnished to the 13 15 Company and Holdings in writing by such Holder expressly for use in any Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto). (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the "indemnified party") shall promptly notify the Person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Placement Agents and all Persons, if any, who control any Placement Agent within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company and Holdings and their respective directors, their respective officers who sign the Registration Statement and each Person, if any, who controls the Company or Holdings within the meaning of either such Section and (c) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Holders and all Persons, if any, who control any Holders within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In such case involving the Placement Agents and Persons who control the Placement Agents, such firm shall be designated in writing by Morgan Stanley & Co. Incorporated. In such case involving the Holders and such Persons who control Holders, such firm shall be designated in writing by the Majority Holders. In all other cases, such firm shall be designated by the Company and Holdings. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party for such fees and expenses of counsel in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which such indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such 14 16 settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) If the indemnification provided for in paragraph (a) or paragraph (b) of this Section 5 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and Holdings, on the one hand, and the Holders, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and Holdings, on the one hand, or by the Holders, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Holders' respective obligations to contribute pursuant to this Section 5(d) are several in proportion to the respective principal amount of Registrable Securities of such Holder that were registered pursuant to a Registration Statement. (e) The Company and Holdings, on the one hand, and each Holder, on the other hand, agree that it would not be just or equitable if contribution pursuant to this Section 5 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5, no Holder shall be required to indemnify or contribute any amount in excess of the amount by which the total price at which Registrable Securities were sold by such Holder exceeds the amount of any damages that such Holder 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. The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. The indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Placement Agents, any Holder or any Person controlling any Placement Agent or any Holder, or by or on behalf of the Company or Holdings, or their respective officers or directors or any Person controlling the Company or Holdings, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement. 15 17 6. MISCELLANEOUS. (a) No Inconsistent Agreements. The Company and Holdings, jointly and severally, represent, warrant and agree that neither the Company nor Holdings has entered into, and on or after the date of this Agreement will not 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 Company and Holdings, jointly and severally, represent, warrant and agree that the rights granted to the Holders hereunder do not and will not in any way conflict with and are not and will not be inconsistent with the rights granted to the holders of the Company's or Holdings' other issued and outstanding securities under any such agreements. (b) 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 and Holdings have 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 consent; provided, however, that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. (c) 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 (i) if to a Holder, at the most current address given by such Holder to the Company or Holdings by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Placement Agents, the address set forth in the Placement Agreement; and (ii) if to the Company or Holdings, initially at the respective addresses set forth in the Placement Agreement and thereafter at such other addresses, notice of which is given in accordance with the provisions of this Section 6(c). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five 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, at the address specified in the Indenture. (d) Successors 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, however, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Placement 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 16 18 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 and such Person shall be entitled to receive the benefits hereof. The Placement Agents (in their capacity as Placement Agents) shall have no liability or obligation to the Company or Holdings with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement. (e) Purchases and Sales of Securities. Neither the Company nor Holdings shall, and the Company and Holdings shall each use its reasonable best efforts to cause its respective affiliates (as defined in Rule 405 under the 1933 Act) not to, purchase and then resell or otherwise transfer any Securities. (f) Third Party Beneficiary. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company and Holdings, on the one hand, and the Placement Agents, on the other hand, and any Holder shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of other Holders hereunder. (g) 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. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. This Agreement shall be governed by the laws of the State of New York. (j) 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. [signature page immediately follows] 17 19 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. DEL MONTE CORPORATION By /s/ Thomas E. Gibbons ------------------------------------------- Name: Thomas E. Gibbons Title: Senior Vice President and Treasurer DEL MONTE FOODS COMPANY By /s/ Thomas E. Gibbons ------------------------------------------- Name: Thomas E. Gibbons Title: Senior Vice President and Treasurer Confirmed and accepted as of the date first above written: MORGAN STANLEY & CO. INCORPORATED BANC OF AMERICA SECURITIES LLC DEUTSCHE BANC ALEX. BROWN, INC. CHASE SECURITIES INC. ABN AMRO INCORPORATED BMO NESBITT BURNS CORP. By: MORGAN STANLEY & CO. INCORPORATED By /s/ Sean Stevens ------------------------ Name: Sean Stevens Title: Vice President 18 EX-10.1 7 f73660ex10-1.txt THIRD AMENDED AND RESTATED CREDIT AGREEMENT 1 EXHIBIT 10.1 ================================================================================ THIRD AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF MAY 15, 2001 AMONG DEL MONTE CORPORATION, DEL MONTE FOODS COMPANY, VARIOUS FINANCIAL INSTITUTIONS, BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT, THE CHASE MANHATTAN BANK, AS SYNDICATION AGENT, AND BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT ARRANGED BY BANC OF AMERICA SECURITIES LLC, JPMORGAN SECURITIES INC. AND DEUTSCHE BANC ALEX. BROWN ================================================================================ *** Indicates confidential material that has been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission. 2 TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS...............................................................1 1.1 Certain Defined Terms........................................................1 1.2 Other Interpretive Provisions...............................................36 1.3 Accounting Principles.......................................................37 1.4 Assignments from Existing Credit Agreement; Addition of Lenders; Reallocation of Loans and Commitments.......................................37 ARTICLE II THE CREDITS..............................................................38 2.1 Amounts and Terms of Commitments............................................38 (a) The Term Credit......................................................38 (b) The Revolving Credit.................................................39 2.2 Loan Accounts...............................................................39 2.3 Procedure for Borrowing.....................................................40 2.4 Conversion and Continuation Elections.......................................40 2.5 Swingline Loans.............................................................42 2.6 Termination or Reduction of Revolving Commitments...........................44 2.7 Optional Prepayments........................................................45 2.8 Mandatory Prepayments of Loans..............................................45 2.9 Repayment...................................................................48 (a) The Term Credit......................................................48 (b) The Revolving Credit.................................................51 2.10 Interest....................................................................51 2.11 Fees........................................................................51 (a) Arranger and Agency Fees.............................................51 (b) Commitment Fees......................................................51 2.12 Computation of Fees and Interest............................................52 2.13 Payments by the Company.....................................................52 2.14 Payments by the Lenders to the Administrative Agent.........................53 2.15 Sharing of Payments, Etc....................................................53 2.16 Optional Increase...........................................................54 ARTICLE III THE LETTERS OF CREDIT....................................................56 3.1 The Letter of Credit Subfacility............................................56
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PAGE 3.2 Issuance, Amendment and Extension of Letters of Credit......................57 3.3 Risk Participations, Drawings and Reimbursements............................59 3.4 Repayment of Participations.................................................61 3.5 Role of the Issuing Lender..................................................61 3.6 Obligations Absolute........................................................62 3.7 Cash Collateral Pledge......................................................63 3.8 Letter of Credit Fees.......................................................63 3.9 Uniform Customs and Practice................................................64 3.10 Non-Dollar Letters of Credit................................................64 ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY...................................66 4.1 Taxes.......................................................................66 4.2 Illegality..................................................................67 4.3 Increased Costs and Reduction of Return.....................................68 4.4 Funding Losses..............................................................68 4.5 Inability to Determine Rates................................................69 4.6 Certificates of Lenders.....................................................69 4.7 Substitution of Lenders.....................................................70 4.8 Survival....................................................................70 ARTICLE V CONDITIONS PRECEDENT.....................................................70 5.1 Conditions to Effectiveness.................................................70 (a) Credit Agreement.....................................................70 (b) Incumbency...........................................................70 (c) Organization Documents; Good Standing................................70 (d) Legal Opinions.......................................................71 (e) Notes................................................................71 (f) Payment of Fees......................................................71 (g) Confirmation.........................................................71 (h) Certificate..........................................................71 (i) Tender Offers........................................................72 (j) Consent Solicitations................................................72
-ii- 4 TABLE OF CONTENTS (continued)
PAGE (k) New Subordinated Notes...............................................72 (l) Documents............................................................72 (m) Solvency Certificates................................................73 (n) Borrowing Base Certificate...........................................73 (o) Other Documents......................................................73 5.2 Conditions to All Credit Extensions.........................................73 (a) Notice, Application..................................................73 (b) Continuation of Representations and Warranties.......................73 (c) No Existing Default..................................................73 ARTICLE VI REPRESENTATIONS AND WARRANTIES...........................................73 6.1 Corporate Existence and Power...............................................73 6.2 Corporate Authorization; No Contravention...................................74 6.3 Governmental Authorization..................................................74 6.4 Binding Effect..............................................................74 6.5 Litigation..................................................................75 6.6 No Default..................................................................75 6.7 ERISA Compliance............................................................75 6.8 Use of Proceeds; Margin Regulations.........................................76 6.9 Title to Properties.........................................................76 6.10 Taxes.......................................................................76 6.11 Financial Condition.........................................................76 6.12 Regulated Entities..........................................................77 6.13 No Burdensome Restrictions..................................................77 6.14 Copyrights, Patents, Trademarks and Licenses, etc...........................77 6.15 Subsidiaries................................................................78 6.16 Insurance...................................................................78 6.17 Solvency, etc...............................................................78 6.18 Real Property...............................................................78 6.19 Swap Obligations............................................................78 6.20 Senior Indebtedness.........................................................78
-iii- 5 TABLE OF CONTENTS (continued)
PAGE 6.21 Environmental Warranties....................................................79 6.22 Full Disclosure.............................................................79 6.23 Refinancing Transactions....................................................80 6.24 Business of Parent..........................................................80 ARTICLE VII AFFIRMATIVE COVENANTS....................................................80 7.1 Financial Statements........................................................80 7.2 Certificates; Other Information.............................................81 7.3 Notices.....................................................................82 7.4 Preservation of Corporate Existence, Etc....................................83 7.5 Maintenance of Property.....................................................83 7.6 Insurance...................................................................83 7.7 Payment of Obligations......................................................84 7.8 Compliance with Laws........................................................84 7.9 Compliance with ERISA.......................................................84 7.10 Inspection of Property and Books and Records................................84 7.11 Interest Rate Protection....................................................85 7.12 Environmental Covenant......................................................85 7.13 Use of Proceeds.............................................................85 7.14 Further Assurances..........................................................85 ARTICLE VIII NEGATIVE COVENANTS.......................................................87 8.1 Limitation on Liens.........................................................87 8.2 Disposition of Assets.......................................................89 8.3 Consolidations and Mergers..................................................90 8.4 Loans and Investments.......................................................90 8.5 Limitation on Indebtedness..................................................92 8.6 Transactions with Affiliates................................................93 8.7 Use of Proceeds.............................................................93 8.8 Contingent Obligations......................................................94 8.9 Joint Ventures..............................................................94 8.10 Lease Obligations...........................................................94
-iv- 6 TABLE OF CONTENTS (continued)
PAGE 8.11 Minimum Fixed Charge Coverage...............................................95 8.12 Minimum Interest Coverage...................................................95 8.13 Maximum Senior Debt Ratio...................................................95 8.14 Maximum Total Debt Ratio....................................................96 8.15 Maximum Capital Expenditures................................................96 8.16 Restricted Payments.........................................................96 8.17 ERISA.......................................................................98 8.18 Limitations on Sale and Leaseback Transactions..............................98 8.19 Limitation on Restriction of Subsidiary Dividends and Distributions.........98 8.20 Inconsistent Agreements.....................................................99 8.21 Change in Business..........................................................99 8.22 Amendments to Certain Documents.............................................99 8.23 Fiscal Year.................................................................99 8.24 Limitation on Issuance of Guaranty Obligations..............................99 8.25 Parent Covenants...........................................................100 8.26 Senior Debt Designation....................................................101 ARTICLE IX EVENTS OF DEFAULT.......................................................101 9.1 Event of Default...........................................................101 (a) Non-Payment.........................................................101 (b) Representation or Warranty..........................................101 (c) Specific Defaults...................................................101 (d) Other Defaults......................................................101 (e) Cross-Default.......................................................101 (f) Insolvency; Voluntary Proceedings...................................102 (g) Involuntary Proceedings.............................................102 (h) ERISA...............................................................102 (i) Monetary Judgments..................................................102 (j) Non-Monetary Judgments..............................................103 (k) Change of Control...................................................103 (l) Guarantor Defaults..................................................103
-v- 7 TABLE OF CONTENTS (continued)
PAGE (m) Collateral Documents, etc...........................................103 9.2 Remedies...................................................................103 9.3 Rights Not Exclusive.......................................................104 ARTICLE X THE AGENTS..............................................................104 10.1 Appointment and Authorization..............................................104 10.2 Delegation of Duties.......................................................105 10.3 Liability of Administrative Agent..........................................105 10.4 Reliance by Administrative Agent...........................................105 10.5 Notice of Default..........................................................105 10.6 Credit Decision............................................................106 10.7 Indemnification of Agents..................................................106 10.8 Administrative Agent in Individual Capacity................................107 10.9 Successor Administrative Agent.............................................107 10.10 Withholding Tax............................................................107 10.11 Collateral Matters.........................................................109 ARTICLE XI MISCELLANEOUS...........................................................111 11.1 Amendments and Waivers.....................................................111 11.2 Notices....................................................................113 11.3 No Waiver; Cumulative Remedies.............................................114 11.4 Costs and Expenses.........................................................114 11.5 Company Indemnification....................................................114 11.6 Payments Set Aside.........................................................115 11.7 Successors and Assigns.....................................................115 11.8 Assignments, Participations, etc...........................................115 11.9 Confidentiality............................................................117 11.10 Set-off....................................................................118 11.11 Automatic Debits of Fees...................................................118 11.12 Notification of Addresses, Lending Offices, Etc............................119 11.13 Counterparts...............................................................119 11.14 Severability...............................................................119
-vi- 8 TABLE OF CONTENTS (continued)
PAGE 11.15 No Third Parties Benefited.................................................119 11.16 Governing Law and Jurisdiction.............................................119 11.17 Waiver of Jury Trial.......................................................119 11.18 Entire Agreement...........................................................120 ARTICLE XII THE GUARANTY............................................................120 12.1 The Guaranty...............................................................120 12.2 Guaranty Unconditional.....................................................121 12.3 Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances..............................................................121 12.4 Waiver.....................................................................121 12.5 Delay of Subrogation.......................................................122 12.6 Stay of Acceleration.......................................................122 12.7 Information................................................................122 12.8 Costs......................................................................122 12.9 Amendment and Restatement..................................................122
-vii- 9 SCHEDULES Pricing Schedule Schedule 1.1 Commitments, Total Percentages, Revolving Percentages, Term Percentages Schedule 1.4 Assignment Agreement Schedule 2.8 Assets Held For Sale Schedule 6.5 Litigation Schedule 6.11 Permitted Liabilities Schedule 6.14 Material Intellectual Property Schedule 6.15(a) Subsidiaries of the Company Schedule 6.15(b) Equity Investments of the Company Schedule 6.16 Insurance Matters Schedule 6.18 Real Property Schedule 6.21 Environmental Matters Schedule 8.1 Liens Schedule 8.4 Permitted Investments Schedule 8.5(d) Existing Indebtedness Schedule 8.8 Contingent Obligations Schedule 11.2 Lending Offices; Addresses for Notices EXHIBITS Exhibit A Form of Notice of Borrowing Exhibit B Form of Notice of Conversion/Continuation Exhibit C Form of Compliance Certificate Exhibit D Form of Promissory Note Exhibit E-1 Form of Security Agreement (Company and Parent) Exhibit E-2 Form of Subsidiary Security Agreement Exhibit F Form of Subsidiary Guaranty Exhibit G-1 Form of Parent Pledge Agreement Exhibit G-2 Form of Company Pledge Agreement Exhibit G-3 Form of Subsidiary Pledge Agreement 10 Exhibit H-1 Form of Company Solvency Certificate Exhibit H-2 Form of Parent Solvency Certificate Exhibit I-1 Form of Opinion of Special Counsel to the Company, Parent and Mike Mac Exhibit I-2 Form of Opinion of Internal Counsel to the Company, Parent and Mike Mac Exhibit K Form of Assignment and Acceptance Exhibit L Form of Lender Certificate Exhibit M Form of Borrowing Base Certificate Exhibit N Form of Bailee's Consent Exhibit O Form of Landlord's Consent Exhibit P Form of Warehouseman's Consent Exhibit Q Intercreditor Agreement Exhibit R Form of Intellectual Property License Exhibit S Form of Environmental Indemnity Exhibit T Form of Confirmation 11 THIRD AMENDED AND RESTATED CREDIT AGREEMENT This THIRD AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of May 15, 2001, among DEL MONTE CORPORATION, DEL MONTE FOODS COMPANY, the several financial institutions from time to time party to this Agreement, BANK OF AMERICA, N.A. (formerly known as Bank of America National Trust and Savings Association), as administrative agent for the Lenders, THE CHASE MANHATTAN BANK, as syndication agent for the Lenders, and BANKERS TRUST COMPANY, as documentation agent for the Lenders. W I T N E S S E T H: WHEREAS, the Company, the Administrative Agent and certain of the Lenders are parties to that certain Second Amended and Restated Credit Agreement dated as of January 14, 2000 (the "Existing Credit Agreement"), which amended and restated an Amended and Restated Credit Agreement dated as of December 17, 1997 (the "First Amended and Restated Credit Agreement"), which amended and restated a Credit Agreement dated as of April 18, 1997 (the "Original Credit Agreement"); and WHEREAS, the Company, the Administrative Agent and the Lenders desire that the Existing Credit Agreement be amended and restated on the terms and conditions set forth herein to, among other things, facilitate the Tender Offers, the Consent Solicitations and the issuance of the New Subordinated Notes (as each such term is defined herein) and set forth the terms and conditions under which the Lenders hereafter will extend credit to the Company; it being the intention of the Company, the Administrative Agent and the Lenders that this Agreement and the execution and delivery of any substituted promissory notes not effect a novation of the obligations of the Company to the Lenders under the Existing Credit Agreement but merely a restatement and, where applicable, a substitution of the terms governing and evidencing such obligations hereafter; NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the Existing Credit Agreement is amended and restated to read in its entirety, and the parties agree, as follows: ARTICLE I DEFINITIONS 1.1 Certain Defined Terms. In this Agreement, including the foregoing preamble and recitals, the following terms have the following meanings: Account Debtor means any Person who is obligated to the Company or any Domestic Subsidiary under, with respect to, or on account of an Account Receivable. Account Receivable means, with respect to any Person, any right of such person to payment for goods sold or leased or for services rendered, whether or not evidenced by an instrument or chattel paper and whether or not yet earned by performance. 12 Acquired Indebtedness means mortgage Indebtedness or Indebtedness with respect to capital leases of a Person existing at the time such Person became a Subsidiary or assumed by the Company or a Subsidiary in an Acquisition permitted hereunder (and not created or incurred in connection with or in anticipation of such Acquisition); provided that such Indebtedness is purchase money Indebtedness or Indebtedness with respect to a capital lease, as the case may be, and was incurred by such Person to finance the acquisition of property or, in either case, such Indebtedness was incurred to refinance such Indebtedness, and the principal amount of such Indebtedness does not exceed the purchase price of such property. Acquisition means any transaction or series of related transactions for the purpose of, or resulting directly or indirectly in, (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of in excess of 50% of the Capital Stock, partnership interests, membership interests or equity of any Person, or otherwise causing any Person to become a Subsidiary or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary) provided that the Company or a Subsidiary is the surviving entity. Acquisition Prospect means each Person whose stock or assets is intended to be acquired in an Acquisition permitted under subsection 8.4(i) including, in each case, the assets and the liabilities thereof. Additional Term Loan -- see subsection 2.1(a). Administrative Agent means BofA in its capacity as administrative agent for the Lenders hereunder, and any successor administrative agent arising under Section 10.9. Affiliate means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities or membership interests, by contract, or otherwise. Without limiting the foregoing, any Person which is an officer, director or shareholder of the Company, or a member of the immediate family of any such officer, director or shareholder, shall be deemed to be an Affiliate of the Company. Agent-Related Persons means the Administrative Agent and any successor administrative agent arising under Section 10.9, the Issuing Lender and any successor Issuing Lender, and the Swingline Lender and any successor Swingline Lender, whether or not acting in such capacities, together with their respective Affiliates (including Banc of America Securities LLC), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. Agent's Payment Office means the address for payments set forth on Schedule 11.2 in relation to the Administrative Agent, or such other address as the Administrative Agent may from time to time specify. -2- 13 Agents means the Administrative Agent, the Syndication Agent and the Documentation Agent. Agreement means this Third Amended and Restated Credit Agreement. Agreement Currency -- see subsection 3.10(f). Applicable Base Rate Margin -- see the Pricing Schedule. Applicable Offshore Rate Margin -- see the Pricing Schedule. Arrangers means Banc of America Securities LLC, a Delaware limited liability company, JPMorgan Securities Inc., a Delaware corporation, and Deutsche Banc Alex. Brown Inc., a Delaware corporation. Assets Held For Sale means assets of the Company and its Subsidiaries listed on Schedule 2.8. Asset Sale means a sale or other disposition of assets other than in the ordinary course of business. Assigned Debt means the principal amount of all Indebtedness outstanding under the Existing Credit Agreement on the Restatement Date, immediately after giving effect to the transactions contemplated hereby, to the extent that (i) such debt is held at such time by an Exiting Lender and (ii) such Exiting Lender shall have agreed to assign such Indebtedness to the Lenders hereunder pursuant to Schedule 1.4. Assignee -- see subsection 11.8(a). Assignment and Acceptance -- see subsection 11.8(a). Attorney Costs means and includes all reasonable fees and disbursements of any law firm or other external counsel and, without duplication of effort, the allocated cost of internal legal services and all reasonable disbursements of internal counsel. Bailee's Consent means a document substantially in the form of Exhibit N, with appropriate insertions, or such other form as shall be acceptable to the Administrative Agent or Required Revolving Lenders. Bankruptcy Code means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. Section 101, et seq.). Base Rate means, for any day, the higher of: (a) 0.50% per annum above the latest Federal Funds Rate; and (b) the rate of interest in effect for such day as publicly announced from time to time by BofA in Charlotte, North Carolina as its "reference rate." (The "reference rate" is a rate set by BofA based upon various factors including BofA's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such -3- 14 announced rate.) Any change in the reference rate announced by BofA shall take effect at the opening of business on the day specified in the public announcement of such change. Base Rate Loan means a Loan that bears interest based on the Base Rate. BofA means Bank of America, N.A., a national banking association. Borrowing means a borrowing hereunder consisting of (a) Revolving Loans or Term Loans of the same Type made to the Company on the same day by the Lenders and, in the case of Offshore Rate Loans, having the same Interest Period, or (b) a Swingline Loan made to the Company by the Swingline Lender, in each case pursuant to Article II. Borrowing Base means an amount equal to the total of (a) 85% of the unpaid amount (net of such reserves and allowances as the Administrative Agent deems necessary in its sole reasonable discretion and in accordance with its customary commercial lending practices) of all Eligible Accounts Receivable plus (b) 70% of the value of all Eligible Inventory consisting of finished goods (whether labeled or unlabeled) or bulk tomato paste, valued at the lower of cost or market (net of such reserves and allowances as the Administrative Agent deems necessary in its sole reasonable discretion and in accordance with its customary commercial lending practices) plus (c) 20% of the value of all other Eligible Inventory, valued at the lower of cost or market (net of such reserves and allowances as the Administrative Agent deems necessary in its sole reasonable discretion and in accordance with its customary commercial lending practices) plus (d) an amount equal to the positive difference, if any, of (x) the aggregate cash purchase price paid by the Company and its Subsidiaries (including related fees and expenses and amounts paid to refinance Indebtedness in connection therewith but excluding the amount of cash purchase price funded with the proceeds of capital contributions to, or new equity sold by, the Company) in Acquisitions permitted under subsection 8.4(i) after the Restatement Date, to the extent funded with proceeds of Revolving Loans, minus (y) an amount equal to the average calendar month end amount of the value of accounts receivable and inventory of the business acquired in each such Acquisition (to the extent the same would have been eligible for inclusion in the Borrowing Base assuming such Acquisition had occurred a year earlier) for the year preceding such Acquisition, as it shall be reasonably determined by a Responsible Officer, in each case multiplied by the applicable advance rate, less (e) the net aggregate payables owing to growers or other suppliers of crops or produce at such time, to the extent that such payables are subject to statutory liens, trusts or priority claims (provided, that if the Company is holding any Inventory at premises leased by the Company or with a bailee or warehouseman and with respect to which the Company shall not have obtained a Landlord's Consent, Bailee's Consent or Warehouseman's Consent, as applicable, the Company may request that a reserve equal to all rent payable by the Company with respect to such property for one year from the date of determination of the reserve (in the case of leased premises) or such other reserve in respect of storage, transportation and other charges as shall be acceptable to the Administrative Agent or Required Revolving Lenders (in the case of Inventory with a bailee or warehouseman) be established, in which case such reserve shall be, if any Inventory located at such premises -4- 15 is to be included in the Borrowing Base, deducted from the Borrowing Base and such Inventory shall not, solely by virtue of clause (3), clause (4) or clause (6) of the definition of "Eligible Inventory," be deemed ineligible). Nothing in this definition providing for reserves on Accounts Receivable or Inventory shall be construed as requiring the Company to set up reserves for financial reporting purposes. Borrowing Base Certificate means a certificate substantially in the form of Exhibit M. Borrowing Date means any date on which a Borrowing occurs under Section 2.3. BTCo. means Bankers Trust Company, a New York banking corporation. Business Day means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco are authorized or required by law to close and, if the applicable Business Day relates to any Offshore Rate Loan, means such a day on which dealings are carried on in the applicable offshore Dollar interbank market. Capital Adequacy Regulation means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, of any central bank or Governmental Authority, in each case regarding capital adequacy of any bank or of any Person controlling a bank. Capital Expenditures means all expenditures which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of the Parent, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced. Capital Stock means the equity securities of any Person. Cash Collateralize means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent, the Issuing Lender and the Revolving Lenders, as additional collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the Issuing Lender (which documents are hereby consented to by the Lenders). Derivatives of such term shall have corresponding meanings. The Company hereby grants the Administrative Agent, for the benefit of the Administrative Agent, the Issuing Lender and the Revolving Lenders, a security interest in all such cash and deposit account balances. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at BofA. Cash Equivalent Investments shall mean (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged -5- 16 in support thereof) having maturities of not more than three years from the date of acquisition, (ii) marketable direct obligations issued by any State of the United States of America or any local government or other political subdivision thereof rated (at the time of acquisition of such security) at least AA by Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. ("S&P") or the equivalent thereof by Moody's Investors Service, Inc. ("Moody's") having maturities of not more than one year from the date of acquisition, (iii) time deposits (including eurodollar time deposits), certificates of deposit (including eurodollar certificates of deposit) and bankers' acceptances of (x) any Lender or any Affiliate of any Lender, (y) any commercial bank of recognized standing either organized under the laws of the United States (or any State or territory thereof) or another country (or a political subdivision thereof) which is a member of the Organization for Economic Cooperation and Development and acting through a branch or agency located in the United States, in either case having capital and surplus in excess of $250,000,000 or (z) any bank whose short-term commercial paper rating (at the time of acquisition of such security) by S&P is at least A-1 or the equivalent thereof (any such bank, an "Approved Bank"), in each case with maturities of not more than six months from the date of acquisition, (iv) commercial paper and variable or fixed rate notes issued by any Lender or Approved Bank or by the parent company of any Lender or Approved Bank and commercial paper and variable rate notes issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating (at the time of acquisition of such security) of at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's, or guaranteed by any industrial company with a long-term unsecured debt rating (at the time of acquisition of such security) of at least AA or the equivalent thereof by S&P or at least Aa or the equivalent thereof by Moody's and in each case maturing within one year after the date of acquisition and (v) repurchase agreements with any Lender or any primary dealer maturing within one year from the date of acquisition that are fully collateralized by investment instruments that would otherwise be Cash Equivalent Investments; provided that the terms of such repurchase agreements comply with the guidelines set forth in the Federal Financial Institutions Examination Council Supervisory Policy -- Repurchase Agreements of Depository Institutions With Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985. CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act of 1980. CERCLIS means the Comprehensive Environmental Response Compensation Liability Information System List. Change of Control means (i) (A) any Person or group of related persons for purposes of Section 13(d) of the Exchange Act (a "Group") (other than TPG Partners or its Affiliates) shall become the owner, directly or indirectly, beneficially or of record, of shares representing 40% or more of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock (the "Voting Stock") of the Parent and (B) TPG Partners and its Affiliates shall beneficially own, directly or indirectly, in the aggregate a lesser percentage of the Voting Stock of the Parent than such Person or Group, (ii) the replacement of a majority of the Board of Directors of the Parent over a two-year period -6- 17 from the directors who constituted the Board of Directors of the Parent at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the Board of Directors of the Parent then still in office who either were members of such Board of Directors at the beginning of such period or whose election as a member of such Board of Directors was previously so approved, (iii) the failure of the Parent to own 100% of the issued and outstanding Capital Stock of the Company free and clear of all Liens (other than Permitted Liens of the type described in subsection 8.1(b), (c) or (g)), (iv) while any Old Subordinated Notes or New Subordinated Notes are outstanding, any "Change of Control" as defined in the New Subordinated Indenture or the Old Subordinated Indenture or, while any Qualified Notes are outstanding, any "Change of Control" as defined in any Qualified Indenture or any other similar event, regardless of how designated, if the occurrence of such event would require the Company to redeem or repurchase any Qualified Notes prior to their expressed maturity or (v) while any Old Parent Discount Notes are outstanding, any "Change of Control" as defined in the Old Parent Discount Indenture. Chase means The Chase Manhattan Bank, a New York corporation. Closing Date means April 18, 1997. Code means the Internal Revenue Code of 1986. Collateral means any property of Parent, the Company or any Domestic Subsidiary upon which a security interest in favor of the Administrative Agent for the benefit of the Lender Parties is purported to be granted pursuant to any Collateral Document. Collateral Document means the Security Agreements, each Copyright Security Agreement, the Intellectual Property License, each Trademark Security Agreement, each Patent Security Agreement, each Pledge Agreement, each Mortgage and any other document pursuant to which collateral securing the liabilities of the Company, Parent or any Subsidiary under any Loan Document is granted or pledged to the Administrative Agent for the benefit of itself and the Lenders. Commercial Letter of Credit means any Letter of Credit which is drawable upon presentation of a sight draft and other documents evidencing the sale or shipment of goods purchased by the Company in the ordinary course of business. Commitment means, as to any Lender at any time, such Lender's Revolving Commitment and any Term Commitment of such Lender at such time. Commitment Date -- see subsection 2.16(b). Commitment Fee Rate -- see the Pricing Schedule. Commitment Increase -- see subsection 2.16(a). -7- 18 Common Stock means the common stock, par value $1.00 per share, of the Company. Company means Del Monte Corporation, a New York corporation and a Wholly-Owned Subsidiary of Parent. Company Pledge Agreement means the Company Pledge Agreement, dated as of the Closing Date, between the Company and the Agent, in the form of Exhibit G-2. Compliance Certificate means a certificate substantially in the form of Exhibit C. Computation Period means, any period of four consecutive fiscal quarters and in any case ending on the last day of a fiscal quarter. Consent Solicitations means the Old Subordinated Note Consent Solicitation and the Old Parent Discount Note Consent Solicitation. Consolidated Net Income means, with respect to any Person and its Subsidiaries for any period, the net income (or loss) of such Person and its Subsidiaries on a consolidated basis for such period. Notwithstanding the foregoing, "Consolidated Net Income" of the Parent shall be calculated without giving effect to any charges arising from any purchase accounting valuation adjustments over historical cost of any Person or assets acquired, as required or permitted by Accounting Principles Board Opinion Nos. 16 and 17. Contadina Acquisition means the acquisition by the Company in December 1997 of the assets constituting the Contadina canned tomato business of Nestle USA. Contingent Obligation means, as to any Person, any direct or indirect liability of such Person, whether or not contingent, with or without recourse: (a) with respect to any Indebtedness, lease, dividend, letter of credit or other obligation (the "primary obligation") of another Person (the "primary obligor"), including any obligation of such Person (i) to purchase, repurchase or otherwise acquire such primary obligation or any security therefor, (ii) to advance or provide funds for the payment or discharge of any primary obligation, or to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument (other than any Letter of Credit) issued for the account of such Person or as to which such Person is otherwise liable for reimbursement of drawings or payments; (c) to purchase any materials, supplies or other property from, or to obtain the services of, another Person if the relevant contract or other related document or obligation requires that payment for such materials, supplies or other property, or for such services, shall be made regardless of whether delivery of such materials, supplies or other property is ever made or tendered, or such services are ever performed or tendered; or (d) in respect of any Swap -8- 19 Contract. The amount of any Contingent Obligation shall, (1) in the case of Guaranty Obligations, be deemed equal to the stated or determinable amount of the primary obligation in respect of which such Guaranty Obligation is made or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof, (2) in the case of Swap Contracts, be equal to the Swap Termination Value and (3) in the case of other Contingent Obligations, be equal to the maximum reasonably anticipated liability in respect thereof. Continuing Lender means each Lender that is a party hereto on the Restatement Date and was a "Lender" (under and as defined in the Existing Credit Agreement) immediately prior to the Restatement Date. Contractual Obligation means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. Conversion/Continuation Date means any date on which, under Section 2.4, the Company (a) converts Loans of one Type to the other Type or (b) continues as Offshore Rate Loans, but with a new Interest Period, Offshore Rate Loans having Interest Periods expiring on such date. Copyright Security Agreement means a copyright security agreement in the form attached to a Security Agreement. Designated Proceeds -- see subsection 2.8(a). Documentation Agent means BTCo., in its capacity as documentation agent for the Lenders. Dollar Amount means, in relation to any Indebtedness at any time (i) denominated in Dollars, the amount of such Indebtedness, and (ii) denominated in a currency other than Dollars, the Dollar Equivalent of the amount of such Indebtedness on the last day of the immediately preceding calendar month. Dollar Equivalent means, in relation to an amount denominated in a currency other than Dollars, the amount of Dollars which could be purchased with such amount at the prevailing foreign exchange spot rate. Dollars and $ mean lawful money of the United States. Domestic Subsidiary means each Subsidiary other than a Foreign Subsidiary. EBITDA means, as to any Person for any Computation Period, the sum of (a) Consolidated Net Income of such Person for such period excluding, to the extent reflected in determining such Consolidated Net Income, extraordinary gains and losses for such period, plus -9- 20 (b) to the extent deducted in determining Consolidated Net Income and without duplication, Interest Expense, income tax expense, depreciation and amortization (including amortization of goodwill and other intangible assets) of such Person for such period, non-cash charges and losses from sales of assets other than inventory sold in the ordinary course of business (provided that in the event cash expenditures are made in such Computation Period to reduce any non-cash charges established in such Computation Period or a prior Computation Period, such cash expenditures shall be deducted to calculate EBITDA for such Computation Period), minus (c) to the extent reflected in determining Consolidated Net Income and without duplication, non-cash credits and gains of such Person from sales of assets other than inventory sold in the ordinary course of business (provided that in the event cash payments are received in such Computation Period to offset any non-cash credits established in such Computation Period or a prior Computation Period, such cash payments shall be added to calculate EBITDA for such Computation Period), plus (d) in the case of Parent, to the extent deducted in determining Consolidated Net Income of Parent and without duplication, management incentive payments in connection with the DMFC Recapitalization (as defined in the First Amended and Restated Credit Agreement) and other fees and expenses in connection with the DMFC Recapitalization, the Contadina Acquisition, the Refinancing Transactions and Acquisitions permitted under subsection 8.4(i); provided that for purposes of calculating EBITDA of Parent for any period (1) the EBITDA (as calculated pursuant to clauses (a), (b), (c) and (d) above) of any Person, or attributable to any assets, acquired by the