0000950149-01-501400.txt : 20011008
0000950149-01-501400.hdr.sgml : 20011008
ACCESSION NUMBER: 0000950149-01-501400
CONFORMED SUBMISSION TYPE: S-4/A
PUBLIC DOCUMENT COUNT: 6
FILED AS OF DATE: 20010918
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/A
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-64802
FILM NUMBER: 1739348
BUSINESS ADDRESS:
STREET 1: ONE MARKET @ THE LANDMARK
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/A
1
f73660a1s-4a.txt
AMENDMENT NO. 1 TO FORM S-4
1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 2001
REGISTRATION NO. 333-64802
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM S-4
AMENDMENT NO. 1
TO
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)
---------------------------------------------------------------------------------------------------------------------------
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(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
PROSPECTUS
$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 OCTOBER 18, 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 October 18,
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 11.
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 September 19, 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 October 18, 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 October 10, 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................................................ 11
The Exchange Offer.......................................... 19
Use of Proceeds............................................. 27
Capitalization.............................................. 28
Selected Historical Consolidated Financial Data............. 29
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 31
Business.................................................... 36
Management.................................................. 54
Description of the Exchange Notes........................... 55
Description of Existing Indebtedness........................ 105
Certain Federal Income Tax Considerations................... 107
Legal Matters............................................... 109
Experts..................................................... 109
-------------------------
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.
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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
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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
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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).
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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.
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RECENT DEVELOPMENTS
FISCAL 2001 FOURTH QUARTER AND YEAR-END EARNINGS RELEASES
On August 2, 2001, we announced our financial results for the forth quarter
and year-end for fiscal 2001. Below is a summary of our results:
SELECTED BALANCE SHEET DATA
JUNE 30, 2001
-------------
(IN MILLIONS)
Cash and cash equivalents................................... $ 12.4
Trade accounts receivable, net of allowance................. 135.8
Inventories................................................. 437.5
Total Assets................................................ 1,124.1
Accounts Payable and accrued expenses....................... 227.0
Short-term borrowings....................................... 0.3
Long-term debt, including current portion................... 714.0
Stockholders' equity........................................ 24.9
SELECTED STATEMENT OF OPERATING DATA
FOR THE THREE MONTHS ENDED
JUNE 30,
-------------------------------
HISTORICAL
-------------------------------
2001 2000
-------------- --------------
(IN MILLIONS, EXCEPT SHARE AND
PER SHARE DATA)
Net Sales................................................... $ 389.6 $ 319.7
Cost of products sold....................................... 270.6 200.2
Selling, administrative and general expenses................ 82.3 79.8
Special changes related to plant consolidation(1)........... 0.6 1.1
----------- -----------
Operating income............................................ 36.1 38.6
Interest expense............................................ 16.3 15.7
Other income................................................ (0.1) --
----------- -----------
Income before taxes and extraordinary item.................. 19.9 22.9
Income tax expense (benefit)(2)............................. 5.5 (67.2)
----------- -----------
Income before extraordinary item............................ 14.4 90.1
Extraordinary item, net of tax benefit(3)................... 26.2 0.4
----------- -----------
Net income (loss)........................................... $ (11.8) $ 89.7
----------- -----------
Diluted earnings (loss) per share........................... $ (0.23) $ 1.70
Diluted weighted average shares............................. 52,247,551 52,876,217
-------------------------
(1)For the three months ended June 30, 2001 and 2000, special charges related to
plant consolidation included accelerated depreciation and other restructuring
costs related to the consolidation of certain processing plants.
(2)Income taxes presented above included the benefit of net operating losses,
other tax adjustments and the reversal of a valuation allowance primarily in
fiscal 2000.
(3)The extraordinary loss consists of prepayment premiums and the related
write-off of previously capitalized debt issue costs as a result of the May
2001 debt refinancing and early debt retirement in fiscal 2000.