Company or any Subsidiary during such period shall be included on a pro forma basis for such period (assuming the consummation of each such acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred on the first day of such period, and including any pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act) if (i) either (x) the audited consolidated balance sheet of such acquired Person and its consolidated Subsidiaries as at the end of the fiscal year of such Person preceding the acquisition of such Person and the related audited consolidated statements of income, stockholders' equity and cash flows for such fiscal year have been provided to the Administrative Agent and the Lenders and have been reported on without a qualification arising from the scope of the audit or a "going concern" or like qualification or exception or (y) such other financial information furnished to the Lenders with respect to such period and such acquisition has been found acceptable by the Required Lenders and (ii) either (x) any subsequent unaudited financial statements for such Person for the period prior to the acquisition of such Person were prepared on a basis consistent with such audited financial statements, have been provided to the Administrative Agent and the Lenders and have been reported on without a qualification arising from the scope of the audit or a "going concern" or like qualification or (y) such other financial information furnished to the Lenders with respect to such period and such acquisition has been found acceptable by the Required Lenders and (2) the EBITDA (as calculated pursuant to clauses (a), (b), (c) and (d) above) of any Person, or attributable to any division or similar business unit, disposed of by the Company or any Subsidiary in an Asset Sale during -10- 21 such period will be excluded on a pro forma basis for such period (assuming the consummation of each such Asset Sale occurred on the first day of such period). Effective Amount means, (a) with respect to any Revolving Loans, Swingline Loans and Term Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any Borrowings and prepayments or repayments of Revolving Loans, Swingline Loans and Term Loans occurring on such date, and (b) with respect to any outstanding L/C Obligations on any date (i) the amount of such L/C Obligations on such date after giving effect to any Issuances of Letters of Credit occurring on such date, (ii) the amount of any undrawn Commercial Letters of Credit which have expired less than 15 days prior to such date and (iii) any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letter of Credit or any reduction in the maximum amount available for drawing under Letters of Credit taking effect on such date. Eligible Account Receivable means an Account Receivable owing to the Company or any Domestic Subsidiary which meets the following requirements: (1) it arises from the sale of goods or the rendering of services by the Company or such Domestic Subsidiary; and if it arises from the sale of goods, (i) such goods comply in all material respects with such Account Debtor's specifications (if any) and have been shipped to such Account Debtor (other than "bill and hold" Accounts Receivable that are not ineligible under clause (6)) and (ii) the Company has possession of, or if requested by the Administrative Agent has delivered to the Administrative Agent, shipping receipts evidencing such shipment; (2) it (a) is subject to a perfected Lien in favor of the Administrative Agent and (b) is not subject to any other assignment, claim or Lien (other than Permitted Liens of the type described in subsections 8.1(c) and (g) and statutory nonconsensual Liens in favor of growers); (3) it is a valid, legally enforceable and unconditional obligation of the Account Debtor with respect thereto, and is not subject to any counterclaim, credit, allowance, discount, rebate or adjustment by the Account Debtor with respect thereto, or to any claim by such Account Debtor denying liability thereunder in whole or in part, and such Account Debtor has not refused to accept any of the goods which are the subject of such Account Receivable or offered or attempted to return any of such goods (provided, that in the event any counterclaim, credit, allowance, rebate or adjustment is asserted, or discount is granted, the Account Receivable shall only be ineligible pursuant to this clause (3) to the extent of the same); (4) there is no Insolvency Proceeding by or against the Account Debtor with respect thereto; (5) the Account Debtor with respect thereto is a resident or citizen of, and is located within, the United States or a province of Canada in which the Personal Property Security Act is in effect, unless (x) the sale of goods giving rise to such Account -11- 22 Receivable is on letter of credit, banker's acceptance or other credit support terms reasonably satisfactory to the Administrative Agent or (y) such Account Receivable is payable by Plaza Provision, a Puerto Rico corporation, or such other Account Debtors in Puerto Rico, or any other territory or possession of the U.S. which has adopted Article 9 of the Uniform Commercial Code or as may be approved by the Administrative Agent or the Required Revolving Lenders; (6) it is not an Account Receivable arising from a "sale on approval," "sale or return," "consignment" or "bill and hold" or subject to any other repurchase or return agreement (provided, that "bill and hold" Accounts Receivable shall not be ineligible solely by virtue of this clause (6) if subject to a written agreement reasonably acceptable to the Administrative Agent or the Required Revolving Lenders to the effect that the related Account Debtor's payment obligation is irrevocable); (7) it is not an Account Receivable with respect to which possession and/or control of the goods sold giving rise thereto is held, maintained or retained by the Company or any Subsidiary (or by any agent or custodian of the Company or any Subsidiary) for the account of or subject to further and/or future direction from the Account Debtor with respect thereto; (8) it arises in the ordinary course of business of the Company or such Domestic Subsidiary; (9) if the Account Debtor is the United States or any department, agency or instrumentality thereof, the Company or the applicable Domestic Subsidiary has assigned its right to payment of such Account Receivable to the Administrative Agent pursuant to the Assignment of Claims Act of 1940, provided, however, that any Accounts Receivable arising out of business conducted by the Company consistent with business conducted prior to the Restatement Date shall not be subject to this clause (9); (10) if the Company or such Domestic Subsidiary maintains a credit limit for an Account Debtor, the aggregate dollar amount of Accounts Receivable due from such Account Debtor, including such Account Receivable, does not exceed such credit limit (provided, that (i) the Company may grant exceptions to such credit limits consistent with past practice and in the ordinary course of business and (ii) only the amount in excess of the credit limit shall be ineligible under this clause (10)); (11) if the Account Receivable is evidenced by chattel paper or an instrument, the originals of such chattel paper or instrument shall have been endorsed and/or assigned and delivered to the Administrative Agent in a manner reasonably satisfactory to the Administrative Agent; (12) such Account Receivable is not more than (a) 60 days past the due date thereof or (b) 120 days past the original invoice date thereof, in each case according to the original terms of sale; (13) it is not an Account Receivable with respect to an Account Debtor that is located in any jurisdiction which has adopted a statute or other requirement with respect -12- 23 to which any Person that obtains business from within such jurisdiction must file a business activity report or make any other required filings in a timely manner in order to enforce its claims in such jurisdiction's courts unless such business activity report has been duly and timely filed or the Company is exempt from filing such report and has provided the Administrative Agent with satisfactory evidence of such exemption; and (14) it is not owed by an Account Debtor if (x) 30% or more of the aggregate Dollar amount of outstanding Accounts Receivable owed at such time by such Account Debtor is classified as ineligible under clause (12) of this definition or (y) the aggregate Dollar amount of all Accounts Receivable owed by the Account Debtor thereon exceeds 20% of the aggregate amount of all Accounts Receivable at such time (but only, in the case of this clause (y), to the extent of such excess). An Account Receivable which is at any time an Eligible Account Receivable, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be an Eligible Account Receivable. Further, with respect to any Account Receivable, if the Administrative Agent or the Required Revolving Lenders at any time hereafter determine in its or their reasonable discretion and in accordance with its or their customary commercial lending practices that the prospect of payment or performance by the Account Debtor with respect thereto is materially impaired for any reason whatsoever, such Account Receivable shall cease to be an Eligible Account Receivable after notice of such determination is given to the Company. Eligible Assignee means (i) an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933 (other than the Company or an Affiliate of the Company), (ii) a Lender, (iii) an Affiliate of a Lender (provided such Affiliate is an "accredited investor"), (iv) any fund that invests in bank loans that is managed by the same investment adviser as another Lender that is such a fund or by an Affiliate of such investment adviser (provided such assignee fund is an "accredited investor") or (v) any investment adviser of any Lender which is a fund (provided that (A) such investment adviser is an "accredited investor" and is acting with discretion, or (B) if such investment adviser is not acting with discretion, then each of such investment adviser and such fund shall be an "accredited investor"). Eligible Inventory means Inventory which meets the following requirements: (1) it (a) is subject to a perfected Lien in favor of the Administrative Agent and (b) is not subject to any other assignment, claim or Lien (other than Permitted Liens of the type described in subsections 8.1(c) and (g) and statutory nonconsensual Liens in favor of growers) (provided, that if the Company has not delivered any Bailee's Consent, Warehouseman's Consent or Landlord's Consent but the Administrative Agent has established adequate reserves in respect thereof under the definition of "Borrowing Base" any claim or Lien of the related bailee, warehouseman or landlord, if it is a Permitted Lien, shall not cause the Inventory kept at such location to be ineligible solely by virtue of this clause (1)); -13- 24 (2) it is (except as the Required Revolving Lenders may otherwise consent in writing) salable; (3) except as provided in clause (4) below or as the Required Revolving Lenders may otherwise consent, it is in the possession and control of the Company or the relevant Domestic Subsidiary and it is stored and held in facilities owned by the Company or the relevant Domestic Subsidiary or, if such facilities are not so owned, leased to the Company or the relevant Domestic Subsidiary and with respect to which the Administrative Agent has received a Landlord's Consent (unless a reserve with respect thereto has been established by the Administrative Agent in accordance with the proviso in the definition of "Borrowing Base") (provided that no Landlord's Consents shall be required with respect to Inventory acquired in any Acquisition permitted under subsection 8.4(i) for the first 60 days after the closing of such Acquisition); (4) if it is in the possession or control of a bailee, warehouseman or processor, the Administrative Agent is in possession of a Bailee's Consent, Warehouseman's Consent or such other agreements, instruments and documents as the Administrative Agent may reasonably require in good faith, including warehouse receipts in the Administrative Agent's name covering such Inventory (unless a reserve with respect thereto has been established by the Administrative Agent in accordance with the proviso in the definition of "Borrowing Base") (provided that no Bailee's Consents shall be required with respect to Inventory acquired in any Acquisition permitted under subsection 8.4(i) for the first 60 days after the closing of such Acquisition); (5) it is not Inventory produced in violation of the Fair Labor Standards Act and subject to the "hot goods" provisions contained in Title 29 U.S.C. Section 215; (6) it is not subject to any agreement which would restrict the Administrative Agent's ability to sell or otherwise dispose of such Inventory (provided, that if the Company has not delivered any Bailee's Consent, Warehouseman's Consent or Landlord's Consent and has established adequate reserves in respect thereof under the definition of "Borrowing Base", any agreement entered into in the ordinary course of business with such bailee, warehouseman or landlord shall not render the Inventory kept at such location to be ineligible solely by virtue of this clause (6)); (7) it is located in the United States or in any territory or possession of the United States that has adopted Article 9 of the Uniform Commercial Code or as may be approved by the Administrative Agent or Required Revolving Lenders; (8) it is not "in transit" to the Company or the relevant Domestic Subsidiary or held by the Company or the relevant Domestic Subsidiary on consignment; and (9) the Administrative Agent (or Required Revolving Lenders) shall not have determined (which determination shall be effective upon notice to the Company) in its (or their) reasonable discretion and in accordance with its (or their) customary commercial lending practices that it is unacceptable due to age, type, category, quality, quantity and/or any other reason whatsoever. -14- 25 Inventory which is at any time Eligible Inventory but which subsequently fails to meet any of the foregoing requirements shall forthwith cease to be Eligible Inventory. Environmental Claims means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability under any Environmental Law or responsibility for violation of any Environmental Law, or for release or injury to the environment. Environmental Indemnity means an unsecured environmental indemnity in the form of Exhibit S in favor of the Administrative Agent. Environmental Laws means CERCLA, the Resource Conservation and Recovery Act and all other federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes relating to pollution or protection of public or employee health or the environment, together with all administrative orders, consent decrees, licenses, authorizations and permits of any Governmental Authority implementing them. ERISA means the Employee Retirement Income Security Act of 1974. ERISA Affiliate means any trade or business (whether or not incorporated) under common control with the Company within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). ERISA Event means: (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a substantial cessation of operations which is treated as such a withdrawal; (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any material liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate. Event of Default means any of the events or circumstances specified in Section 9.1. Excess Cash Flow means, for any period, the remainder of -15- 26 (a) EBITDA of Parent for such period (without giving effect to any amount included in such EBITDA on a pro forma basis solely by virtue of the proviso to the definition of "EBITDA"), less (b) the sum, without duplication, of (i) repayments of principal of Term Loans pursuant to Section 2.9, regularly scheduled principal payments arising with respect to any other long-term Indebtedness of the Company and its Subsidiaries, and the portion of any regularly scheduled payments with respect to capital leases allocable to principal, in each case made during such period, plus (ii) voluntary prepayments of the Term Loans pursuant to Section 2.7 during such period, plus (iii) cash payments made in such period with respect to Capital Expenditures, plus (iv) all federal, state, local and foreign income taxes paid by the Company and its Subsidiaries during such period, plus (v) (cash Interest Expense of the Company and its Subsidiaries during such period and, to the extent not deducted in determining EBITDA of Parent, cash payments (other than payments of principal) made by the Company in connection with prepayments and repayments of Term Loans under clauses (b)(i) and (b)(ii) above, plus (vi) cash dividends of the Company permitted under subsection 8.16(e) or (f) made in such period, plus (vii) cash payments made by the Company and its Subsidiaries in respect of pension liability, workers' compensation and other post-employment benefits to the extent such payments exceed book expenses for such items reflected in the calculation of EBITDA, plus (viii) cash payments made by Parent and its Subsidiaries during such period in respect of fees and expenses in connection with Acquisitions permitted under subsection 8.4(i) and the amendment and restatement of the Existing Credit Agreement. Exchange Act means the Securities Exchange Act of 1934. Excluded Taxes -- see the definition of "Taxes." Existing Credit Agreement -- see the recitals. Exiting Lender -- see subsection 1.4(a). -16- 27 Federal Funds Rate means, for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, "H.15 (519)") on the preceding Business Day opposite the caption "Federal Funds (Effective)"; or, if for any relevant day such rate is not so published on any such preceding Business Day, the rate for such day will be the arithmetic mean as determined by the Administrative Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrative Agent. Fee Letter -- see subsection 2.11(a). Fixed Charge Coverage Ratio means, for any Computation Period, the ratio of (a) (i) EBITDA of Parent for such Computation Period minus (ii) Capital Expenditures made during such Computation Period to (b) the sum of (i) Interest Expense of Parent payable in cash for such Computation Period (excluding, for purposes of this definition, any Interest Expense attributable to the Old Parent Discount Notes) plus (ii) the scheduled installments of principal of the Term Loans for such Computation Period (excluding therefrom the last four scheduled installments of principal of Term Loans to the extent that such installments are refinanced with Indebtedness maturing after, and having no mandatory prepayments or sinking fund payments prior to, May 15, 2008 and giving effect to any reduction of such scheduled installments by virtue of the application of any prepayments or repayments made which reduce scheduled installments pro rata or in inverse order of maturity pursuant to Section 2.7 or 2.8) plus (iii) cash income taxes of Parent and its Subsidiaries paid during such period (other than income taxes on income arising directly from Asset Sales); provided that, to the extent that any Acquisition or any Asset Sale of a Person or a division or similar business unit occurred during such Computation Period, all items in clauses (a)(i), (a)(ii), (b)(i), (b)(ii) and (b)(iii) shall be calculated on a pro forma basis as if each such Acquisition or Asset Sale of a Person or a division or similar business unit occurred prior to the first day of such Computation Period. Foreign Subsidiary shall mean each Subsidiary of the Company organized under the laws of any jurisdiction other than the United States or any state thereof. FRB means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. Further Taxes means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges (including net income taxes and franchise taxes), and all liabilities with respect thereto, imposed by any jurisdiction on account of amounts paid or payable pursuant to Section 4.1 other than Excluded Taxes (as defined below under the definition of "Taxes"). GAAP means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements -17- 28 of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. Governmental Authority means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. Guaranteed Obligations means (i) all Obligations owing by the Company or any Subsidiary (including post-petition interest) and (ii) all Permitted Swap Obligations (monetary or otherwise) of the Company under any Swap Contract with a Lender Party (other than Swap Contracts that, by their terms, are unsecured); provided that the term "Guaranteed Obligations" shall not include any obligations arising under any Environmental Indemnity. Guarantor means Parent and each Subsidiary that from time to time executes and delivers a counterpart of the Subsidiary Guaranty. Guaranty Obligation has the meaning specified in the definition of Contingent Obligation. Hazardous Material means (a) any "hazardous substance", as defined by CERCLA; (b) any "hazardous waste", as defined by the Resource Conservation and Recovery Act; (c) any petroleum product; or (d) any pollutant or contaminant or hazardous or toxic chemical, material or substance within the meaning of any other Environmental Law. Honor Date -- see subsection 3.3(b). Increase Date -- see subsection 2.16(a). Increasing Lender -- see subsection 2.16(c). Indebtedness of any Person means, without duplication: (a) all indebtedness of such Person for borrowed money; (b) all obligations issued, undertaken or assumed by such Person as the deferred purchase price of property or services (other than trade payables entered into and accrued expenses arising in the ordinary course of business on ordinary terms); (c) all non-contingent reimbursement or payment obligations with respect to Surety Instruments; (d) all obligations of such Person evidenced by notes, -18- 29 bonds, debentures or similar instruments; (e) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to property acquired by such Person (even though 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); (f) all obligations of such Person with respect to capital leases; (g) all indebtedness referred to in clauses (a) through (f) above 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 in property (including Accounts Receivable and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; and (h) all Guaranty Obligations of such Person in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above. Indemnified Liabilities -- see Section 11.5. Indemnified Person -- see Section 11.5. Independent Auditor -- see subsection 7.1(a). Insolvency Proceeding means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person's creditors generally or any substantial portion of such creditors; in each case undertaken under any U.S. Federal, State or foreign law, including the Bankruptcy Code. Intellectual Property -- see Section 6.14. Intellectual Property License means the Intellectual Property License, substantially in the form of Exhibit R, between the Company and the Administrative Agent dated as of the Closing Date. Intercreditor Agreement means the Amended and Restated Intercreditor Agreement, dated as of December 5, 1989, among certain Creditors (as therein defined), a copy of which is attached hereto as Exhibit Q. Interest Coverage Ratio means, for any Computation Period, the ratio of (a) EBITDA of Parent for such Computation Period to (b) Interest Expense of Parent payable in cash for such Computation Period; provided that, to the extent that any Acquisition or any Asset Sale of a Person or a division or similar business unit occurred during such Computation Period, all items in clauses (a) and (b) shall be calculated on a pro forma basis as if each such Acquisition or Asset Sale of a Person or a division or similar business unit occurred prior to the first day of such Computation Period. -19- 30 Interest Expense means, as to any Person for any period, the consolidated interest expense of such Person and its Subsidiaries for such period (including all imputed interest on capital leases) excluding amortization or write-off of deferred financing costs. Interest Payment Date means (i) as to any Offshore Rate Loan, the last day of each Interest Period applicable to such Loan and, in the case of any Offshore Rate Loan with a six-month Interest Period, the three-month anniversary of the first day of such Interest Period, and (ii) as to any Base Rate Loan, the last Business Day of each fiscal quarter. Interest Period means, as to any Offshore Rate Loan, the period commencing on the Borrowing Date of such Loan or on the Conversion/Continuation Date on which the Loan is converted into or continued as an Offshore Rate Loan, and ending one, two, three or six months thereafter, as selected by the Company in its Notice of Borrowing or Notice of Conversion/Continuation; provided that: (i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day; (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; (iii) no Interest Period applicable to a Term Loan or any portion of any thereof shall extend beyond any date upon which is due any scheduled principal payment in respect of the Term Loans unless the aggregate principal amount of Term Loans represented by Base Rate Loans, or by Offshore Rate Loans having Interest Periods that will expire on or before such date, equals or exceeds the amount of such principal payment; and (iv) no Interest Period for any Revolving Loan shall extend beyond the Revolving Termination Date. Inventory means any and all of the goods of the Company or a Domestic Subsidiary, wheresoever located, that are held for sale or held as raw materials, work in process or materials used or consumed in the business of the Company or the applicable Domestic Subsidiary. IRS means the Internal Revenue Service, and any Governmental Authority succeeding to any of its principal functions under the Code. Issuance Date -- see subsection 3.1(a). -20- 31 Issue means, with respect to any Letter of Credit, to issue or amend such Letter of Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding meanings. Issuing Lender means BofA in its capacity as issuer of one or more Letters of Credit hereunder, together with any replacement letter of credit issuer arising under subsection 10.1(b) or Section 10.9, or any successor thereto acceptable to the Company, the Administrative Agent and the predecessor Issuing Lender. Joint Venture means a corporation, partnership, limited liability company, joint venture or other similar legal arrangement (whether created by contract or conducted through a separate legal entity) which is not a Subsidiary of the Company or any of its Subsidiaries and which is now or hereafter formed by the Company or any of its Subsidiaries with another Person in order to conduct a common venture or enterprise with such Person. Judgment Currency -- see subsection 3.10(f). Landlord's Consent means a document substantially in the form of Exhibit O, with appropriate insertions, or such other form as shall be acceptable to the Administrative Agent or Required Revolving Lenders. L/C Advance means each Revolving Lender's participation in any L/C Borrowing in accordance with its Revolving Percentage. L/C Amendment Application means an application form for amendment of an outstanding standby or commercial documentary letter of credit as shall at any time be in use at the Issuing Lender, as the Issuing Lender shall request. L/C Application means an application form for issuances of a standby or commercial documentary letter of credit as shall at any time be in use at the Issuing Lender, as the Issuing Lender shall request. L/C Borrowing means an extension of credit resulting from a drawing under any Letter of Credit which shall not have been reimbursed on the date when made nor converted into a Borrowing of Revolving Loans under subsection 3.3(c). L/C Commitment means the commitment of the Issuing Lender to Issue, and the commitments of the Revolving Lenders severally to participate in, Letters of Credit from time to time Issued or outstanding under Article III, in an aggregate amount not to exceed on any date the lesser of $70,000,000 and the amount of the aggregate amount of all Revolving Commitments; it being understood that the L/C Commitment is a part of the Revolving Commitments, rather than a separate, independent commitment. L/C Fee Rate -- see the Pricing Schedule. L/C Obligations means at any time the sum of (a) the aggregate undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of all unreimbursed drawings under all Letters of Credit, including all outstanding L/C Borrowings. -21- 32 L/C-Related Documents means the Letters of Credit, the L/C Applications, the L/C Amendment Applications and any other document relating to any Letter of Credit, including any of the Issuing Lender's standard form documents for letter of credit issuances. Lenders means the several financial institutions from time to time party to this Agreement. References to the "Lenders" shall include BofA in its capacity as the Issuing Lender and BofA in its capacity as Swingline Lender; for purposes of clarification only, to the extent that the Swingline Lender or the Issuing Lender may have any rights or obligations in addition to those of the other Lenders due to its status as Swingline Lender or Issuing Lender, its status as such will be specifically referenced. Lender Party means (i) any Lender or any Agent or (ii) any Affiliate of any Lender that is party to a Swap Contract with the Company. Lending Office means, as to any Lender, the office or offices of such Lender specified as its "Lending Office" or "Domestic Lending Office" or "Offshore Lending Office", as the case may be, on Schedule 11.2, or such other office or offices as such Lender may from time to time specify to the Company and the Administrative Agent. Letters of Credit means any letters of credit (whether standby letters of credit or commercial documentary letters of credit) Issued by the Issuing Lender pursuant to Article III. Liabilities means (i) all Obligations owing by the Company, Parent or any Subsidiary (including post-petition interest) and (ii) all Permitted Swap Obligations (monetary or otherwise) of the Company under any Swap Contract with a Lender Party (other than Swap Contracts that, by their terms, are unsecured); provided, however, that the term "Liabilities" shall not include any obligations arising under any Environmental Indemnity. Lien means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, or any financing lease having substantially the same economic effect as any of the foregoing, but not including the interest of a lessor under an operating lease). Loan means an extension of credit by a Lender to the Company under Article II or Article III in the form of a Revolving Loan, Term Loan, Swingline Loan or L/C Advance. Each Revolving Loan and each Term Loan may be divided into tranches which are Base Rate Loans or Offshore Rate Loans (each a "Type" of Loan). For purposes of greater clarity, a conversion of one Type of Loan to the other Type or the continuation of an Offshore Rate Loan into a different Interest Period is not the making of a "Loan" hereunder. -22- 33 Loan Documents means this Agreement, any Notes, the Fee Letter, the fee letter delivered to BofA in connection with this Agreement, the L/C-Related Documents, the Subsidiary Guaranty, the Collateral Documents and all other documents delivered to the Administrative Agent or any Lender in connection herewith or therewith. Mandatory Prepayment Event -- see subsection 2.8(a). Margin Stock means "margin stock" as such term is defined in Regulation T, U or X of the FRB. Material Adverse Effect means: (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of the Company and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Company, Parent or any Subsidiary to perform any of its obligations under any Loan Document; (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Company, Parent or any Subsidiary of any Loan Document; or (d) a material adverse effect upon the Lien of any Collateral Document or a material impairment of the rights, powers and remedies of the Administrative Agent or any Lender under any Loan Document. Material Subsidiary means a Subsidiary of the Company that meets any of the following criteria: (i) the assets of such Subsidiary and its Subsidiaries exceed 3% of the consolidated assets (giving effect to intercompany eliminations) of the Company and its Subsidiaries; (ii) the revenues of such Subsidiary and its Subsidiaries for any fiscal quarter exceed 3% of the consolidated revenues (giving effect to intercompany eliminations) of the Company and its Subsidiaries for such period; or (iii) the investments of the Company and its other Subsidiaries in and advances to such Subsidiary and its Subsidiaries exceed 3% of the consolidated assets (giving effect to intercompany eliminations) of the Company and its Subsidiaries. Mike Mac means Mike Mac IHC, Inc., a Delaware corporation and a Subsidiary. Mortgage means a mortgage, leasehold mortgage, deed of trust or similar document granting a Lien on real property in appropriate form for filing or recording in the applicable jurisdiction and otherwise reasonably satisfactory to the Administrative Agent. Multiemployer Plan means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, with respect to which the Company or any ERISA Affiliate may have any liability. Net Cash Proceeds means: -23- 34 (a) with respect to the sale, transfer, or other disposition by the Company or any Subsidiary of any asset (including any stock of any Subsidiary or any Accounts Receivable pursuant to a Permitted Receivables Facility), the aggregate cash proceeds (including cash proceeds received by way of deferred payment of principal pursuant to a note, installment receivable or otherwise, but only as and when received) received by the Company or any Subsidiary pursuant to such sale, transfer or other disposition, net of (i) the direct costs relating to such sale, transfer or other disposition (including sales commissions and legal, accounting and investment banking fees), (ii) taxes paid or reasonably estimated by the Company to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) amounts required to be applied to the repayment of any Indebtedness secured by a Lien on the asset subject to such sale, transfer or other disposition (other than the Loans) and (iv) 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 sale, transfer or other disposition and retained by the Company or any Subsidiary, as the case may be, after such sale, transfer or other disposition, including pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such sale, transfer or other disposition (provided that, if and to the extent that such reserves are no longer required to be maintained in accordance with GAAP, such amounts shall constitute Net Cash Proceeds, to the extent such amounts would have otherwise constituted Net Cash Proceeds under this clause (a)); and (b) with respect to any issuance of equity securities or Other Debt, the aggregate cash proceeds received by Parent, the Company or any Subsidiary pursuant to such issuance, net of the direct costs relating to such issuance (including sales and underwriter's commissions, private placement fees and legal, accounting and investment banking fees). New Lender -- see subsection 2.16(e). New Subordinated Indenture means the indenture governing the New Subordinated Notes, as amended from time to time in accordance with Section 8.22. New Subordinated Note Purchase Agreement means the Placement Agreement dated as of May 3, 2001, relating to the New Subordinated Notes, as amended from time to time in accordance with Section 8.22. New Subordinated Notes means the $300,000,000 9 1/4% Senior Subordinated Notes due May 15, 2011 of the Company issued under the New Subordinated Indenture (including both the initial New Subordinated Notes and the Series B New Subordinated Notes as set forth in the New Subordinated Indenture), as amended from time to time in accordance with Section 8.22. Non-Dollar Letter of Credit -- see Section 3.10. -24- 35 Note means a promissory note executed by the Company in favor of a Lender pursuant to subsection 2.2(b), in substantially the form of Exhibit D. Notice of Borrowing means a notice in substantially the form of Exhibit A. Notice of Conversion/Continuation means a notice in substantially the form of Exhibit B. Obligations means all advances, debts, liabilities, obligations, covenants and duties arising under any Loan Document owing by the Company, Parent or any Subsidiary to any Lender, the Administrative Agent or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, or now existing or hereafter arising; provided, that "Obligations" shall not include any obligations under any Environmental Indemnity. Offshore Rate means, for any Interest Period, with respect to Offshore Rate Loans comprising part of the same Borrowing, the rate of interest per annum (rounded upward, if necessary, to the next 1/16th of 1%) determined by the Administrative Agent as follows: Offshore Rate = IBOR -------------------------------- 1.00 - Eurodollar Reserve Percentage Where, "Eurodollar Reserve Percentage" means for any day for any Interest Period the maximum reserve percentage (expressed as a decimal, rounded upward, if necessary, to the next 1/100th of 1%) in effect on such day (whether or not applicable to any Lender) under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"); and "IBOR" means the rate of interest per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 a.m., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate Service (or otherwise on such service), "IBOR" for purposes of this definition shall be determined by the Administrative Agent as the rate at which Dollar deposits in the approximate amount of BofA's Offshore Rate Loan for such Interest Period would be offered by BofA's Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may be designated for such purpose by BofA), to major banks in the offshore dollar interbank market at their request at approximately 11:00 a.m. (New York City time) two Business Days prior to the commencement of such Interest Period. -25- 36 The Offshore Rate shall be adjusted automatically as to all Offshore Rate Loans then outstanding as of the effective date of any change in the Eurodollar Reserve Percentage. Offshore Rate Loan means a Loan that bears interest based on the Offshore Rate. Old Parent Discount Note Consents means each written consent permitting the Parent to enter into the Old Parent Discount Note Supplemental Indenture from a holder of one or more Old Parent Discount Notes. Old Parent Discount Note Consent Solicitation means the solicitation by the Company of Old Parent Discount Note Consents to amend the Old Parent Discount Note Indenture pursuant to the Tender Offer Documents. Old Parent Discount Note Indenture means the Indenture dated as of December 17, 1997, pursuant to which the Old Parent Discount Notes were issued, between the Parent and the Old Parent Discount Note Trustee, as amended from time to time in accordance with Section 8.22. Old Parent Discount Note Supplemental Indenture means a supplemental indenture with respect to the Old Parent Discount Note Indenture to be executed by the Parent and the Old Parent Discount Note Trustee on or prior to the Restatement Date whereby Sections 4.03 through 4.13, 4.16 through 4.22, 5.01, 6.01(4), 6.01(5) and 6.01(8) of the Old Parent Discount Note Indenture will be deleted therefrom. Old Parent Discount Note Tender Offer means the offer by the Company to purchase for cash all of the Old Parent Discount Notes, to be effected pursuant to the Tender Offer Documents. Old Parent Discount Note Trustee means HSBC Bank USA, in its capacity as trustee under the Old Parent Discount Note Indenture, or any successor trustee appointed in accordance with the Old Parent Discount Note Indenture. Old Parent Discount Notes means the $149,500,000 aggregate face amount at maturity of 12.5% Series B Senior Discount Notes due 2007 of Parent. Old Subordinated Indenture means the Indenture, dated as of April 18, 1997, pursuant to which the Old Subordinated Notes were issued, among the Company, Parent, as guarantor, and the Old Subordinated Note Trustee, as amended from time to time in accordance with Section 8.22. Old Subordinated Note Consents means each written consent permitting the Company to enter into the Old Subordinated Note Supplemental Indenture from a holder of one or more Old Subordinated Notes. Old Subordinated Note Consent Solicitation means the solicitation by the Company of Old Subordinated Note Consents to amend the Old Subordinated Indenture pursuant to the Tender Offer Documents. -26- 37 Old Subordinated Note Purchase Agreement means the Purchase Agreement dated as of April 15, 1997 relating to the Old Subordinated Notes, as amended from time to time in accordance with Section 8.22. Old Subordinated Note Supplemental Indenture means a supplemental indenture with respect to the Old Subordinated Indenture to be executed by the Company, each guarantor of the Old Subordinated Notes and the Old Subordinated Note Trustee on or prior to the Restatement Date whereby Sections 4.03 through 4.14, 4.16 through 4.20, 5.01, 5.03, 6.01(4), 6.01(5) and 6.01(8) of the Old Subordinated Indenture will be deleted therefrom. Old Subordinated Note Tender Offer means the offer by the Company to purchase for cash all of the Old Subordinated Notes, to be effected pursuant to the Tender Offer Documents. Old Subordinated Note Trustee means HSBC Bank USA, in its capacity as trustee under the Old Subordinated Indenture, or any successor trustee appointed in accordance with the Old Subordinated Indenture. Old Subordinated Notes means the 12-1/4% Series B Senior Subordinated Notes due April 15, 2007 of the Company issued under the Old Subordinated Indenture, as amended from time to time in accordance with Section 8.22. Organization Documents means, (a) for any domestic corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation, any shareholder rights agreement, and all applicable resolutions of the board of directors (or any committee thereof) of such corporation and (b) for any foreign corporation, the equivalent documents. Original Credit Agreement -- see the recitals. Other Debt means debt securities of the Company and its Subsidiaries, other than as expressly permitted by Section 8.5. Other Taxes means any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, this Agreement or any other Loan Document. Overnight Rate -- see subsection 3.10(g). Parent means Del Monte Foods Company, a Delaware corporation. Parent Pledge Agreement means the Parent Pledge Agreement, dated as of the Closing Date, between the Parent and the Administrative Agent, a copy of which is attached as Exhibit G-1. -27- 38 Participant -- see subsection 11.8(c). Patent Security Agreement means a patent security agreement in the form attached to a Security Agreement. PBGC means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under ERISA. Pension Plan means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA with respect to which the Company or any ERISA Affiliate may have any liability other than a Multiemployer Plan. Permitted Liens -- see Section 8.1. Permitted Liability Management Swap means one or more Swap Contracts, in form and substance reasonably satisfactory to the Administrative Agent, with a term not beyond May 15, 2004, which are entered into when no Event of Default or Unmatured Event of Default exists or would result therefrom, whereby (x) the Company enters into an interest rate protection agreement with respect to not more than $10,000,000 of New Subordinated Notes or Qualified Notes whereby the effective interest rate on such principal amount of New Subordinated Notes or Qualified Notes is set at a floating rate, rather than a fixed rate and (y) the Company and the related swap counterparty enter into a "total return" swap with respect to not more than $10,000,000 of New Subordinated Notes or Qualified Notes (that is, the related swap counterparty purchases the principal amount of New Subordinated Notes or Qualified Notes subject to such swap transaction, and the Company agrees to pay such counterparty for losses caused to such counterparty by any depreciation in the market price of the New Subordinated Notes or Qualified Notes subject to such Swap Contracts during the period from the time such Swap Contracts were entered into to the time such Swap Contracts are terminated and such counterparty agrees to pay the Company the amount of any gain caused by any appreciation in the market price of the New Subordinated Notes or Qualified Notes subject to such Swap Contracts during the period from the time such Swap Contracts were entered into to the time such Swap Contracts are terminated); provided that, in the event the Company has repurchased or redeemed any New Subordinated Notes or Qualified Notes under subsection 8.16(g), the maximum Dollar amounts set forth above in this definition shall be reduced by the amount of New Subordinated Notes or Qualified Notes so repurchased or redeemed. Permitted Receivables Facility means any receivables financing facility arrangement entered into by the Company providing for the discount, sale or other transfer of its Accounts Receivable on a nonrecourse basis for a transfer price at least equivalent to the advance rate on such Accounts Receivable hereunder and otherwise on terms and conditions (including repurchase provisions) satisfactory to the Required Lenders. Permitted Security Agreements means the Intellectual Property Security Agreements and Assignments between the Company and Wafer Limited and the -28- 39 Company and Del Monte Tropical Fruit Company, North America, each dated December 5, 1989, the Intellectual Property Security Agreement and Assignment dated as of January 9, 1990 between the Company and Kikkoman Corporation, the Intellectual Property Security Agreement and Assignment dated as of May 9, 1990 between the Company and Del Monte Foods Limited, the Intellectual Property Security Agreement and Assignment dated as of May 9, 1990 between the Company and Del Monte International, Inc., and any other security agreement between the Company and a licensee of Intellectual Property to secure the damages, if any, of such licensee resulting from the rejection of the license of such licensee in a bankruptcy, reorganization or similar proceeding with respect to the Company; provided that each such Permitted Security Agreement shall be subject to the Intercreditor Agreement. Permitted Swap Obligations means all obligations (contingent or otherwise) of the Company or any Subsidiary existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view" (provided that obligations in respect of a Permitted Liability Management Swap shall not be excluded from the definition of "Permitted Swap Obligations" by virtue of this clause (a)); and (b) such Swap Contracts do not contain (i) any provision ("walk-away" provision) exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party or (ii) if the counterparty is not a Lender Party, any provision creating or permitting the declaration of an event of default, termination event or similar event upon the occurrence of an Event of Default hereunder (other than an Event of Default under subsection 9.1(a)). Person means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority. Plan means an employee benefit plan (as defined in Section 3(3) of ERISA) with respect to which the Company may have any liability. Pledge Agreement means the Parent Pledge Agreement, the Company Pledge Agreement and each Subsidiary Pledge Agreement. Proposed New Lender -- see subsection 2.16(b). Public Offering means an offering of equity securities or Indebtedness registered under the Securities Act of 1933. Qualified Indenture means a trust indenture entered into by the Company with an indenture trustee with terms and provisions no more restrictive to the Company than the New Subordinated Indenture, and with terms no less advantageous to the Lenders than -29- 40 the terms of the New Subordinated Indenture, as amended from time to time in accordance with Section 8.22. Qualified Notes means subordinated notes of the Company which shall not require scheduled payments of principal prior to May 15, 2011, which shall not require cash interest payments thereon at a rate in excess of 9.25% per annum, and which are issued pursuant to a Qualified Indenture, as such notes may be amended from time to time in accordance with Section 8.22. Qualified Refinancing means a refinancing of the New Subordinated Notes with Qualified Notes; provided, that the aggregate principal amount of Qualified Notes issued in connection therewith does not exceed the aggregate principal amount of the Indebtedness so refinanced unless the excess is applied as set forth in subsection 2.8(a)(vi). Refinancing Transactions means each of the Tender Offers, the Consent Solicitations, the issuance of the New Subordinated Notes and the amendment and restatement of the Existing Credit Agreement. Refinancing Transaction Documents means the Tender Offer Documents, the Consent Solicitation Documents, the New Subordinated Indenture, the New Subordinated Notes, the New Subordinated Note Purchase Agreement, all other documents used in connection with the issuance and sale of the New Subordinated Notes (including any offering memorandum) and all documents necessary to amend and restate the Existing Credit Agreement on the terms and conditions hereof. Register -- see subsection 11.8(a). Release means a "release", as such term is defined in CERCLA. Replacement Lender -- see Section 4.7. Reportable Event means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC or administrative pronouncements. Required Lenders means, at any time, Lenders having an aggregate Total Percentage of more than 50%. Required Revolving Lenders means, at any time, Revolving Lenders having an aggregate Revolving Percentage of more than 50%. Required Term Lenders means, at any time, Term Lenders having an aggregate Term Percentage of more than 50%. Requirement of Law means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental -30- 41 Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. Resource Conservation and Recovery Act means the Resource Conservation and Recovery Act, 42 U.S.C. Section 690, et seq. Responsible Officer means the chief executive officer, chief operating officer, chief financial officer, chief accounting officer, treasurer or the president of the Company, or Parent, as the context requires, or any other officer having substantially the same authority and responsibility. Restatement Date -- see Section 5.1. Revolving Commitment means, as to any Lender, the commitment of such Lender to make Revolving Loans pursuant to subsection 2.1(b). The amount of each Revolving Lender's Revolving Commitment on the date hereof is set forth across from such Lender's name on Schedule 1.1. Revolving Lender means, at any time, a Lender with a Revolving Commitment at such time or which then holds any Revolving Loan. Revolving Loan -- see subsection 2.1(b). Revolving Percentage means, as to any Lender, the percentage which (a) prior to the termination of the Revolving Commitments, (x) the amount of such Lender's Revolving Commitment is of (y) the aggregate amount of all of the Revolving Lenders' Revolving Commitments and (b) after the termination of the Revolving Commitments, (x) the amount of such Lender's Revolving Loans is of (y) the aggregate amount of all Revolving Loans of all Revolving Lenders. Revolving Portion means, with respect to the Assigned Debt, the portion thereof obtained by dividing the aggregate principal amount of Assigned Debt times a fraction, the numerator of which is the aggregate principal amount of Revolving Loans outstanding on the Restatement Date and the denominator of which is the aggregate principal amount of Revolving Loans and Term Loans outstanding on the Restatement Date. Revolving Termination Date means the earlier to occur of: (a) May 15, 2007; and (b) the date on which the Revolving Commitments terminate in accordance with the provisions of this Agreement. Sale/Leaseback Transaction -- see Section 8.18. SEC means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. -31- 42 Security Agreement means either the Security Agreement (Company and Parent) or the Subsidiary Security Agreement. Security Agreement (Company and Parent) means the Security Agreement, dated as of the Closing Date, among the Company, Parent and the Administrative Agent in the form of Exhibit E-1 hereto. Senior Debt Ratio means for any Computation Period the ratio of (i) the sum of (A) the outstanding principal amount of all Total Debt (other than Subordinated Debt and Revolving Loans) outstanding on the last day of such Computation Period plus (B) the quotient of (1) the sum of the aggregate principal amount of all Revolving Loans outstanding on the last day of each of the twelve fiscal months during such Computation Period divided by (2) twelve, to (ii) EBITDA of Parent for such Computation Period; provided, however, that for purposes of clause (i)(B)(1) above, for each fiscal month of Parent ended prior to the Restatement Date, the aggregate principal amount of all Revolving Loans outstanding on the last day of such fiscal month shall be adjusted on a pro forma basis as if the Refinancing Transactions and the Company's borrowing of $100,000,000 of Additional Term B Loans under the Existing Credit Agreement occurred prior to the end of such month. Standby Letter of Credit means any Letter of Credit that is not a Commercial Letter of Credit. Subordinated Debt means the Old Subordinated Notes outstanding after the closing of the Old Subordinated Note Tender Offer, the New Subordinated Notes and any Qualified Notes and all other unsecured Indebtedness of the Company for borrowed money which is subject to, and is only entitled to the benefits of, terms and provisions (including maturity, amortization, acceleration, interest rate, sinking fund, covenant, default and subordination provisions) satisfactory in form and substance to the Required Lenders, as evidenced by their written approval thereof (which may be granted or withheld in their sole discretion). Subsidiary of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than 50% of the voting stock, membership interests or other equity interests is owned or controlled directly or indirectly by such Person, or one or more of the Subsidiaries of such Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of the Company. Subsidiary Guaranty means the guaranty, substantially in the form of Exhibit F, which may be executed from time to time by certain Subsidiaries of the Company. Subsidiary Pledge Agreement means the Subsidiary Pledge Agreement, dated as of the Closing Date, between Mike Mac and the Administrative Agent in the form of -32- 43 Exhibit G-3; such pledge agreement may be joined after the Restatement Date by other Subsidiaries. Subsidiary Security Agreement means the security agreement, substantially in the form of Exhibit E-2, which may be executed from time to time by certain Subsidiaries of the Company. Surety Instruments means all letters of credit (including standby and commercial), banker's acceptances, bank guaranties, surety bonds and similar instruments. Swap Contract means any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. Swap Termination Value means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Lender). Swingline Lender means BofA in its capacity as lender of Swingline Loans together with any replacement lender of Swingline Loans arising under Section 10.9. Swingline Loan has the meaning specified in subsection 2.5(a). Syndication Agent means Chase, in its capacity as syndication agent for the Lenders. Tax Sharing Agreement means the Tax Sharing Agreement dated as of January 9, 1990 by and between Parent and the Company, as the same may be amended from time to time in accordance with Section 8.22. Taxes means any and all present or future taxes, levies, assessments, imposts, duties, deductions, charges or withholdings, fees or similar charges and all liabilities with respect thereto, excluding, in the case of each Lender and the Administrative Agent, such taxes (including income taxes, branch profit taxes or franchise taxes) as are imposed on or measured by such Lender's or the Administrative Agent's, as the case may be, net income by the jurisdiction (or any political subdivision thereof) under the laws of which -33- 44 such Lender or the Administrative Agent, as the case may be, is organized, maintains a lending office or conducts business (collectively, "Excluded Taxes"). Tender Offers means each of the Old Subordinated Note Tender Offer and the Old Parent Discount Note Tender Offer. Tender Offer Documents means the offer to purchase distributed by the Company in connection with the Tender Offers and the Consent Solicitations, all amendments and exhibits thereto, and all related documents filed with the SEC or distributed to the holders of the Old Subordinated Notes and the Old Parent Discount Notes in connection with the Tender Offers. Term Commitment means, as to any Lender, (x) on the Restatement Date, the commitment of such Lender to make a Term Loan pursuant to subsection 2.1(a) and (y) at any time after the Restatement Date, any commitment of such Lender to make an Additional Term Loan at such time pursuant to subsection 2.1(a). Term Lender means, at any time, a Lender which then holds any Term Loan. Term Loan -- see subsection 2.1(a). Term Percentage means, as to any Lender, the percentage which (a) the aggregate amount of such Lender's Term Commitment plus the outstanding principal amount of such Lender's Term Loans is of (b) the aggregate amount of the Term Commitments of all Lenders plus the outstanding principal amount of all Term Loans; provided, that for purposes of allocating payments among the Term Lenders pursuant to subsections 2.7(b) and 2.13(a), the Term Commitments shall be disregarded in calculating Term Percentage. The Term Percentage of each Lender as in effect on the Restatement Date is set forth across from such Lender's name on Schedule 1.1. Term Portion means, with respect to the Assigned Debt, the aggregate principal amount of the Assigned Debt less the Revolving Portion of such Assigned Debt. Total Debt means (i) total Indebtedness of Parent and its Subsidiaries at the time of determination less (ii) Indebtedness of the type described in clause (c) of the definition of "Indebtedness" in respect of Surety Instruments under which Parent or any Subsidiary has only an unmatured payment obligation determined at such time less (iii) Indebtedness of the type described in clauses (g) and (h) of the definition of "Indebtedness" in respect of Indebtedness at such time described in clause (ii) above less (iv) any amounts outstanding under any Old Parent Discount Notes. Total Debt Ratio means for any Computation Period the ratio of (i) the sum of (A) the aggregate outstanding principal amount of all Total Debt (other than Revolving Loans) outstanding on the last day of such Computation Period plus (B) the quotient of (1) the sum of the aggregate outstanding principal amount of all Revolving Loans outstanding on the last day -34- 45 of each of the twelve fiscal months during such Computation Period divided by (2) twelve, to (ii) EBITDA of Parent for such Computation Period; provided, however, that for purposes of clause (i)(B)(1) above, for each fiscal month of Parent ended prior to the Restatement Date, the aggregate principal amount of all Revolving Loans outstanding on the last day of such fiscal month shall be adjusted on a pro forma basis as if the Refinancing Transactions and the Company's borrowing of $100,000,000 of Additional Term B Loans under the Existing Credit Agreement occurred prior to the end of such month. Total Percentage means, as to any Lender, the percentage which (a) the aggregate amount of such (i) Lender's Revolving Commitment plus (ii) the aggregate amount of such Lender's commitment to make Additional Term Loans plus the outstanding principal amount of such Lender's Term Loans is of (b) the aggregate amount of (i) the Revolving Commitments of all Lenders plus (ii) the aggregate amount of the commitments to make Additional Term Loans of all Term Lenders plus the outstanding principal amount of all Term Loans; provided that, after the Revolving Commitments and any Term Commitments have been terminated, "Total Percentage" shall mean as to any Lender the percentage which the aggregate principal amount of such Lender's Loans is of the aggregate principal amount of all Loans. The Total Percentage of each Lender as in effect at the Restatement Date is set forth opposite such Lender's name on Schedule 1.1. TPG Acquisition Preferred Stock means the 14% Series A Redeemable Preferred Stock, original liquidation preference $1,000 per share, of Parent. TPG Agreements means (i) the Management Advisory Agreement, dated as of April 18, 1997, between the Company and TPG Partners and (ii) the Transaction Advisory Agreement, dated as of April 18, 1997, between the Company and TPG Partners, in each case as amended from time to time in accordance with Section 8.22. TPG Partners means TPG Partners, L.P., a Delaware limited partnership. Trademark Security Agreement means a trademark security agreement in the form attached to a Security Agreement. Type has the meaning specified in the definition of "Loan." United States and U.S. each means the United States of America. Unmatured Event of Default means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. Warehouseman's Consent means a document substantially in the form of Exhibit P, with appropriate insertions, or such other form as shall be acceptable to the Administrative Agent or Required Revolving Lenders. -35- 46 Wholly-Owned Subsidiary means any corporation in which (other than directors' qualifying shares or due to native ownership requirements) 100% of the Capital Stock of each class is owned beneficially and of record by the Company or by one or more other Wholly-Owned Subsidiaries. 1.2 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and Article, subsection, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. (c) (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. (i) The term "including" is not limiting and means "including without limitation." (ii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding"; and the word "through" means "to and including." (d) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (e) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. (f) This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms. Unless otherwise expressly provided herein, any reference to any action of the Administrative Agent, the Lenders, the Required Lenders, the Required Term Lenders or the Required Revolving Lenders by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole discretion." (g) This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agents, the Company and the other parties, and are the products of all parties. Accordingly, they shall not be construed against -36- 47 the Lenders or the Agents merely because of the Lenders' or the Agents' involvement in their preparation. 1.3 Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied; provided that if the Company notifies the Administrative Agent that the Company wishes to amend any covenant in Article VIII or any corresponding definition to eliminate the effect of any change in GAAP after the date hereof on the operation of such covenant (or if the Administrative Agent notifies the Company that the Required Lenders wish to amend Article VIII or any corresponding definition for such purpose), then the Company's compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Lenders. (b) References herein to "fiscal year," "fiscal quarter" and "fiscal month" refer to such fiscal periods of Parent. 1.4 Assignments from Existing Credit Agreement; Addition of Lenders; Reallocation of Loans and Commitments. (a) By their execution of Schedule 1.4 each lender under the Existing Credit Agreement that is not a party hereto but is a party to such Schedule 1.4 (the "Exiting Lenders") agrees, and by its execution of this Agreement each of the Lenders agrees, to the assignment of the interests of the Exiting Lenders to the Lenders contemplated by Schedule 1.4 on the Restatement Date. The Term Portion of the Assigned Debt shall on the Restatement Date become Term Loans hereunder and shall be allocated among the Term Lenders to achieve the result specified in the first sentence of subsection 2.1(a) and the Administrative Agent will apply an amount equal to the Term Portion of the Assigned Debt from the proceeds of the funding described in the second sentence of subsection 2.1(a) to pay the purchase price of the Term Portion of the Assigned Debt (at 100% of the principal amount thereof). The Revolving Portion of the Assigned Debt shall on the Restatement Date become Revolving Loans hereunder and shall be allocated among the Revolving Lenders to achieve the result specified in the first sentence of subsection 2.1(b) and the Administrative Agent will apply an amount equal to the Revolving Portion of the Assigned Debt from the proceeds of the funding described in the second sentence of subsection 2.1(b) to pay the purchase price of the Revolving Portion of the Assigned Debt (at 100% of the principal amount thereof). (b) On the Restatement Date, (i) each financial institution listed on the signature pages hereof that was not a party to the Existing Credit Agreement shall automatically become a party hereto and be entitled to the benefits, and have the obligations, of a "Lender" hereunder, (ii) each Lender's Revolving Percentage and Term Percentage shall be as set forth on Schedule 1.1 to this Agreement, (iii) each Continuing Lender that is a Term Lender and that will have a greater principal amount of Term Loans outstanding hereunder on the Restatement Date than such Lender had "Term Loans" (under and as defined in the Existing Credit Agreement) outstanding under the Existing Credit Agreement immediately prior to the Restatement Date will fund to the Administrative Agent the amount of the difference, (iv) each Continuing Lender that -37- 48 is a Revolving Lender and that will have a greater principal amount of Revolving Loans outstanding hereunder on the Restatement Date than such Lender had "Revolving Loans" (under and as defined in the Existing Credit Agreement) outstanding under the Existing Credit Agreement immediately prior to the Restatement Date will fund to the Administrative Agent the amount of the difference, (v) the Administrative Agent will, if necessary, apply the proceeds of fundings under the second sentence of each of subsection 2.1(a) and subsection 2.1(b) to disburse funds to the Lenders (including Continuing Lenders that will have a lower amount of Loans hereunder on the Restatement Date than under the Existing Credit Agreement immediately prior to the Restatement Date) such that, after giving effect to the allocation of Assigned Debt as contemplated by subsection 1.4(a) and such disbursements, each Lender has the correct amount of Loans outstanding on the Restatement Date and (vi) after giving effect to all other adjustments set forth herein, the Loans of each Continuing Lender shall be allocated among Revolving Loans and Term Loans such that, after giving effect thereto, such Continuing Lender has the correct amount of Revolving Loans and Term Loans outstanding on the Restatement Date. To facilitate the transactions described in this Section and in the first two sentences of each of subsection 2.1(a) and subsection 2.1(b), the Company agrees that on the Restatement Date the Company will (i) convert all Offshore Rate Loans outstanding under the Existing Credit Agreement to Base Rate Loans and (ii) pay to the Administrative Agent for the account of each lender that is a party to the Existing Credit Agreement all interest, fees and other amounts (including amounts payable under Section 4.4 of the Existing Credit Agreement as a result of the conversion described in clause (i) of this sentence and with the understanding that, for purposes of such Section 4.4, the Company will be deemed to have prepaid all Offshore Rate Loans (under and as defined in the Existing Credit Agreement) assigned in the Assigned Debt) owed to such lender under the Existing Credit Agreement. The Company, the Issuing Lender, the Lenders and the Administrative Agent further agree that, on the Restatement Date, the letters of credit issued by BofA pursuant to the Existing Credit Agreement shall remain outstanding and, without further act, be deemed to be, and constitute, Letters of Credit Issued by the Issuing Lender hereunder. Without limiting the generality of the foregoing, each Revolving Lender shall be deemed to have purchased from the Issuing Lender a participation in such Letters of Credit on the Restatement Date pursuant to subsection 3.3(a). ARTICLE II THE CREDITS 2.1 Amounts and Terms of Commitments. (a) The Term Credit. It is the purpose and intent of this Agreement that, after giving effect to the amendment and restatement of the Existing Credit Agreement and the fundings hereunder on the Restatement Date, each Term Lender will hold outstanding Term Loans in an aggregate principal amount equal to its Term Commitment set forth opposite its name on Schedule 1.1. Accordingly, each Term Lender agrees to fund the Administrative Agent on the Restatement Date an amount equal to its Term Percentage of $415,000,000. Following the effectiveness of any Commitment Increase which creates obligations to make Term Loans, each Term Lender that has made a Term Commitment in respect of such Commitment Increase severally agrees, on the related Increase Date, to make a loan to the Company (an "Additional Term Loan") in the amount of such Lender's Term Commitment. All such fundings and Loans -38- 49 referred to in the two immediately preceding sentences (including any Additional Term Loans) are collectively referred to herein as the "Term Loans." Amounts borrowed as Term Loans which are repaid or prepaid by the Company may not be reborrowed. After the making of Additional Term Loans on any Increase Date, the Term Commitments made with respect to such Increase Date shall be zero. (b) The Revolving Credit. It is the purpose and intent of this Agreement that, after giving effect to the amendment and restatement of the Existing Credit Agreement and the fundings hereunder on the Restatement Date, each Revolving Lender will hold on the Restatement Date outstanding Revolving Loans in an aggregate principal amount equal to its Revolving Percentage of the aggregate principal amount of all Revolving Loans outstanding on the Restatement Date. Accordingly, each Revolving Lender agrees to fund the Administrative Agent on the Restatement Date an amount equal to its Revolving Percentage of such amount of Revolving Loans as shall be outstanding on the Restatement Date. Each Revolving Lender severally agrees, on the terms and conditions set forth herein, to make loans to the Company (each such loan, a "Revolving Loan"), from time to time on any Business Day during the period from the Restatement Date to the Revolving Termination Date, in an aggregate amount not to exceed at any time outstanding such Revolving Lender's Revolving Percentage of the aggregate amount of the Revolving Commitments; provided that (i) on the Restatement Date, the aggregate amount of Revolving Loans may not exceed $100,000,000 and (ii) after giving effect to any Borrowing of Revolving Loans, (x) the sum of the Effective Amount of all Revolving Loans plus the Effective Amount of all Swingline Loans plus the Effective Amount of all L/C Obligations shall not exceed (y) the lesser of (1) the aggregate amount of the Revolving Commitments and (2) the Borrowing Base. Within the foregoing limits, and subject to the other terms and conditions hereof, the Company may borrow under this subsection 2.1(b), prepay under Section 2.7 and reborrow under this subsection 2.1(b). 2.2 Loan Accounts. (a) The Loans made by each Lender and the Letters of Credit Issued by the Issuing Lender shall be evidenced by one or more accounts or records maintained by such Lender or the Issuing Lender, as the case may be, in the ordinary course of business. The accounts or records maintained by the Administrative Agent, the Issuing Lender and each Lender shall be prima facie evidence as to the amount of the Loans made by the Lenders to the Company and the Letters of Credit Issued for the account of the Company, and the interest and payments thereon. Any failure to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Company hereunder to pay any amount owing with respect to any Loan or any Letter of Credit. (b) Upon the request of any Lender made through the Administrative Agent, the Loans made by such Lender may be evidenced by one or more Notes in addition to loan accounts. Each such Lender is hereby authorized to endorse on the schedules annexed to its Note(s) the date, amount and maturity of each Loan made by it and the amount of each payment of principal made by the Company with respect thereto. Each such Lender is irrevocably authorized by the Company to endorse its Note(s) and each Lender's record shall be conclusive absent manifest error; provided that the failure of a Lender to make, or an error in making, a notation thereon with respect to any Loan shall not limit or otherwise affect the obligations of the Company hereunder or under any Note to such Lender. -39- 50 2.3 Procedure for Borrowing. (a) Each Borrowing shall be made upon the Company's irrevocable written notice delivered to the Administrative Agent in the form of a Notice of Borrowing (which notice must be received by the Administrative Agent (i) prior to 11:00 a.m. (Chicago time) three Business Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans and (ii) prior to 11:00 a.m. (Chicago time) one Business Day prior to the requested Borrowing Date, in the case of Base Rate Loans), specifying: (A) the amount of the Borrowing, which shall be in an amount of $5,000,000 or a higher integral multiple of $100,000; (B) the requested Borrowing Date, which shall be a Business Day; (C) the Type of Loans comprising the Borrowing; and (D) in the case of Offshore Rate Loans, the duration of the Interest Period applicable to such Loans included in such notice. (b) The Administrative Agent will promptly notify each Lender of its receipt of any Notice of Borrowing and of the amount of such Lender's share of the related Borrowing based upon such Lender's Revolving Percentage or Term Percentage, as applicable. Notwithstanding the immediately preceding sentence, any Borrowing of Additional Term Loans pursuant to a Commitment Increase shall be made by the Term Lenders holding Term Commitments in respect of such Commitment Increase in accordance with their respective Term Commitments with respect to such Commitment Increase, and any Term Lender that does not hold a Term Commitment with respect to such Commitment Increase shall have no obligation to make any Additional Term Loan. (c) Each Lender will make the amount of its share of each Borrowing available to the Administrative Agent for the account of the Company at the Agent's Payment Office by 1:00 p.m. (Chicago time) on the Borrowing Date requested by the Company in funds immediately available to the Administrative Agent. The proceeds of all Loans will then be made available to the Company by the Administrative Agent at such office by crediting the account of the Company on the books of BofA with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent. (d) After giving effect to any Borrowing, there may not be more than twelve different Interest Periods in effect. 2.4 Conversion and Continuation Elections. (a) The Company may, upon irrevocable written notice to the Administrative Agent in accordance with subsection 2.4(b): (i) elect to convert, on any Business Day, any Base Rate Loans (in an aggregate amount of $5,000,000 or a higher integral multiple of $100,000) into Offshore Rate Loans; (ii) elect to convert, on the last day of the applicable Interest Period, any Offshore Rate Loans (or any part thereof in an aggregate -40- 51 amount of $5,000,000 or a higher integral multiple of $100,000) into Base Rate Loans; or (iii) elect to continue, as of the last day of the applicable Interest Period, any Offshore Rate Loans having Interest Periods expiring on such day (or any part thereof in an aggregate amount of $5,000,000 or a higher integral multiple of $100,000); provided that if at any time the aggregate amount of Offshore Rate Loans in respect of any Borrowing shall have been reduced, by payment, prepayment or conversion of part thereof, to be less than $5,000,000, such Offshore Rate Loans shall automatically convert into Base Rate Loans. (b) The Company shall deliver a Notice of Conversion/Continuation to be received by the Administrative Agent (i) not later than 11:00 a.m. (Chicago time) at least three Business Days in advance of the Conversion/Continuation Date, if the Loans are to be converted into or continued as Offshore Rate Loans and (ii) not later than 11:00 a.m. (Chicago time) one Business Day prior to the Conversion/Continuation Date, if the Loans are to be converted into Base Rate Loans, specifying: (A) the proposed Conversion/Continuation Date; (B) the aggregate principal amount of Loans to be converted or continued; (C) the Type of Loans resulting from the proposed conversion or continuation; and (D) in the case of conversions into Offshore Rate Loans, the duration of the requested Interest Period. (c) If upon the expiration of any Interest Period applicable to Offshore Rate Loans, the Company has failed to select timely a new Interest Period to be applicable to such Offshore Rate Loans, the Company shall be deemed to have elected to convert such Offshore Rate Loans into Base Rate Loans effective as of the expiration date of such Interest Period. (d) The Administrative Agent will promptly notify each Lender of its receipt of a Notice of Conversion/Continuation or, if no timely notice is provided by the Company, the Administrative Agent will promptly notify each Lender of the details of any automatic conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Loans held by each Lender with respect to which the notice was given. (e) Unless the Required Lenders otherwise agree, during the existence of an Event of Default or Unmatured Event of Default, the Company may not elect to have a Loan converted into or continued as an Offshore Rate Loan. -41- 52 (f) After giving effect to any conversion or continuation of Loans, there may not be more than twelve different Interest Periods in effect. 2.5 Swingline Loans. (a) Subject to the terms and conditions hereof, the Swingline Lender may, in its sole discretion (subject to subsection 2.5(b)), make a portion of the Revolving Commitments available to the Company by making swingline loans (each such loan, a "Swingline Loan") to the Company on any Business Day during the period from the Restatement Date to the Revolving Termination Date in accordance with the procedures set forth in this Section 2.5 in an aggregate principal amount at any one time outstanding not to exceed the lesser of (x) the lesser of (1) the aggregate available amount of the Revolving Commitments and (2) the Borrowing Base and (y) $25,000,000, notwithstanding the fact that such Swingline Loans, when aggregated with the Swingline Lender's outstanding Revolving Loans, may exceed the Swingline Lender's Revolving Percentage of the aggregate amount of the Revolving Commitments; provided that at no time shall the sum of the Effective Amount of all Swingline Loans, Revolving Loans and L/C Obligations exceed the lesser of (1) the aggregate amount of the Revolving Commitments and (2) the Borrowing Base. Subject to the other terms and conditions hereof, the Company may borrow under this subsection 2.5(a), prepay pursuant to subsection 2.5(d) and reborrow pursuant to this subsection 2.5(a) from time to time; provided that the Swingline Lender shall not be obligated to make any Swingline Loan. (b) The Company shall provide the Administrative Agent and the Swingline Lender irrevocable written notice (or notice by a telephone call confirmed promptly by facsimile) of any Swingline Loan requested hereunder (which notice must be received by the Swingline Lender and the Administrative Agent prior to 12:00 p.m. (Chicago time) on the requested Borrowing Date) specifying (i) the amount to be borrowed and (ii) the requested Borrowing Date, which must be a Business Day. Upon receipt of such notice, the Swingline Lender will promptly confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such notice from the Company and, if not, the Swingline Lender will provide the Administrative Agent with a copy thereof. If and only if the Administrative Agent notifies the Swingline Lender on the proposed Borrowing Date that it may make available to the Company the amount of the requested Swingline Loan, then, subject to the terms and conditions hereof, the Swingline Lender may make the amount of the requested Swingline Loan available to the Company by crediting the account of the Company on the books of BofA with the amount of such Swingline Loan. The Administrative Agent will not so notify the Swingline Lender if the Administrative Agent has knowledge that (A) the limitations set forth in the proviso set forth in the first sentence of subsection 2.5(a) are being violated or would be violated by such Swingline Loan or (B) one or more conditions specified in Article V is not then satisfied. Each Swingline Loan shall be in an aggregate principal amount equal to $500,000 or a higher integral multiple of $100,000. The Swingline Lender will promptly notify the Administrative Agent of the amount of each Swingline Loan. (c) Principal of and accrued interest on each Swingline Loan shall be due and payable (i) on demand made by the Swingline Lender at any time upon one Business Day's prior notice to the Company with a copy to the Administrative Agent furnished at or before 10:45 a.m. (Chicago time), and (ii) in any event on the Revolving Termination Date. Interest on Swingline -42- 53 Loans shall be for the sole account of the Swingline Lender (except to the extent that the other Lenders have funded the purchase of participations therein pursuant to subsection 2.5(e)). (d) The Company may, from time to time on any Business Day, make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any Swingline Loan, without incurring any premium or penalty; provided that (i) each such voluntary prepayment shall require prior written notice given to the Administrative Agent and the Swingline Lender no later than 1:00 p.m. (Chicago time) on the day on which the Company intends to make a voluntary prepayment, and (ii) each such voluntary prepayment shall be in an amount equal to $500,000 or a higher integral multiple of $100,000 (or, if less, the aggregate outstanding principal amount of all Swingline Loans then outstanding). Voluntary prepayments of Swingline Loans shall be made by the Company to the Swingline Lender at such office as the Swingline Lender may designate by notice to the Company from time to time. All such payments shall be made in Dollars and in immediately available funds no later than 4:00 p.m. (Chicago time) on the date specified by the Company pursuant to clause (i) above (and any payment received later than such time shall be deemed to have been received on the next Business Day). The Swingline Lender will promptly notify the Administrative Agent of the amount of each prepayment of Swingline Loans. (e) If (i) any Swingline Loan shall remain outstanding at 11:00 a.m. (Chicago time) on the Business Day immediately prior to a Business Day on which Swingline Loans are due and payable pursuant to subsection 2.5(c) and by such time on such Business Day the Administrative Agent shall have received neither (A) a Notice of Borrowing delivered pursuant to Section 2.3 requesting that Revolving Loans be made pursuant to subsection 2.1(b) on such following Business Day in an amount at least equal to the aggregate principal amount of such Swingline Loans, nor (B) any other notice indicating the Company's intent to repay such Swingline Loans with funds obtained from other sources, or (ii) any Swingline Loans shall remain outstanding during the existence of an Unmatured Event of Default or Event of Default and the Swingline Lender shall in its sole discretion notify the Administrative Agent that the Swingline Lender desires that such Swingline Loans be converted into Revolving Loans, then the Administrative Agent shall be deemed to have received a Notice of Borrowing from the Company pursuant to Section 2.3 requesting that Base Rate Loans be made pursuant to subsection 2.1(b) on the following Business Day in an amount equal to the aggregate amount of such Swingline Loans, and the procedures set forth in subsections 2.3(b) and 2.3(c) shall be followed in making such Base Rate Loans; provided that such Base Rate Loans shall be made notwithstanding the Company's failure to comply with Section 5.2; and provided, further, that if a Borrowing of Revolving Loans becomes legally impracticable and if so required by the Swingline Lender at the time such Revolving Loans are required to be made by the Revolving Lenders in accordance with this subsection 2.5(e), each Revolving Lender agrees that in lieu of making Revolving Loans as described in this subsection 2.5(e), such Revolving Lender shall purchase a participation from the Swingline Lender in the applicable Swingline Loans in an -43- 54 amount equal to such Revolving Lender's Revolving Percentage of such Swingline Loans, and the procedures set forth in subsections 2.3(b) and 2.3(c) shall be followed in connection with the purchases of such participations. The proceeds of such Base Rate Loans (or participations purchased) shall be delivered by the Administrative Agent to the Swingline Lender to repay such Swingline Loans (or as payment for such participations). A copy of each notice given by the Administrative Agent to the Revolving Lenders pursuant to this subsection 2.5(e) with respect to the making of Loans, or the purchases of participations, shall be promptly delivered by the Administrative Agent to the Company. Each Revolving Lender's obligation in accordance with this Agreement to make the Revolving Loans, or purchase the participations, as contemplated by this subsection 2.5(e), shall be absolute and unconditional and shall not be affected by any circumstance, including (1) any set-off, counterclaim, recoupment, defense or other right which such Revolving Lender may have against the Swingline Lender, the Company or any other Person for any reason whatsoever, (2) the occurrence or continuance of an Unmatured Event of Default, an Event of Default or a Material Adverse Effect or (3) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. 2.6 Termination or Reduction of Revolving Commitments. (a) The Company may, upon not less than three Business Days' prior written notice to the Administrative Agent, permanently reduce the Revolving Commitments to an amount which is not less than the sum of the Effective Amount of all Revolving Loans plus the Effective Amount of all Swingline Loans plus the Effective Amount of all L/C Obligations. Any such reduction shall be in an aggregate amount of $10,000,000 or a higher integral multiple of $5,000,000. The Company may at any time on like notice terminate the Revolving Commitments upon payment in full of all Revolving Loans and Swingline Loans and Cash Collateralization in full of all L/C Obligations. (b) In addition, after (and to the extent not applied to) the payment in full of all Term Loans pursuant to subsection 2.8(a), upon the occurrence of any Mandatory Prepayment Event, the Revolving Commitments shall be reduced by the amount of all Designated Proceeds resulting from such Mandatory Prepayment Event, with each such reduction effective at the time required in subsection 2.8(a) for a prepayment of Term Loans resulting from such Mandatory Prepayment Event; provided, that upon any Mandatory Prepayment Event arising from the transfer of Accounts Receivable under a Permitted Receivables Facility under clause (viii) of subsection 2.8(a), (i) the Revolving Loans shall be repaid in an amount equal to the Designated Proceeds from such transfer, (ii) the Revolving Commitments shall be reduced by the full amount of all Designated Proceeds from such transfer until the Revolving Commitments have been reduced to zero and (iii) no such Designated Proceeds shall be applied to the Term Loans until the Revolving Commitments have so been reduced to zero. (c) Once reduced in accordance with this Section, the Revolving Commitments may not be increased (including pursuant to Section 2.16). Any reduction of the Revolving Commitments shall be applied to the Revolving Commitment of each Revolving Lender according to its Revolving Percentage. All accrued commitment fees to, but not including, the effective date of any reduction or termination of the Revolving Commitments shall be paid on the effective date of such reduction or termination. -44- 55 2.7 Optional Prepayments. (a) Subject to Section 4.4, (i) the Company may, from time to time, upon irrevocable written notice to the Administrative Agent (which notice must be received by 11:00 a.m. (Chicago time) one Business Day prior to the requested day of prepayment in the case of Base Rate Loans and 11:00 a.m. (Chicago time) three Business Days prior to the date of prepayment in the case of Offshore Rate Loans), prepay any Borrowing of Revolving Loans in whole or in part, without premium or penalty, in an aggregate amount of $5,000,000 or a higher integral multiple of $100,000 and (ii) the Company may, from time to time, upon not less than three Business Days' irrevocable notice to the Administrative Agent, prepay any Borrowing of Term Loans in whole or in part, without premium or penalty, in an aggregate amount of $5,000,000 or a higher integral multiple of $100,000. (b) Each notice of prepayment shall specify the date and amount of such prepayment and the Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of any such notice and of such Lender's share of such prepayment based upon such Lender's Revolving Percentage, in the case of a prepayment of Revolving Loans, or Term Percentage, in the case of a prepayment of Term Loans. If any such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid and any amounts required pursuant to Section 4.4. Each prepayment of Revolving Loans shall be applied to each Revolving Lender's Revolving Loans according to such Revolving Lender's Revolving Percentage. Each prepayment of Term Loans shall be applied to each Term Lender's Term Loans according to such Term Lender's Term Percentage and shall be applied to the installments of the Term Loans pro rata. 2.8 Mandatory Prepayments of Loans. (a) The Company (or, in the case of clause (iii), if the Administrative Agent is holding the proceeds of insurance or condemnation as additional Collateral pursuant to the terms of a Security Agreement or any Mortgage, the Administrative Agent) shall make a prepayment of the Term Loans upon the occurrence of any of the following (each a "Mandatory Prepayment Event") at the following times and in the following amounts (such applicable amounts being referred to as "Designated Proceeds"): (i) Within 180 days after any sale, transfer or other disposition by the Company or any Subsidiary of any asset (other than assets described in clause (ii) below), other than sales of Inventory, Assets Held for Sale and transfers of Accounts Receivable pursuant to a Permitted Receivables Facility and dispositions of obsolete, unused, surplus or unnecessary equipment, in each case in the ordinary course of business, to a Person other than the Company or a Subsidiary, in an amount equal to 100% of the Net Cash Proceeds of such sale, transfer or other disposition; provided that (A) the foregoing shall not apply (x) to sales, transfers or other dispositions of such assets the proceeds (or an amount equal to anticipated proceeds) of which are used or committed to be used by the Company for the financing of the replacement or substitution of such assets being sold prior to or within 180 days after any such sale, (y) to the extent that the Net Cash Proceeds of all such sales, transfers or other -45- 56 dispositions in any fiscal year are less than $5,000,000 or (z) to proceeds of Sale/Leaseback Transactions permitted under Section 8.18 and (B) the Company and its Subsidiaries may retain the first $25,000,000 of Net Cash Proceeds of any sale, transfer or other disposition of the Company's San Jose Plant #3 received by the Company and its Subsidiaries in the aggregate after the Restatement Date, and shall not be required to prepay Term Loans in an amount equal to such proceeds, and such proceeds shall not constitute "Designated Proceeds" hereunder. (ii) Within 30 days after any sale, transfer or other disposition (including by way of merger or consolidation) by the Company or any Subsidiary of any of the Capital Stock of any of the Company's operating Subsidiaries to a Person other than the Company or a Subsidiary, in an amount equal to 100% of the Net Cash Proceeds of such sale, transfer or other disposition. (iii) Within 180 days after the receipt of any insurance or condemnation proceeds (or other similar recoveries) by Parent, the Company or any Subsidiary or by the Administrative Agent (to the extent the Administrative Agent is holding the insurance or condemnation proceeds as additional Collateral pursuant to Section 6 of a Security Agreement or any provision of any Mortgage) from any casualty loss incurred by Parent, the Company or any Subsidiary or condemnation of property, in an amount equal to 100% of such insurance or condemnation proceeds (or other similar recoveries) net of any collection expenses; provided that no such prepayment shall be required (x) to the extent such proceeds (or an amount equal to anticipated proceeds) are used by the Company, or will be so used prior to or within 180 days after the date of receipt of such proceeds for the financing of the replacement, substitution or restoration of the assets sustaining such casualty loss or condemnation or (y) to the extent that all such insurance or condemnation proceeds received in any fiscal year is less than $5,000,000. (iv) Promptly, and in any event within 15 days, after the receipt of any Net Cash Proceeds from any issuance of equity securities of Parent, the Company or any Subsidiary (including a Public Offering, but excluding (x) any issuance of shares of Capital Stock pursuant to any employee or director stock option program, benefit plan or compensation program and (y) issuances of equity securities (the Net Cash Proceeds of which are used within 90 days of receipt thereof to finance Acquisitions permitted under subsection 8.4(i))), in an amount equal to 50% of such Net Cash Proceeds. (v) Promptly, and in any event within 15 days, after the receipt of any Net Cash Proceeds from the issuance of any Other Debt of the Company or any Subsidiary, in an amount equal to 100% of such Net Cash Proceeds. -46- 57 (vi) If the amount of net proceeds received on issuance of any Qualified Notes exceeds the amount of net proceeds received by the Company upon the issuance of the New Subordinated Notes or upon any prior issuance of Qualified Notes, promptly, and in any event within 15 days, after the receipt of the proceeds of such notes by the Company in an amount equal to such excess. (vii) Within 95 days after the end of each fiscal year (commencing with the fiscal year ending June 30, 2002), in an amount equal to 75% of Excess Cash Flow for such fiscal year (provided that if the aggregate unpaid principal amount of the Term Loans as of the end of such fiscal year is less than $150,000,000, then no prepayment shall be required pursuant to this clause (vii)). (viii) Subject to the proviso to subsection 2.6(b), immediately following any transfer by the Company or any Subsidiary of Accounts Receivable pursuant to a Permitted Receivables Facility, in an amount equal to the Net Cash Proceeds of such transfer (provided, that if the Permitted Receivables Facility is a revolving program, the Designated Proceeds available for application to the Loans and/or Revolving Commitments from such Permitted Receivables Facility under this clause (viii) shall not exceed the maximum outstanding amount of such Permitted Receivables Facility (without giving effect to any reduction in such amount but giving effect to any increase in such amount)). (ix) Concurrently with the receipt of any Net Cash Proceeds from the issuance of any Indebtedness by Parent, in an amount equal to 100% of the Net Cash Proceeds thereof. All prepayments of Term Loans pursuant to this subsection 2.8(a) shall be applied to the installments of the Term Loans (x) in inverse order of maturity, in the case of prepayments pursuant to clauses (v), (vi) and (ix) and (y) pro rata, in the case of prepayments pursuant to clauses (i), (ii), (iii), (iv), (vii) and (viii); provided, that Designated Proceeds arising under clause (viii) shall only be applied to the Term Loans after the Revolving Commitments have been reduced to zero pursuant to subsection 2.6(b); provided, further, that if the Company offers to any Lender holding Term Loans the right to waive any such prepayment, and any such Lender notifies the Administrative Agent of such Lender's waiver of such prepayment not later than two Business Days prior to the date upon which such prepayment is due, 100% of the portion of any prepayment which would have been applied to such Lender's Term Loans may be retained by the Company or used by the Company for purposes not prohibited by this Agreement (including the making of any payment to shareholders of the Company or holders of Subordinated Debt of the Company not prohibited by Section 8.16). (b) If on any day the Effective Amount of all Revolving Loans plus the Effective Amount of all Swingline Loans plus the Effective Amount of all L/C Obligations exceeds the lesser of (x) the Borrowing Base and (y) the Revolving Commitments, the Company shall immediately prepay Revolving Loans and/or Swingline Loans or Cash Collateralize the -47- 58 outstanding Letters of Credit, or do a combination of the foregoing, in an amount sufficient to eliminate such excess. (c) If on any date the Effective Amount of L/C Obligations exceeds the amount of the L/C Commitment, the Company shall Cash Collateralize on such date the outstanding Letters of Credit in an amount equal to the excess of the L/C Obligations over the amount of the L/C Commitment. 2.9 Repayment. (a) The Term Credit. The Company shall repay the Term Loans in quarterly installments on the last Business Day of each fiscal quarter, commencing on June 30, 2001, in the amount set forth opposite the period below in which such quarterly date occur:
Payment Date Payment Amount ------------ -------------- June 30, 2001 $1,037,500 plus the Specified Percentage (as defined below) of the principal amount of any Additional Term Loans theretofore made hereunder September 30, 2001 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder December 31, 2001 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder March 31, 2002 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder June 30, 2002 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder September 30, 2002 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder December 31, 2002 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder March 31, 2003 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder
-48- 59 June 30, 2003 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder September 30, 2003 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder December 31, 2003 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder March 31, 2004 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder June 30, 2004 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder September 30, 2004 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder December 31, 2004 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder March 31, 2005 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder June 30, 2005 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder September 30, 2005 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder December 31, 2005 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder March 31, 2006 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder
-49- 60 June 30, 2006 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder September 30, 2006 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder December 31, 2006 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder March 31, 2007 $1,037,500 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder June 30, 2007 $97,525,000 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder September 30, 2007 $97,525,000 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder December 31, 2007 $97,525,000 plus the Specified Percentage of the principal amount of any Additional Term Loans theretofore made hereunder March 31, 2008 All Term Loans then outstanding.
For purposes of the foregoing table, "Specified Percentage" means for any Additional Term Loan: (i) for each Payment Date from June 30, 2001 through March 31, 2007, the percentage which $1,037,500 is of the aggregate principal amount of all Term Loans (other than Additional Term Loans) outstanding on the date such Additional Term Loan was made; and (ii) for June 30, 2007, September 30, 2007 and December 31, 2007, the percentage which $97,525,000 is of the aggregate principal amount of all Term Loans (other than Additional Term Loans) outstanding on the date such Additional Term Loan was made. The amount of any scheduled payment in the table above based upon a Specified Percentage of any Additional Term Loan shall be adjusted to account for any prepayment made after the making of such Additional Term Loan and prior to the date of such scheduled payment. -50- 61 (b) The Revolving Credit. The Company shall pay to the Administrative Agent, for the account of the Lenders, on the Revolving Termination Date the aggregate principal amount of all Revolving Loans outstanding on such date. 2.10 Interest. (a) Each Revolving Loan and Term Loan shall bear interest on the outstanding principal amount thereof from the applicable Borrowing Date at a rate per annum equal to the Offshore Rate or the Base Rate, as the case may be (and subject to the Company's right to convert to the other Type of Loans under Section 2.4), plus the Applicable Offshore Rate Margin or Applicable Base Rate Margin, as the case may be. Each Swingline Loan shall bear interest on the outstanding principal amount thereof from the applicable Borrowing Date at a rate per annum equal to the Base Rate plus 1% per annum. (b) Interest on each Loan shall be paid in arrears on each Interest Payment Date therefor. Interest shall also be paid on the date of any prepayment of Offshore Rate Loans under Section 2.7 or 2.8 for the portion of the Loans so prepaid and upon payment (including prepayment) in full thereof. (c) Notwithstanding subsection 2.10(a), during the existence of any Event of Default, the Company shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all outstanding Loans and, to the extent permitted by applicable law, on any other amount payable hereunder or under any other Loan Document, at a rate per annum equal to the rate otherwise applicable thereto pursuant to the terms hereof or such other Loan Document (or, if no such rate is specified, the Base Rate plus the Applicable Base Rate Margin then in effect for Revolving Loans) plus 2%. All such interest shall be payable on demand. (d) Anything herein to the contrary notwithstanding, the obligations of the Company to any Lender hereunder shall be subject to the limitation that payments of interest shall not be required for any period for which interest is computed hereunder to the extent (but only to the extent) that contracting for or receiving such payment by such Lender would be contrary to the provisions of any law applicable to such Lender limiting the highest rate of interest that may be lawfully contracted for, charged or received by such Lender, and in such event the Company shall pay such Lender interest at the highest rate permitted by applicable law. 2.11 Fees. In addition to certain fees described in Section 3.8: (a) Arranger and Agency Fees. The Company shall pay fees to the Agents for their own accounts and agency fees to the Administrative Agent for the Administrative Agent's own account, in each case as required by the letter agreement (the "Fee Letter") among the Company, the Arrangers and the Agents dated April 6, 2001. (b) Commitment Fees. The Company shall pay to the Administrative Agent for the account of each Revolving Lender a commitment fee calculated at a rate per annum equal to the Commitment Fee Rate on the average daily unused portion of such Revolving Lender's Revolving Commitment, computed on a quarterly basis in arrears on the last Business Day of each fiscal quarter based upon the daily utilization for that quarter as calculated by the Administrative Agent. For purposes of calculating utilization under this subsection, the -51- 62 Revolving Commitments shall be deemed used to the extent of the Effective Amount of all Revolving Loans then outstanding (but Swingline Loans shall not constitute usage of any Revolving Lender's Revolving Commitment for the purpose of calculating commitment fees) plus the Effective Amount of all L/C Obligations then outstanding. Such commitment fee shall accrue from the Restatement Date to the Revolving Termination Date and shall be due and payable quarterly in arrears on the last Business Day of each fiscal quarter, with the final payment to be made on the Revolving Termination Date. The commitment fees provided in this subsection shall accrue at all times after the Restatement Date, including at any time during which one or more conditions in Article V are not met. 2.12 Computation of Fees and Interest. (a) All computations of interest for Base Rate Loans when the Base Rate is determined by BofA's "reference rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of interest and fees shall be made on the basis of a 360-day year and actual days elapsed. Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof. (b) Each determination of an interest rate by the Administrative Agent shall be prima facie evidence thereof. The Administrative Agent will, at the request of the Company or any Lender, deliver to the Company or such Lender, as the case may be, a statement showing the quotations used by the Administrative Agent in determining any interest rate and the resulting interest rate. 2.13 Payments by the Company. (a) All payments to be made by the Company shall be made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all payments by the Company shall be made to the Administrative Agent for the account of the Lenders at the Agent's Payment Office, and shall be made in Dollars and in immediately available funds, no later than 1:00 p.m. (Chicago time) on the date specified herein. Except as expressly provided herein, the Administrative Agent will promptly distribute, in like funds as received, to each Lender its Revolving Percentage of any portion of such payment related to the Revolving Loans or its Term Percentage of any portion of such payment relating to the Term Loans. Any payment received by the Administrative Agent later than 1:00 p.m. (Chicago time) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue. (b) Whenever any payment is due on a day other than a Business Day, such payment shall be made on the preceding Business Day, and such shortening of time shall in such case be reflected in the computation of interest or fees, as the case may be. (c) Unless the Administrative Agent receives notice from the Company prior to the date on which any payment is due to the Lenders that the Company will not make such payment in full as and when required, the Administrative Agent may assume that the Company has made such payment in full to the Administrative Agent on such date in immediately available funds and the Administrative Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Company has not made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent on demand such -52- 63 amount distributed to such Lender, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid. 2.14 Payments by the Lenders to the Administrative Agent. (a) Unless the Administrative Agent receives notice from a Lender at least one Business Day prior to the date of a Borrowing, that such Lender will not make available as and when required hereunder to the Administrative Agent for the account of the Company the amount of such Lender's Revolving Percentage, Term Percentage, or proportionate commitment to make Additional Term Loans, as applicable, of such Borrowing, the Administrative Agent may assume that each Lender has made such amount available to the Administrative Agent in immediately available funds on the Borrowing Date and the Administrative Agent may (but shall not be required to), in reliance upon such assumption, make available to the Company on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to the Administrative Agent in immediately available funds and the Administrative Agent in such circumstances has made available to the Company such amount, such Lender shall on the Business Day following such Borrowing Date make such amount available to the Administrative Agent, together with interest at the Federal Funds Rate for each day during such period. A notice of the Administrative Agent submitted to any Lender with respect to amounts owing under this subsection (a) shall be conclusive, absent manifest error. If such amount is so made available, such payment to the Administrative Agent shall constitute such Lender's Loan on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to the Administrative Agent on the Business Day following the Borrowing Date, the Administrative Agent will notify the Company of such failure to fund and, upon demand by the Administrative Agent, the Company shall pay such amount to the Administrative Agent for the Administrative Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing. (b) The failure of any Lender to make any Loan on any Borrowing Date shall not relieve any other Lender of any obligation hereunder to make a Loan on such Borrowing Date, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on any Borrowing Date. 2.15 Sharing of Payments, Etc. If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Loans made by it any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share of such payment (determined in accordance with the provisions of this Agreement), such Lender shall immediately (a) notify the Administrative Agent of such fact and (b) purchase from the other Lenders such participations in the Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment pro rata with each other Lender; provided that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender, such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender's ratable share (according to the proportion of (i) the amount of such paying Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Company agrees that any Lender so purchasing a participation from -53- 64 another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 11.10) with respect to such participation as fully as if such Lender were the direct creditor of the Company in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. 2.16 Optional Increase. (a) The Company may, at any time or times during the term of this Agreement, by written notice in the form of Exhibit J to the Administrative Agent, make one or more requests that the aggregate amount of the Revolving Commitments be increased, or that Commitments to make Additional Term Loans be committed to, in an aggregate amount (for all such increases) not to exceed $100,000,000 (each, a "Commitment Increase"), with any such Commitment Increase to be effective as of a date (the "Increase Date") specified in the related notice to the Administrative Agent that is at least 30 Business Days after the date of such notice; provided, however, that (i) no Event of Default or Unmatured Event of Default shall have occurred and be continuing and (ii) the Company shall be in compliance with all financial covenants set forth in Sections 8.11, 8.12, 8.13 and 8.14 on a pro forma basis for the period of four consecutive fiscal quarters ending on the last day of the last completed fiscal quarter immediately preceding the date the Commitment Increase is proposed to become effective (on the assumption that the full amount of Indebtedness represented by the Commitment Increase was outstanding for the entire such period). (b) The Administrative Agent shall promptly notify the Lenders (as well as any other financial institution specified by the Company and reasonably acceptable to the Administrative Agent (each such financial institution that is not a Lender, a "Proposed New Lender")) of the request by the Company for the Commitment Increase, which notice shall include (A) the proposed amount of the requested Commitment Increase, (B) the proposed Increase Date and (C) the date by which Lenders and Proposed New Lenders wishing to participate in the Commitment Increase must commit to participate in such Commitment Increase (the "Commitment Date"), which date shall be no later than five Business Days prior to the Increase Date. (c) Each Lender and Proposed New Lender that is willing to participate in such Commitment Increase (each, an "Increasing Lender") shall give written notice to the Administrative Agent no later than 10:00 a.m. (San Francisco time) on the Commitment Date of the amount by which it is willing to participate in such Commitment Increase, which amount shall not exceed the amount of the requested Commitment Increase. It shall be in each Lender's sole discretion whether to offer to participate in such Commitment Increase. If the Lenders and Proposed New Lenders notify the Administrative Agent that they are willing to increase the amount of their respective Commitments by an aggregate amount that exceeds the amount of the requested Commitment Increase, the Commitment Increase shall be allocated among the Lenders and Proposed New Lenders willing to participate therein in the manner specified by the Company and the Administrative Agent. (d) Promptly following (but in no event later than two Business Days after) the Commitment Date with respect to any Commitment Increase, the Administrative Agent shall -54- 65 notify the Company as to the amount, if any, of the requested Commitment Increase in which the Lenders and Proposed New Lenders are willing to participate. (e) On each Increase Date, each Proposed New Lender that accepts an offer to participate in the requested Commitment Increase as a Lender shall become a Lender party to this Agreement as of such Increase Date (each a "New Lender"), with a Revolving Commitment and/or Term Commitment, and the Revolving Commitment of each Increasing Lender for the requested Commitment Increase shall be increased, or, if applicable, each Increasing Lender shall have a Term Commitment, in each case as of the Increase Date in the amount set forth in its notice delivered to the Administrative Agent in accordance with subsection 2.16(c) (or by the amount allocated to such Lender or Proposed New Lender pursuant to the last sentence of subsection 2.16(c)); provided, however, that the Administrative Agent shall have received on or before noon (San Francisco time) on such Increase Date the following, each dated such date: (i) (A) a certificate of a Responsible Officer of the Company stating that no Event of Default or Unmatured Event of Default has occurred and is continuing, or would result from the Commitment Increase, (B) instruments executed by each Guarantor reaffirming its respective obligations under the Loan Documents after giving effect to the Commitment Increase, (C) in the event that, after giving effect to such Commitment Increase, the principal amount of the Term Loans outstanding plus the aggregate Revolving Commitments would exceed the maximum principal amount secured by the Mortgages, if the Administrative Agent requests, amendments to the Mortgages in form and substance satisfactory to the Administrative Agent increasing the maximum principal amount secured by the Mortgages so that such amount is not less than the principal amount of the Term Loans and Revolving Commitments, after giving effect to such Commitment Increase, together with such endorsements to the related title insurance policies held by the Administrative Agent as the Administrative Agent may request and (D) such other approvals, opinions or documents as any Lender through the Administrative Agent may reasonably request in connection with the Commitment Increase; (ii) an assumption letter in the form of Annex 2 to Exhibit J duly executed by each New Lender; and (iii) confirmation from each Increasing Lender of the increase in the amount of its Revolving Commitment or, if applicable, its Term Commitment, in the form of Annex 1 to Exhibit J. (f) On each Increase Date, upon fulfillment of the conditions set forth in subsection 2.16(e), the Administrative Agent shall notify the Lenders and the Company, on or before 1:00 p.m. (San Francisco time) by facsimile of the occurrence of the Commitment Increase to be effected on such Increase Date. Each Increasing Lender and each New Lender shall, before 2:00 p.m. (San Francisco time) on the applicable Increase Date, make available to the Administrative Agent in immediately available funds, (A) in the case of any New Lender, an -55- 66 amount equal to (x) in the case of an increase to the Revolving Commitments, such New Lender's Revolving Percentage (after giving effect to such Commitment Increase) of all Revolving Loans then outstanding and (y) in the case of the creation of Term Commitments, in the amount of such New Lender's Term Commitment and (B) in the case of any Increasing Lender, an amount equal to (x) in the case of an increase to the Revolving Commitments, the excess of (1) such Increasing Lender's Revolving Percentage (after giving effect to such Commitment Increase) of all Revolving Loans then outstanding over (2) such Increasing Lender's Revolving Percentage (immediately prior to giving effect to such Commitment Increase) of all Revolving Loans then outstanding and (y) in the case of the creation of Term Commitments, in the amount of such Increasing Lender's Term Commitment. After the Administrative Agent's receipt of such funds from each Increasing Lender and each New Lender, the Administrative Agent will promptly thereafter cause to be distributed like funds to the other Lenders holding Revolving Loans or Term Loans, as applicable, in an amount to each such Lender such that the aggregate amount owing to each Lender after giving effect to such distribution equals such Lender's ratable share of all Loans then outstanding (calculated after giving effect to such Commitment Increase). If any Increase Date shall occur on a date that is not the last day of the Interest Period for all Revolving Loans or Term Loans bearing interest based on the Offshore Rate then outstanding (x) the Company shall pay any amounts owing pursuant to Section 4.4 to any Lender whose proportionate share of any outstanding Offshore Rate Loan is decreased as a result of the distributions to Lenders under this subsection 2.16(f), and (y) for each outstanding Borrowing of Offshore Rate Loans, each Offshore Rate Loan made by the respective Increasing Lenders and New Lenders pursuant to this subsection 2.16(f) shall be deemed to be funded at the applicable Offshore Rate for such Borrowing. ARTICLE III THE LETTERS OF CREDIT 3.1 The Letter of Credit Subfacility. (a) On the terms and conditions set forth herein: (i) the Issuing Lender agrees, (A) from time to time on any Business Day during the period from the Restatement Date to the Revolving Termination Date to issue Letters of Credit for the account of the Company, and to amend Letters of Credit previously issued by it, in accordance with subsections 3.2(c) and 3.2(d), and (B) to honor drawings which comply with the terms of the Letters of Credit Issued by it; and (ii) the Revolving Lenders severally agree to participate in Letters of Credit Issued for the account of the Company; provided that the Issuing Lender shall not be obligated to Issue, and no Revolving Lender shall be obligated to participate in, any Letter of Credit if as of the date of Issuance of such Letter of Credit (the "Issuance Date") (1) the sum of the Effective Amount of all L/C Obligations plus the Effective Amount of all Revolving Loans plus the Effective Amount of all Swingline Loans exceeds the lesser of (x) the aggregate amount of all Revolving Commitments and (y) the Borrowing Base, (2) the Effective Amount of all L/C Obligations exceeds the amount of the L/C Commitment or (3) with respect to any particular Revolving Lender, the sum of the participation of such Revolving Lender in the Effective Amount of all L/C Obligations plus the outstanding principal amount of the Revolving Loans of such Revolving Lender shall exceed such Revolving Lender's Revolving Commitment. Within the foregoing limits, and subject to the other terms and conditions hereof, the Company's ability to obtain Letters of Credit shall be fully revolving, and, accordingly, the Company may, -56- 67 during the foregoing period, obtain Letters of Credit to replace Letters of Credit which have expired or which have been drawn upon and reimbursed. (b) The Issuing Lender shall not be under any obligation to Issue any Letter of Credit if: (i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender from Issuing such Letter of Credit, or any Requirement of Law applicable to the Issuing Lender or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing Lender refrain from, the Issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Lender with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Lender is not otherwise compensated hereunder) not in effect on the Restatement Date, or shall impose upon the Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the Restatement Date and which the Issuing Lender in good faith deems material to it; (ii) the Issuing Lender has received written notice from any Lender, the Administrative Agent or the Company, on or prior to the Business Day prior to the requested date of Issuance of such Letter of Credit, that one or more of the applicable conditions contained in Article V is not then satisfied; (iii) the expiry date of such Letter of Credit is after the Revolving Termination Date, or, in the case of a Commercial Letter of Credit, the expiry date of such Letter of Credit is less than 15 days prior to the Revolving Termination Date, unless all of the Revolving Lenders have approved such expiry date in writing; (iv) such Letter of Credit does not provide for drafts, or is not otherwise in form and substance acceptable to the Issuing Lender, or the Issuance of such Letter of Credit shall violate any applicable policies of the Issuing Lender; or (v) such Letter of Credit is denominated in a currency other than Dollars. 3.2 Issuance, Amendment and Extension of Letters of Credit. (a) Each Letter of Credit shall be issued upon the irrevocable written request of the Company received by the Issuing Lender and the Administrative Agent at least four Business Days (or such shorter time as the Issuing Lender and the Administrative Agent may agree in a particular instance in their sole discretion) prior to the proposed date of issuance. Each such request for issuance of a Letter of Credit shall be by facsimile, confirmed immediately in an original writing, in the form of an L/C -57- 68 Application, and shall specify in form and detail satisfactory to the Issuing Lender: (i) the face amount of the Letter of Credit; (ii) the expiry date of the Letter of Credit; (iii) the name and address of the beneficiary thereof; (iv) the documents to be presented by the beneficiary of the Letter of Credit in case of any drawing thereunder; (v) the full text of any certificate to be presented by the beneficiary in case of any drawing thereunder; and (vi) such other matters as the Issuing Lender may require. (b) At least two Business Days prior to the Issuance of any Letter of Credit, the Issuing Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of the L/C Application or L/C Amendment Application from the Company and, if not, the Issuing Lender will provide the Administrative Agent with a copy thereof. If and only if the Administrative Agent notifies the Issuing Lender on or before the Business Day immediately preceding the proposed date of Issuance of a Letter of Credit that the Issuing Lender may Issue such Letter of Credit, then, subject to the terms and conditions hereof, the Issuing Lender shall, on the requested date, Issue such Letter of Credit for the account of the Company in accordance with the Issuing Lender's usual and customary business practices. The Administrative Agent shall not give such notice if the Administrative Agent has knowledge that (A) such Issuance is not then permitted under subsection 3.1(a) as a result of the limitations set forth in clause (1) or (2) thereof or (B) the Issuing Lender has received a notice described in subsection 3.1(b)(ii). The Administrative Agent will promptly notify the Lenders of any Letter of Credit Issuance hereunder. (c) From time to time while a Letter of Credit is outstanding and prior to the Revolving Termination Date, the Issuing Lender will, upon the written request of the Company received by the Issuing Lender (with a copy sent by the Company to the Administrative Agent) at least four Business Days (or such shorter time as the Issuing Lender and the Administrative Agent may agree in a particular instance in their sole discretion) prior to the proposed date of amendment, amend any Letter of Credit issued by it. Each such request for amendment of a Letter of Credit shall be made by facsimile, confirmed immediately in an original writing, made in the form of an L/C Amendment Application and shall specify in form and detail satisfactory to the Issuing Lender: (i) the Letter of Credit to be amended; (ii) the proposed date of amendment of such Letter of Credit (which shall be a Business Day); (iii) the nature of the proposed amendment; and (iv) such other matters as the Issuing Lender may require. The Issuing Lender shall not have any obligation to amend any Letter of Credit if the Issuing Lender would have no obligation at such time to Issue such Letter of Credit in its amended form under the terms of this Agreement. (d) The Issuing Lender and the Lenders agree that, while a Standby Letter of Credit is outstanding and prior to the Revolving Termination Date, at the option of the Company and upon the written request of the Company received by the Issuing Lender (with a copy sent by the Company to the Administrative Agent) at least four Business Days (or such shorter time as the Issuing Lender and the Administrative Agent may agree in a particular instance in their sole discretion) prior to the proposed date of notification of extension, the Issuing Lender shall be entitled, with the approval of the Administrative Agent, to authorize the automatic extension of any Standby Letter of Credit issued by it. Each such request for extension of a Standby Letter of Credit shall be made by facsimile, confirmed immediately in an original writing, in the form of an L/C Amendment Application, and shall specify in form and detail satisfactory to the -58- 69 Issuing Lender: (i) the Letter of Credit to be extended; (ii) the proposed date of notification of extension of such Letter of Credit (which shall be a Business Day); (iii) the revised expiry date of such Letter of Credit (which, unless all Lenders otherwise consent in writing, shall be prior to the Revolving Termination Date); and (iv) such other matters as the Issuing Lender may require. The Issuing Lender shall not be under any obligation to extend any Letter of Credit if: (A) the Issuing Lender would have no obligation at such time to Issue or amend such Letter of Credit in its extended form under the terms of this Agreement; or (B) the beneficiary of such Letter of Credit does not accept the proposed extension of such Letter of Credit. If any outstanding Letter of Credit shall provide that it shall be automatically extended unless the beneficiary thereof receives notice from the Issuing Lender that such Letter of Credit shall not be extended, and if at the time of extension the Issuing Lender would be entitled to authorize the automatic extension of such Letter of Credit in accordance with this subsection 3.2(d) upon the request of the Company but the Issuing Lender shall not have received any L/C Amendment Application from the Company with respect to such extension or other written direction by the Company with respect thereto, the Issuing Lender shall nonetheless be permitted to allow such Letter of Credit to be extended, subject to the approval of the Administrative Agent, and the Company and the Lenders hereby authorize such extension, and, accordingly, the Issuing Lender shall be deemed to have received an L/C Amendment Application from the Company requesting such extension. (e) The Issuing Lender may, at its election (or as required by the Administrative Agent at the direction of the Required Lenders), deliver any notices of termination or other communications to any Letter of Credit beneficiary or transferee, and take any other action as necessary or appropriate, at any time and from time to time, in order to cause the expiry date of such Letter of Credit to be, in the case of Standby Letters of Credit, a date not later than the Revolving Termination Date, and in the case of Commercial Letters of Credit, a date not later than 15 days prior to the Revolving Termination Date. (f) This Agreement shall control in the event of any conflict with any L/C-Related Document (other than, as between the beneficiary and the Issuing Lender, any Letter of Credit). (g) The Issuing Lender will deliver to the Administrative Agent, concurrently or promptly following its delivery of a Letter of Credit, or amendment to or extension of a Letter of Credit, to an advising bank or a beneficiary, a true and complete copy of each such Letter of Credit or amendment to or extension of a Letter of Credit. (h) The Issuing Lender shall deliver to the Administrative Agent, on the last day of each calendar month (or, if such day is not a Business Day, the next succeeding Business Day) and upon the date of each payment by the Company of the letter of credit fee referred to in subsection 3.8(a), a report setting forth as of such day the aggregate Effective Amount of all L/C Obligations outstanding on such date, and the Administrative Agent shall promptly forward copies of such report to all Revolving Lenders. 3.3 Risk Participations, Drawings and Reimbursements. (a) Immediately upon the Issuance of each Letter of Credit, each Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from -59- 70 the Issuing Lender a participation in such Letter of Credit and each drawing thereunder in an amount equal to the product of (i) such Revolving Lender's Revolving Percentage times (ii) the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively. (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Issuing Lender will promptly notify the Company and the Administrative Agent. The Company shall reimburse the Issuing Lender on each date that any amount is paid by the Issuing Lender under any Letter of Credit (each such date, an "Honor Date") in an amount equal to the amount so paid by the Issuing Lender. If the Company fails to reimburse the Issuing Lender for the full amount of any drawing under any Letter of Credit on the Honor Date, the Issuing Lender will promptly notify the Administrative Agent and the Administrative Agent will promptly notify each Revolving Lender thereof, and the Company shall be deemed to have requested that Base Rate Loans be made by the Revolving Lenders to be disbursed on the Honor Date under such Letter of Credit, subject to the amount of the unutilized portion of the Revolving Commitments and subject to the conditions set forth in Section 5.2 other than subsection 5.2(a). Any notice given by the Issuing Lender or the Administrative Agent pursuant to this subsection 3.3(b) may be oral if immediately confirmed in writing (including by facsimile); provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (c) Each Revolving Lender shall upon any notice pursuant to subsection 3.3(b) make available to the Administrative Agent for the account of the Issuing Lender an amount in Dollars and in immediately available funds equal to its Revolving Percentage of the amount of the drawing, whereupon the participating Revolving Lenders shall (subject to subsection 3.3(d)) each be deemed to have made a Revolving Loan consisting of a Base Rate Loan to the Company in such amount. If any Revolving Lender so notified fails to make available to the Administrative Agent for the account of the Issuing Lender the amount of such Revolving Lender's Revolving Percentage of the amount of such drawing by no later than 1:00 p.m. (Chicago time) on the Honor Date, then interest shall accrue on such Revolving Lender's obligation to make such payment, from the Honor Date to the date such Revolving Lender makes such payment, at a rate per annum equal to the Federal Funds Rate in effect from time to time during such period. The Administrative Agent will promptly give notice of the occurrence of the Honor Date, but failure of the Administrative Agent to give any such notice on the Honor Date or in sufficient time to enable any Revolving Lender to effect such payment on such date shall not relieve such Revolving Lender from its obligations under this Section 3.3. (d) With respect to any unreimbursed drawing that is not converted into Revolving Loans consisting of Base Rate Loans in whole or in part, because of the Company's failure to satisfy the conditions set forth in Section 5.2 (other than subsection 5.2(a), which need not be satisfied) or for any other reason, the Company shall be deemed to have incurred from the Issuing Lender an L/C Borrowing in the amount of such drawing, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Base Rate Margin then in effect for Revolving Loans plus 2% per annum, and each Revolving Lender's payment to the Issuing Lender pursuant to subsection 3.3(c) shall be deemed payment in respect of its participation in such L/C Borrowing -60- 71 and shall constitute an L/C Advance from such Revolving Lender in satisfaction of its participation obligation under this Section 3.3. (e) Each Revolving Lender's obligation in accordance with this Agreement to make Revolving Loans or L/C Advances, as contemplated by this Section 3.3, as a result of a drawing under a Letter of Credit, shall be absolute and unconditional and without recourse to the Issuing Lender and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which such Revolving Lender may have against the Issuing Lender, the Company or any other Person for any reason whatsoever, (ii) the occurrence or continuance of an Event of Default, an Unmatured Event of Default or a Material Adverse Effect or (iii) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided that each Revolving Lender's obligation to make Revolving Loans under this Section 3.3 is subject to the conditions set forth in Section 5.2. 3.4 Repayment of Participations. (a) Upon (and only upon) receipt by the Administrative Agent for the account of the Issuing Lender of immediately available funds from the Company (i) in reimbursement of any payment made by the Issuing Lender under a Letter of Credit with respect to which any Revolving Lender has paid the Administrative Agent for the account of the Issuing Lender for such Revolving Lender's participation in such Letter of Credit pursuant to Section 3.3 or (ii) in payment of interest thereon, the Administrative Agent will pay to each Revolving Lender, in like funds as those received by the Administrative Agent for the account of the Issuing Lender, the amount of such Revolving Lender's Revolving Percentage of such funds, and the Issuing Lender shall receive the amount of the Revolving Percentage of such funds of any Revolving Lender that did not so pay the Administrative Agent for the account of the Issuing Lender. (b) If the Administrative Agent or the Issuing Lender is required at any time to return to the Company, or to a trustee, receiver, liquidator or custodian, or to any official in any Insolvency Proceeding, any portion of any payment made by the Company to the Administrative Agent for the account of the Issuing Lender pursuant to subsection 3.4(a) in reimbursement of a payment made under a Letter of Credit or interest or fee thereon, each Revolving Lender shall, on demand of the Administrative Agent, forthwith return to the Administrative Agent or the Issuing Lender the amount of its Revolving Percentage of any amount so returned by the Administrative Agent or the Issuing Lender plus interest thereon from the date such demand is made to the date such amount is returned by such Revolving Lender to the Administrative Agent or the Issuing Lender, at a rate per annum equal to the Federal Funds Rate in effect from time to time. 3.5 Role of the Issuing Lender. (a) Each Lender and the Company agree that, in honoring any drawing under a Letter of Credit, the Issuing Lender shall not have any responsibility to obtain any document (other than any sight draft and certificate expressly required by such Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. (b) No Agent-Related Person, Issuing Lender nor any of their respective correspondents, participants or assignees shall be liable to any Lender for: (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders (including the -61- 72 Required Lenders, as applicable); (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any L/C-Related Document. (c) The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude the Company's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under this Agreement or any other agreement. No Agent-Related Person, Issuing Lender nor any of their respective correspondents, participants or assignees shall be liable or responsible for any of the matters described in clauses (i) through (vii) of Section 3.6; provided that, anything in such clauses to the contrary notwithstanding, the Company may have a claim against the Issuing Lender, and the Issuing Lender may be liable to the Company, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by the Issuing Lender's willful misconduct or gross negligence or the Issuing Lender's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of such Letter of Credit. In furtherance and not in limitation of the foregoing: (i) the Issuing Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; and (ii) the Issuing Lender shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. 3.6 Obligations Absolute. The obligations of the Company under this Agreement and any L/C-Related Document to reimburse the Issuing Lender for a drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing under a Letter of Credit converted into Revolving Loans, shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and each such other L/C-Related Document under all circumstances, including the following: (i) any lack of validity or enforceability of this Agreement or any L/C-Related Document; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of any Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the L/C-Related Documents; (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against any beneficiary or any transferee of any Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Issuing Lender or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by the L/C-Related Documents or any unrelated transaction; -62- 73 (iv) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit; (v) any payment by the Issuing Lender under any Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the Issuing Lender under any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of any Letter of Credit, including any arising in connection with any Insolvency Proceeding; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Company in respect of any Letter of Credit; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. 3.7 Cash Collateral Pledge. If any Letter of Credit remains outstanding and partially or wholly undrawn as of the Revolving Termination Date, then the Company shall immediately Cash Collateralize the L/C Obligations in an amount equal to the maximum amount then available to be drawn under all Letters of Credit. 3.8 Letter of Credit Fees. (a) The Company shall pay to the Administrative Agent for the account of each Revolving Lender a letter of credit fee with respect to each Letter of Credit equal to the L/C Fee Rate per annum of the daily maximum amount available to be drawn on such Letter of Credit, computed for each day such Letter of Credit is outstanding in arrears on the last Business Day of each fiscal quarter; provided that, during the existence of any Event of Default, the L/C Fee Rate shall be increased by 2% per annum. (b) The Company shall pay to the Issuing Lender a letter of credit fronting fee for each Letter of Credit Issued equal to 0.25% per annum of the daily maximum amount available to be drawn on such Letter of Credit, computed for each day such Letter of Credit is outstanding, on the last Business Day of each fiscal quarter and on the Revolving Termination Date (or such later date on which such Letter of Credit shall expire or be fully drawn). (c) The letter of credit fees payable under subsection 3.8(a) and the fronting fees payable under subsection 3.8(b) shall be due and payable quarterly in arrears on the last Business Day of each fiscal quarter during which Letters of Credit are outstanding, commencing -63- 74 on the first such quarterly date to occur after the Restatement Date, to the Revolving Termination Date (or such later date upon which all outstanding Letters of Credit shall expire or be fully drawn), with the final payment to be made on the Revolving Termination Date (or such later date). For purposes of calculating the fees payable under subsection 3.8(a) and subsection 3.8(b), any undrawn Commercial Letter of Credit shall be considered outstanding and available to be drawn upon for 15 days after its expiry date. (d) The Company shall pay to the Issuing Lender from time to time on demand the normal issuance, payment, amendment and other processing fees, and other standard costs and charges, of the Issuing Lender relating to letters of credit as from time to time in effect. 3.9 Uniform Customs and Practice. The Uniform Customs and Practice for Documentary Credits as published by the International Chamber of Commerce most recently at the time of issuance of any Letter of Credit shall (unless otherwise expressly provided in such Letter of Credit) apply to each Letter of Credit. 3.10 Non-Dollar Letters of Credit. The Company, the Administrative Agent, the Issuing Lender and all of the Lenders (i) agree that, upon the request of the Company, the Issuing Lender may (in its sole discretion) issue Letters of Credit ("Non-Dollar Letters of Credit") in currencies other than Dollars and (ii) further agree as follows with respect to such Non-Dollar Letters of Credit: (a) The Company agrees that its reimbursement obligation under subsection 3.3(b) and any resulting L/C Borrowing, in each case in respect of a drawing under any Non-Dollar Letter of Credit, (i) shall be payable in Dollars at the Dollar Equivalent of such obligation in the currency in which such Non-Dollar Letter of Credit was issued (determined on the date of payment) and (ii) shall bear interest at a rate per annum equal to the sum of the Overnight Rate plus the Applicable Offshore Rate Margin for Revolving Loans plus 3% for each day from and including the Honor Date to but excluding the date such obligation is paid in full (it being understood that any payment received after 10:30 a.m., Chicago time, on any day shall be deemed received on the following Business Day). (b) Each Lender agrees that its obligation to make Revolving Loans under subsection 3.3(b) and to make L/C Advances for any unpaid reimbursement obligation or L/C Borrowing in respect of a drawing under any Non-Dollar Letter of Credit shall be payable in Dollars at the Dollar Equivalent of such obligation in the currency in which such Non-Dollar Letter of Credit was issued (calculated on the date of payment) (and any such amount which is not paid when due shall bear interest at a rate per annum equal to the Overnight Rate plus, beginning on the third Business Day after such amount was due, the Applicable Offshore Rate Margin for Revolving Loans). (c) For purposes of determining whether there is availability for the Company to request, continue or convert any Loan, or request, extend or increase the face amount of any Letter of Credit, the Dollar Equivalent of the Effective Amount of each Non-Dollar Letter of Credit shall be calculated on the date such Loan is to be made, continued or converted or such Letter of Credit is to be issued, extended or increased. -64- 75 (d) For purposes of determining (i) the amount of the unused portion of the Revolving Commitments under subsection 2.11(b), (ii) the letter of credit fee under subsection 3.8(a) and (iii) the letter of credit fronting fee under subsection 3.8(b), the Dollar Equivalent of the Effective Amount of any Non-Dollar Letter of Credit shall be determined on each of (1) the date of an issuance, extension or change in the stated amount of such Non-Dollar Letter of Credit, (2) the date of any payment by the Issuing Lender in respect of a drawing under such Non-Dollar Letter of Credit, (3) the last day of each calendar month and (4) each day on which the aggregate amount of the Revolving Commitments and/or L/C Commitment is reduced. (e) If, on the last day of any calendar month or any day on which the aggregate amount of the Revolving Commitments and/or L/C Commitment is reduced, the sum of the Effective Amount of all Revolving Loans plus the Effective Amount of all Letters of Credit plus the Effective Amount of all Swingline Loans (valuing the Effective Amount of, and all reimbursement obligations and L/C Borrowings of the Company in respect of, any Non-Dollar Letter of Credit at the Dollar Equivalent thereof as of such day) would exceed the aggregate amount of the Revolving Commitments, then the Company will immediately eliminate such excess by prepaying Revolving Loans and/or Swingline Loans and/or causing one or more Letters of Credit to be reduced or terminated. (f) If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due in respect of any Non-Dollar Letter of Credit in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Issuing Lender could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Company in respect of any such sum due from it to the Administrative Agent, the Issuing Lender or any Lender hereunder shall, notwithstanding any judgment in a currency (the "Judgment Currency") other than that in which such sum is denominated in accordance with the applicable provisions of the applicable Non-Dollar Letter of Credit (the "Agreement Currency"), be discharged only to the extent that on the Business Day following receipt by the Issuing Lender of any sum adjudged to be so due in the Judgment Currency, the Issuing Lender may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Issuing Lender in the Agreement Currency, the Company agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent, the Issuing Lender or the Lender to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Issuing Lender in such currency, the Issuing Lender agrees to return the amount of any excess to the Company (or to any other Person who may be entitled thereto under applicable law). (g) For purposes of this Section, "Overnight Rate" means, for any day, the rate of interest per annum at which overnight deposits in the applicable currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by the London Branch of BofA to major banks in the London or other applicable offshore interbank market. The Overnight Rate for any day which is not a Business Day (or on which dealings are not carried on in the applicable offshore interbank market) shall be the Overnight Rate for the immediately preceding Business Day. -65- 76 ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY 4.1 Taxes. (a) Any and all payments by the Company to each Lender or the Administrative Agent under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for, any Taxes. In addition, the Company shall pay all Other Taxes. (b) Subject to subsection 4.1(g), the Company agrees to indemnify and hold harmless each Lender and the Administrative Agent for the full amount of Taxes, Other Taxes and Further Taxes paid by such Lender in the amount necessary to preserve the amount such Lender would have received hereunder if such Taxes, Other Taxes or Further Taxes had not been imposed, and any liability (including penalties, interest, additions to tax and reasonable out-of-pocket expenses) arising therefrom or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly or legally asserted; provided, however, that the Company shall not have to indemnify any Lender or the Administrative Agent for Taxes, Other Taxes, Further Taxes, penalties, additions to tax or expenses arising as a result of the gross negligence or wilful misconduct of such Person. Payment under this subsection 4.1(b) shall be made within 30 days from the date such Lender or the Administrative Agent makes written demand therefor and provides reasonable evidence of the payment of such Taxes, Other Taxes or Further Taxes. (c) If the Company shall be required by law to deduct or withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable hereunder to any Lender or the Administrative Agent, then: (i) (the sum payable shall be increased as necessary so that, after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section), such Lender or the Administrative Agent, as the case may be, receives and retains an amount equal to the sum it would have received and retained had no such deductions or withholdings been made; (ii) the Company shall make such deductions and withholdings; and (iii) the Company shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law. (d) Within 10 days after the date the Company receives any receipt for the payment of Taxes, Other Taxes or Further Taxes, the Company shall furnish to the Administrative Agent the original or a certified copy of such receipt evidencing payment thereof, or other evidence of payment satisfactory to the Administrative Agent and the Administrative Agent will promptly provide a copy thereof to all interested Lenders. (e) If the Company is required to pay additional amounts to any Lender or the Administrative Agent pursuant to subsection (b) of this Section or Section 4.3, then such Lender -66- 77 shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office so as to reduce or eliminate any such additional payment by the Company which may thereafter accrue, if such change in the sole judgment of such Lender is not otherwise disadvantageous to such Lender. (f) If any Lender or the Administrative Agent receives a refund in respect of any Taxes, Other Taxes or Further Taxes as to which it has been indemnified by the Company pursuant to this Section 4.1, it shall repay such refund (to the extent of amounts that have been paid by the Company under this Section 4.1 with respect to such refund and not previously reimbursed) to the Company, net of all out-of-pocket expenses of such Lender or the Administrative Agent and without any interest. (g) The Company shall not be required to pay additional amounts to the Administrative Agent or any Lender pursuant to this Section 4.1 to the extent that the obligation to pay such additional amounts would not have arisen but for a failure by the Administrative Agent or such Lender to comply with Section 10.10. 4.2 Illegality. (a) After the date hereof, if any Lender determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make Offshore Rate Loans, then, on notice thereof by the Lender to the Company through the Administrative Agent, any obligation of such Lender to make Offshore Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Company that the circumstances giving rise to such determination no longer exist. (b) After the date hereof, if a Lender determines that it is unlawful to maintain any Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact and demand from such Lender (with a copy to the Administrative Agent), prepay in full such Offshore Rate Loan, together with interest accrued thereon and any amount required under Section 4.4, either on the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such Offshore Rate Loan to such day, or on such earlier date on which such Lender may no longer lawfully continue to maintain such Offshore Rate Loan (as determined by such Lender). If the Company is required to so prepay any Offshore Rate Loan, then concurrently with such prepayment, the Company shall borrow from the affected Lender, in the amount of such repayment, a Base Rate Loan. (c) If the obligation of any Lender to make or maintain Offshore Rate Loans has been terminated or suspended pursuant to subsection (a) or (b) above, all Loans which would otherwise be made by such Lender as Offshore Rate Loans shall be instead Base Rate Loans. (d) Before giving any notice to the Administrative Agent or demand upon the Company under this Section, the affected Lender shall designate a different Lending Office with respect to its Offshore Rate Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the sole judgment of such Lender, be illegal or otherwise disadvantageous to such Lender. -67- 78 4.3 Increased Costs and Reduction of Return. (a) After the date hereof, if any Lender determines that, due to either (i) the introduction of or any change (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the Offshore Rate) in or in the interpretation of any law or regulation or (ii) compliance by such Lender with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining any Offshore Rate Loan or participating in Letters of Credit or, in the case of the Issuing Lender, any increase in the cost to the Issuing Lender of agreeing to issue, issuing or maintaining any Letter of Credit or of agreeing to make or making, funding or maintaining any unpaid drawing under any Letter of Credit, then the Company shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Administrative Agent), pay to the Administrative Agent for the account of such Lender, additional amounts as are sufficient to compensate such Lender for such increased costs. (b) After the date hereof, if any Lender shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof or (iv) compliance by such Lender (or its Lending Office) or any Person controlling such Lender with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by such Lender or any Person controlling such Lender and (taking into consideration such Lender's or such Person's policies with respect to capital adequacy and such Lender's desired return on capital) determines that the amount of such capital is increased as a consequence of any of its Commitments, Loans, credits or obligations under this Agreement, then, upon demand of such Lender to the Company through the Administrative Agent, the Company shall pay to such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender for such increase. (c) This Section 4.3 shall not require the Company to reimburse the Administrative Agent or any Lender for any Taxes which are otherwise covered by the indemnity set forth in Section 4.1 or any Excluded Taxes. 4.4 Funding Losses. The Company shall reimburse each Lender and hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of: (a) the failure of the Company to make on a timely basis any payment of principal of any Offshore Rate Loan; (b) the failure of the Company to borrow, continue or convert a Loan after the Company has given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/Continuation; (c) the failure of the Company to make any prepayment in accordance with any notice delivered under Section 2.7; -68- 79 (d) the prepayment (including pursuant to Section 2.8) or other payment (including after acceleration thereof) of an Offshore Rate Loan on a day that is not the last day of the relevant Interest Period; or (e) the automatic conversion under subsection 2.4(a) of any Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant Interest Period; including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans or from fees payable to terminate the deposits from which such funds were obtained. For purposes of calculating amounts payable by the Company to the Lenders under this Section and under subsection 4.3(a), each Offshore Rate Loan made by a Lender (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the IBOR used in determining the Offshore Rate for such Offshore Rate Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Offshore Rate Loan is in fact so funded. In connection with any assignment by any of BofA, Chase or BTCo. pursuant to Section 11.8(a) of any portion of the Loans or Commitments made prior to the earlier to occur of (i) the completion of the syndication of the facilities hereunder (as determined by the Arrangers) and (ii) 180 days following the Restatement Date, if the Company has an Offshore Rate Loan outstanding an interest in which is being assigned, then, unless the assigning Lender in its discretion agrees otherwise, the Company shall be deemed to have repaid any such Offshore Rate Loan as of such date and this Section 4.4 shall apply to any such deemed repayment. 4.5 Inability to Determine Rates. If the Administrative Agent determines that for any reason adequate and reasonable means do not exist for determining the Offshore Rate for any requested Interest Period with respect to a proposed Offshore Rate Loan, or the Required Lenders determine (and notify the Administrative Agent) that the Offshore Rate applicable pursuant to subsection 2.10(a) for any requested Interest Period with respect to a proposed Offshore Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Company and each Lender. Thereafter, the obligation of the Lenders to make or maintain Offshore Rate Loans hereunder shall be suspended until the Administrative Agent, with the consent of the Required Lenders, revokes such notice in writing. Upon receipt of such notice, the Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation then submitted by it. If the Company does not revoke such Notice, the Lenders shall make, convert or continue the Loans, as proposed by the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made, converted or continued as Base Rate Loans instead of Offshore Rate Loans. 4.6 Certificates of Lenders. Any Lender claiming reimbursement or compensation under this Article IV shall deliver to the Company (with a copy to the Administrative Agent) a certificate setting forth in reasonable detail the basis for such claim and a calculation of the amount payable to such Lender and such certificate shall be prima facie evidence thereof. The Company shall not be required to make any payment to any Lender pursuant to Section 4.3 which is attributable to any period of time occurring more than 180 days prior to the date of any certificate described in the immediately preceding sentence delivered by such Lender to the -69- 80 Company; provided that if the event or circumstance giving rise to any such payment under Section 4.3 is retroactive, the 180-day period referred to above will be extended to include the period of retroactive effect of the event or circumstance giving rise to such payment. 4.7 Substitution of Lenders. In the event the Company becomes obligated to pay additional amounts to any Lender pursuant to Section 4.3 or the circumstances described in Section 4.2 exist with respect to any Lender, the Company may designate another Lender (with such other Lender's consent) which is acceptable to the Administrative Agent, the Issuing Lender and the Swingline Lender in their sole discretion (such other Lender being herein called a "Replacement Lender") to purchase the Loans of such Lender and such Lender's rights hereunder, without recourse to or warranty by, or expense to, such Lender for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and accrued but unpaid commitment fees in respect of such Lender's Commitments and any other amounts payable to such Lender under this Agreement, and to assume all the obligations of such Lender hereunder, and, upon such purchase, such Lender shall no longer be a party hereto or have any rights hereunder (other than indemnities and other similar rights applicable to such Lender prior to the date of such assignment and assumption) and shall be relieved from all obligations to the Company hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder; without limiting the generality of the foregoing, the Replacement Lender or the Company shall bear the processing fee referred to in subsection 11.8(a) in any such substitution. 4.8 Survival. The agreements and obligations of the Company in this Article IV shall survive the payment of all other Obligations. ARTICLE V CONDITIONS PRECEDENT 5.1 Conditions to Effectiveness. This Agreement shall become effective on the date (the "Restatement Date") each of the conditions precedent set forth in this Section 5.1 has been satisfied or waived with the consent of the Required Lenders (or, with respect to subsection 5.1(f), with the consent of the Persons entitled to receive payment). The effectiveness of this Agreement is subject to the conditions that the Administrative Agent shall have received all of the following, in form and substance satisfactory to each Agent and each Lender, and (except for the New Notes) in sufficient copies for the Administrative Agent and each Lender: (a) Credit Agreement. This Agreement executed by the Company and the Lenders. (b) Incumbency. A certificate of the Secretary or an Assistant Secretary of the Company, Parent and Mike Mac certifying the names and true signatures of the officers of such Person authorized to execute, deliver and perform this Agreement and all other Loan Documents to be delivered by it hereunder. (c) Organization Documents; Good Standing. Each of the following documents: -70- 81 (i) for the Company, Parent and Mike Mac, the articles or certificate of incorporation and the bylaws of each such Person, as the case may be, as in effect on the Restatement Date, certified by the Secretary or Treasurer of such Person, as of the Restatement Date; and (ii) a good standing certificate for the Company, Parent and Mike Mac from the Secretary of State (or similar applicable Governmental Authority) of the jurisdiction of its organization. (d) Legal Opinions. (i) An opinion of Gibson, Dunn & Crutcher LLP, special counsel to the Company, Parent and Mike Mac, substantially in the form of Exhibit I-1, and (ii) An opinion of internal counsel to the Company, Parent and Mike Mac, substantially in the form of Exhibit I-2. (e) Notes. Notes payable to the order of each of the Lenders who have requested a Note under subsection 2.2(b) (collectively, the "New Notes"). (f) Payment of Fees. Evidence of payment by the Company of all accrued and unpaid fees, costs and expenses to the extent then due and payable on the Restatement Date, together with Attorney Costs of the Administrative Agent and Banc of America Securities LLC to the extent invoiced at least three Business Days prior to the Restatement Date, plus such additional amounts of Attorney Costs as shall constitute the Administrative Agent's reasonable estimate of Attorney Costs incurred or to be incurred by it or Banc of America Securities LLC through the Restatement Date (provided that such estimate shall not thereafter preclude final settling of accounts between the Company and the Administrative Agent), including such costs, fees and expenses arising under or referenced in Section 11.4. (g) Confirmation. A confirmation from Parent and Mike Mac, substantially in the form of Exhibit T hereto. (h) Certificate. A certificate signed by a Responsible Officer, dated as of the Restatement Date, stating that: (i) the representations and warranties contained in Article VI are true and correct in all material respects on and as of such date, as though made on and as of such date; (ii) no Event of Default or Unmatured Event of Default exists or will result from the effectiveness of this Agreement; and (iii) no event or circumstance has occurred since June 30, 2000 that has resulted, or would reasonably be expected to result, in a Material Adverse Effect. -71- 82 (i) Tender Offers. Evidence satisfactory to the Agents that: the Company shall have accepted for payment and provided, pursuant to arrangements satisfactory to the Agents, for the payment of not less than 90% of the outstanding principal amount of the Old Subordinated Notes pursuant to the Old Subordinated Note Tender Offer and each of the conditions precedent to the purchases pursuant thereto shall have been satisfied to the satisfaction of the Administrative Agent; the Company shall have accepted for payment and provided, pursuant to arrangements satisfactory to the Agents, for the payment of not less than 90% of the outstanding principal amount of the Old Parent Discount Notes pursuant to the Old Parent Discount Note Tender Offer and each of the conditions precedent to the purchases pursuant thereto shall have been satisfied to the satisfaction of the Administrative Agent; and all terms and conditions of the Tender Offers and the Consent Solicitations shall be satisfactory to the Agents (including the maximum tender price and the aggregate amount of all fees and commissions paid to any information agent, solicitation agent, dealer manager or Person performing any similar role) and each Tender Offer and Consent Solicitation shall comply with the Tender Offer Documents and all applicable laws (including Rule 14e-1 under the Exchange Act and other Federal and state securities laws and regulations). There shall have been delivered to the Agents true and correct copies of all Tender Offer Documents, all of which shall be in form and substance satisfactory to the Agents. (j) Consent Solicitations. Evidence satisfactory to the Agents that (i) the Company shall have received sufficient Old Subordinated Note Consents pursuant to the Old Subordinated Note Consent Solicitation to authorize the execution and delivery of the Old Subordinated Note Supplemental Indenture and the Old Subordinated Note Supplemental Indenture shall have been duly executed and delivered by the Company, all guarantors of the Old Subordinated Notes and the Old Subordinated Note Trustee and all conditions to the effectiveness thereof shall have been satisfied or that all Old Subordinated Notes shall have been tendered to Bankers Trust Company, as depositary under the Old Subordinated Note Tender Offer, and not withdrawn and, subject to the terms of the Old Subordinated Note Tender Offer, the right to withdraw such tenders shall have expired and (ii) the Company shall have received sufficient Old Parent Discount Note Consents pursuant to the Old Parent Discount Note Consent Solicitation to authorize the execution and delivery of the Old Parent Discount Note Supplemental Indenture and the Old Parent Discount Note Supplemental Indenture shall have been duly executed and delivered by the Parent and the Old Parent Discount Note Trustee and all conditions to the effectiveness thereof shall have been satisfied or that all Old Parent Discount Notes shall have been tendered to Bankers Trust Company, as depositary under the Old Parent Discount Note Tender Offer, and not withdrawn and, subject to the terms of the Old Parent Discount Note Tender Offer, the right to withdraw such tenders shall have expired. (k) New Subordinated Notes. Evidence satisfactory to the Agents that the Company shall have issued the New Subordinated Notes on terms and conditions satisfactory to the Agents for gross proceeds of not less than $300,000,000. (l) Documents. A copy, certified as true and correct by the Secretary or the Treasurer of the Company, of each of (a) the New Subordinated Indenture, (b) the New Subordinated Note Purchase Agreement and (c) the registration rights agreement executed by the Company in connection with the issuance of the New Subordinated Notes. -72- 83 (m) Solvency Certificates. A Solvency Certificate, substantially in the form of Exhibit H-1, executed by a Responsible Officer of the Company and a Solvency Certificate, substantially in the form of Exhibit H-2, executed by a Responsible Officer of Parent. (n) Borrowing Base Certificate. A Borrowing Base Certificate dated as of March 31, 2001, appropriately completed. (o) Other Documents. Such other approvals, opinions, documents or materials as any Agent or any Lender may reasonably request. 5.2 Conditions to All Credit Extensions. The obligation of each Lender to make any Loan to be made by it and the obligation of the Issuing Lender to Issue any Letter of Credit is subject to the satisfaction of the following conditions precedent on the relevant Borrowing Date or Issuance Date: (a) Notice, Application. In the case of any Loan, the Administrative Agent shall have received a Notice of Borrowing and, in the case of any Issuance of any Letter of Credit, the Issuing Lender and the Administrative Agent shall have received an L/C Application or L/C Amendment Application, as required under Section 3.2. (b) Continuation of Representations and Warranties. The representations and warranties in Article VI shall be true and correct in all material respects on and as of such Borrowing Date or Issuance Date with the same effect as if made on and as of such Borrowing Date or Issuance Date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date). (c) No Existing Default. No Event of Default or Unmatured Event of Default shall exist or shall result from such Borrowing or Issuance. Each Notice of Borrowing and L/C Application or L/C Amendment Application submitted by the Company hereunder shall constitute a representation and warranty by the Company hereunder, as of the date of such notice and as of the applicable Borrowing Date or Issuance Date, that the conditions in this Section 5.2 are satisfied. ARTICLE VI REPRESENTATIONS AND WARRANTIES Each of the Company and Parent represents and warrants to each Agent and each Lender that: 6.1 Corporate Existence and Power. Each of Parent, the Company and each of its Subsidiaries: (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; -73- 84 (b) has the power and authority and all governmental licenses, authorizations, consents and approvals (i) to own its assets and to carry on its business and (ii) to execute, deliver and perform its obligations under the Loan Documents; (c) is duly qualified as a foreign corporation and is licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license; and (d) is in compliance with all Requirements of Law; except, in each case referred to in clause (b)(i), (c) or (d), to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect. 6.2 Corporate Authorization; No Contravention. The execution and delivery by each of the Company and Parent of this Agreement and each other Loan Document to which it is a party, the Borrowings hereunder, the execution and delivery by each Subsidiary of each Loan Document to which it is a party, the performance by each of the Company, Parent and each Subsidiary of its obligations under each Loan Document to which it is a party and the incurrence of the Obligations (i) are within the corporate powers of the Company, Parent and each Subsidiary, as applicable, (ii) have been duly authorized by all necessary corporate action on the part of the Company, Parent and each Subsidiary (including any necessary shareholder action) and (iii) do not and will not: (a) contravene the terms of any of the Organization Documents of the Company, Parent or any Subsidiary; (b) conflict with or result in a breach or contravention of, or the creation of any Lien (other than Liens in favor of the Administrative Agent) under, any document evidencing any Contractual Obligation to which the Company, Parent or any Subsidiary is a party or any order, injunction, writ or decree of any Governmental Authority to which the Company, Parent, any Subsidiary or any of their properties are subject; or (c) violate any Requirement of Law. 6.3 Governmental Authorization. No approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority is necessary or required for the execution, delivery or performance by, or enforcement against, (i) the Company or Parent of this Agreement or any other Loan Document to which it is a party or (ii) any Subsidiary with respect to each Loan Document to which it is a party, except, in each case, for filings required to perfect Liens in favor of the Administrative Agent granted under the Loan Documents. 6.4 Binding Effect. This Agreement and each other Loan Document to which the Company or Parent is a party constitutes the legal, valid and binding obligation of the Company or Parent, as the case may be, enforceable against the Company or Parent, as the case may be, in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability; and with respect to each Subsidiary, each Loan Document to which such Subsidiary is a party constitutes the legal, valid and binding obligation -74- 85 of such Subsidiary, enforceable against such Subsidiary in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and by equitable principles relating to enforceability. 6.5 Litigation. Except as specifically disclosed in Schedule 6.5, there are no actions, suits, proceedings, claims or disputes pending or, to the best knowledge of the Company, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against Parent, the Company or any Subsidiary or any of their respective properties which: (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or thereby; or (b) would reasonably be expected to have a Material Adverse Effect. No injunction, writ, temporary restraining order or other order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any other Loan Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided. 6.6 No Default. No Event of Default or Unmatured Event of Default exists or would result from the incurring of any Obligations by the Company, Parent or any Subsidiary. As of the Restatement Date, neither the Company nor any Subsidiary is in default under or with respect to any Contractual Obligation in any respect that, individually or together with all such defaults, would reasonably be expected to have a Material Adverse Effect, or that would, if such default had occurred after the Restatement Date, create an Event of Default under subsection 9.1(e). 6.7 ERISA Compliance. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law. To the best knowledge of the Company, nothing has occurred which would cause any Plan which is intended to qualify under Section 401(a) of the Code to fail to be so qualified. The Company and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made within the last five years with respect to any Plan. (b) There are no pending or, to the best knowledge of the Company, threatened claims, actions or lawsuits, or actions by any Governmental Authority, with respect to any Plan which has resulted or would reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or would reasonably be expected to result in a Material Adverse Effect. (c) (i) No ERISA Event has occurred or is reasonably expected to occur that would reasonably be expected to have a Material Adverse Effect; (ii) no contribution failure has occurred with respect to a Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA; and (iii) except for liability the Company has incurred under the agreement between the Company and the PBGC, dated April 7, 1997, as amended, neither the Company nor any ERISA Affiliate has incurred, or reasonably expects to incur, any material liability to the PBGC under Title IV of ERISA with respect to any Pension Plan. -75- 86 6.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be used solely for the purposes set forth in and permitted by Sections 7.13 and 8.7. Neither the Company nor any Subsidiary is generally engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. 6.9 Title to Properties. Each of the Company and each Subsidiary has good record and marketable title in fee simple to, or a valid leasehold interest in, all real property necessary or used in the ordinary conduct of its businesses, except for such defects in title as would not, individually or in the aggregate, have a Material Adverse Effect. Each of the Company and each Subsidiary has good title to all their other respective material properties and assets (except for those assets disposed of not in violation of this Agreement and the other Loan Documents and except for encumbrances and title defects that would not be reasonably likely to have a Material Adverse Effect). As of the Restatement Date, the property of the Company and its Subsidiaries is subject to no Liens, other than Permitted Liens. 6.10 Taxes. Parent, the Company and its Subsidiaries have filed all Federal and State income tax returns and all other material tax returns and reports required to be filed, and have paid all Federal and State income taxes and all other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against Parent, the Company or any Subsidiary that would, if made, have a Material Adverse Effect. The Tax Sharing Agreement is the only agreement among Parent, the Company and its Subsidiaries regarding tax sharing, tax reimbursement or tax indemnification. 6.11 Financial Condition. (a) The audited consolidated financial statements of Parent dated June 30, 1998, June 30, 1999 and June 30, 2000, and the related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal periods ended on such dates: (i) were prepared in accordance with GAAP consistently applied throughout the periods covered thereby, except as otherwise expressly noted therein; (ii) present fairly the financial condition of Parent and its Subsidiaries as of the dates thereof and results of operations for the periods covered thereby; and (iii) except as specifically disclosed in Schedule 6.11, show all material indebtedness and other liabilities, direct or contingent, of Parent and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Contingent Obligations, to the extent required by GAAP to be shown on such financial statements. (b) Since June 30, 2000, there has been no Material Adverse Effect. -76- 87 (c) The Company has furnished to each Agent and each Lender an estimated consolidated pro forma balance sheet of Parent and its Subsidiaries as of June 30, 2001 (giving effect to the Refinancing Transactions, assuming all such transactions had occurred on June 30, 2001), prepared by the Company and certified as true and correct in all material respects by a Responsible Officer of the Company. (d) The Company has furnished to each Agent and each Lender financial projections and covering the period from the commencement of the 2002 fiscal year through the 2010 fiscal year. Such projections were prepared by the Company and its Subsidiaries in good faith on the basis of information and assumptions that the Company and its senior management believed to be reasonable as of the date of such projections and such assumptions are reasonable as of the Restatement Date (it being understood that projections are subject to significant uncertainties and contingencies, many of which are beyond the Company's control, and that no assurance can be given that the projections will be realized). 6.12 Regulated Entities. None of Parent, the Company or any Subsidiary is an "investment company" within the meaning of the Investment Company Act of 1940. None of Parent, the Company or any Subsidiary is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code or any other Federal or state statute or regulation limiting its ability to incur Indebtedness. 6.13 No Burdensome Restrictions. None of Parent, the Company nor any Subsidiary is a party to or bound by any Contractual Obligation or subject to any restriction in any Organization Document or any Requirement of Law which would reasonably be expected to have a Material Adverse Effect. 6.14 Copyrights, Patents, Trademarks and Licenses, etc. The Company and its Subsidiaries own or are licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, trade secrets and other similar rights ("Intellectual Property") that are necessary for the operation of their respective businesses, without conflict with the rights of any other Person except for Intellectual Property the failure of which to own or be licensed or otherwise have the right to use, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect. All of such Intellectual Property is subsisting, valid and enforceable, except to the extent that the failure to be subsisting, valid and enforceable would not be reasonably expected to have a Material Adverse Effect. Except to the extent set forth on Schedule 6.14, there is no individual item of Intellectual Property the loss of which would reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Company, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Company or any Subsidiary infringes upon any rights held by any other Person except for any infringement which, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect. Except as specifically disclosed on Schedule 6.5, no claim or litigation regarding any of the foregoing is pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code, relating in each case to Intellectual -77- 88 Property, is, to the knowledge of the Company, pending or proposed, which, in either case, would reasonably be expected to have a Material Adverse Effect. 6.15 Subsidiaries. As of the Restatement Date, the Company has no Subsidiaries other than those specifically disclosed in part (a) of Schedule 6.15 hereto and has no equity investments in any other corporation or entity other than those specifically disclosed in part (b) of Schedule 6.15. As of the Restatement Date, the Company has no Material Subsidiaries. 6.16 Insurance. Except as specifically disclosed in Schedule 6.16, the properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Company, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Company or such Subsidiary operates. 6.17 Solvency, etc. On the Restatement Date (or, in the case of any Person that becomes a party to any Loan Document after the Restatement Date, on the date such Person becomes such a party), and immediately prior to and after giving effect to the Issuance of each Letter of Credit and each Borrowing hereunder and the use of the proceeds thereof, (a) each of the Company, Parent and each Material Subsidiary will not have an unreasonably small capital, (b) each of the Company, Parent and each Material Subsidiary will be solvent, will be able to pay its liabilities as they mature and (c) both the fair value and fair saleable value of the assets of the Company, Parent and each Material Subsidiary exceeds the liabilities, respectively, of each of the Company, Parent and each Material Subsidiary. 6.18 Real Property. Set forth on Schedule 6.18 is a complete and accurate list, as of the Restatement Date, of the address and legal description of any real property owned by the Company or any Subsidiary. 6.19 Swap Obligations. Neither the Company nor any of its Subsidiaries has incurred any outstanding obligations under any Swap Contracts, other than Permitted Swap Obligations. The Company has undertaken its own independent assessment of its consolidated assets, liabilities and commitments and has considered appropriate means of mitigating and managing risks associated with such matters and has not relied on any swap counterparty or any Affiliate of any swap counterparty in determining whether to enter into any Swap Contract. 6.20 Senior Indebtedness. The Company's obligation to pay the Obligations, including interest thereon and all fees, costs, expenses and indemnities related thereto, constitutes "Designated Senior Debt" of the Company as such term is defined in the New Subordinated Indenture. Parent's obligation to pay its Guaranty Obligations under Article XII constitutes "Guarantor Designated Senior Debt" of Parent as such term is defined in the New Subordinated Indenture. The Company acknowledges that the Lenders and the Administrative Agent have entered into this Agreement, and have extended Commitments, in reliance upon the subordination provisions in the New Subordinated Notes and the New Subordinated Indenture. If any Qualified Notes are outstanding, the representations and warranties in this Section shall be deemed made with respect to Qualified Notes and the related Qualified Indenture to the same extent made with respect to New Subordinated Notes and the New Subordinated Indenture. -78- 89 6.21 Environmental Warranties. Except as set forth in Schedule 6.21: (a) all facilities and property (including underlying groundwater) owned or leased by the Company or any of its Subsidiaries are in compliance with all Environmental Laws, except for such non-compliance as would not reasonably be expected to result in a Material Adverse Effect; (b) there are no pending or, to the best knowledge of the Company, threatened Environmental Claims, except for such Environmental Claims that are not reasonably likely, either singly or in the aggregate, to result in a Material Adverse Effect; (c) there have been no Releases of Hazardous Materials at, on or under any property now or, to the best of the Company's knowledge, previously owned or leased by the Company or any of its Subsidiaries that, singly or in the aggregate, have, or may reasonably be expected to have, a Material Adverse Effect; (d) the Company and its Subsidiaries have been issued and are in compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters and necessary or desirable for their businesses, except to the extent that the failure to have or comply with such permits, certificates, approvals, licenses and other authorizations relating to environmental matters would not be reasonably likely to have a Material Adverse Effect; (e) no property now or, to the best of the Company's knowledge, previously owned or leased by the Company or any of its Subsidiaries is listed or proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA, or, to the best of the Company's knowledge, is on the CERCLIS or on any similar state list of sites requiring investigation or clean-up, except, in each case, for any such listing that, singly or in the aggregate, would not reasonably be expected to have a Material Adverse Effect; and (f) to the best of the Company's knowledge, neither the Company nor any Subsidiary of the Company has directly transported or directly arranged for the transportation of any Hazardous Material to any location which is listed or proposed for listing on the National Priorities List pursuant to CERCLA, or which is the subject of Federal, state or local enforcement actions or other investigations which may lead to Environmental Claims against the Company or such Subsidiary except, in each case, to the extent that the foregoing would not reasonably be expected to have a Material Adverse Effect. 6.22 Full Disclosure. None of the representations or warranties made by Parent, the Company or any Subsidiary in the Loan Documents as of the date such representations and warranties are made or deemed made and none of the written statements contained in any exhibit, report, statement or certificate furnished by or on behalf of Parent, the Company or any Subsidiary in connection with the Loan Documents, considering each of the foregoing and in the context in which it was made and together with all other representations, warranties and written statements theretofore furnished by Parent, the Company and its Subsidiaries to the Administrative Agent and the Lenders in connection with the Loan Documents, contains any untrue statement of a material fact or omits any material fact required to be stated therein or -79- 90 necessary to make such representation, warranty or written statement, in light of the circumstances under which it is made, not misleading as of the time when made or delivered; provided that the Company's representation and warranty as to any forecast, projection or other statement regarding future performance, future financial results or other future development is limited to the fact that such forecast, projection or statement was prepared in good faith on the basis of information and assumptions that the Company believed to be reasonable as of the date such material was prepared (it being understood that projections are subject to significant uncertainties and contingencies, many of which are beyond the Company's control, and that no assurance can be given that the projections will be realized). 6.23 Refinancing Transactions. At the time of consummation thereof, each Refinancing Transaction shall have been consummated in accordance with the respective Refinancing Transaction Documents applicable thereto and in compliance with all applicable laws (including the Securities Act of 1933, Rule 14e-1 under the Exchange Act and all other Federal and state securities laws). At the time of consummation thereof, all consents and approvals of, and filings and registrations with, and all other actions in respect of, all Governmental Authorities required in order to consummate the Refinancing Transactions shall have been obtained, given, filed or taken and are or will be in full force and effect. All applicable waiting periods with respect to the Refinancing Transactions have expired without any action being taken by any competent Governmental Authority which restrains, prevents or imposes material adverse conditions upon the consummation of any such transaction. At the time of consummation thereof, there shall not exist any judgment, order or injunction prohibiting or imposing material adverse conditions on any of the Refinancing Transactions. The execution and delivery of the Refinancing Transaction Documents did not, and the consummation of the Refinancing Transactions will not, violate in any material respect any Requirement of Law, or result in a breach of, or constitute a default under, any Contractual Obligation affecting the Company or any of its Subsidiaries. None of the Refinancing Transaction Documents contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 6.24 Business of Parent. Parent is engaged solely in the business of being a holding company for the Company. ARTICLE VII AFFIRMATIVE COVENANTS So long as any Lender shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, unless the Required Lenders waive compliance in writing: 7.1 Financial Statements. The Company shall deliver to the Administrative Agent (which shall promptly provide copies to each Lender), in form and detail satisfactory to the Required Lenders: -80- 91 (a) as soon as available, but not later than 90 days after the end of each fiscal year, a copy of the audited consolidated balance sheet of Parent and its Subsidiaries as at the end of such year and the related consolidated statements of income or operations, shareholders' equity and cash flows for such year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by (i) the opinion of a nationally-recognized independent public accounting firm (the "Independent Auditor"), which report (x) shall state that such consolidated financial statements present fairly the consolidated financial position of Parent and its Subsidiaries for the periods indicated in conformity with GAAP applied on a basis consistent with prior years and (y) shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of Parent's or any of its Subsidiary's records and (ii) a comparison with the budget for such fiscal year; (b) Promptly when available, and in any event within 30 days after the end of each month that is not the end of a fiscal quarter, and within 45 days after the end of each month that is the end of a fiscal quarter (other than the last month of each fiscal year), a copy of the unaudited consolidated balance sheet of Parent and its Subsidiaries as of the end of such month and the related consolidated statements of income, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such month, including a comparison with the corresponding month and period of the previous fiscal year and a comparison with the budget for such month and for such period of the current fiscal year, together with a certificate of a Responsible Officer of the Company that each such statement fairly presents the financial condition and results of operations (subject to normal year-end audit adjustments) of Parent and its Subsidiaries and has been prepared in accordance with GAAP consistently applied; and (c) Not later than 60 days after the end of each fiscal year, a copy of the projections of Parent of the consolidated operating budget and cash flow budget of Parent and its Subsidiaries for the succeeding fiscal year (including an explanation of the assumptions used in preparing such budgets), such projections to be accompanied by a certificate of a Responsible Officer of the Company to the effect that (i) such projections were prepared by the Company in good faith, (ii) the Company has a reasonable basis for the assumptions contained in such projections and (iii) such projections have been prepared according to such assumptions. 7.2 Certificates; Other Information. The Company shall furnish to the Administrative Agent (and the Administrative Agent will promptly distribute copies of the same to the Lenders): (a) concurrently with the delivery of the financial statements referred to in subsection 7.1(a), a certificate of the Independent Auditor stating that in making the examination necessary therefor no knowledge was obtained of any Event of Default or Unmatured Event of Default, except as specified in such certificate; (b) concurrently with the delivery of the financial statements referred to in subsection 7.1(a) and each set of quarterly statements referred to in subsection 7.1(b), a Compliance Certificate executed by a Responsible Officer; -81- 92 (c) promptly, copies of all financial statements and regular, periodic or special reports (including Forms 10K, 10Q and 8K) that Parent, the Company or any Subsidiary may make to, or file with, the SEC; (d) promptly from time to time, any notices (including notices of default or acceleration thereunder) received from any holder or trustee of, under or with respect to any Subordinated Debt of the Company; (e) forthwith upon any Qualified Refinancing, a copy of the related Qualified Indenture, certified as true and correct by the Secretary or an Assistant Secretary of the Company; (f) within 30 days of the end of each month, a Borrowing Base Certificate dated as of the end of such month and executed by a Responsible Officer (provided that (i) the Company may deliver a Borrowing Base Certificate more frequently if it chooses and (ii) after an Event of Default shall have occurred and be continuing, the Required Revolving Lenders may request that the Company deliver Borrowing Base Certificates more frequently); and (g) promptly, such additional information regarding the business, financial or corporate affairs of Parent, the Company or any Subsidiary as the Administrative Agent, at the request of any Lender, may from time to time reasonably request. 7.3 Notices. Promptly upon a Responsible Officer obtaining knowledge thereof, the Company shall notify the Administrative Agent (and the Administrative Agent will promptly distribute such notice to the Lenders) of: (a) the occurrence of any Event of Default or Unmatured Event of Default; (b) any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect, including, if applicable, (i) any breach or non-performance of, or any default under, a Contractual Obligation of the Company or any Subsidiary, (ii) any dispute, litigation, investigation, proceeding or suspension between the Company or any Subsidiary and any Governmental Authority or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Company or any Subsidiary; (c) the occurrence of any of the following events affecting the Company or any ERISA Affiliate (but in no event more than ten days after such event), and deliver to the Administrative Agent (which shall promptly deliver to each Lender a copy thereof) a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to the Company or any ERISA Affiliate with respect to such event: (i) an ERISA Event; or (ii) a contribution failure with respect to a Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA; -82- 93 (d) any material change in accounting policies or financial reporting practices by the Company or any of its consolidated Subsidiaries; (e) any Mandatory Prepayment Event; (f) other than payments permitted by subsection 8.16(g), any proposed payment of principal of Subordinated Debt prior to the making thereof; and (g) upon the request from time to time of the Administrative Agent, the Swap Termination Values, together with a description of the method by which such values were determined, relating to any then-outstanding Swap Contracts to which the Company or any of its Subsidiaries is party. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Company or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under subsection 7.3(a) shall describe with particularity any and all clauses or provisions of this Agreement or any other Loan Document that have been breached or violated. 7.4 Preservation of Corporate Existence, Etc. The Company shall cause each Subsidiary to: (a) preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation, except a Subsidiary need not be in compliance with the foregoing to the extent such Subsidiary is sold pursuant to Section 8.2 or merged or consolidated into another Person pursuant to Section 8.3; (b) preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises, in each case which are material and which are necessary or desirable in the normal conduct of its business, except in connection with transactions permitted by Section 8.3 and dispositions of assets permitted by Section 8.2; and (c) preserve or renew all of its registered patents, copyrights, trademarks, trade names and service marks, the non-preservation of which would reasonably be expected to have a Material Adverse Effect. 7.5 Maintenance of Property. Each of the Company and Parent shall, and shall cause each Subsidiary to, maintain and preserve all property material to the normal conduct of its business in good working order and condition, ordinary wear and tear excepted, other than obsolete, worn out or surplus equipment. 7.6 Insurance. The Company shall, and shall cause each Subsidiary to, maintain with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. -83- 94 7.7 Payment of Obligations. Each of the Company and Parent shall, and shall cause each Subsidiary to, pay and discharge as the same shall become due and payable, unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Company or such Subsidiary in respect thereof, all of its obligations and liabilities, including: (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets; and (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; provided that no violation of this Section 7.7 with respect to any Indebtedness shall constitute an Event of Default unless such violation is also an Event of Default under subsection 9.1(e). 7.8 Compliance with Laws. Each of the Company and Parent shall, and shall cause each Subsidiary to, comply in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act), except such as may be contested in good faith or as to which a bona fide dispute may exist. 7.9 Compliance with ERISA. The Company shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code. 7.10 Inspection of Property and Books and Records. Each of the Company and Parent shall, and shall cause each Subsidiary to, maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Company and such Subsidiary. Each of the Company and Parent shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Administrative Agent or any Lender (a) to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and to make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants and (b) to inspect any of their Inventory and equipment, to perform appraisals of any of their equipment, and to inspect, audit, check and make copies and/or extracts from the books, records, computer data and records, computer programs, journals, orders, receipts, correspondence and other data relating to Inventory, Accounts Receivable, contract rights, general intangibles, equipment and any other Collateral, or relating to any other transactions between the parties hereto; at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company; provided, however, that when an Event of Default exists, the Administrative Agent or any Lender may do any of the foregoing without advance notice. After the occurrence and during the continuance of an Event of Default, any such inspection shall be at the Company's expense. -84- 95 7.11 Interest Rate Protection. The Company shall, within 90 days of the Restatement Date, enter into and thereafter maintain one or more Permitted Swap Obligations for a notional amount of at least $200,000,000 for a term of at least three years, on terms and conditions reasonably satisfactory to the Administrative Agent, and, except for interest rate caps for which all of the Company's obligations are paid in full upon the Company's entering into such Permitted Swap Obligations and with respect to which the Company's obligations are not secured under the Collateral Documents, on an ISDA standard form with one or more Lenders or Affiliates thereof or with counterparties reasonably acceptable to the Administrative Agent. 7.12 Environmental Covenant. The Company will, and will cause each of its Subsidiaries to, (a) use and operate all of its facilities and properties in material compliance with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in material compliance therewith, and handle all Hazardous Materials in material compliance with all applicable Environmental Laws; (b) promptly notify the Administrative Agent and provide copies of all written material Environmental Claims, and act in a diligent and prudent fashion to address such Environmental Claims, including Environmental Claims that allege that the Company or any of its Subsidiaries is not in compliance with Environmental Laws; and (c) provide such information and certifications which the Administrative Agent may reasonably request from time to time to evidence compliance with this Section 7.12. 7.13 Use of Proceeds. The Company shall use the proceeds of the Loans and the Letters of Credit (i) to finance the Refinancing Transactions and to pay fees and expenses related thereto and (ii) for working capital and other general corporate purposes not in contravention of any Requirement of Law or of any Loan Document; provided that Revolving Loans may be used to finance Acquisitions permitted in accordance with subsection 8.4(i). 7.14 Further Assurances. (a) Each of the Company and Parent shall, and shall cause each Subsidiary to, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all such further acts, deeds, conveyances, security agreement, mortgages, assignments, estoppel certificates, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments the Administrative Agent or the Required Lenders, as the case may be, may reasonably request from time to time in order (1) to ensure that (i) the obligations of the Company and Parent hereunder and under the other Loan Documents are secured by substantially all assets of the Company and Parent (provided, that unless otherwise reasonably required by the Required Lenders, the pledge of the Capital Stock of a Foreign Subsidiary shall be limited to 65% of the outstanding Capital Stock of such Subsidiary) and guaranteed, pursuant to the Loan Documents, by Parent and all Domestic Subsidiaries that are Material Subsidiaries (including, promptly upon the acquisition or creation thereof, any Material Subsidiary created or acquired after the date hereof) and (ii) the obligations of each Subsidiary under the Loan Documents are secured by substantially all of the assets of such Subsidiary (provided, that unless reasonably required by the Required Lenders, the -85- 96 pledge of the Capital Stock of a Foreign Subsidiary shall be limited to 65% of the outstanding Capital Stock of such Subsidiary), (2) to perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby and (3) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Administrative Agent and the Lenders the rights granted or now or hereafter intended to be granted to the Administrative Agent and the Lenders under any Loan Document or under any other document executed in connection therewith. Contemporaneously with the execution and delivery of any document referred to above, each of the Company and Parent shall, and shall cause each Subsidiary to, deliver all resolutions, opinions and corporate documents as the Administrative Agent or the Required Lenders may reasonably request to confirm the enforceability of such document and the perfection of the security interest created thereby, if applicable. The Company shall, and shall cause its Subsidiaries to, use best efforts to obtain consents of landlords to the granting of security interests in favor of the Administrative Agent for the benefit of the Lender Parties in all leasehold interests of the Company or any Subsidiary of real property that is used for distribution or warehousing and has aggregate improvements of 100,000 square feet or greater and such other leased properties as the Administrative Agent may reasonably request; provided, however, that such best efforts obligation shall not require the Company or any Subsidiary to make any payment of money or property. (b) If at any time (x) there are Subsidiaries that are not parties to the Subsidiary Security Agreement or the Subsidiary Guaranty and (y) (i) the aggregate assets of such Subsidiaries exceed 5% of the consolidated assets of the Company and its Subsidiaries, (ii) the aggregate revenues of such Subsidiaries for any fiscal quarter exceed 5% of the consolidated revenues of the Company and its Subsidiaries for such period or (iii) the aggregate investments of the Company and its other Subsidiaries in and advances to such Subsidiaries exceed 5% of the consolidated assets of the Company and its Subsidiaries, then the Company shall cause one or more Subsidiaries that are not then parties to the Subsidiary Security Agreement and/or the Subsidiary Guaranty to execute and deliver to the Administrative Agent counterparts to such agreements and become parties thereto such that the circumstances described in the foregoing clauses (y)(i), (y)(ii) and (y)(iii) do not exist, and in connection with such execution and delivery the Company shall cause to be delivered to the Administrative Agent such opinions of counsel and other supporting documentation in respect thereof as the Administrative Agent shall reasonably request. (c) The Company shall cause each financial institution at which Parent, the Company or any Domestic Subsidiary maintains any lockbox, deposit account or other similar account to deliver to the Administrative Agent and the Company a writing, in form and substance satisfactory to the Administrative Agent, acknowledging and consenting to the security interest of the Administrative Agent in such lockbox or account and all cash, checks, drafts and other instruments or writings for the payment of money from time to time therein, confirming such financial institution's agreement to follow the instructions of the Administrative Agent with respect to all such cash, checks, drafts and other instruments or writings for the payment of money following the occurrence of any Event of Default or Unmatured Event of Default of the type specified in subsection 9.1(f) or (g) and waiving all rights of setoff and banker's lien on all items held in any such lockbox or account. With respect to each of the accounts held at First State Bank Lake Lillian and listed on Schedule V of the Security Agreement (Company and Parent), the Company shall not be obligated to obtain an agreement from such bank covering -86- 97 such account and satisfying the requirements of the immediately preceding sentence so long as the amount in such account is less than $5,000; provided, however, that notwithstanding the foregoing, upon the occurrence of an Event of Default or Unmatured Event of Default or at the request of Administrative Agent, the Company shall have 30 days to obtain an agreement covering each of the accounts referred to in this sentence and satisfying the requirements of the immediately preceding sentence. ARTICLE VIII NEGATIVE COVENANTS So long as any Lender shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, unless the Required Lenders waive compliance in writing: 8.1 Limitation on Liens. The Company and Parent shall not, and shall not permit any Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following ("Permitted Liens"): (a) any Lien existing on property of the Company or any Subsidiary on the Restatement Date and set forth on Schedule 8.1 securing Indebtedness outstanding on such date; (b) any Lien created under any Loan Document; (c) Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section 7.7, provided that no notice of lien has been filed or recorded under the Code; (d) growers', carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business which are not delinquent or which are being contested in good faith and by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; (e) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation; (f) Liens on property of the Company or any Subsidiary securing (i) the non-delinquent performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, (ii) surety bonds (excluding appeal bonds and other bonds posted in connection with court proceedings or judgments) and (iii) other non-delinquent obligations of a like nature, in each case, incurred in the ordinary course of business, provided that all such Liens in the aggregate would not (even if enforced) cause a Material Adverse Effect; -87- 98 (g) Liens consisting of judgment or judicial attachment Liens and Liens securing contingent obligations on appeal bonds and other bonds posted in connection with court proceedings or judgments, provided that the enforcement of such Liens is effectively stayed; (h) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the businesses of the Company and its Subsidiaries; (i) purchase money security interests on any property acquired by the Company or any Subsidiary in the ordinary course of business, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property, provided that (i) any such Lien attaches to such property concurrently with or within 45 days after the acquisition thereof, (ii) such Lien attaches solely to the property so acquired in such transaction, (iii) the principal amount of the Indebtedness secured thereby does not exceed 100% of the cost of such property and (iv) the principal amount of the Indebtedness secured by all such purchase money security interests shall not at any time exceed $***; (j) Liens securing obligations in respect of capital leases on assets subject to such leases (and secured by only the assets subject to such leases) (provided that such capital leases are otherwise permitted hereunder) or Liens on property sold in a Sale/Leaseback Transaction provided that such Liens shall cover only the property subject to such Sale/Leaseback Transaction and the amount of Indebtedness secured thereby shall not exceed the fair market value of the property sold; (k) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution, provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the FRB and (ii) such deposit account is not intended by the Company or any Subsidiary to provide collateral to the depository institution; (l) Liens in connection with a Permitted Receivables Facility; (m) Liens under Permitted Security Agreements; (n) Liens securing Acquired Indebtedness permitted by subsection 8.5(k), provided that such Liens were in existence prior to the contemplation of the related Acquisition and do not extend to any assets other than the property financed with such Acquired Indebtedness; (o) Liens, defects and other matters specifically disclosed on the title insurance policies delivered to and accepted by the Administrative Agent on the Closing Date in connection with properties subjected to a Mortgage on the Closing Date; (p) extensions, renewals and replacements of Liens referred to in clauses (a) through (o) above, provided that any such extension, renewal or replacement Lien is limited to -88- 99 the property or assets covered by the Lien extended, renewed or replaced and does not secure any Indebtedness in addition to that secured immediately prior to such extension, renewal or replacement; and (q) Liens securing other Indebtedness of the Company and its Subsidiaries not expressly permitted by clauses (a) through (p) above; provided that the aggregate amount of the Indebtedness secured by Liens permitted pursuant to this clause (q) shall not exceed $*** in the aggregate outstanding at any time. 8.2 Disposition of Assets. The Company shall not, and shall not permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of (whether in one or a series of transactions) any property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except: (a) dispositions of Inventory, or worn-out or surplus equipment, all in the ordinary course of business; (b) the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment, unless such equipment is not needed in the Company's or such Subsidiary's business; (c) transfers of Accounts Receivable under a Permitted Receivables Facility; (d) dispositions not otherwise permitted hereunder (including the disposition of all of the Capital Stock of any operating Subsidiary by sale of stock or by merger of such Subsidiary with or into another Person, but excluding any Sale/Leaseback Transaction) which are made for fair market value if the fair market value of all assets so disposed of by the Company and its Subsidiaries under this clause (d) since the Restatement Date does not exceed $*** in the aggregate; provided that (i) at the time of any disposition, no Event of Default or Unmatured Event of Default shall exist or will result from such disposition, (ii) at least 75% of the consideration received by the Company or such Subsidiary from such disposition is in cash or Cash Equivalent Investments and (iii) the proceeds thereof are applied as provided in subsection 2.8(a); (e) mergers expressly permitted by clauses (i) and (ii) of Section 8.3 or transfers by any Wholly-Owned Subsidiary of the Company of its assets upon its liquidation to the Company or any of its other Wholly-Owned Subsidiaries; (f) dispositions (including by means of a Sale/Leaseback Transaction) of Assets Held for Sale for consideration not less than the fair market value of the assets disposed of; (g) dispositions of assets for not less than fair market value in Sale/Leaseback Transactions permitted under Section 8.18 (provided that the aggregate fair market value of all property sold pursuant to this clause (g) may not exceed $***); and -89- 100 (h) dispositions of assets having an aggregate fair market value not exceeding $*** in any fiscal year. 8.3 Consolidations and Mergers. The Company shall not, and shall not permit any Subsidiary to, merge or consolidate with or into any other Person, except that (i) any Subsidiary may merge with the Company (provided that the Company shall be the continuing or surviving corporation) or with any one or more Wholly-Owned Subsidiaries (provided that a Wholly-Owned Subsidiary shall be the continuing or surviving corporation), (ii) any Wholly-Owned Subsidiary may acquire by merger any Person in an Acquisition permitted by subsection 8.4(i) (provided that such Wholly-Owned Subsidiary is the survivor of such merger) and (iii) any Subsidiary may be merged with or into any other Person in a transaction permitted by subsection 8.2(d). 8.4 Loans and Investments. The Company shall not, and shall not permit any Subsidiary to, purchase or acquire, or make any commitment to purchase or acquire, any Capital Stock, equity interest or other obligations or securities of, or any interest in, any other Person, or make or commit to make any Acquisition, or make or commit to make any advance, loan, extension of credit or capital contribution to or any other investment in, any other Person, except for: (a) investments in Cash Equivalent Investments; (b) extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business; (c) investments by the Company in its Wholly-Owned Subsidiaries or by any Subsidiary in any Wholly-Owned Subsidiary, in the form of contributions to capital or loans or advances; provided that, immediately before and after giving effect to such investment, no Event of Default or Unmatured Event of Default shall have occurred and be continuing and the aggregate amount invested in Foreign Subsidiaries after the Restatement Date shall not exceed $***; (d) loans or advances made by any Subsidiary to the Company; (e) loans and advances to employees in the ordinary course of business (such as travel advances) in an aggregate amount not at any time exceeding $***; (f) investments by the Company and its Subsidiaries in Joint Ventures in the form of contributions of capital, loans, advances or Contingent Obligations; provided that, immediately before and after giving effect to such investment, (x) no Event of Default or Unmatured Event of Default shall have occurred and be continuing, including pursuant to Section 8.9, and (y) the aggregate amount of all investments pursuant to this clause (f) shall not exceed $*** in the aggregate outstanding at any time; (g) investments constituting Permitted Swap Obligations or payments or advances under Swap Contracts relating to Permitted Swap Obligations; -90- 101 (h) other investments in an aggregate amount not exceeding $*** on and after the Restatement Date (with all such investments valued at the time of investment at the cash amount thereof, if in cash, the fair market value thereof as determined by the board of directors of the Company, if in property, and at the maximum amount thereof if in Contingent Obligations); (i) Acquisitions, provided that (i) the Company shall have delivered to the Administrative Agent evidence in form and substance satisfactory to the Administrative Agent that the financial conditions referred to in clause (ii) below with respect to such Acquisition will be satisfied, together with a statement of a Responsible Officer of the Company detailing all amounts required to consummate the prospective Acquisition and a business description and summary of terms of the prospective Acquisition, (ii) the Company shall be in compliance with all financial covenants in Sections 8.11, 8.12, 8.13 and 8.14 on a pro forma basis for the period of four consecutive fiscal quarters ending on the last day of the last completed fiscal quarter immediately preceding the proposed date of consummation of the prospective Acquisition (on the assumption such Acquisition occurred on the first day of such four fiscal quarter period and using historical results of the Company and its Subsidiaries and the related Acquisition Prospect for such period, and including any pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act), (iii) such Acquisition shall be consummated in accordance with all Requirements of Law and the Company and its Subsidiaries shall have obtained all consents and approvals necessary or desirable to such consummation and the business operations of such Acquisition Prospect after such Acquisition, including governmental and contractual approvals, (iv) no Event of Default or Unmatured Event of Default shall exist at the time of consummation thereof or would result therefrom, (v) the Person to be acquired (or its Board of Directors or equivalent governing body) has not (A) announced it will oppose such Acquisition or (B) commenced any action which alleges that such Acquisition violates, or will violate, any Requirement of Law, and (vi) the total consideration for all such Acquisitions (including cash and noncash purchase price, liabilities assumed, deferred or financed purchase price, purchase price characterized as noncompetition payments and the like), together with the amount of all investments made pursuant to subsection 8.4(j), does not exceed in the aggregate during the term of this Agreement an amount equal to the sum of (x) $*** plus (y) an amount -91- 102 equal to the aggregate amount received by the Company as capital contributions from Parent after the Restatement Date (provided that no more than $*** (plus an amount equal to the aggregate amount received by the Company as capital contributions from Parent after the Restatement Date) of such total consideration may be paid with the proceeds of Indebtedness); (j) investments in Subsidiaries acquired in Acquisitions permitted under subsection 8.4(i) that are not Wholly-Owned Subsidiaries, provided that the amount of all such investments, together with the aggregate total consideration paid in connection with all Acquisitions permitted by subsection 8.4(i) (calculated in the manner set forth in subsection 8.4(i)(vi)), does not exceed in the aggregate during the term of this Agreement an amount equal to the sum of (x) $*** plus (y) an amount equal to the aggregate amount received by the Company as capital contributions from Parent after the Restatement Date; (k) notes in an aggregate principal amount not to exceed 80% of the aggregate consideration received by the Company (including cash and noncash purchase price, purchase price characterized as non competition payments and the like) in connection with the sale of the Company's Woodland, California Plant # 23 (together with any refinancing of such notes, provided that such refinancing does not increase the principal amount thereof); and (l) Investments in existence on the Restatement Date which are set forth on Schedule 8.4. For purposes of this Section and subsection 8.5(e), the amount of any investment outstanding at any time shall be the total of (x) the original cost of such investment (meaning the cash amount thereof, if in cash, or the fair market value thereof as determined by the senior management of the Company, if in property) without any adjustment for increases or decreases in value or any writeup or writedown with respect to such investment (provided that any investment in the form of Contingent Obligations shall be valued at the maximum reasonably expected liability thereof) minus (y) an amount equal to the lesser of the return of cash with respect to any such investment (other than a Contingent Obligation) and the initial amount of such investment, in either case, less the cost of disposition of such investment. 8.5 Limitation on Indebtedness. The Company shall not, and shall not permit any Subsidiary to, create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except: (a) Indebtedness incurred pursuant to this Agreement, the Subsidiary Guaranty and the other Loan Documents; (b) (i) the Old Subordinated Notes outstanding on the Restatement Date after the closing of the Old Subordinated Note Tender Offer and (ii) the New Subordinated Notes and any Qualified Notes issued in a Qualified Refinancing and, in each case, related Guaranty Obligations by Subsidiaries of the Company; (c) Indebtedness consisting of Contingent Obligations permitted pursuant to Section 8.8; -92- 103 (d) Indebtedness existing on the Restatement Date, as set forth in Schedule 8.5(d), and extensions, renewals or replacements of such Indebtedness to the extent that the principal amount of such Indebtedness is not increased; (e) Indebtedness of Subsidiaries to the Company or Wholly-Owned Subsidiaries; provided, that the aggregate amount of all such Indebtedness of Foreign Subsidiaries shall not exceed $*** at any one time outstanding; (f) Indebtedness up to $*** outstanding at any time secured by Liens permitted by subsection 8.1(i); (g) Indebtedness incurred in connection with leases permitted pursuant to Section 8.10; (h) Indebtedness of the Company or any Subsidiary of the Company in connection with guaranties resulting from endorsement of negotiable instruments in the ordinary course of business; (i) surety bonds and appeal bonds required in the ordinary course of business or in connection with the enforcement of rights or claims of the Company or in connection with judgments that do not result in an Unmatured Event of Default or an Event of Default; (j) any Indebtedness arising under a Permitted Receivables Facility; (k) up to $*** of Acquired Indebtedness assumed in Acquisitions permitted under subsection 8.4(i); (l) Indebtedness incurred in a Sale/Leaseback Transaction permitted under Section 8.18; and (m) other Indebtedness in an aggregate amount not at any time exceeding $***. It is understood that any Indebtedness borrowed in a foreign currency shall continue to be permitted under this Section, notwithstanding any fluctuation in the Dollar Amount of such Indebtedness, as long as the outstanding principal balance of such Indebtedness (denominated in its original currency) does not exceed the maximum amount of such Indebtedness (denominated in such currency) permitted to be outstanding on the date such Indebtedness was incurred. 8.6 Transactions with Affiliates. The Company shall not, and shall not permit any Subsidiary to, enter into any transaction with any Affiliate of the Company (other than a Material Subsidiary), except upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate of the Company; provided that the TPG Agreements and the Tax Sharing Agreement shall not violate this Section. 8.7 Use of Proceeds. The Company shall not, and shall not permit any Subsidiary to, use any portion of the proceeds of any Loan or any Letter of Credit, directly or indirectly, (i) to -93- 104 purchase or carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Company or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act. 8.8 Contingent Obligations. The Company shall not, and shall not permit any Subsidiary to, create, incur, assume or suffer to exist any Contingent Obligation except: (a) endorsements for collection or deposit in the ordinary course of business; (b) Permitted Swap Obligations; (c) Contingent Obligations of the Company and its Subsidiaries existing as of the Restatement Date and listed on Schedule 8.8 and Guaranty Obligations by the Company relating to Indebtedness of Wholly-Owned Subsidiaries, provided, that all Contingent Obligations permitted by this subsection 8.8(c) shall not exceed $*** at any one time outstanding; (d) Contingent Obligations arising under the Loan Documents; (e) Guaranty Obligations with respect to or constituting obligations of the Company or a Wholly-Owned Subsidiary that are permitted by the Loan Documents; (f) Guaranty Obligations of Subsidiaries of the Old Subordinated Notes and the New Subordinated Notes pursuant to the terms of the Old Subordinated Indenture and the New Subordinated Indenture, respectively; and (g) Contingent Obligations with respect to Joint Ventures to the extent permitted by Section 8.9. 8.9 Joint Ventures. The Company shall not, and shall not permit any Subsidiary to, enter into any Joint Venture, except that the Company or any Subsidiary may enter into any Joint Venture so long as the aggregate amount invested by the Company and its Subsidiaries in all Joint Ventures in any form (including by capital contribution, incurrence of Indebtedness by any such Joint Venture to the Company or any Subsidiary or the incurrence of Contingent Obligations by the Company or any Subsidiary with respect to any such Joint Venture), during the term of this Agreement does not exceed $***; provided, however, that for purposes of determining the aggregate amount invested in Joint Ventures hereunder (x) any return of principal or equity received in cash on any amount invested hereunder and (y) the fair market value of any other property received in exchange for any amount invested hereunder shall be deducted. 8.10 Lease Obligations. The Company shall not, and shall not permit any Subsidiary to, create or suffer to exist any obligations for the payment of rent for any property under lease or agreement to lease, except for: (a) leases of the Company and its Subsidiaries in existence on the Restatement Date and any renewal, extension or refinancing thereof; -94- 105 (b) operating leases entered into by the Company or any Subsidiary after the Restatement Date in the ordinary course of business; (c) capital leases entered into by the Company or any Subsidiary, provided that no Event of Default or Unmatured Event of Default has occurred and is continuing or will result from the incurrence of the obligations contemplated thereby; and (d) operating leases entered into by the Company or any Subsidiary in connection with any Sale/Leaseback Transaction permitted under Section 8.18, provided that no Event of Default or Unmatured Event of Default has occurred and is continuing or will result from the incurrence of the obligations contemplated thereby. 8.11 Minimum Fixed Charge Coverage. The Parent will not permit the Fixed Charge Coverage Ratio for any Computation Period to be less than the ratio set forth below opposite the period in which such Computation Period ends:
Period Ratio ------ ----- 6/30/01 through 3/31/03 ***:1 6/30/03 through 3/31/05 ***:1 6/30/05 and thereafter ***:1.
8.12 Minimum Interest Coverage. The Parent will not permit the Interest Coverage Ratio for any Computation Period set forth below to be less than the ratio set forth below opposite the period in which such Computation Period ends:
Period Ratio ------ ----- 6/30/01 through 3/31/03 ***:1 6/30/03 through 3/31/04 ***:1 6/30/04 through 3/31/05 ***:1 6/30/05 and thereafter ***:1.
8.13 Maximum Senior Debt Ratio. The Parent will not permit the Senior Debt Ratio for any Computation Period to exceed the ratio set forth below opposite the period in which such Computation Period ends:
Period Ratio ------ ----- 6/30/01 through 6/30/02 ***:1 9/30/02 through 3/31/03 ***:1 6/30/03 through 3/31/04 ***:1 6/30/04 through 3/31/05 ***:1
-95- 106 6/30/05 and thereafter ***:1.
8.14 Maximum Total Debt Ratio. The Parent will not permit the Total Debt Ratio for any Computation Period set forth below to exceed the ratio set forth below opposite the period in which such Computation Period ends: Period Ratio ------ ----- 6/30/01 through 6/30/02 ***:1 9/30/02 through 3/31/03 ***:1 6/30/03 through 3/31/04 ***:1 6/30/04 through 3/31/05 ***:1 6/30/05 and thereafter ***:1.
8.15 Maximum Capital Expenditures. The Parent will not permit the aggregate amount of all Capital Expenditures made during any fiscal year to exceed the Base Amount (defined below); provided that to the extent Capital Expenditures actually made in any fiscal year (beginning with the fiscal year ending June 30, 2002) are less than the Base Amount for such fiscal year, the lesser of (x) the amount of the difference and (y) $*** may be carried forward and used to make Capital Expenditures in the two next succeeding fiscal years; provided, further, that in any fiscal year, Capital Expenditures made shall be applied first to the Base Amount for such fiscal year and second to reduce a carryforward from the least recent fiscal year prior to reducing any other carryforward. When used herein, "Base Amount" means (x) with respect to each fiscal year (other than the fiscal year ending June 30, 2002), $*** and (y) with respect to the fiscal year ending June 30, 2002, $***. 8.16 Restricted Payments. The Company shall not, and shall not permit any Subsidiary to, (1) declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class of its Capital Stock, or purchase, redeem or otherwise acquire for value any shares of its Capital Stock or any warrants, rights or options to acquire such shares, now or hereafter outstanding, or (2) make any redemptions, prepayments, defeasances or repurchases of any Subordinated Debt except that: (a) any Subsidiary may declare and pay dividends to the Company or a Wholly-Owned Subsidiary; (b) the Company may declare and make dividend payments or other distributions payable solely in Common Stock; (c) the initial New Subordinated Notes may be exchanged for the Series B New Subordinated Notes pursuant to the terms of the New Subordinated Note Purchase -96- 107 Agreement and the New Subordinated Notes may be repaid using the Net Cash Proceeds of a Qualified Refinancing; (d) the Company or any of its Subsidiaries may purchase (or may pay a dividend to Parent to enable Parent to purchase) (i) Capital Stock or options with respect to Capital Stock held by employees or management of Parent or any of its Subsidiaries in connection with the termination of employment of any such employees or management and (ii) Capital Stock for the purpose of holding such Capital Stock for future issuance under an employee stock plan, provided that all such payments in the aggregate for clauses (i) and (ii) do not exceed $*** in any fiscal year or $*** in the aggregate from and after the Restatement Date; (e) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing or would result therefrom, (i) the Company may pay a dividend to Parent not more than 10 days in advance of June 15 and December 15 of each year commencing in 2003, with each such dividend to be in an amount no greater than the amount Parent is required to pay in respect of the next scheduled payment of cash interest on the Old Parent Discount Notes which is to become due on such June 15 or December 15, and (ii) the Company may pay a dividend to Parent in an amount sufficient to permit Parent to redeem or repurchase any Old Parent Discount Notes remaining outstanding after the Restatement Date; (f) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing or would result therefrom, the Company may pay dividends to Parent; provided, that the Company may only pay dividends pursuant to this clause (f) if, after giving effect thereto (as well as to all dividends made under clause (e) above), the Company's pro forma Senior Debt Ratio for the last four fiscal quarters immediately preceding the date of such dividend (determined as if such all dividends had been made on the first day of such period), would be less than ***:1; (g) ***; (h) so long as no Event of Default or Unmatured Event of Default has occurred and is continuing or would result therefrom, the Company may repurchase or redeem New Subordinated Notes or Qualified Notes in an amount not to exceed the portion of Net Cash Proceeds of an issuance of equity securities of Parent, the Company or any Subsidiary which is not used to finance Acquisitions under subsection 8.4(i) or required to be used to repay Term Loans under subsection 2.8(a)(iv); (i) the Company may make payments to Parent at the times and in the amounts provided for in the Tax Sharing Agreement; (j) the Company may make payments to TPG Partners of fees and expenses at the times and in the amounts provided for in the TPG Agreements; (k) the Company may make payments to Parent in amounts not to exceed $*** per fiscal year to reimburse Parent for expenses incurred by Parent in the ordinary course of business; and -97- 108 (l) on the Restatement Date, the Company may purchase and retire the Old Subordinated Notes in accordance with the Old Subordinated Note Tender Offer. 8.17 ERISA. The Company shall not, and shall not permit any of its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or would reasonably be expected to result in a Material Adverse Effect; or (b) engage in a transaction that could reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA. 8.18 Limitations on Sale and Leaseback Transactions. The Company shall not, and shall not permit any Subsidiary to, enter into any arrangement with any Person providing for the leasing by the Company or any Subsidiary of any real or personal property, which property is or has been sold or transferred by the Company or any Subsidiary to such Person in contemplation of taking back a lease thereof (a "Sale/Leaseback Transaction"); provided, however, that the Company or any Subsidiary may enter into Sale/Leaseback Transactions if, with respect to each such Sale/Leaseback Transaction (i) the Company or such Subsidiary is permitted to incur or suffer to exist the Lien resulting therefrom and the Indebtedness related thereto under subsection 8.1(j), (ii) the Company or such Subsidiary is permitted to dispose of the property disposed of in such Sale/Leaseback Transaction under subsection 8.2(f) or (g), and (iii) the Company or such Subsidiary is permitted to lease the property relating thereto under Section 8.10. 8.19 Limitation on Restriction of Subsidiary Dividends and Distributions. The Company will not, and will not permit any Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (a) pay dividends or make other distributions on its Capital Stock owned by the Company or any Subsidiary, or pay any Indebtedness owed to the Company or any Subsidiary, (b) make loans or advances to the Company or (c) transfer any of its assets or properties to the Company, except for such encumbrances or restrictions existing by reason of or under (i) applicable law, (ii) this Agreement and the other Loan Documents, (iii) customary non-assignment provisions of any contract or lease governing a leasehold or ownership interest of any Subsidiary, (iv) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired, (v) customary net worth provisions contained in leases and other agreements entered into by a Subsidiary in the ordinary course of business, (vi) customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock of such Subsidiaries, (vii) customary provisions in joint venture agreements and other similar agreements relating solely to the securities, assets and revenues of such joint venture or other business venture, (viii) the New Subordinated Indenture, as in effect on the Restatement Date and (ix) any agreement governing Indebtedness incurred to refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clause (iv) above, provided, however, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are not, in the aggregate, materially less favorable to the Company as determined by the Board of Directors of the Company in its reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in the agreements referred to in such clause (iv). -98- 109 8.20 Inconsistent Agreements. The Company will not, and will not permit any Subsidiary to, enter into any agreement containing any provision which would be violated or breached by any borrowing by the Company hereunder or by the performance by the Company, Parent or any Subsidiary of their respective obligations hereunder or under any other Loan Document. The Company will not, and will not permit any of its Subsidiaries to, enter into any agreement (other than this Agreement and the other Loan Documents) prohibiting the creation or assumption of any Lien upon its properties, revenues or assets, whether now owned or hereafter acquired, or the ability of the Company and its Subsidiaries to amend or modify this Agreement or any other Loan Document, other than (i) the New Subordinated Indenture and (ii) any agreement in connection with Permitted Liens described in subsections 8.l(i) and (j) if such prohibition is by its terms effective only against the assets subject to such Permitted Lien. 8.21 Change in Business. The Company shall not, and shall not permit any Subsidiary to, engage in any material business other than production, processing and related distribution of food and beverage products and other related businesses. 8.22 Amendments to Certain Documents. The Company and Parent shall not make or agree to any amendment to or modification of, or waive any of their respective rights under, any of the terms of (a) the Merger Agreement, (b) the Old Subordinated Note Purchase Agreement or the New Subordinated Note Purchase Agreement, (c) the Old Subordinated Indenture (other than pursuant to the Old Subordinated Note Supplemental Indenture) or the New Subordinated Indenture, (d) any Qualified Indenture, (e) any other instrument evidencing Subordinated Debt, (f) the Tax Sharing Agreement, (g) the TPG Agreements, (h) the Old Parent Discount Note Indenture (other than pursuant to the Old Parent Discount Note Supplemental Indenture) or (i) any other instrument evidencing Old Parent Discount Notes, unless, in any case, any such amendment, modification or waiver is not adverse in any respect to the Lenders. 8.23 Fiscal Year. The Company and Parent shall not, and shall not permit any Material Subsidiary to, change the fiscal year of the Parent, the Company or any Material Subsidiary; provided, that any Material Subsidiary acquired in an Acquisition permitted hereunder may change its fiscal year to end on June 30. 8.24 Limitation on Issuance of Guaranty Obligations. The Company will not permit any Subsidiary to create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to any Guaranty Obligation of such Subsidiary relating to any Indebtedness of the Company unless: (a) such Subsidiary, if it is not already a party to the Subsidiary Guaranty, simultaneously executes and delivers to the Administrative Agent a counterpart to the Subsidiary Guaranty, together with such supporting documentation as the Administrative Agent may reasonably request, notwithstanding Section 7.14, (b) if such Indebtedness is by its terms subordinated to the Obligations, any such assumption, guaranty or other liability of such Subsidiary with respect to such Indebtedness shall be subordinated, in form and substance satisfactory to the Administrative Agent, to such Subsidiary's Guaranty Obligation with respect to the Obligations to the same extent as such Indebtedness is subordinated to the Obligations (provided that such Subsidiary's Guaranty -99- 110 Obligation of such Indebtedness of the Company shall be subordinated to the full amount of such Subsidiary's Guaranty Obligation under the Subsidiary Guaranty without giving effect to any reduction thereto necessary to render the Guaranty Obligation of such Subsidiary thereunder not voidable under applicable law relating to fraudulent conveyance or fraudulent transfer), and (c) such Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any right of reimbursement, indemnity or subrogation or any other rights against the Company or any other Subsidiary as a result of any payment by such Subsidiary under such Guaranty Obligation unless and until payment in full in cash is made of such Indebtedness of the Company. 8.25 Parent Covenants. Parent covenants that (i) it will not permit any change to be made in the character of its business as carried out on the date hereof and will not engage in any business or activity of any kind or enter into any transaction or indenture, mortgage, instrument, agreement, contract, lease or other undertaking other than in the ordinary course of its business as the holding company for the Company or as expressly contemplated by this Section, (ii) it will not merge or consolidate with or into, or sell, lease or otherwise dispose of (whether in one transaction or a series of transactions) substantially all of its assets (whether now or hereafter acquired) to any other Person, (iii) it will have no material assets other than Capital Stock of the Company, (iv) it will have no material liabilities other than (a) liabilities arising directly as a result of its ownership of the Company and (b) the Old Parent Discount Notes outstanding on the Restatement Date after the closing of the Old Parent Discount Note Tender Offer and in any event will not incur or suffer to exist any Indebtedness for borrowed money (other than as permitted above) or Guaranty Obligations) other than such Old Parent Discount Notes, pursuant to Article XII and pursuant to the New Subordinated Indenture, the Old Subordinated Indenture and any Qualified Indenture, provided that the Guaranty Obligations that arise pursuant to such indentures are subordinated to the Guaranty Obligations that arise pursuant to Article XII on substantially the same terms as the New Subordinated Notes are subordinated to the Guaranteed Obligations, (v) it will not, and will not permit any of its Subsidiaries to, (a) declare or make any dividend payment or other distribution on account of any shares of the TPG Acquisition Preferred Stock other than a distribution made solely of additional shares of TPG Acquisition Preferred Stock, or (b) make any redemptions, prepayments, defeasances or repurchases (collectively, "Redemptions") of any shares of TPG Acquisition Preferred Stock other than, so long as no Event of Default or Unmatured Event of Default of the type specified in Section 9.1(f) or (g) has occurred and is continuing, Redemptions made with the Net Cash Proceeds of an equity issuance by, or capital contribution to, Parent and (vi) it will not issue any TPG Acquisition Preferred Stock for a price per share less than the liquidation preference thereof (i.e., $1,000 per share), other than in payment of regularly scheduled dividends thereon. 8.26 Senior Debt Designation. The Company will not designate any Indebtedness as "Designated Senior Debt" pursuant to the terms of the New Subordinated Indenture (or make any comparable designation with respect to any Qualified Indenture). Parent will not, and the Company and Parent will not permit any Subsidiary to, designate any Indebtedness as "Guarantor Designated Senior Debt" pursuant to the terms of the New Subordinated Indenture (or make any comparable designation with respect to any Qualified Indenture). -100- 111 ARTICLE IX EVENTS OF DEFAULT 9.1 Event of Default. Any of the following shall constitute an "Event of Default": (a) Non-Payment. The Company fails to pay, when and as required to be paid herein, any amount of principal of any Loan or of any L/C Obligation, or, within three days after the same becomes due, any amount of interest or any fees or other amounts payable hereunder or under any other Loan Document. (b) Representation or Warranty. Any representation or warranty by Parent, the Company or any Subsidiary made or deemed made herein or in any other Loan Document, or which is contained in any certificate, document or financial or other statement by Parent, the Company, any Subsidiary or any Responsible Officer furnished at any time under this Agreement or any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made. (c) Specific Defaults. The Company fails to perform or observe any term, covenant or agreement contained in any of Section 7.3 or Article VIII (other than Section 8.1, 8.5, 8.6, 8.16(1), 8.18, 8.25 or 8.26). (d) Other Defaults. The Company or Parent fails to perform or observe any term or covenant contained in Section 8.1, 8.5, 8.6, 8.16(1), 8.18, 8.25 or 8.26, and such default shall continue unremedied for a period of 10 days after the earlier of (i) the date upon which a Responsible Officer knew or reasonably should have known of such failure or (ii) the date upon which written notice thereof is given to the Company by the Administrative Agent or any Lender; or the Company, Parent or any Subsidiary fails to perform or observe any term or covenant contained in this Agreement (other than Section 7.3 or Article VIII) or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the earlier of (x) the date upon which a Responsible Officer knew or reasonably should have known of such failure or (y) the date upon which written notice thereof is given to the Company by the Administrative Agent or any Lender. (e) Cross-Default. (i) The Company, Parent or any Subsidiary (A) fails to make any payment in respect of any Indebtedness or Contingent Obligation (other than in respect of Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $10,000,000 when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise but subject to any applicable grace period) or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition shall exist, under any agreement or instrument relating to any such Indebtedness or Contingent Obligation, if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be due and payable prior to its stated maturity, or such Contingent Obligation to become payable, or cash collateral in respect thereof -101- 112 to be demanded or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Company or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) as to which the Company or any Subsidiary is an Affected Party (as so defined), and, in either event, the Swap Termination Value owed by the Company or such Subsidiary as a result thereof is greater than $5,000,000. (f) Insolvency; Voluntary Proceedings. The Company, Parent or any Material Subsidiary: (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing. (g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against the Company, Parent or any Material Subsidiary, or any writ, judgment, warrant of attachment, warrant of execution or similar process is issued or levied against a substantial part of the Company's, Parent's or any Material Subsidiary's properties, and such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, warrant of execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) the Company, Parent or any Material Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company, Parent or any Material Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor) or other similar Person for itself or a substantial portion of its property or business. (h) ERISA. (i) One or more ERISA Events shall occur with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Company under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $10,000,000; (ii) a contribution failure shall have occurred with respect to a Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA; or (iii) the Company or any ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period, one or more installment payments with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan which results in an aggregate withdrawal liability in excess of $10,000,000. (i) Monetary Judgments. One or more judgments, orders, decrees or arbitration awards is entered against the Company, Parent or any Subsidiary involving in the aggregate a liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), as to any single or related series of transactions, incidents or conditions, of $10,000,000 or more, and the same shall remain undischarged, unvacated and unstayed pending appeal for a period of 30 days after the entry thereof, or the Company, Parent or any Subsidiary shall enter into any agreement to settle or compromise any pending or threatened litigation, as to any single or related series of claims, involving payment by the Company, Parent or any Subsidiary of $10,000,000 or more. -102- 113 (j) Non-Monetary Judgments. Any non-monetary judgment, order or decree is entered against the Company, Parent or any Subsidiary which has or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. (k) Change of Control. Any Change of Control occurs. (l) Guarantor Defaults. Any Guaranty shall cease to be in full force and effect with respect to any Guarantor (other than as expressly permitted hereunder), or any Guarantor (or any Person acting by, through or on behalf of such Guarantor) shall contest in any manner the validity, binding nature or enforceability of any Guaranty with respect to such Guarantor. (m) Collateral Documents, etc. Any Collateral Document shall cease to be in full force and effect with respect to the Company, Parent or any Subsidiary (other than pursuant to its terms or as expressly permitted hereunder), or the Company, Parent or any Subsidiary (or any Person acting by, through or on behalf of the Company, Parent or any Subsidiary) shall contest in any manner the validity, binding nature or enforceability of any Collateral Document. 9.2 Remedies. If any Event of Default occurs, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders do any or all of the following: (a) declare the commitment of each Lender to make Loans and any obligation of the Issuing Lender to Issue Letters of Credit to be terminated, whereupon such commitments and obligations shall be terminated (provided, that if any Event of Default occurs after the making of the Term Loans, the Revolving Commitments shall, at the request of, or may, with the consent of, the Required Revolving Lenders (and not the Required Lenders), be terminated); (b) declare an amount equal to the maximum aggregate amount that is or at any time thereafter may become available for drawing under any outstanding Letter of Credit (whether or not any beneficiary shall have presented, or shall be entitled at such time to present, the drafts or other documents required to draw under such Letter of Credit) to be immediately due and payable, and declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; and (c) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law; provided, however, that upon the occurrence of any Event of Default specified in subsection 9.1(f) or (g), the obligation of each Lender to make Loans and the obligation of the Issuing Lender to Issue Letters of Credit shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Administrative Agent, the Issuing Lender or any other Lender. -103- 114 9.3 Rights Not Exclusive. The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising. ARTICLE X THE AGENTS 10.1 Appointment and Authorization. (a) Each Lender hereby irrevocably (subject to Section 10.9) appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Each Lender hereby appoints Chase as Syndication Agent for the Lenders, BTCo. as Documentation Agent for the Lenders, ABN AMRO Bank N.V. as Co-Syndication Agent for the Lenders and Harris Trust & Savings Bank as Co-Documentation Agent for the Lenders. The Syndication Agent, the Documentation Agent, the Co-Syndication Agent and the Co-Documentation Agent, in their capacities as such, shall have no rights or duties hereunder or under any other Loan Document. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in this Agreement and in the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligation arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. (b) The Issuing Lender shall act on behalf of the Lenders with respect to any Letters of Credit Issued by it and the documents associated therewith until such time and except for so long as the Administrative Agent may agree at the request of the Required Lenders to act for the Issuing Lender with respect thereto; provided, however, that the Issuing Lender shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article X with respect to any acts taken or omissions suffered by the Issuing Lender in connection with Letters of Credit Issued by it or proposed to be Issued by it and the applications and agreements for letters of credit pertaining to the Letters of Credit as fully as if the term "Administrative Agent", as used in this Article X, included the Issuing Lender with respect to such acts or omissions and (ii) as additionally provided in this Agreement with respect to the Issuing Lender. 10.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to -104- 115 such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. 10.3 Liability of Administrative Agent. None of the Agent-Related Persons shall (a) be liable to any Lender for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct) or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by the Company or any Subsidiary or Affiliate of the Company, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or the existence, creation, validity, attachment, perfection, enforceability, value or sufficiency of any collateral security for the Obligations or for any failure of the Company or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Company or any of the Company's Subsidiaries or Affiliates. 10.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. 10.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default or Unmatured Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Company referring to this Agreement, describing such Event of Default or Unmatured Event of Default and stating that such notice is a "notice of default". The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to such Event of Default or Unmatured Event of Default as may be requested by the Required Lenders in accordance with Article IX; provided, however, that unless and until the Administrative Agent has received any -105- 116 such request, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default or Unmatured Event of Default as it shall deem advisable or in the best interest of the Lenders. 10.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Company and its Subsidiaries, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender confirms to the Administrative Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Company and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Company hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Administrative Agent, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Company which may come into the possession of any of the Agent-Related Persons. 10.7 Indemnification of Agents. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agents and the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so), pro rata, from and against any and all Indemnified Liabilities incurred by the Agents or the Agent-Related Persons in their capacities as such; provided, however, that no Lender shall be liable for the payment to any Agent or Agent-Related Person of any portion of the Indemnified Liabilities resulting from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, to the extent the same are not reimbursed by the Company, each Lender shall reimburse each Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by such Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that such Agent is not reimbursed for such expenses by or on behalf of the Company. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of any Agent. 10.8 Administrative Agent in Individual Capacity. BofA and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other -106- 117 business with the Company and its Subsidiaries and Affiliates as though BofA were not the Administrative Agent hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, BofA or its Affiliates may receive information regarding the Company or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Company or such Affiliates) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, BofA and any Affiliate thereof shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though BofA were not the Administrative Agent. 10.9 Successor Administrative Agent. The Administrative Agent may, and at the request of the Required Lenders shall, resign as Administrative Agent upon 30 days' notice to the Lenders and the Company. If the Administrative Agent resigns under this Agreement, the Required Lenders shall have the right, with the consent of the Company so long as no Event of Default or Unmatured Event of Default has occurred and is continuing (which consent shall not be unreasonably withheld or delayed), to appoint from among the Lenders a successor agent for the Lenders. If no successor agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Company, a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term "Administrative Agent" shall mean such successor agent and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article X and Sections 11.4 and 11.5 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. Notwithstanding the foregoing, however, BofA may not be removed as the Administrative Agent at the request of the Required Lenders unless BofA and any Affiliate thereof acting as the Issuing Lender or Swingline Lender hereunder shall also simultaneously be replaced as the Issuing Lender and Swingline Lender pursuant to documentation in form and substance reasonably satisfactory to BofA (and, if applicable, such Affiliate). 10.10 Withholding Tax. (a) If any Lender is not a "U.S. person" within the meaning of the Code, such Lender shall deliver to the Administrative Agent and the Company either: (i) properly completed IRS Form W-8ECI certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party that reduces the rate of withholding tax on interest to zero before the payment of any interest in the first calendar year and before the payment of any interest in each third succeeding calendar year during which interest may be paid under this Agreement; -107- 118 (ii) two properly completed and executed copies of IRS Form W-8BEN certifying that income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States before the payment of any interest is due in the first taxable year of such Lender and in each succeeding taxable year of such Lender during which interest may be paid under this Agreement, and IRS Form W-9; or (iii) if such Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, such Lender shall deliver (A) a certificate substantially in the form of Exhibit L and (B) two properly completed and signed copies of Internal Revenue Service Form W-8BEN certifying that such Lender is entitled to an exemption from United States withholding tax with respect to payments of interest to be made under this Agreement and any Note. Each such Lender further agrees to deliver such other form or forms from time to time as may be required under the Code or other laws or regulations of the United States as a condition to exemption from, or reduction of, United States withholding tax, to the extent legally permitted to do so. Each such Lender agrees to promptly notify the Administrative Agent and the Company of any change in circumstances which would modify or render invalid any claimed exemption or reduction. If any Lender is a United States person, it agrees to complete and deliver to the Administrative Agent and the Company a statement signed by an authorized signatory of such Lender to the effect that such Lender is a United States person together with a duly completed and executed copy of Internal Revenue Service Form W-9 or a successor form establishing that such Lender is not subject to U.S. backup withholding tax. (b) If any Lender claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form W-8ECI and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company to such Lender, such Lender agrees to notify the Administrative Agent and the Company of the percentage amount in which it is no longer the beneficial owner of Obligations of the Company to such Lender. To the extent of such percentage amount, the Administrative Agent and the Company will treat such Lender's IRS Form W-8ECI as no longer valid. (c) If any Lender claiming exemption from United States withholding tax by filing IRS Form W-8BEN with the Administrative Agent and the Company grants a participation in all or part of the Obligations of the Company to such Lender, such Lender agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code. (d) If any Lender is entitled to a reduction in the applicable withholding tax, the Administrative Agent or the Company, as the case may be, may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (a) of this Section are not timely delivered to the Administrative Agent, or the Company, as the case may -108- 119 be, then the Administrative Agent or the Company, as the case may be, may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax without reduction. (e) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent or the Company did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered or was not properly executed, or because such Lender failed to notify the Administrative Agent or the Company of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify the Administrative Agent or the Company, as the case may be, fully for all amounts paid, directly or indirectly, by the Administrative Agent or the Company, as the case may be, as Tax or otherwise, including penalties and interest, and including any Taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent or the Company, as the case may be, under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of the Administrative Agent. (f) If any Lender claims exemption from, or reduction of, withholding tax under the Code by providing IRS Form W-8BEN and a certificate in the form of Exhibit L and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company to such Lender, such Lender agrees to notify the Administrative Agent and the Company of the percentage amount in which it is no longer the beneficial owner of Obligations of the Company to such Lender. To the extent of such percentage amount, the Administrative Agent and the Company will treat such Lender's IRS Form W-8BEN and certificate in the form of Exhibit L as no longer valid. 10.11 Collateral Matters. (a) The Administrative Agent is authorized on behalf of all the Lenders, without the necessity of any notice to or further consent from the Lenders, from time to time to take any action with respect to any Collateral or the Collateral Documents which may be necessary to perfect and maintain perfected the security interest in and Liens upon the Collateral granted pursuant to the Collateral Documents. (b) The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion, to release any Lien granted to or held by the Administrative Agent upon any Collateral: (i) upon termination of the Commitments and payment in full of all Loans and all other obligations known to the Administrative Agent and payable under this Agreement or any other Loan Document; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder; (iii) constituting property in which the Company or any Subsidiary owned no interest at the time the Lien was granted or at any time thereafter; (iv) constituting property leased to the Company or any Subsidiary under a lease which has expired or been terminated in a transaction permitted under this Agreement or is about to expire and which has not been, and is not intended by the Company or such Subsidiary to be, renewed or extended; (v) consisting of an instrument evidencing Indebtedness or other debt instrument, if the indebtedness thereby has been paid in full; or (vi) if approved, authorized or ratified in writing by the Required Lenders or, if required by subsection 11.1(h), all the Lenders. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the -109- 120 Administrative Agent's authority to release particular types or items of Collateral pursuant to this subsection 10.11(b). (c) Each Lender agrees with and in favor of each other (which agreement shall not be for the benefit of the Company or any Subsidiary) that any security interest in real property collateral received by a Lender in connection with the extension of any loan or financial commitment between such Lender and the Company or any of its Affiliates and not related to the transactions contemplated hereby shall not constitute collateral for the Company's obligations under this Agreement or any other Loan Document. (d) (i) Any and all proceeds of disposition or other realization on the Collateral or from any realization on Article XII or the Subsidiary Guaranty received by the Administrative Agent in connection with any enforcement, sale, collection (including judicial or non-judicial foreclosure) or similar proceedings with respect to the Collateral or a demand or other enforcement or collection with respect to Article XII or the Subsidiary Guaranty shall be applied by the Administrative Agent, as follows: FIRST: To the payment of the reasonable costs and expenses of such disposition, collection or other realization, including Attorney Costs, and all reasonable expenses, liabilities and advances made or incurred by the Administrative Agent in connection therewith; SECOND: To the ratable payment of the Liabilities then due and owing to the Lender Parties; provided that with respect to Liabilities consisting of the undrawn amounts of outstanding Letters of Credit, payment shall be made to the Administrative Agent, to be retained as Cash Collateral, for the ratable portion of the Liabilities consisting of such undrawn amount of outstanding Letters of Credit (provided that (A) if any such Letter of Credit is drawn upon, the Administrative Agent shall distribute (ratably in accordance with subsection 3.4(a)) the Cash Collateral therefor which is allocable to the amount drawn upon such Letter of Credit to the Issuing Lender and, if any Revolving Lenders have paid the Administrative Agent for the account of the Issuing Lender for such Revolving Lenders' participation in such Letter of Credit in accordance with Section 3.3, the Revolving Lenders entitled to receive such distribution and (B) if and to the extent that any such Letter of Credit shall expire or terminate, the amount of Cash Collateral therefor shall be applied in accordance with this subsection 10.11(d)(i)), calculated in accordance with the provisions of subsection 10.11(d)(ii); and THIRD: After payment in full of all Liabilities, any surplus then remaining from such proceeds shall be paid to the Company or to whomsoever may be lawfully entitled to receive the same or paid as a court of competent jurisdiction may direct. Until such proceeds are so applied, the Administrative Agent shall hold such proceeds in its custody in accordance with its regular procedures for handling deposited funds. (ii) Payment of proceeds of Collateral or of any realization on Article XII or the Subsidiary Guaranty to any Lender Party shall be based upon the proportion which the amount of such Liabilities of such Lender -110- 121 Party bears to the total amount of all Liabilities of all such Lender Parties. For purposes of determining the proportionate amounts of all Liabilities sharing in any such distribution, (A) the amount of the outstanding Obligations shall be deemed to be the Effective Amount of the Loans and Letters of Credit and all accrued interest, fees and costs with respect thereto and (B) the amount under any outstanding Swap Contract shall be deemed to be the amount of the Permitted Swap Obligations then due and payable (including early termination payments then due) in connection therewith and all accrued interest and fees with respect thereto, after giving effect to any netting of payments to which the Company is entitled with respect to such Swap Contract vis-a-vis the Company's counterparty to such Swap Contract. (iii) Payments of proceeds of Collateral or of any realization on Article XII or the Subsidiary Guaranty by the Administrative Agent in respect of (x) the Obligations shall be made to the Administrative Agent for distribution to the Lenders pro rata and (y) any Swap Contract shall be made as directed by the Lender Party to which the same is owed. ARTICLE XI MISCELLANEOUS 11.1 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by the Company or Parent therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders, the Company and Parent and acknowledged by the Administrative Agent, and then any such waiver or consent shall be effective only if in writing and in the specific instance and for the specific purpose for which given; provided that: (a) no such waiver, amendment or consent shall increase or extend any Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 9.2) without the written consent of such Lender; (b) no such waiver, amendment or consent shall postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of regularly scheduled principal or interest on any Loan without the written consent of the Lender holding such Loan; (c) no such waiver, amendment or consent shall reduce the principal of, or the rate of interest specified herein on, any Loan without the written consent of the Lender holding such Loan; (d) no such waiver, amendment or consent shall (subject to clause (n) below) reduce any fees payable hereunder or under any other Loan Document, or postpone or delay any date fixed by this Agreement or any other Loan Document for the payment of fees or any other amounts due to any Lender hereunder or under any other Loan Document, without the written consent of the Lender to whom such fee or other amount is owing; -111- 122 (e) no such waiver, amendment or consent shall (x) change the aggregate percentage of the Total Percentage which is required for the Lenders or any of them to take any action hereunder without the written consent of all Lenders, (y) amend the definition of "Required Revolving Lenders" without the written consent of all Revolving Lenders or (z) amend the definition of "Required Term Lenders" without the written consent of all Term Lenders; (f) no such waiver, amendment or consent shall, without the written consent of the Required Revolving Lenders and the Required Term Lenders, change the advance rates or any other term of the definition of "Borrowing Base" or the definitions of "Eligible Account Receivable" or "Eligible Inventory" or amend or modify this clause (f); (g) no such waiver, amendment or consent relating to the definition of "Mandatory Prepayment Event" or to any provision of this Agreement or any other Loan Document which would result in any increased or decreased mandatory prepayment of any Loan, or any increased or decreased mandatory reduction of any Commitment, or to this clause (g), shall be made without the written consent of the Required Revolving Lenders and the Required Term Lenders; (h) no such waiver, amendment or consent shall release the Subsidiary Guaranty or Article XII or Parent or any Subsidiary from its respective obligations under the Loan Documents to which it is a party or release all or substantially all of the collateral securing the Obligations without the written consent of all Lenders; (i) no such waiver, amendment or consent shall amend or waive any provision of this Section or Section 2.15, or any other provision herein providing for consent or other action by all Lenders, without the written consent of all Lenders; (j) after the making of the Term Loans, Section 2.3, 2.4 (as it relates to conversions and continuations of Revolving Loans), 2.6, 2.7 (as it relates to an optional prepayment of Revolving Loans), 2.8(b) or 2.9(c) or Article III may be amended, or the rights or privileges thereunder waived, with the written consent of the Required Revolving Lenders (or, in the case of Section 2.9(c), all of the Revolving Lenders), the Company and the acknowledgment of the Administrative Agent; (k) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Lender in addition to the Required Lenders or all Lenders, as the case may be, affect the rights or duties of the Issuing Lender under this Agreement or any L/C-Related Document relating to any Letter of Credit Issued or to be Issued by it; (l) no amendment, waiver or consent shall, unless in writing and signed by the Swingline Lender in addition to the Required Lenders or all Lenders, as the case may be, affect the rights and duties of the Swingline Lender under this Agreement; (m) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Required Lenders or all Lenders, as the case may be, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and -112- 123 (n) the Fee Letter may be amended, or rights or privileges thereunder waived, in writing executed by the parties thereto. 11.2 Notices. (a) All notices, requests and other communications hereunder shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Company or Parent by facsimile (i) shall be immediately followed by a telephone call to the recipient at the number specified on Schedule 11.2, and (ii) shall be followed promptly by delivery of a hard copy original thereof) and mailed, faxed or delivered to the address or facsimile number specified for notices on Schedule 11.2; or, as directed to the Company or the Administrative Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to any other party, at such other address as shall be designated by such party in a written notice to the Company and the Administrative Agent. (b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail, return receipt requested; except that notices to the Administrative Agent pursuant to Article II, III or X shall not be effective until actually received by the Administrative Agent, and notices pursuant to Article III to the Issuing Lender shall not be effective until actually received by the Issuing Lender at the address specified for the "Issuing Lender" on Schedule 11.2. (c) Any agreement of the Administrative Agent and the Lenders herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of the Company. The Administrative Agent and the Lenders shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company to give such notice and the Administrative Agent and the Lenders shall not have any liability to the Company or any other Person on account of any action taken or not taken by the Administrative Agent or the Lenders in reliance upon such telephonic or facsimile notice. The obligation of the Company to repay the Loans and L/C Obligations shall not be affected in any way or to any extent by any failure of the Administrative Agent and the Lenders to receive written confirmation of any telephonic or facsimile notice or the receipt by the Administrative Agent and the Lenders of a confirmation which is at variance with the terms understood by the Administrative Agent and the Lenders to be contained in the telephonic or facsimile notice. 11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 11.4 Costs and Expenses. The Company shall: (a) whether or not the transactions contemplated hereby are consummated, pay or reimburse the Agents and the Arrangers and their Affiliates (including BofA in its capacities as Swingline Lender and Issuing Lender) within five Business Days after demand -113- 124 therefor (subject to subsection 5.1(f)) for all reasonable and documented costs and expenses incurred by the Agents and the Arrangers and their Affiliates in connection with the preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any Loan Document and any other document prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including Attorney Costs incurred by the Agents and the Arrangers with respect thereto; and (b) pay or reimburse the Administrative Agent and each Lender within five Business Days after demand therefor (subject to subsection 5.1(f)) for all costs and expenses (including Attorney Costs) incurred by them in connection with the enforcement, attempted enforcement or preservation of any right or remedy under this Agreement or any other Loan Document during the existence of an Event of Default or after acceleration of the Loans (including in connection with any "workout" or restructuring regarding the Loans and including in any Insolvency Proceeding or appellate proceeding). 11.5 Company Indemnification. Whether or not the transactions contemplated hereby are consummated, the Company shall indemnify and hold the Agent-Related Persons, each Agent and each Lender and each of their respective Affiliates, officers, directors, employees, counsel, agents, investment advisers, trustees and attorneys-in-fact (each an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever (excluding costs and expenses specifically referred to in Section 11.4) which may at any time (including at any time following repayment of the Loans, the termination of the Letters of Credit and the termination, resignation or replacement of the Administrative Agent or replacement of any Lender) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby or thereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding or any investigation, litigation or proceeding related to any environmental cleanup, audit, compliance or other matter relating to the protection of the environment or the Release by the Company or any of its Subsidiaries of any Hazardous Material) related to or arising out of this Agreement or the Loans or Letters of Credit or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided that the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities resulting solely from the gross negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall survive payment of all other Obligations. Each Agent-Related Person and each Lender agrees that in the event that any investigation, litigation or proceeding is asserted or threatened in writing or instituted against it or any other Indemnified Person, or any remedial, removal or response action which is requested of it or any other Indemnified Person, for which any Agent-Related Person or Lender may desire indemnity or defense hereunder, such Agent-Related Person or such Lender shall notify the Company in writing of such event; provided that failure to so notify the Company shall not affect the right of any Agent-Related Person or Lender to seek indemnification under this Section. -114- 125 11.6 Payments Set Aside. To the extent that the Company makes a payment to the Administrative Agent or the Lenders, or the Administrative Agent or the Lenders exercise their right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee or receiver, or any other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its pro rata share of any amount so recovered from or repaid by the Administrative Agent. 11.7 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent and each Lender. 11.8 Assignments, Participations, etc. (a) Any Lender may, with the written consent of the Company at all times other than during the existence of an Event of Default and with the written consents of the Administrative Agent and, in case of an assignment of a Revolving Commitment or L/C Obligations, the Issuing Lender and the Swingline Lender, which consents shall not be unreasonably withheld or delayed, at any time assign and delegate to one or more Eligible Assignees (provided that no written consent of the Company, the Administrative Agent, the Issuing Lender or the Swingline Lender shall be required in connection with any assignment and delegation by a Lender to a Person described in clause (ii), (iii), (iv) or (v) of the definition of Eligible Assignee) (each, an "Assignee") all, or any part, of the Loans, the Revolving Commitment, the L/C Obligations and the other rights and obligations of such Lender hereunder, in a minimum amount of $5,000,000 (or, if less, all of such Lender's remaining rights and obligations hereunder or all of such Lender's rights and obligations with respect to Revolving Commitment and Revolving Loans or Term Loans) or such lesser amount as may be approved by the Company and the Administrative Agent (provided that such minimum amount shall not apply to assignments by a Lender to Persons described in clause (ii), (iii), (iv) or (v) of the definition of Eligible Assignee and provided further that any assignment consisting solely of Term Loans may be in a minimum amount of $1,000,000); provided, however, that (A) the Company, the Administrative Agent, the Issuing Lender and the Swingline Lender may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee shall have been given to the Company and the Administrative Agent by such Lender and the Assignee, (ii) such Lender and the Assignee shall have delivered to the Company and the Administrative Agent an Assignment and Acceptance in the form of Exhibit K (an "Assignment and Acceptance") together with any Note or Notes subject to such assignment and (iii) the assignor Lender or the Assignee shall have paid to the Administrative Agent a processing fee in the amount of $3,500 (provided that such fee shall not apply to any assignment by any Lender to any Affiliate of such Lender or, in the case of any assignee Lender that is a fund, to any Person in clause (iv) of the definition of Eligible Assignee that has the same investment adviser as such assignee or that is managed by an Affiliate of such investment adviser) and (B) the Company shall not, as a result of any -115- 126 assignment, delegation or participation by any Lender, incur any increased liability for Taxes, Other Taxes or Further Taxes pursuant to Section 4.1. The Company designates the Administrative Agent as its agent for maintaining a book entry record of ownership identifying the Lenders, their respective addresses and the amount of the respective Loans and Notes which they own. The foregoing provisions are intended to comply with the registration requirements in Treasury Regulation Section 5f.103-1 so that the Loans and Notes are considered to be in "registered form" pursuant to such regulation. The Administrative Agent, acting for this purpose as the agent of the Company, shall maintain at its address a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders and the Commitments and Loans of each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, absent manifest error, and the Company, the Agents, the Issuing Lender, the Swingline Lender and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Company, the Agents and the Lenders at any reasonable time and from time to time upon reasonable prior notice. (b) From and after the date that the Administrative Agent notifies the assignor Lender that it has provided its consent, and received the consents of the Swingline Lender, the Issuing Lender and (if applicable) the Company, with respect to an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents. Concurrently with or prior to giving such notice to the assignor Lender, the Administrative Agent shall have recorded the information contained in such Assignment and Acceptance in the Register. No assignment shall be effective for the purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (c) Any Lender may at any time sell to one or more commercial banks or other Persons not Affiliates of the Company (a "Participant") participating interests in any Loan, the Revolving Commitment of such Lender and the other interests of such Lender (the "originating Lender") hereunder and under the other Loan Documents; provided, however, that (i) the originating Lender's obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations, (iii) the Company, the Swingline Lender, the Issuing Lender and the Administrative Agent shall continue to deal solely and directly with the originating Lender in connection with the originating Lender's rights and obligations under this Agreement and the other Loan Documents and (iv) no Lender shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment, consent or waiver would require unanimous consent of the Lenders or the consent of a particular Lender or the consent of the Required Revolving Lenders or Required Term Lenders, in each case as described in clauses (a) through (i) of the proviso to Section 11.1. In the case of any such -116- 127 participation, the Participant shall be entitled to the benefit of Sections 4.1, 4.3 and 11.5 as though it were also a Lender hereunder (provided, with respect to Sections 4.1 and 4.3, the Company shall not be required to pay any amount which it would not have been required to pay if no participating interest had been sold), and if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, the Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. Each Lender which sells a participation will maintain a book entry record of ownership identifying the Participant(s) and the amount of such participation(s) owned by such Participant(s). Such book entry record of ownership shall be maintained by the Lender as agent for the Company and the Administrative Agent. This provision is intended to comply with the registration requirements in Treasury Regulation Section 5f.103-1 so that the Loans and Notes are considered to be in "registered form" pursuant to such regulation. Each Lender may furnish any information concerning the Company and its Subsidiaries in the possession of such Lender from time to time to participants and prospective participants and may furnish information in response to credit inquiries consistent with general banking practice. (d) Notwithstanding any other provision in this Agreement, (i) any Lender may at any time assign all or any portion of its rights under and interest in this Agreement and any Note held by it to any Affiliate of such Lender that is an "Eligible Assignee" or create a security interest in, or pledge all or any portion of its rights under and interest in this Agreement and any Note held by it in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law and (ii) any Lender which is a fund may, pledge all or any portion of its Loans and Notes to its trustee in support of its obligations to its trustee. 11.9 Confidentiality. Each Lender agrees to take, and to cause its Affiliates to take, normal and reasonable precautions and exercise due care to maintain the confidentiality of all non-public information provided to it by the Company or any Subsidiary, or by the Administrative Agent on the Company's or any Subsidiary's behalf, under this Agreement or any other Loan Document, and neither such Lender nor any of its Affiliates shall use any such information other than in connection with or in enforcement of this Agreement and the other Loan Documents or in connection with other business now or hereafter existing or contemplated with the Company or any Subsidiary, except to the extent such information (i) was or becomes generally available to the public other than as a result of disclosure by such Lender or (ii) was or becomes available on a non-confidential basis from a source other than the Company (provided that such source is not bound by a confidentiality agreement with the Company or any Subsidiary known to such Lender); provided, however, that any Lender may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which such Lender is subject or in connection with an examination of such Lender by any such authority, (B) pursuant to subpoena or other court process, (C) when required to do so in accordance with the provisions of any applicable Requirement of Law, (D) to the extent reasonably required in connection with any litigation or proceeding to which the Administrative Agent or any Lender or any of their respective Affiliates may be party, (E) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other -117- 128 Loan Document, (F) to such Lender's independent auditors and other professional advisors, (G) to any Participant or Assignee, actual or potential, or to direct or indirect contractual counterparties to swap agreements or such contractual counterparties' professional advisors provided that such Person or contractual counterparty or professional advisor to such contractual counterparty agrees in writing to keep such information confidential to the same extent required of the Lenders hereunder, (H) as to any Lender or its Affiliate, as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the Company or any Subsidiary is party or is deemed party with such Lender or such Affiliate, (I) to its Affiliates and (J) to the National Association of Insurance Commissioners or any similar organization or, with the consent of the Company (not to be unreasonably withheld or delayed), any nationally recognized rating agency that requires access to information about such Lender's investment portfolio in connection with ratings issued to such Lender. 11.10 Set-off. In addition to any right or remedy of the Lenders provided by law, if an Event of Default exists, or the Loans have been accelerated, each Lender is authorized at any time and from time to time, without prior notice to the Company or Parent, any such notice being waived by the Company and Parent to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender or any Affiliate of such Lender to or for the credit or the account of the Company or Parent against any and all Obligations then due and owing to such Lender, and each Affiliate of such Lender is hereby irrevocably authorized to permit such set-off and application. Each Lender agrees promptly to notify the Company and the Administrative Agent after any such set-off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application. 11.11 Automatic Debits of Fees. With respect to any commitment fee, arrangement fee, agency fee, letter of credit fee or other fee, or any other cost or expense (including Attorney Costs) due and payable to the Administrative Agent, the Swingline Lender or the Issuing Lender under the Loan Documents, each of the Company and Parent hereby irrevocably authorizes BofA to debit any deposit account of the Company or Parent with BofA in an amount such that the aggregate amount debited from all such deposit accounts does not exceed such fee or other cost or expense. If there are insufficient funds in such deposit accounts to cover the amount of the fee or other cost or expense then due, such debits will be reversed (in whole or in part, in BofA's sole discretion) and such amount not debited shall be deemed to be unpaid. No such debit under this Section shall be deemed a set-off. 11.12 Notification of Addresses, Lending Offices, Etc. Each Lender shall notify the Administrative Agent in writing of any change in the address to which notices to such Lender should be directed, of addresses of any Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Administrative Agent shall reasonably request. 11.13 Counterparts. This Agreement may be executed in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of which taken together shall constitute but one and the same instrument. -118- 129 11.14 Severability. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or such instrument or agreement. 11.15 No Third Parties Benefited. This Agreement is made and entered into for the sole protection and legal benefit of the Company, Parent, the Lender Parties, the Administrative Agent and the Agent-Related Persons, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other Loan Document. 11.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, PARENT, THE ADMINISTRATIVE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH OF THE COMPANY, PARENT, THE ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, PARENT, THE ADMINISTRATIVE AGENT AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW. 11.17 Waiver of Jury Trial. THE COMPANY, PARENT, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE COMPANY, PARENT, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY -119- 130 ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENT, RENEWAL, SUPPLEMENT OR MODIFICATION TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 11.18 Entire Agreement. This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the Company, Parent, the Lenders and the Agents, and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof. ARTICLE XII THE GUARANTY 12.1 The Guaranty. Parent hereby unconditionally and irrevocably guarantees (as primary obligor and not merely as surety) to the Lender Parties and the Administrative Agent, and to each of them, the due and punctual payment, observance and performance of all of the Guaranteed Obligations when and as due, whether at maturity, by acceleration, mandatory prepayment or otherwise, according to the terms hereof and thereof, and Parent hereby unconditionally and irrevocably agrees to cause payment or performance of the Guaranteed Obligations to be made punctually as and when the same shall become due upon demand; provided, however, that the liability of Parent under this Article XII shall be limited to the maximum amount which Parent may incur without violating any fraudulent conveyance or fraudulent transfer law (plus all reasonable costs and expenses paid or incurred by the Administrative Agent or any Lender Party in enforcing this Article XII against Parent). The guaranty under this Article XII shall be of payment and performance and not of collection merely. Parent agrees that upon the occurrence of any Event of Default under Section 9.1(f) or (g) with respect to the Company or any Material Subsidiary, and if such event shall occur at a time when any of the Guaranteed Obligations may not then be due and payable, Parent will pay to the Administrative Agent for the account of the Lender Parties forthwith the full amount which would be payable hereunder by Parent if all Guaranteed Obligations were then due and payable. 12.2 Guaranty Unconditional. The obligations of Parent under this Article XII shall be continuing, unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver or release in respect of any Guaranteed Obligation, by operation of law or otherwise; (b) any modification or amendment of or supplement to any Loan Document; (c) any modification, amendment, waiver, release, non-perfection or invalidity of any direct or indirect security, or of any guaranty or other liability of any third party, for any Guaranteed Obligation; -120- 131 (d) any change in the corporate existence, structure or ownership of the Company or any Subsidiary, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or any Subsidiary or its assets or any resulting release or discharge of any Guaranteed Obligation; (e) the existence of any claim, setoff or other right which Parent may have at any time against the Company, the Administrative Agent, any Lender or any other Person, whether or not arising in connection with the Loan Documents; (f) any invalidity or unenforceability relating to or against the Company or any Subsidiary for any reason of the whole or any provision of any Loan Document, or any provision of applicable law purporting to prohibit the payment or performance by the Company of the Guaranteed Obligations; or (g) any other act or omission of any kind to act or delay by the Company, any Subsidiary, the Administrative Agent, any Lender or any other Person or any other circumstance whatsoever that might, but for the provisions of this Section 12.2, constitute a legal or equitable discharge of the obligations of Parent under this Article XII. 12.3 Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances. The obligations of Parent under this Article XII shall remain in full force and effect until all of the Commitments shall have expired or been terminated, all of the Guaranteed Obligations shall have been paid in full in cash and all Letters of Credit shall have expired. If at any time all or any part of any payment previously applied to any Guaranteed Obligation is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company or otherwise, the obligations of Parent under this Article XII with respect to such payment shall be reinstated at such time as though such payment had become due but not been made at such time. 12.4 Waiver. Parent irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Company or any other Person or any collateral securing the Guaranteed Obligations. Parent hereby further expressly waives notice of the existence or creation or nonpayment of all or any of the Guaranteed Obligations. 12.5 Delay of Subrogation. Notwithstanding any payment made by or for the account of Parent pursuant to this Article XII, Parent shall not be subrogated to any right of the Administrative Agent or any Lender Party until such time as the Administrative Agent and each Lender shall have received final payment in cash of the full amount of the Guaranteed Obligations. 12.6 Stay of Acceleration. If acceleration of the time for payment of any amount payable by the Company under any Loan Document is stayed upon the insolvency, bankruptcy or reorganization of the Company, all such amounts otherwise subject to acceleration under the terms of the Loan Documents shall nonetheless be payable by Parent hereunder forthwith on demand by the Administrative Agent. -121- 132 12.7 Information. Parent represents and warrants to the Administrative Agent and the Lender Parties that it now has and will continue to have independent means of obtaining information concerning the affairs, financial condition and business of the Company. Neither the Administrative Agent nor any Lender Party shall have any duty or responsibility to provide the Guarantor with any credit or other information concerning the affairs, financial condition or business of the Company. 12.8 Costs. Parent further agrees to pay all reasonable expenses (including Attorney Costs) paid or incurred by the Administrative Agent or any Lender Party in endeavoring to collect the Obligations of Parent under this Article XII or any part thereof, and in enforcing this Article XII against Parent. 12.9 Amendment and Restatement. This Article XII amends, restates and replaces the Amended and Restated Parent Guaranty dated as of December 17, 1997. -122- 133 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. DEL MONTE CORPORATION By: ----------------------------------- Title: ----------------------------------- DEL MONTE FOODS COMPANY By: ----------------------------------- Title: ----------------------------------- S-1 134 ABN AMRO BANK N.V., as Co-Syndication Agent and as a Lender By: ----------------------------------- Title: ----------------------------------- By: ----------------------------------- Title: ----------------------------------- S-2 135 ALLFIRST BANK, as a Lender By: ----------------------------------- Title: ----------------------------------- S-3 136 AMERICAN AGCREDIT, PCA, as a Lender By: ----------------------------------- Title: ----------------------------------- S-4 137 BANK OF AMERICA, N.A., as Administrative Agent, Issuing Lender, Swingline Lender and Lender By: ----------------------------------- William Stafeil Title: Managing Director S-5 138 THE BANK OF NEW YORK, as a Lender By: ----------------------------------- Title: ----------------------------------- S-6 139 BANKERS TRUST COMPANY, as Documentation Agent and as a Lender By: ----------------------------------- Title: ----------------------------------- S-7 140 BNP PARIBAS, as a Lender By: ----------------------------------- Title: ----------------------------------- S-8 141 CAPITAL FARM CREDIT, as a Lender By: ----------------------------------- Title: ----------------------------------- S-9 142 THE CHASE MANHATTAN BANK, as Syndication Agent and as a Lender By: ----------------------------------- Title: ----------------------------------- S-10 143 COBANK, ACB as a Lender By: ----------------------------------- Title: ----------------------------------- S-11 144 CREDIT AGRICOLE INDOSUEZ, as a Lender By: ----------------------------------- Title: ----------------------------------- By: ----------------------------------- Title: ----------------------------------- S-12 145 GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender By: ----------------------------------- Title: ----------------------------------- S-13 146 HARRIS TRUST & SAVINGS BANK, as Co-Documentation Agent and as a Lender By: ----------------------------------- Title: ----------------------------------- S-14 147 NATEXIS BANQUES POPULAIRES, as a Lender By: ----------------------------------- Title: ----------------------------------- By: ----------------------------------- Title: ----------------------------------- S-15 148 NATIONAL CITY BANK, as a Lender By: ----------------------------------- Title: ----------------------------------- S-16 149 NORTHWEST FARM CREDIT SERVICES, PCA, as a Lender By: ----------------------------------- Title: ----------------------------------- S-17 150 THE PROVIDENT BANK, as a Lender By: ----------------------------------- Title: ----------------------------------- S-18 151 TRANSAMERICA BUSINESS CAPITAL CORPORATION, as a Lender By: ----------------------------------- Title: ----------------------------------- S-19 152 U.S. BANK NATIONAL ASSOCIATION, as a Lender By: ----------------------------------- Title: ----------------------------------- S-20 153 PRICING SCHEDULE Revolving Loans, Term Loans, L/C Fee Rate and Commitment Fee Rate The Applicable Base Rate Margin and Applicable Offshore Rate Margin for Revolving Loans, the Applicable Base Rate Margin and the Applicable Offshore Rate Margin for Term Loans, the L/C Fee Rate and Commitment Fee Rate shall be as follows: *** 154 SCHEDULE 1.4 ASSIGNMENT AGREEMENT dated as of May 15, 2001, among Del Monte Corporation (the "Company"), the Assignors (as defined below), and Bank of America, N.A. ("BofA"), as administrative agent (in such capacity, the "Administrative Agent") for the Assignees (as defined below). Reference is made to (a) the Second Amended and Restated Credit Agreement dated as of January 14, 2000, among the Company, various financial institutions and Bank of America, N.A., as administrative agent (as amended, the "Existing Credit Agreement") and (b) the Third Amended and Restated Credit Agreement dated as of May 15, 2001 (the "Restated Agreement"), among the Company, the financial institutions party thereto as lenders (the "Continuing Lenders"), and BofA as administrative agent. The Company desires to amend and restate the terms and conditions of the Company's outstanding indebtedness in respect of the "Loans" (as defined in the Existing Credit Agreement and referred to herein as the "Existing Loans"). The Company has entered into (or is entering into) the Restated Agreement, providing for the amendment and restatement of the terms and conditions of the outstanding indebtedness in respect of the Existing Loans as set forth therein, as well as the incurrence by the Company of certain additional indebtedness thereunder. In furtherance of the foregoing, the Company has requested that each holder of any Existing Loan that is not a party to the Restated Agreement as a Continuing Lender (each such holder that becomes a party to this Agreement being referred to herein as an "Assignor") agree to assign the Existing Loans held by it (the "Assigned Debt") to the Continuing Lenders that have Commitments (as defined in the Restated Agreement) under the Restated Agreement (such Continuing Lenders being referred to herein as the "Assignees") on the terms and subject to the conditions set forth in this Agreement. Accordingly, the parties hereto hereby agree as follows: SECTION 1. Assignment. (a) Subject to the conditions set forth in Section 2, on and as of the date of the initial funding of loans under the Restated Agreement (the "Restatement Date"), each Assignor hereby assigns and transfers to the Assignees the outstanding principal amount of the Assigned Debt held by such Assignor. The Assigned Debt of each Assignor is described beneath its signature to this Agreement. (b) The assignments provided for herein are being made by the Assignors without recourse, representation or warranty, except as expressly set forth in Section 3. (c) Each Assignor retains its rights in respect of all indemnification and expense reimbursement provisions under the Existing Credit Agreement. (d) The Assigned Debt assigned hereby shall be allocated among the Assignees in accordance with the Restated Agreement. (e) On or after the Restatement Date, the indebtedness in respect of the Assigned Debt assigned hereby shall be governed by and evidenced as provided in the Restated Agreement. SECTION 2. Conditions. The assignments contemplated by Section 1 hereof shall become effective only upon the satisfaction of the following conditions: 155 (a) the Restatement Date shall occur on or prior to May 16, 2001 (failing which, this Agreement shall terminate); (b) each Assignor shall have received from the Administrative Agent (on behalf of the Assignees) payment of an amount equal to the outstanding principal amount of Assigned Debt assigned by such Assignor hereunder, as consideration for the assignment by such Assignor hereunder; and (c) each Assignor shall have received payment from the Company of all accrued and unpaid interest on the Assigned Debt assigned by such Assignor hereunder accrued to and excluding the Restatement Date, together with any fees or other amounts owing to such Assignor under the Existing Credit Agreement. The payments to be made to each Assignor as contemplated by clauses (b) and (c) above shall be made to such Assignor by wire transfer of immediately available funds to (i) the account to which payments of principal and interest are to be made to such Assignor as provided in the applicable Existing Credit Agreement and related documentation or (ii) if requested by such Assignor, to such account as such Assignor shall specify beneath its signature to this Agreement. SECTION 3. Representations. (a) Each Assignor represents and warrants to the Administrative Agent (for the benefit of the Assignees), and the Company that, as of the Restatement Date, such Assignor has legal and beneficial ownership of the Assigned Debt assigned by it hereunder and that such Assigned Debt has not been sold or transferred and is not subject to any participating interest, lien or encumbrance (except for participating interests, liens or encumbrances that will terminate upon the assignment provided for herein). (b) Each party hereto represents and warrants to the other parties hereto that it has the power and authority to execute, deliver and perform its obligations under this Agreement and that this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. SECTION 4. Agreements of the Company. The Company agrees that it shall be liable for and will make all payments to be made by it as contemplated by clause (c) of Section 2 above. The Company also acknowledges and agrees that each assignment of Existing Loans hereunder shall be treated as a prepayment thereof for purposes of determining any amounts payable to Assignors under Section 4.4 of the Existing Credit Agreement, and the Company shall be responsible for any payment due to any Assignor under each such Section. SECTION 5. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 6. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York. 156 SECTION 7. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective with respect to an Assignor upon execution of a signature page to this Agreement on behalf of such Assignor and delivery thereof to the Administrative Agent (or its counsel) and execution of counterparts hereof by each of the Administrative Agent and the Company. SECTION 8. No Novation. Neither this Agreement nor any assignment contemplated hereby shall extinguish the indebtedness of the Company in respect of the Assigned Debt. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. DEL MONTE CORPORATION by: -------------------------------------- Name: --------------------------------- Title: -------------------------------- BANK OF AMERICA, N.A., as Administrative Agent by: -------------------------------------- Name: --------------------------------- Title: -------------------------------- 157 SIGNATURE PAGE to the ASSIGNMENT AGREEMENT dated as of May 15, 2001, among DEL MONTE CORPORATION , the ASSIGNORS and BANK OF AMERICA, N.A., as Administrative Agent for the Assignees Name of Assignor: by: -------------------------------------- Name: Title: Assigned Debt: $______________ of Existing Loans Payment Instructions: 158 SCHEDULE 11.2 ADDRESSES FOR NOTICES OFFSHORE AND DOMESTIC LENDING OFFICES DEL MONTE CORPORATION DEL MONTE FOODS COMPANY One Market San Francisco, California 94105 Attention: Thomas E. Gibbons, Treasurer Telephone: (415) 247-3336 Fax: (415) 247-3339 With a copy to: One Market San Francisco, California 94105 Attention: General Counsel Telephone: (415) 247-3262 Fax: (415) 247-3263 159 ABN AMRO BANK N.V. as a Lender Domestic and Offshore Lending Office: 208 South LaSalle Street, Suite 1500 Chicago, IL 60604 Notices (other than Borrowing notices and Notices of Conversion/Continuation): ABN AMRO Bank N.V. 208 South LaSalle Street, Suite 1500 Chicago, IL 60604 Attention: Credit Administration Telephone: (312) 992-5110 fax: (312) 992-5111 e-mail: sherry.manning@abnamro.com With a copy to: ABN AMRO Bank N.V. 300 South Grand Avenue, Suite 2650 Los Angeles, CA 90071 Attention: Delia Fance Telephone: (213) 687-2067 E-mail: delia.fance@abnamro.com Borrowing notices and Notices of Conversion/Continuation: ABN AMRO Bank N.V. 208 South LaSalle Street, Suite 1500 Chicago, IL 60604 Attention: Loan Administration Telephone: (312) 992-5152 Fax: (312) 992-5157 160 ALLFIRST BANK as a Lender Domestic and Offshore Lending Office: 25 South Charles Street 14th Floor Baltimore, MD 21201 Notices (other than Borrowing notices and Notices of Conversion/Continuation): ALLFIRST BANK 25 South Charles Street Baltimore, MD 21201 Attention: John T. Penny Telephone: (410) 244-4138 fax: (410) 244-4245 e-mail: John.Penny@Allfirst.com Borrowing notices and Notices of Conversion/Continuation: ALLFIRST BANK 25 South Charles Baltimore, MD 21201 Attention: Carrie Scarborough Telephone: (410) 545-2097 fax: (410) 244-4295 e-mail: Carrie.Scarborough@allfirst.com 161 AMERICAN AGCREDIT, PCA as a Lender Domestic and Offshore Lending Office: 5560 S. Broadway Eureka, CA 95503 POB 398 Fields Landing, CA 95537 Notices (other than Borrowing notices and Notices of Conversion/Continuation): American AgCredit, PCA 924 E. Blanco Road Salinas, CA 93901 Attention: James Cooper Telephone: (831) 424-1756 fax: (831) 424-5963 e-mail: jcooper@agloan.com Borrowing notices and Notices of Conversion/Continuation: American AgCredit, PCA P.O. Box 1120 Santa Rosa, CA 95402 Attention: Tina Anaya Telephone: (707) 545-1200 fax: (707) 545-4446 e-mail: tanaya@agloan.com 162 BANK OF AMERICA, N.A., as Administrative Agent Address for Notices (Borrowing Notices and Notices of Conversion/Continuation) Bank of America, N.A. 101 N. Tryon Street Charlotte, NC 28255-0001 Attention: Jeff Strickland Telephone: 704-386-8388 Fax: 704-409-0006 e-mail: jeff.strickland@bankofamerica.com Address for Notices (other than Borrowing Notices and Notices of Conversion/Continuation) Bank of America, N.A. 1455 Market Street, 12th Floor San Francisco, CA 94103-1394 Attention: Liliana Claar Telephone: (415) 436-2770 Fax: (415) 503-5003 e-mail: liliana.claar@bankofamerica.com Agent's Payment Office: Bank of America, N.A. Charlotte, NC ABA #053-000-196 Account: 1366212250600 Ref.: Del Monte Corporation BANK OF AMERICA, N.A., as Issuing Lender Address for Notices: 333 South Beaudry 19th Floor Los Angeles, California 90017 Attention: Margaret Kwiatek Telephone: (213) 345-6631 Fax: (213) 345-6694 163 BANK OF AMERICA, N.A., as Swingline Lender Address for Notices: Bank of America, N.A. 101 N. Tryon Street Charlotte, NC 28255-0001 Attention: Jeff Strickland Telephone: (704) 386-9399 Fax: (704) 409-0006 e-mail: jeff.strickland@bankofamerica.com BANK OF AMERICA, N.A., as a Lender Domestic and Offshore Lending Office: 100 N. Tryon Street Charlotte, NC 28255-0001 Notices (other than Borrowing notices and Notices of Conversion/Continuation): Bank of America, N.A. 100 N. Tryon Street Charlotte, NC 28255-0001 Attention: Yousuf Omar Telephone: (704) 388-3129 fax: (704) 386-9607 e-mail: yousuf.omar@bankofamerica.com Borrowing notices and Notices of Conversion/Continuation: Bank of America, N.A. 100 N. Tryon Street Charlotte, NC 28255-0001 Attention: Jeff Strickland Telephone: (704) 386-8388 fax: (704) 409-0006 e-mail: jeff.strickland@bankofamerica.com 164 THE BANK OF NEW YORK as a Lender Domestic and Offshore Lending Office: One Wall St., 22nd Floor New York, NY 10005 Notices (other than Borrowing notices and Notices of Conversion/Continuation): The Bank of New York One Wall St., 22nd Floor New York, NY 10005 Attention: Dawn Hertling Telephone: (212) 635-6742 e-mail: dawn-hertling@bankofny.com Borrowing notices and Notices of Conversion/Continuation: The Bank of New York One Wall St., 22nd Floor New York, NY 10005 Attention: Dawn Hertling e-mail: dawn-hertling@bankofny.com 165 BANKERS TRUST COMPANY as a Lender Address for Notices: Bankers Trust Company 1 BT Plaza, 14th Floor New York, NY 10006 Attention: Mary Jo Jolly Telephone: (212) 250-5860 Fax: (212) 250-5817 Domestic and Offshore Lending Office: Bankers Trust Company 1 BT Plaza, 14th Floor New York, NY 10006 Attention: Mary Jo Jolly Telephone: (212) 250-5860 Fax: (212) 250-5817 With a copy to: Deutsche Bank 300 South Grand Avenue Los Angeles, California 90071 Attention: Wade Winter Telephone: (213) 620-8121 Fax: (231) 620-8484 166 BNP PARIBAS as a Lender Domestic and Offshore Lending Office: 180 Montgomery Street, 3rd Floor San Francisco, CA 94104 Notices (other than Borrowing notices and Notices of Conversion/Continuation): BNP Paribas 180 Montgomery Street, 3rd Floor San Francisco, CA 94104 Attention: David Low Telephone: (415) 772-1332 e-mail: david.low@americas.bnpparibas.com With a copy to: BNP Paribas 180 Montgomery Street, 3rd Floor San Francisco, CA 94104 Attention: Rosanna Bartolazo Telephone: (415) 772-1393 fax: (415) 956-4230 e-mail: rosanna.bartolazo@americas.bnpparibas.com Borrowing notices and Notices of Conversion/Continuation: BNP Paribas 180 Montgomery Street, 3rd Floor San Francisco, CA 94104 Attention: Donald Hart Telephone: (415) 956-2511 fax: (415) 989-9041 e-mail: donald.hart@americas.bnpparibas.com 167 CAPITAL FARM CREDIT as a Lender Domestic and Offshore Lending Office: 507 East 26th Street Bryan, TX 77803 Notices (other than Borrowing notices and Notices of Conversion/Continuation): Capital Farm Credit 5865 Ridgeway Ctr. Parkway, Suite 300 Memphis, TN 38120 Attention: Robert P. Abbott Telephone: (901) 683-9853 fax: (901) 683-9610 e-mail: AbbottMAI@aol.com Borrowing notices and Notices of Conversion/Continuation: Capital Farm Credit P.O. Box 232 Bryan, TX 77806 Attention: Don VandeVanter Telephone: (979) 822-3018 fax: (979) 691-1174 e-mail: dvandevanter@farmcreditbank.com 168 THE CHASE MANHATTAN BANK as a Lender Domestic and Offshore Lending Office 270 Park Avenue New York, NY 10017 Notices (other than Borrowing notices and Notices Conversion/Continuation): The Chase Manhattan Bank 227 West Monroe Suite 2800 Chicago, IL 60606 Attention: Robert Krasnow Telephone: (312) 541-4211 fax: (312) 541-3379 e-mail: Robert.Krasnow@Chase.com Borrowing notices and Notices of Conversion/Continuation The Chase Manhattan Bank 1 CMP 8TH Floor New York, NY 10081 Attention: Vito Cipriano Telephone: (212) 552-7402 fax: (212) 552-5662 e-mail: Vito.S.Cipriano@Chase.com 169 COBANK, ACB as a Lender Domestic and Offshore Lending Office: 5500 South Quebec Street Greenwood Village, CO 80111 Notices (other than Borrowing Notices and Notices of Conversion/Continuation): CoBank, ACB 5500 South Quebec Street Greenwood Village, CO 80111 Attention: Darla Moran Telephone: (303) 740-4033 fax: (303) 740-4021 e-mail: dmoran@cobank.com Borrowing notices and Notices of Conversion/Continuation: CoBank, ACB 5500 South Quebec Street Greenwood Village, CO 80111 Attention: Brian Klatt Telephone: (303) 740-6511 170 CREDIT AGRICOLE INDOSUEZ as a Lender Domestic and Offshore Lending Office: 55 East Monroe, Suite 4700 Chicago, IL 60603 Notices (other than Borrowing notices and Notices of Conversion/Continuation): Credit Agricole Indosuez 55 East Monroe, Suite 4700 Chicago, IL 60603 Attention: Alan Schmelzer Telephone: (312) 917-7455 fax: (312) 372-3455 e-mail: aschmelzer@US.CA-indosuez.com Borrowing notices and Notices of Conversion/Continuation: Credit Agricole Indosuez 55 East Monroe, Suite 4700 Chicago, IL 60603 Attention: Natalie Klotz Telephone: (312) 917-7498 fax: (312) 372-4421 e-mail: nklotz@US.CA-indosuez.com 171 GE CAPITAL as a Lender Domestic and Offshore Lending Office: 60 Long Ridge Road Stamford, CT 06927-5100 Notices (other than Borrowing notices and Notices of Conversion/Contination): GE Capital 60 Long Ridge Road Stamford, CT 06927-5100 Attention: Julia Shchukina Telephone: (203) 357-3838 fax: (203) 316-7978 e-mail: julia.shchukina@gecapital.com Borrowing notices and Notices of Conversion/Continuation: GE Capital 60 Long Ridge Road Stamford, CT 06927-5100 Attention: Anan Durango Telephone: (203) 316-7731 fax: (203) 602-8345 e-mail: anan.durango@gecapital.com 172 HARRIS TRUST AND SAVINGS BANK as a Lender Domestic and Offshore Lending Office 111 West Monroe Street Chicago, IL 60603 Notices (other than Borrowing notices and Notices of Conversion/Continuation): Harris Trust & Savings Bank One Sansome Street Suite 2910 San Francisco, CA 94104 Attention: Mr. Edwin A. Adams, Jr. Telephone: (415) 434-2200 fax: (415) 397-1888 e-mail: edwin.adams@harrisbank.com Borrowing notices and Notices of Conversion/Continuation: Harris Trust & Savings Bank 111 West Monroe Street 17th Floor West Chicago, IL 60603 Attention: Ms. Adriana Rocha Telephone: (312) 461-7664 fax: (312) 293-4798 173 NATEXIS BANQUES POPULAIRES as a Lender Domestic and Offshore Lending Office: 1251 Avenue of the Americas 34th Floor New York, NY 10020 Notices (other than Borrowing notices and Notices of Conversion/Continuation): Natexis Banques Populaires 1251 Avenue of the Americas New York, NY 10020 Attention: Frank Madden Telephone: (212) 872-5180 fax: (212) 354-9106 e-mail: fmadden.@natexisny.com Borrowing notices and Notices of Conversion/Continuation: Natexis Banques Populaires 1251 Avenue of the Americas New York, NY 10020 Attention: Roslyn Adams Telephone: (212) 872-5177 fax: (212) 872-5160 174 NATIONAL CITY BANK as a Lender Domestic and Offshore Lending Office: 1900 East Ninth Street, LOC. #2077 Cleveland, OH 44114 Notices (other than Borrowing notices and Notices of Conversion/Continuation): National City Bank 1900 East Ninth Street, LOC. #2077 Cleveland, OH 44114 Attention: Phillip Duryea Telephone: (216) 222-3629 fax: (216) 222-0003 Borrowing notices and Notices of Conversion/Continuation: National City Bank 23000 Mill Creek Boulevard, LOC# 7520 Highland Hills, OH 44122 Telephone: (216) 488-7099 fax: (216) 488-7110 175 NORTHWEST FARM CREDIT SERVICES, PCA as a Lender Domestic and Offshore Lending Office: 1700 South Assembly Street Spokane, WA 99224 Notices (other than Borrowing notices and Conversion/Continuation): Northwest Farm Credit Services, PCA 1700 South Assembly Street Spokane, WA 99224 Attention: Jim D. Allen Telephone: (509) 340-5555 fax: (509) 340-5410 e-mail: jallen@farm-credit.com Borrowing notices and Notices of Conversion/Continuation: Northwest Farm Credit Services, PCA 1700 South Assembly Street Spokane, WA 99224 Attention: Technical Accountant Telephone: 1-800-216-4535 fax: (509) 340-5364 e-mail: tech_acctg@farm-credit.com 176 THE PROVIDENT BANK as a Lender Domestic and Offshore Lending Office: One East Fourth St., 216A Cincinnati, OH 45202 Notices (other than Borrowing notices and Notices of Conversion/Continuation): The Provident Bank One East 4th St., 216A Cincinnati, OH 45202 Attention: Scott Kray Telephone: (513) 579-2243 fax: (513) 639-4794 e-mail: Skray@Provident-Bank.com Borrowing notices and Notices of Conversion/Continuation: The Provident Bank One East 4th St., 216A Cincinnati, OH 45202 Attention: Janet Douglas Telephone: (513) 639-1413 fax: (513) 639-1494 e-mail: jadouglas@Provident-Bank.com 177 TRANSAMERICA BUSINESS CAPITAL CORPORATION as a Lender Domestic and Offshore Lending Office: 555 Theodore Fremd Ave., Suite C-301 Rye, New York 10580 Notices (other than Borrowing notices and Notices of Conversion/Continuation): Transamerica Business Capital Corporation 555 Theodore Fremd Ave., Suite C-301 Rye, New York 10580 Attention: Frank Bertelle Telephone: (914) 925-7256 Fax: (914) 921-9072 Borrowing notices and Notices of Conversion/Continuation Transamerica Business Capital Corporation 555 Theodore Fremd Ave., Suite C-301 Rye, New York 10580 Attention: Venereen Lee Telephone: (914) 925-7239 fax: (914) 925-7248 178 U.S. BANK NATIONAL ASSOCIATION as a Lender Domestic and Offshore Lending Office: c/o U.S. BANCORP AG CREDIT 950 17TH Street, Suite 330 CNDT0321 Denver, CO 80202 Notices (other than Borrowing notices and Notices of Conversion/Continuation): U.S. Bank National Association c/o U.S. Bancorp AG Credit 950 17th Street, Suite 330 CNDT 0321 Denver, CO 80202 Attention: John W. Ball Telephone: (303) 585-4930 fax: (303) 585-4732 e-mail: john.ball@usbank.com Borrowing notices and Notices of Conversion/Continuation: U.S. Bank National Association c/o U.S. Bancorp AG Credit 950 17th Street, Suite 330 CNDT 0321 Denver, CO 80202 Attention: Pamela Leyba Telephone: (303)585-4916 fax: (303) 585-4732 e-mail: pamela.leyba@usbank.com 179 EXHIBIT L CERTIFICATE Reference is made to the Third Amended and Restated Credit Agreement, dated as of May 15, 2001, among Del Monte Corporation, Del Monte Foods Company, the lenders parties thereto, Bank of America, N.A., as administrative agent, The Chase Manhattan Bank, as syndication agent, and Bankers Trust Company, as documentation agent (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Pursuant to the provisions of subsection 10.10(a)(iii) of the Credit Agreement, the undersigned hereby certifies that it is not a "bank" as such term is defined in Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended. [NAME OF LENDER] By: -------------------------------------- Its: ------------------------------------- EX-21.1 8 f73660ex21-1.txt SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21.1 DEL MONTE CORPORATION SUBSIDIARIES ------------
Subsidiaries Jurisdiction of Incorporation - ------------ ----------------------------- Mike Mac IHC, Inc. Delaware Oak Grove Trucking Company California Contadina Foods, Inc. Delaware S & W Fine Foods, Inc. Delaware Del Monte Andina, C.A. Venezuela Del Monte Ecuador, C.A. Ecuador Del Monte Peru, S.A. Peru Del Monte Colombiana, S.A. Colombia
EX-23.2 9 f73660ex23-2.txt CONSENT OF KPMG LLP 1 EXHIBIT 23.2 The Board of Directors and Stockholders Del Monte Foods Company: We consent to the use of our report incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus. San Francisco, California /s/ KPMG LLP July 6, 2001 1 EX-25.1 10 f73660ex25-1.txt FORM T-1 STATEMENT OF ELIGIBILTY 1 EXHIBIT 25.1 - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ------------------------------ BANKERS TRUST COMPANY (Exact name of trustee as specified in its charter) NEW YORK 13-4941247 (Jurisdiction of Incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification no.) FOUR ALBANY STREET NEW YORK, NEW YORK 10006 (Address of principal (Zip Code) executive offices)
BANKERS TRUST COMPANY LEGAL DEPARTMENT 130 LIBERTY STREET, 31ST FLOOR NEW YORK, NEW YORK 10006 (212) 250-2201 (Name, address and telephone number of agent for service) ------------------------------------------------------------- DEL MONTE CORPORATION (Exact name of Registrant as specified in its charter) NEW YORK 2033 56-1221479 (State or other jurisdiction (Primary Standard Industrial (IRS Employer of organization) Classification Code No.) Identification no.)
DEL MONTE FOODS COMPANY (Exact name of Registrant as specified in its charter) DELAWARE 6719 13-3542950 (State or other jurisdiction (Primary Standard Industrial (IRS Employer of organization) Classification Code No.) Identification no.)
ONE MARKET @ THE LANDMARK SAN FRANCISCO, CA 94105 (415) 274-3000 (Address, including zip code and telephone number of principal executive offices) 2 DEBT SECURITIES 3 Item 1. General Information. Furnish the following information as to the trustee. (a) Name and address of each examining or supervising authority to which it is subject.
NAME ADDRESS ---- ------- Federal Reserve Bank (2nd District) New York, NY Federal Deposit Insurance Corporation Washington, D.C. New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers. Yes. ITEM 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation. None. ITEM 3.-15. NOT APPLICABLE ITEM 16. LIST OF EXHIBITS. EXHIBIT 1 - Restated Organization Certificate of Bankers Trust Company dated August 6, 1998, Certificate of Amendment of the Organization Certificate of Bankers Trust Company dated September 25, 1998, and Certificate of Amendment of the Organization Certificate of Bankers Trust Company dated December 16, 1998, copies attached. EXHIBIT 2 - Certificate of Authority to commence business - Incorporated herein by reference to Exhibit 2 filed with Form T-1 Statement, Registration No. 33-21047. EXHIBIT 3 - Authorization of the Trustee to exercise corporate trust powers - Incorporated herein by reference to Exhibit 2 filed with Form T-1 Statement, Registration No. 33-21047. EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, as amended on June 22, 1999. Copy attached. -2- 4 EXHIBIT 5 - Not applicable. EXHIBIT 6 - Consent of Bankers Trust Company required by Section 321(b) of the Act. - Incorporated herein by reference to Exhibit 4 filed with Form T-1 Statement, Registration No. 22-18864. EXHIBIT 7 - The latest report of condition of Bankers Trust Company dated as of March 31, 2001. Copy attached. EXHIBIT 8 - Not Applicable. EXHIBIT 9 - Not Applicable. -3- 5 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Bankers Trust Company, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on this 13th day of June, 2001. BANKERS TRUST COMPANY /s/ Tracy A. Salzmann ----------------------------------- By: Tracy A. Salzmann Associate -4- 6 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Bankers Trust Company, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on this 13th day of June, 2001. BANKERS TRUST COMPANY /s/ Tracy A. Salzmann ----------------------------------- By: Tracy A. Salzmann Associate -5- 7 EXHIBIT 1 RESTATED ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY DATED AUGUST 6, 1998 CERTIFICATE OF AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY DATED SEPTEMBER 25, 1998 AND CERTIFICATE OF AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY DATED DECEMBER 16, 1998, COPIES ATTACHED. 8 State of New York, Banking Department I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New York, DO HEREBY APPROVE the annexed Certificate entitled "RESTATED ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION 8007 OF THE BANKING LAW," dated August 6, 1998, providing for the restatement of the Organization Certificate and all amendments into a single certificate. WITNESS, my hand and official seal of the Banking Department at the City of New York, this 31ST day of AUGUST in the Year of our Lord one thousand nine hundred and NINETY-EIGHT. Manuel Kursky ------------------------------ DEPUTY Superintendent of Banks 9 RESTATED ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY ---------------------------- Under Section 8007 Of the Banking Law ---------------------------- Bankers Trust Company 130 Liberty Street New York, N.Y. 10006 Counterpart Filed in the Office of the Superintendent of Banks, State of New York, August 31, 1998 10 RESTATED ORGANIZATION CERTIFICATE OF BANKERS TRUST Under Section 8007 of the Banking Law ----------------------------- We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing Director and an Assistant Secretary and a Vice President and an Assistant Secretary of BANKERS TRUST COMPANY, do hereby certify: 1. The name of the corporation is Bankers Trust Company. 2. The organization certificate of the corporation was filed by the Superintendent of Banks of the State of New York on March 5, 1903. 3. The text of the organization certificate, as amended heretofore, is hereby restated without further amendment or change to read as herein-set forth in full, to wit: "Certificate of Organization of Bankers Trust Company Know All Men By These Presents That we, the undersigned, James A. Blair, James G. Cannon, E. C. Converse, Henry P. Davison, Granville W. Garth, A. Barton Hepburn, Will Logan, Gates W. McGarrah, George W. Perkins, William H. Porter, John F. Thompson, Albert H. Wiggin, Samuel Woolverton and Edward F. C. Young, all being persons of full age and citizens of the United States, and a majority of us being residents of the State of New York, desiring to form a corporation to be known as a Trust Company, do hereby associate ourselves together for that purpose under and pursuant to the laws of the State of New York, and for such purpose we do hereby, under our respective hands and seals, execute and duly acknowledge this Organization Certificate in duplicate, and hereby specifically state as follows, to wit: I. The name by which the said corporation shall be known is Bankers Trust Company. II. The place where its business is to be transacted is the City of New York, in the State of New York. III. Capital Stock: The amount of capital stock which the corporation is hereafter to have is Three Billion One Million, Six Hundred Sixty-Six Thousand, Six Hundred Seventy Dollars ($3,001,666,670), divided into Two Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven (200,166,667) shares with a par value of $10 each designated as Common Stock and 1,000 shares with a par value of One Million Dollars ($1,000,000) each designated as Series Preferred Stock. (a) Common Stock 11 1. Dividends: Subject to all of the rights of the Series Preferred Stock, dividends may be declared and paid or set apart for payment upon the Common Stock out of any assets or funds of the corporation legally available for the payment of dividends. 2. Voting Rights: Except as otherwise expressly provided with respect to the Series Preferred Stock or with respect to any series of the Series Preferred Stock, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, each holder of the Common Stock being entitled to one vote for each share thereof held. 3. Liquidation: Upon any liquidation, dissolution or winding up of the corporation, whether voluntary or involuntary, and after the holders of the Series Preferred Stock of each series shall have been paid in full the amounts to which they respectively shall be entitled, or a sum sufficient for the payment in full set aside, the remaining net assets of the corporation shall be distributed pro rata to the holders of the Common Stock in accordance with their respective rights and interests, to the exclusion of the holders of the Series Preferred Stock. 4. Preemptive Rights: No holder of Common Stock of the corporation shall be entitled, as such, as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of any class or series whatsoever, any rights or options to purchase stock of any class or series whatsoever, or any securities convertible into, exchangeable for or carrying rights or options to purchase stock of any class or series whatsoever, whether now or hereafter authorized, and whether issued for cash or other consideration, or by way of dividend or other distribution. (b) Series Preferred Stock 1. Board Authority: The Series Preferred Stock may be issued from time to time by the Board of Directors as herein provided in one or more series. The designations, relative rights, preferences and limitations of the Series Preferred Stock, and particularly of the shares of each series thereof, may, to the extent permitted by law, be similar to or may differ from those of any other series. The Board of Directors of the corporation is hereby expressly granted authority, subject to the provisions of this Article III, to issue from time to time Series Preferred Stock in one or more series and to fix from time to time before issuance thereof, by filing a certificate pursuant to the Banking Law, the number of shares in each such series of such class and all designations, relative rights (including the right, to the extent permitted by law, to convert into shares of any class or into shares of any series of any class), preferences and limitations of the shares in each such series, including, buy without limiting the generality of the foregoing, the following: (i) The number of shares to constitute such series (which number may at any time, or from time to time, be increased or decreased by the Board of Directors, notwithstanding that shares of the series may be outstanding at the time of such increase or decrease, unless the Board of Directors shall have otherwise provided in creating such series) and the distinctive designation thereof; (ii) The dividend rate on the shares of such series, whether or not dividends on the shares of such series shall be cumulative, and the date or dates, if any, from which dividends thereon shall be cumulative; (iii) Whether or not the share of such series shall be redeemable, and, if redeemable, the date or dates upon or after which they shall be redeemable, the amount 12 or amounts per share (which shall be, in the case of each share, not less than its preference upon involuntary liquidation, plus an amount equal to all dividends thereon accrued and unpaid, whether or not earned or declared) payable thereon in the case of the redemption thereof, which amount may vary at different redemption dates or otherwise as permitted by law; (iv) The right, if any, of holders of shares of such series to convert the same into, or exchange the same for, Common Stock or other stock as permitted by law, and the terms and conditions of such conversion or exchange, as well as provisions for adjustment of the conversion rate in such events as the Board of Directors shall determine; (v) The amount per share payable on the shares of such series upon the voluntary and involuntary liquidation, dissolution or winding up of the corporation; (vi) Whether the holders of shares of such series shall have voting power, full or limited, in addition to the voting powers provided by law and, in case additional voting powers are accorded, to fix the extent thereof; and (vii) Generally to fix the other rights and privileges and any qualifications, limitations or restrictions of such rights and privileges of such series, provided, however, that no such rights, privileges, qualifications, limitations or restrictions shall be in conflict with the organization certificate of the corporation or with the resolution or resolutions adopted by the Board of Directors providing for the issue of any series of which there are shares outstanding. All shares of Series Preferred Stock of the same series shall be identical in all respects, except that shares of any one series issued at different times may differ as to dates, if any, from which dividends thereon may accumulate. All shares of Series Preferred Stock of all series shall be of equal rank and shall be identical in all respects except that to the extent not otherwise limited in this Article III any series may differ from any other series with respect to any one or more of the designations, relative rights, preferences and limitations described or referred to in subparagraphs (I) to (vii) inclusive above. 2. Dividends: Dividends on the outstanding Series Preferred Stock of each series shall be declared and paid or set apart for payment before any dividends shall be declared and paid or set apart for payment on the Common Stock with respect to the same quarterly dividend period. Dividends on any shares of Series Preferred Stock shall be cumulative only if and to the extent set forth in a certificate filed pursuant to law. After dividends on all shares of Series Preferred Stock (including cumulative dividends if and to the extent any such shares shall be entitled thereto) shall have been declared and paid or set apart for payment with respect to any quarterly dividend period, then and not otherwise so long as any shares of Series Preferred Stock shall remain outstanding, dividends may be declared and paid or set apart for payment with respect to the same quarterly dividend period on the Common Stock out the assets or funds of the corporation legally available therefor. All Shares of Series Preferred Stock of all series shall be of equal rank, preference and priority as to dividends irrespective of whether or not the rates of dividends to which the same shall be entitled shall be the same and when the stated dividends are not paid in full, the shares of all series of the Series Preferred Stock shall share ratably in the payment thereof in accordance with the sums which would be payable on such shares if all dividends were paid in full, provided, however, that any two or more series of the Series Preferred Stock may differ from each other as to the existence and extent of the right to cumulative dividends, as aforesaid. 13 3. Voting Rights: Except as otherwise specifically provided in the certificate filed pursuant to law with respect to any series of the Series Preferred Stock, or as otherwise provided by law, the Series Preferred Stock shall not have any right to vote for the election of directors or for any other purpose and the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. 4. Liquidation: In the event of any liquidation, dissolution or winding up of the corporation, whether voluntary or involuntary, each series of Series Preferred Stock shall have preference and priority over the Common Stock for payment of the amount to which each outstanding series of Series Preferred Stock shall be entitled in accordance with the provisions thereof and each holder of Series Preferred Stock shall be entitled to be paid in full such amount, or have a sum sufficient for the payment in full set aside, before any payments shall be made to the holders of the Common Stock. If, upon liquidation, dissolution or winding up of the corporation, the assets of the corporation or proceeds thereof, distributable among the holders of the shares of all series of the Series Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid, then such assets, or the proceeds thereof, shall be distributed among such holders ratably in accordance with the respective amounts which would be payable if all amounts payable thereon were paid in full. After the payment to the holders of Series Preferred Stock of all such amounts to which they are entitled, as above provided, the remaining assets and funds of the corporation shall be divided and paid to the holders of the Common Stock. 5. Redemption: In the event that the Series Preferred Stock of any series shall be made redeemable as provided in clause (iii) of paragraph 1 of section (b) of this Article III, the corporation, at the option of the Board of Directors, may redeem at any time or times, and from time to time, all or any part of any one or more series of Series Preferred Stock outstanding by paying for each share the then applicable redemption price fixed by the Board of Directors as provided herein, plus an amount equal to accrued and unpaid dividends to the date fixed for redemption, upon such notice and terms as may be specifically provided in the certificate filed pursuant to law with respect to the series. 6. Preemptive Rights: No holder of Series Preferred Stock of the corporation shall be entitled, as such, as a matter or right, to subscribe for or purchase any part of any new or additional issue of stock of any class or series whatsoever, any rights or options to purchase stock of any class or series whatsoever, or any securities convertible into, exchangeable for or carrying rights or options to purchase stock of any class or series whatsoever, whether now or hereafter authorized, and whether issued for cash or other consideration, or by way of dividend. (c) Provisions relating to Floating Rate Non-Cumulative Preferred Stock, Series A. (Liquidation value $1,000,000 per share.) 1. Designation: The distinctive designation of the series established hereby shall be "Floating Rate Non-Cumulative Preferred Stock, Series A" (hereinafter called "Series A Preferred Stock"). 2. Number: The number of shares of Series A Preferred Stock shall initially be 250 shares. Shares of Series A Preferred Stock redeemed, purchased or otherwise acquired by the corporation shall be cancelled and shall revert to authorized but unissued Series Preferred Stock undesignated as to series. 3. Dividends: (a) Dividend Payments Dates. Holders of the Series A Preferred Stock shall be entitled to receive non-cumulative cash dividends when, as and if declared by the Board of Directors of the corporation, out of funds legally available therefor, from the date of original 14 issuance of such shares (the "Issue Date") and such dividends will be payable on March 28, June 28, September 28 and December 28 of each year ("Dividend Payment Date") commencing September 28, 1990, at a rate per annum as determined in paragraph 3(b) below. The period beginning on the Issue Date and ending on the day preceding the first Dividend Payment Date and each successive period beginning on a Dividend Payment Date and ending on the date preceding the next succeeding Dividend Payment Date is herein called a "Dividend Period". If any Dividend Payment Date shall be, in The City of New York, a Sunday or a legal holiday or a day on which banking institutions are authorized by law to close, then payment will be postponed to the next succeeding business day with the same force and effect as if made on the Dividend Payment Date, and no interest shall accrue for such Dividend Period after such Dividend Payment Date. (b) Dividend Rate. The dividend rate from time to time payable in respect of Series A Preferred Stock (the "Dividend Rate") shall be determined on the basis of the following provisions: (i) On the Dividend Determination Date, LIBOR will be determined on the basis of the offered rates for deposits in U.S. dollars having a maturity of three months commencing on the second London Business Day immediately following such Dividend Determination Date, as such rates appear on the Reuters Screen LIBO Page as of 11:00 A.M. London time, on such Dividend Determination Date. If at least two such offered rates appear on the Reuters Screen LIBO Page, LIBOR in respect of such Dividend Determination Dates will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of such offered rates. If fewer than those offered rates appear, LIBOR in respect of such Dividend Determination Date will be determined as described in paragraph (ii) below. (ii) On any Dividend Determination Date on which fewer than those offered rates for the applicable maturity appear on the Reuters Screen LIBO Page as specified in paragraph (I) above, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars having a maturity of three months commencing on the second London Business Day immediately following such Dividend Determination Date and in a principal amount of not less than $1,000,000 that is representative of a single transaction in such market at such time are offered by three major banks in the London interbank market selected by the corporation at approximately 11:00 A.M., London time, on such Dividend Determination Date to prime banks in the London market. The corporation will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR in respect of such Dividend Determination Date will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of such quotations. If fewer than two quotations are provided, LIBOR in respect of such Dividend Determination Date will be the arithmetic mean (rounded to the nearest one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) of the rates quoted by three major banks in New York City selected by the corporation at approximately 11:00 A.M., New York City time, on such Dividend Determination Date for loans in U.S. dollars to leading European banks having a maturity of three months commencing on the second London Business Day immediately following such Dividend Determination Date and in a principal amount of not less than $1,000,000 that is representative of a single transaction in such market at such time; provided, however, that if the banks selected as aforesaid by the corporation are not quoting as aforementioned in this sentence, then, with respect to such Dividend Period, LIBOR for the preceding Dividend Period will be continued as LIBOR for such Dividend Period. (iii) The Dividend Rate for any Dividend Period shall be equal to the lower of 18% or 50 basis points above LIBOR for such Dividend Period as LIBOR is determined by sections (I) or (ii) above. 15 As used above, the term "Dividend Determination Date" shall mean, with respect to any Dividend Period, the second London Business Day prior to the commencement of such Dividend Period; and the term "London Business Day" shall mean any day that is not a Saturday or Sunday and that, in New York City, is not a day on which banking institutions generally are authorized or required by law or executive order to close and that is a day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. 4. Voting Rights: The holders of the Series A Preferred Stock shall have the voting power and rights set forth in this paragraph 4 and shall have no other voting power or rights except as otherwise may from time to time be required by law. So long as any shares of Series A Preferred Stock remain outstanding, the corporation shall not, without the affirmative vote or consent of the holders of at least a majority of the votes of the Series Preferred Stock entitled to vote outstanding at the time, given in person or by proxy, either in writing or by resolution adopted at a meeting at which the holders of Series A Preferred Stock (alone or together with the holders of one or more other series of Series Preferred Stock at the time outstanding and entitled to vote) vote separately as a class, alter the provisions of the Series Preferred Stock so as to materially adversely affect its rights; provided, however, that in the event any such materially adverse alteration affects the rights of only the Series A Preferred Stock, then the alteration may be effected with the vote or consent of at least a majority of the votes of the Series A Preferred Stock; provided, further, that an increase in the amount of the authorized Series Preferred Stock and/or the creation and/or issuance of other series of Series Preferred Stock in accordance with the organization certificate shall not be, nor be deemed to be, materially adverse alterations. In connection with the exercise of the voting rights contained in the preceding sentence, holders of all series of Series Preferred Stock which are granted such voting rights (of which the Series A Preferred Stock is the initial series) shall vote as a class (except as specifically provided otherwise) and each holder of Series A Preferred Stock shall have one vote for each share of stock held and each other series shall have such number of votes, if any, for each share of stock held as may be granted to them. The foregoing voting provisions will not apply if, in connection with the matters specified, provision is made for the redemption or retirement of all outstanding Series A Preferred Stock. 5. Liquidation: Subject to the provisions of section (b) of this Article III, upon any liquidation, dissolution or winding up of the corporation, whether voluntary or involuntary, the holders of the Series A Preferred Stock shall have preference and priority over the Common Stock for payment out of the assets of the corporation or proceeds thereof, whether from capital or surplus, of $1,000,000 per share (the "liquidation value") together with the amount of all dividends accrued and unpaid thereon, and after such payment the holders of Series A Preferred Stock shall be entitled to no other payments. 6. Redemption: Subject to the provisions of section (b) of this Article III, Series A Preferred Stock may be redeemed, at the option of the corporation in whole or part, at any time or from time to time at a redemption price of $1,000,000 per share, in each case plus accrued and unpaid dividends to the date of redemption. At the option of the corporation, shares of Series A Preferred Stock redeemed or otherwise acquired may be restored to the status of authorized but unissued shares of Series Preferred Stock. In the case of any redemption, the corporation shall give notice of such redemption to the holders of the Series A Preferred Stock to be redeemed in the following manner: a notice specifying the shares to be redeemed and the time and place of redemption (and, if less than the 16 total outstanding shares are to be redeemed, specifying the certificate numbers and number of shares to be redeemed) shall be mailed by first class mail, addressed to the holders of record of the Series A Preferred Stock to be redeemed at their respective addresses as the same shall appear upon the books of the corporation, not more than sixty (60) days and not less than thirty (30) days previous to the date fixed for redemption. In the event such notice is not given to any shareholder such failure to give notice shall not affect the notice given to other shareholders. If less than the whole amount of outstanding Series A Preferred Stock is to be redeemed, the shares to be redeemed shall be selected by lot or pro rata in any manner determined by resolution of the Board of Directors to be fair and proper. From and after the date fixed in any such notice as the date of redemption (unless default shall be made by the corporation in providing moneys at the time and place of redemption for the payment of the redemption price) all dividends upon the Series A Preferred Stock so called for redemption shall cease to accrue, and all rights of the holders of said Series A Preferred Stock as stockholders in the corporation, except the right to receive the redemption price (without interest) upon surrender of the certificate representing the Series A Preferred Stock so called for redemption, duly endorsed for transfer, if required, shall cease and terminate. The corporation's obligation to provide moneys in accordance with the preceding sentence shall be deemed fulfilled if, on or before the redemption date, the corporation shall deposit with a bank or trust company (which may be an affiliate of the corporation) having an office in the Borough of Manhattan, City of New York, having a capital and surplus of at least $5,000,000 funds necessary for such redemption, in trust with irrevocable instructions that such funds be applied to the redemption of the shares of Series A Preferred Stock so called for redemption. Any interest accrued on such funds shall be paid to the corporation from time to time. Any funds so deposited and unclaimed at the end of two (2) years from such redemption date shall be released or repaid to the corporation, after which the holders of such shares of Series A Preferred Stock so called for redemption shall look only to the corporation for payment of the redemption price. IV. The name, residence and post office address of each member of the corporation are as follows:
NAME RESIDENCE POST OFFICE ADDRESS James A. Blair 9 West 50th Street, 33 Wall Street, Manhattan, New York City Manhattan, New York City James G. Cannon 72 East 54th Street, 14 Nassau Street, Manhattan New York City Manhattan, New York City E. C. Converse 3 East 78th Street, 139 Broadway, Manhattan, New York City Manhattan, New York City Henry P. Davison Englewood, 2 Wall Street, New Jersey Manhattan, New York City Granville W. Garth 160 West 57th Street, 33 Wall Street Manhattan, New York City Manhattan, New York City A. Barton Hepburn 205 West 57th Street 83 Cedar Street Manhattan, New York City Manhattan, New York City William Logan Montclair, 13 Nassau Street New Jersey Manhattan, New York City George W. Perkins Riverdale, 23 Wall Street,
17 New York Manhattan, New York City William H. Porter 56 East 67th Street 270 Broadway, Manhattan, New York City Manhattan, New York City John F. Thompson Newark, 143 Liberty Street, New Jersey Manhattan, New York City Albert H. Wiggin 42 West 49th Street, 214 Broadway, Manhattan, New York City Manhattan, New York City Samuel Woolverton Mount Vernon, 34 Wall Street, New York Manhattan, New York City Edward F.C. Young 85 Glenwood Avenue, 1 Exchange Place, Jersey City, New Jersey Jersey City, New Jersey
V. The existence of the corporation shall be perpetual. VI. The subscribers, the members of the said corporation, do, and each for himself does, hereby declare that he will accept the responsibilities and faithfully discharge the duties of a director therein, if elected to act as such, when authorized accordance with the provisions of the Banking Law of the State of New York. VII. The number of directors of the corporation shall not be less than 10 nor more than 25." 4. The foregoing restatement of the organization certificate was authorized by the Board of Directors of the corporation at a meeting held on July 21, 1998. IN WITNESS WHEREOF, we have made and subscribed this certificate this 6th day of August, 1998. IN WITNESS WHEREOF, we have made and subscribed this certificate this 6th day of August, 1998. James T. Byrne, Jr. -------------------------------------- James T. Byrne, Jr. Managing Director and Secretary Lea Lahtinen -------------------------------------- Lea Lahtinen Vice President and Assistant Secretary Lea Lahtinen -------------------------------------- Lea Lahtinen 18 State of New York ) ) ss: County of New York ) Lea Lahtinen, being duly sworn, deposes and says that she is a Vice President and an Assistant Secretary of Bankers Trust Company, the corporation described in the foregoing certificate; that she has read the foregoing certificate and knows the contents thereof, and that the statements herein contained are true. Lea Lahtinen -------------------------------------- Lea Lahtinen Sworn to before me this 6th day of August, 1998. Sandra L. West - ------------------------------------- Notary Public SANDRA L. WEST Notary Public State of New York No. 31-4942101 Qualified in New York County Commission Expires September 19, 1998 19 State of New York, Banking Department I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION 8005 OF THE BANKING LAW," dated September 16, 1998, providing for an increase in authorized capital stock from $3,001,666,670 consisting of 200,166,667 shares with a par value of $10 each designated as Common Stock and 1,000 shares with a par value of $1,000,000 each designated as Series Preferred Stock to $3,501,666,670 consisting of 200,166,667 shares with a par value of $10 each designated as Common Stock and 1,500 shares with a par value of $1,000,000 each designated as Series Preferred Stock. WITNESS, my hand and official seal of the Banking Department at the City of New York, this 25TH day of SEPTEMBER in the Year of our Lord one thousand nine hundred and NINETY-EIGHT. Manuel Kursky ------------------------------ Deputy Superintendent of Banks CERTIFICATE OF AMENDMENT 20 OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST Under Section 8005 of the Banking Law ----------------------------- We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing Director and Secretary and a Vice President and an Assistant Secretary of Bankers Trust Company, do hereby certify: 1. The name of the corporation is Bankers Trust Company. 2. The organization certificate of said corporation was filed by the Superintendent of Banks on the 5th of March, 1903. 3. The organization certificate as heretofore amended is hereby amended to increase the aggregate number of shares which the corporation shall have authority to issue and to increase the amount of its authorized capital stock in conformity therewith. 4. Article III of the organization certificate with reference to the authorized capital stock, the number of shares into which the capital stock shall be divided, the par value of the shares and the capital stock outstanding, which reads as follows: "III. The amount of capital stock which the corporation is hereafter to have is Three Billion, One Million, Six Hundred Sixty-Six Thousand, Six Hundred Seventy Dollars ($3,001,666,670), divided into Two Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven (200,166,667) shares with a par value of $10 each designated as Common Stock and 1000 shares with a par value of One Million Dollars ($1,000,000) each designated as Series Preferred Stock." is hereby amended to read as follows: "III. The amount of capital stock which the corporation is hereafter to have is Three Billion, Five Hundred One Million, Six Hundred Sixty-Six Thousand, Six Hundred Seventy Dollars ($3,501,666,670), divided into Two Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven (200,166,667) shares with a par value of $10 each designated as Common Stock and 1500 shares with a par value of One Million Dollars ($1,000,000) each designated as Series Preferred Stock." 21 5. The foregoing amendment of the organization certificate was authorized by unanimous written consent signed by the holder of all outstanding shares entitled to vote thereon. IN WITNESS WHEREOF, we have made and subscribed this certificate this 25th day of September, 1998. James T. Byrne, Jr. -------------------------------------- James T. Byrne, Jr. Managing Director and Secretary Lea Lahtinen -------------------------------------- Lea Lahtinen Vice President and Assistant Secretary State of New York ) ) ss: County of New York ) Lea Lahtinen, being fully sworn, deposes and says that she is a Vice President and an Assistant Secretary of Bankers Trust Company, the corporation described in the foregoing certificate; that she has read the foregoing certificate and knows the contents thereof, and that the statements herein contained are true. Lea Lahtinen -------------------------------------- Lea Lahtinen Sworn to before me this 25th day of September, 1998 Sandra L. West - ------------------------------------- Notary Public SANDRA L. WEST Notary Public State of New York No. 31-4942101 Qualified in New York County Commission Expires September 19, 2000 22 State of New York, Banking Department I, P. VINCENT CONLON, Deputy Superintendent of Banks of the State of New York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION 8005 OF THE BANKING LAW," dated December 16, 1998, providing for an increase in authorized capital stock from $3,501,666,670 consisting of 200,166,667 shares with a par value of $10 each designated as Common Stock and 1,500 shares with a par value of $1,000,000 each designated as Series Preferred Stock to $3,627,308,670 consisting of 212,730,867 shares with a par value of $10 each designated as Common Stock and 1,500 shares with a par value of $1,000,000 each designated as Series Preferred Stock. WITNESS, my hand and official seal of the Banking Department at the City of New York, this 18TH day of DECEMBER in the Year of our Lord one thousand nine hundred and NINETY-EIGHT. P. Vincent Conlon ------------------------------ Deputy Superintendent of Banks 23 CERTIFICATE OF AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST Under Section 8005 of the Banking Law ----------------------------- We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing Director and Secretary and a Vice President and an Assistant Secretary of Bankers Trust Company, do hereby certify: 1. The name of the corporation is Bankers Trust Company. 2. The organization certificate of said corporation was filed by the Superintendent of Banks on the 5th of March, 1903. 3. The organization certificate as heretofore amended is hereby amended to increase the aggregate number of shares which the corporation shall have authority to issue and to increase the amount of its authorized capital stock in conformity therewith. 4. Article III of the organization certificate with reference to the authorized capital stock, the number of shares into which the capital stock shall be divided, the par value of the shares and the capital stock outstanding, which reads as follows: "III. The amount of capital stock which the corporation is hereafter to have is Three Billion, Five Hundred One Million, Six Hundred Sixty-Six Thousand, Six Hundred Seventy Dollars ($3,501,666,670), divided into Two Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven (200,166,667) shares with a par value of $10 each designated as Common Stock and 1500 shares with a par value of One Million Dollars ($1,000,000) each designated as Series Preferred Stock." is hereby amended to read as follows: "III. The amount of capital stock which the corporation is hereafter to have is Three Billion, Six Hundred Twenty-Seven Million, Three Hundred Eight Thousand, Six Hundred Seventy Dollars ($3,627,308,670), divided into Two Hundred Twelve Million, Seven Hundred Thirty Thousand, Eight Hundred Sixty-Seven (212,730,867) shares with a par value of $10 each designated as Common Stock and 1500 shares with a par value of One Million Dollars ($1,000,000) each designated as Series Preferred Stock." 24 5. The foregoing amendment of the organization certificate was authorized by unanimous written consent signed by the holder of all outstanding shares entitled to vote thereon. IN WITNESS WHEREOF, we have made and subscribed this certificate this 16th day of December, 1998. James T. Byrne, Jr. -------------------------------------- James T. Byrne, Jr. Managing Director and Secretary Lea Lahtinen -------------------------------------- Lea Lahtinen Vice President and Assistant Secretary State of New York ) ) ss: County of New York ) Lea Lahtinen, being fully sworn, deposes and says that she is a Vice President and an Assistant Secretary of Bankers Trust Company, the corporation described in the foregoing certificate; that she has read the foregoing certificate and knows the contents thereof, and that the statements herein contained are true. Lea Lahtinen -------------------------------------- Lea Lahtinen Sworn to before me this 16th day of December, 1998 Sandra L. West - ------------------------------------- Notary Public SANDRA L. WEST Notary Public State of New York No. 31-4942101 Qualified in New York County Commission Expires September 19, 2000 25 EXHIBIT 4 EXISTING BY-LAWS OF BANKERS TRUST COMPANY, AS AMENDED ON JUNE 22, 1999. COPY ATTACHED. 26 BY-LAWS JUNE 22, 1999 BANKERS TRUST CORPORATION (INCORPORATED UNDER THE NEW YORK BUSINESS CORPORATION LAW) 27 1 BANKERS TRUST CORPORATION --------------------------------------- BY-LAWS --------------------------------------- ARTICLE I SHAREHOLDERS SECTION 1.01 Annual Meetings. The annual meetings of shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on the third Tuesday in April of each year, if not a legal holiday, and if a legal holiday then on the next succeeding business day, at such hour as shall be designated by the Board of Directors. If no other hour shall be so designated such meeting shall be held at 3 P.M. SECTION 1.02 Special Meetings. Special meetings of the shareholders, except those regulated otherwise by statute, may be called at any time by the Board of Directors, or by any person or committee expressly so authorized by the Board of Directors and by no other person or persons. SECTION 1.03 Place of Meetings. Meetings of shareholders shall be held at such place within or without the State of New York as shall be determined from time to time by the Board of Directors or, in the case of special meetings, by such person or persons as may be authorized to call a meeting. The place in which each meeting is to be held shall be specified in the notice of such meeting. SECTION 1.04 Notice of Meetings. A copy of the written notice of the place, date and hour of each meeting of shareholders shall be given personally or by mail, not less than ten nor more than fifty days before the date of the meeting, to each shareholder entitled to vote at such meeting. Notice of a special meeting shall indicate that it is being issued by or at the direction of the person or persons calling the meeting and shall also state the purpose or purposes for which the meeting is called. Notice of any meeting at which is proposed to take action which would entitle shareholders to receive payment for their shares pursuant to statutory provisions must include a statement of that purpose and to that effect. If mailed, such notices of the annual and each special meeting are given when deposited in the United States mail, postage prepaid, directed to the shareholder at his address as it appears in the record of shareholders unless he shall have filed with the Secretary of the corporation a written request that notices intended for him shall be mailed to some other address, in which case it shall be directed to him at such other address. SECTION 1.05 Record Date. For the purpose of determining the shareholders entitled to notice of or to vote any meeting of shareholders or any adjournment thereof, or to express consent to or dissent from any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the Board of Directors may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be more than fifty nor less than ten days before the date of such meeting, nor more than fifty days prior to any other action. 28 SECTION 1.06 Quorum. The presence, in person or by proxy, of the holders of a majority of the shares entitled to vote thereat shall constitute a quorum at a meeting of shareholders for the transaction of business, except as otherwise provided by statute, by the Certificate of Incorporation or by the By-Laws. The shareholders present in person or by proxy and entitled to vote at any meeting, despite the absence of a quorum, shall have power to adjourn the meeting from time to time, to a designated time and place, without notice other than by announcement at the meeting, and at any adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. However, if after the adjournment the Board of Directors fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record on the new record date entitled to notice. SECTION 1.07 Notice of Shareholder Business at Annual Meeting. At an annual meeting of shareholders, only such business shall be conducted as shall have been brought before the meeting (a) by or at the direction of the Board of Directors or (b) by any shareholder of the corporation who complies with the notice procedures set forth in this Section 1.07. For business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than thirty days nor more than fifty days prior to the meeting; provided, however, that in the event that less than forty days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the corporation's books, of the shareholder proposing such business, (c) the class and number of shares of the corporation which are beneficially owned by the shareholder and (d) any material interest of the shareholder in such business. Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 1.07 and Section 2.03. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 1.07 and Section 2.03, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. ARTICLE II BOARD OF DIRECTORS SECTION 2.01 Number and Qualifications. The business of the corporation shall be managed by its Board of Directors. The number of directors constituting the entire Board of Directors shall be not less than seven nor more than fifteen, as shall be fixed from time to time by vote of a majority of the entire Board of Directors. Each director shall be at least 21 years of age. Directors need not be shareholders. No Officer-Director who shall have attained age 65, or earlier relinquishes his responsibilities and title, shall be eligible to serve as a director. SECTION 2.02 Election. At each annual meeting of shareholders, directors shall be elected by a plurality of the votes to hold office until the next annual meeting. Subject to the provisions of the statute, of the Certificate of Incorporation and of the By-Laws, each director shall hold office until the expiration of the term for which elected, and until his successor has been elected and qualified. SECTION 2.03 Nomination and Notification of Nomination. Subject to the rights of holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, 29 nominations for the election of directors may be made by the Board of Directors or to any committee appointed by the Board of Directors or by any shareholder entitled to vote in the election of directors generally. However, any shareholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if written notice of such shareholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the corporation not later than (i) with respect to an election to be held at an annual meeting of shareholders ninety days in advance of such meeting, and (ii) with respect to an election to be held at a special meeting of shareholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. Each such notice shall set forth: (a) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the shareholder is a holder of record of stock of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (d) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (e) the consent of each nominee to serve as a director of the corporation if so elected. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the corporation that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in the By-Laws. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these By-Laws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. SECTION 2.04 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such places and times as may be fixed from time to time by resolution of the Board and a regular meeting for the purpose of organization and transaction of other business shall be held each year after the adjournment of the annual meeting of shareholders. SECTION 2.05 Special Meetings. The Chairman of the Board, the Chief Executive Officer, the President, the Senior Vice Chairman or any Vice Chairman may, and at the request of three directors shall, call a special meeting of the Board of Directors, two days' notice of which shall be given in person or by mail, telegraph, radio, telephone or cable. Notice of a special meeting need not be given to any director who submits a signed waiver of notice whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to him. SECTION 2.06 Place of Meeting. The directors may hold their meetings, have one or more offices, and keep the books of the corporation (except as may be provided by law) at any place, either within or without the State of New York, as they may from time to time determine. SECTION 2.07 Quorum and Vote. At all meetings of the Board of Directors the presence of one-third of the entire Board, but not less than two directors, shall constitute a quorum for the transaction of business. Any one or more members of the Board of Directors or of any committee thereof may participate in a meeting of the Board of Directors or a committee thereof by means of a conference telephone or similar communications equipment which allows all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at such a meeting. The vote of a majority of the directors present at the time of the vote, if a quorum is present at such time, shall be the act of the Board of Directors, except as may be otherwise provided by statute or the By-Laws. 30 SECTION 2.08 Vacancies. Newly created directorships resulting from increase in the number of directors and vacancies in the Board of Directors, whether caused by resignation, death, removal or otherwise, may be filled by vote of a majority of the directors then in office, although less than a quorum exists. ARTICLE III EXECUTIVE AND OTHER COMMITTEES SECTION 3.01 Designation and Authority. The Board of Directors, by resolution adopted by a majority of the entire Board, may designate from among its members an Executive Committee and other committees, each consisting of three or more directors. Each such committee, to the extent provided in the resolution or the By-Laws, shall have all the authority of the Board, except that no such committee shall have authority as to: (i) the submission to shareholders of any action as to which shareholders' authorization is required by law. (ii) the filling of vacancies in the Board of Directors or any committee. (iii) the fixing of compensation of directors for serving on the Board or on any committee. (iv) the amendment or appeal of the By-Laws, or the adoption of new By-Laws. (v) the amendment or repeal of any resolution of the Board which by its terms shall not be so amendable or repealable. The Board may designate one or more directors as alternate members of any such committee, who may replace any absent member or members at any meeting of such committee. Each such committee shall serve at the pleasure of the Board of Directors. SECTION 3.02 Procedure. Except as may be otherwise provided by statute, by the By-Laws or by resolution of the Board of Directors, each committee may make rules for the call and conduct of its meetings. Each committee shall keep a record of its acts and proceedings and shall report the same from time to time to the Board of Directors. ARTICLE IV OFFICERS SECTION 4.01 Titles and General. The Board of Directors shall elect from among their number a Chairman of the Board and a Chief Executive Officer, and may also elect a President, a Senior Vice Chairman, one or more Vice Chairmen, one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Principals, one or more Vice Presidents, a Secretary, a Controller, a Treasurer, a General Counsel, a General Auditor, and a General Credit Auditor, who need not be directors. The officers of the corporation may also include such other officers or assistant officers as shall from time to time be elected or appointed by the Board. The Chairman of the Board or the Chief Executive Officer or, in their absence, the President, the Senior Vice Chairman or any Vice Chairman, may from time to time appoint assistant officers. All officers elected or appointed by the Board of Directors shall hold their respective 31 offices during the pleasure of the Board of Directors, and all assistant officers shall hold office at the pleasure of the Board or the Chairman of the Board or the Chief Executive Officer or, in their absence, the President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors may require any and all officers and employees to give security for the faithful performance of their duties. SECTION 4.02 Chairman of the Board. The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors. Subject to the Board of Directors, he shall exercise all the powers and perform all the duties usual to such office and shall have such other powers as may be prescribed by the Board of Directors or the Executive Committee or vested in him by the By-Laws. SECTION 4.03 Chief Executive Officer. The Board of Directors shall designate the Chief Executive Officer of the corporation, which person may also hold the additional title of Chairman of the Board, President, Senior Vice Chairman or Vice Chairman. Subject to the Board of Directors, he shall exercise all the powers and perform all the duties usual to such office and shall have such other powers as may be prescribed by the Board of Directors or the Executive Committee or vested in him by the By-Laws. SECTION 4.04 Chairman of the Board, President, Senior Vice Chairman, Vice Chairmen, Executive Vice Presidents, Senior Vice Presidents, Principals and Vice Presidents. The Chairman of the Board or, in his absence or incapacity the President or, in his absence or incapacity, the Senior Vice Chairman, the Vice Chairmen, the Executive Vice Presidents, or in their absence, the Senior Vice Presidents, in the order established by the Board of Directors shall, in the absence or incapacity of the Chief Executive Officer perform the duties of the Chief Executive Officer. The President, the Senior Vice Chairman, the Vice Chairmen, the Executive Vice Presidents, the Senior Vice Presidents, the Principals, and the Vice Presidents shall also perform such other duties and have such other powers as may be prescribed or assigned to them, respectively, from time to time by the Board of Directors, the Executive Committee, the Chief Executive Officer, or the By-Laws. SECTION 4.05 Controller. The Controller shall perform all the duties customary to that office and except as may be otherwise provided by the Board of Directors shall have the general supervision of the books of account of the corporation and shall also perform such other duties and have such powers as may be prescribed or assigned to him from time to time by the Board of Directors, the Executive Committee, the Chief Executive Officer, or the By-Laws. SECTION 4.06 Secretary. The Secretary shall keep the minutes of the meetings of the Board of Directors and of the shareholders and shall have the custody of the seal of the corporation. He shall perform all other duties usual to that office, and shall also perform such other duties and have such powers as may be prescribed or assigned to him from time to time by the Board of Directors, the Executive Committee, the Chairman of the Board, the Chief Executive Officer, or the By-Laws. ARTICLE V INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS SECTION 5.01 The corporation shall, to the fullest extent permitted by Section 721 of the New York Business Corporation Law, indemnify any person who is or was made, or threatened to be made, a party to an action or proceeding, whether civil or criminal, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or agency, including an action by or in the right of the corporation to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint 32 venture, trust, employee benefit plan or other enterprise, which any director or officer of the corporation is serving or served in any capacity at the request of the corporation by reason of the fact that he, his testator or intestate, is or was a director or officer of the corporation, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, or any appeal therein; provided, however, that no indemnification shall be provided to any such person if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled. SECTION 5.02 The corporation may indemnify any other person to whom the corporation is permitted to provide indemnification or the advancement of expenses by applicable law, whether pursuant to rights granted pursuant to, or provided by, the New York Business Corporation Law or other rights created by (i) a resolution of shareholders, (ii) a resolution of directors, or (iii) an agreement providing for such indemnification, it being expressly intended that these By-Laws authorize the creation of other rights in any such manner. SECTION 5.03 The corporation shall, from time to time, reimburse or advance to any person referred to in Section 5.01 the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action or proceeding referred to in Section 5.01, upon receipt of a written undertaking by or on behalf of such person to repay such amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled. SECTION 5.04 Any director or officer of the corporation serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the corporation, or (ii) any employee benefit plan of the corporation or any corporation referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the corporation. In all other cases, the provisions of this Article V will apply (i) only if the person serving another corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise so served at the specific request of the corporation, evidenced by a written communication signed by the Chairman of the Board, the Chief Executive Officer, the President, the Senior Vice Chairman or any Vice Chairman, and (ii) only if and to the extent that, after making such efforts as the Chairman of the Board, the Chief Executive Officer, or the President shall deem adequate in the circumstances, such person shall be unable to obtain indemnification from such other enterprise or its insurer. SECTION 5.05 Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right pursuant to this Article V may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the action or proceeding, to the extent permitted by law, or on the basis of the applicable law in effect at the time indemnification is sought. SECTION 5.06 The right to be indemnified or to the reimbursement or advancement of expenses pursuant to this Article V (i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the corporation and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. 33 SECTION 5.07 If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the corporation within thirty days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstances, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. SECTION 5.08 A person who has been successful, on the merits or otherwise, in the defense of a civil or criminal action or proceeding of the character described in Section 5.01 shall be entitled to indemnification only as provided in Sections 5.01 and 5.03, notwithstanding any provision of the New York Business Corporation Law to the contrary. ARTICLE VI SEAL SECTION 6.01 Corporate Seal. The corporate seal shall contain the name of the corporation and the year and state of its incorporation. The seal may be altered from time to time at the discretion of the Board of Directors. ARTICLE VII SHARE CERTIFICATES SECTION 7.01 Form. The certificates for shares of the corporation shall be in such form as shall be approved by the Board of Directors and shall be signed by the Chairman of the Board, the Chief Executive Officer, the President, the Senior Vice Chairman or any Vice Chairman and the Secretary or an Assistant Secretary, and shall be sealed with the seal of the corporation or a facsimile thereof. The signatures of the officers upon the certificate may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the corporation itself or its employees. ARTICLE VIII CHECKS SECTION 8.01 Signatures. All checks, drafts and other orders for the payment of money shall be signed by such officer or officers or agent or agents as the Board of Directors may designate from time to time. 34 ARTICLE IX AMENDMENT SECTION 9.01 Amendment of By-Laws. The By-Laws may be amended, repealed or added to by vote of the holders of the shares at the time entitled to vote in the election of any directors. The Board of Directors may also amend, repeal or add to the By-Laws, but any By-Laws adopted by the Board of Directors may be amended or repealed by the shareholders entitled to vote thereon as provided herein. If any By-Law regulating an impending election of directors is adopted, amended or repealed by the Board, there shall be set forth in the notice of the next meeting of shareholders for the election of directors the By-Laws so adopted, amended or repealed, together with concise statement of the changes made. ARTICLE X SECTION 10.01 Construction. The masculine gender, when appearing in these By-Laws, shall be deemed to include the feminine gender. 35 I, Tracy A. Salzmann, Associate of Bankers Trust Company, New York, New York, hereby certify that the foregoing is a complete, true and correct copy of the By-Laws of Bankers Trust Company, and that the same are in full force and effect at this date. /s/ Tracy A. Salzmann ----------------------------------- By: Tracy A. Salzmann Associate DATED: June 13, 2001 36 EXHIBIT 7 THE LATEST REPORT OF CONDITION OF BANKERS TRUST COMPANY DATED AS OF MARCH 31, 2001. COPY ATTACHED. 37 Legal Title of Bank: Bankers Trust Company Call Date: 05/15/01 State#: 36-4840 FFIEC 031 Address: 130 Liberty Street Vendor ID: D Cert#: 00623 Page RC-1 City, State ZIP: New York, NY 10006 Transit#: 21001003
11 CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 2001 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, reported the amount outstanding as of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 Dollar Amounts in Thousands RCFD - ---------------------------------------------------------------------------------------------------------------------------------- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1) ........... 0081 2,380,000 1.a. b. Interest-bearing balances(2) .................................... 0071 636,000 1.b. 2. Securities: a. Held-to-maturity securities (from Schedule RC-B, column A) ...... 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) .... 1773 103,000 2.b. 3. Federal funds sold and securities purchased under agreements to resell .......................................................... 1350 2,733,000 3. 4. Loans and lease financing receivables (from Schedule RC-C): a. Loans and leases held for sale .................................. 5369 0 4.a. b. Loans and leases, net unearned income ........................... B528 16,536,000 4.b. c. LESS: Allowance for loan and lease losses ....................... 3123 442,000 4.c. d. Loans and leases, net of unearned income and allowance (item 4.b minus 4.c) .................................. B529 16,094,000 4.d. 5. Trading Assets (from schedule RC-D) ................................ 3545 13,324,000 5. 6. Premises and fixed assets (including capitalized leases) ........... 2145 563,000 6. 7. Other real estate owned (from Schedule RC-M) ....................... 2150 100,000 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ..................................... 2130 2,649,000 8. 9. Customers' liability to this bank on acceptances outstanding ....... 2155 237,000 9. 10. Intangible assets .................................................. a. Goodwill ........................................................ 3163 56,000 10.a b. Other intangible assets (from Schedule RC-M) .................... 0426 10,000 10.b 11. Other assets (from Schedule RC-F) .................................. 2160 2,989,000 11. 12. Total assets (sum of items 1 through 11) ........................... 2170 41,874,000 12.
- ---------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 38
Legal Title of Bank: Bankers Trust Company Call Date: 05/15/01 FFIEC 031 Address: 130 Liberty Street Vendor ID: D Cert#: 00623 Page RC-2 City, State Zip: New York, NY 10006 Transit#: 21001003 SCHEDULE RC--CONTINUED 12 DOLLAR AMOUNTS IN THOUSANDS - ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES 13. Deposits: | | a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) | RCON 2200 12,065,000 |13.a. (1) Noninterest-bearing(1) ..................................... RCON 6631 3,280,000 | |13.a.(1) (2) Interest-bearing ........................................... RCON 6636 8,785,000 | |13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E part II) | | | RCFN 2200 8,315,000 |13.b. (1) Noninterest-bearing ........................................ RCFN 6631 1,177,000 | |13.b.(1) (2) Interest-bearing ........................................... RCFN 6636 7,138,000 | |13.a.(2) 14. Federal funds purchased and securities sold under agreements to repurchase ......................................................... | RCFD 2800 7,957,000 |14. 15. Trading liabilities (from Schedule RC-D)............................ | RCFD 3548 1, 515,000 |15 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): | | (from Schedule RC-M): | RCFD 3190 2,213,000 |16. 17. Not Applicable. | |17. 18. Bank's liability on acceptances executed and outstanding ........... | RCFD 2920 237,000 |18. 19. Subordinated notes and debentures (2)............................... | RCFD 3200 285,000 |19. 20. Other liabilities (from Schedule RC-G) ............................. | RCFD 2930 2,063,000 |20. 21. Total liabilities (sum of items 13 through 20) ..................... | RCFD 2948 34,650,000 |21. 22. Minority interest in consolidated subsidiaries | RCFD 3000 618,000 |22. | | EQUITY CAPITAL | | 23. Perpetual preferred stock and related surplus ...................... | RCFD 3838 1,500,000 |23. 24. Common stock ....................................................... | RCFD 3230 2,127,000 |24. 25. Surplus (exclude all surplus related to preferred stock) ........... | RCFD 3839 584,000 |25. 26. a. Retained earnings ............................................. | RCFD 3632 2,527,000 |26.a. b. Accumulated other comprehensive Income (3) .................... | RCFD B530 (132,000)|26.b. 27. Other equity capital components (4) ................................ | RCFD A130 0 |27. 28. Total equity capital (sum of items 23 through 27) .................. | RCFD 3210 6,606,000 |28. 29. Total liabilities, minority interest, and equity capital (sum of items 21, 22, and 28)..................... | RCFD 3300 41,874,000 |29 | | Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number -------------------------------- auditors as of any date during 2000 .............................. | RCFD 6724 1 |M.1 -------------------------------- 1 = Independent audit of the bank conducted in accordance 5 = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 6 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 7 = Compilation of the bank's financial statements by submits a report on the consolidated holding company external auditors (but not on the bank separately) 8 = Other audit procedures (excluding tax preparation work) 3 = Attestation on bank management's assertion on the 9 = No external audit work effectiveness of the bank's internal control over financial reporting by a certified public accounting firm 4 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority)
- ---------------------- (1) Including total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus. -----END PRIVACY-ENHANCED MESSAGE-----