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SELECTED STATEMENT OF OPERATING DATA
FOR THE YEAR ENDED JUNE 30,
-------------------------------
HISTORICAL
-------------------------------
2001 2000
-------------- --------------
(IN MILLIONS, EXCEPT SHARE AND
PER SHARE DATA)
Net sales................................................... $ 1,512.0 $ 1,462.1
Cost of products sold....................................... 1,009.9 920.5
Selling, administrative and general expenses................ 361.0 384.2
Special charges related to plant consolidation(1)........... 14.6 10.9
----------- -----------
Operating income............................................ 126.5 146.5
Interest expense............................................ 74.6 67.1
Other Income................................................ (4.8) --
----------- -----------
Income before taxes and extraordinary item.................. 56.7 79.4
Income tax expense (benefit)(2)............................. 16.7 (53.6)
----------- -----------
Income tax before extraordinary item........................ 40.0 133.0
Extraordinary item, net of tax benefit(3)................... 26.2 4.3
----------- -----------
Net income.................................................. $ 13.8 $ 128.7
----------- -----------
Diluted earnings per share.................................. $ 0.26 $ 2.42
Diluted weighted average shares............................. 52,767,734 53,097,898
-------------------------
(1)For the year ended June 30, 2001 and 2000, special charges related to plant
consolidation included accelerated depreciation and other restructuring costs
related to the consolidation of certain processing plants.
(2)Income taxes presented above included the benefit of net operating losses,
other tax adjustments and the reversal of a valuation allowance primarily in
fiscal 2000.
(3)The extraordinary loss consists of prepayment premiums and the related
write-off of previously capitalized debt issue costs as a result of the May
2001 debt refinancing and early debt retirement in fiscal 2000.
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 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 iden-
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10
tical. 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, October
18, 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."
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
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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.
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
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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.
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."
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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 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
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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.
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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.
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(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.
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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.
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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.
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- 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.
THE CAPABILITY IMPROVEMENT PROGRAM BEGUN IN JUNE 2000 MAY NOT PERFORM AS
EXPECTED, RESULTING IN BUSINESS DISRUPTIONS.
In June 2000, we began implementing a capability improvement program to
upgrade business processes and information systems. The program will be
implemented in phases and is scheduled to be completed in June 2003 at an
estimated cost of $36 million. Significant disruptions to our business may
result if the program does not work as expected, if implementation is delayed or
if our personnel are unable to effectively adapt to new programs and processes.
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.
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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.
- 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.
WE HAVE APPOINTED A SINGLE NATIONAL BROKER TO REPRESENT US TO THE RETAIL TRADE.
In June 2001, we appointed Advantage Sales and Marketing ("Advantage") as
our single national broker to represent our products to the retail trade. Prior
to the appointment of Advantage, we relied on multiple regional brokers to
represent our products. We believe that a single broker will be able to more
effectively represent our products to the increasing consolidated retail grocery
trade. However, our business would suffer substantial disruption if Advantage
were to default in the performance of its obligation to perform brokerage
services. Our business would be adversely affected if Advantage fails to
effectively represent us to the retail trade.
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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, 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.
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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 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
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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."
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.
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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 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.
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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
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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 October 18, 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.
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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 October
18, 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.
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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.
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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
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- 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.
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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.
25
32
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 OVERNIGHT COURIER: BY MAIL:
Bankers Trust Company Bankers Trust Company
648 Grassmere Park Road P.O. Box 2927737
Nashville, TN 37211 Nashville, TN 37229-2737
Telephone number: 1-800-735-7772 Attn: Reorganization Unit
BY FACSIMILE:
Facsimile transmission: (615) 835-3701
(for eligible institutions only)
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.
26
33
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.
27
34
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.
28
35
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 -- -- --
29
36
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.
30
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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.
31
38
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. We completed the sale of the Woodland facility in July, 2001. 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 June 30, 2001. Please see
the "Summary -- Recent Developments."
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%
===== ===== ===== ===== =====
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39
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.
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40
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.
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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.
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."
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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%
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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
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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
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$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
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- 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.
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(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.
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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.
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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.
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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.
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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
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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
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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 conjunction with the acquisition of the rights to the SunFresh brand
citrus and tropical fruits line of UniMark Group Inc, we executed a five-year
supply agreement under which a UniMark affiliate will produce certain chilled
and canned fruit products at UniMark's existing facility in Mexico that we will
purchase at specified prices.
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
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usage at Hanford by 5% to 15% to lessen the possibility of a total service
interruption during peak operating periods.
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 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 and Stockton facilities and completed the sale
of Woodland facilities in July 2001.
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.
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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 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. In June 2001, we appointed Advantage
Sales and Marketing to act as a single national broker representing our
products. We pay Advantage Sales and Marketing a percentage of sales, with the
base commission rate set at 2.5%. Our broker 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
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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.
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 June 30, 2001, we had approximately 2,700 full-time employees. In
addition, approximately 11,000 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 eight collective bargaining agreements with eight union locals
covering approximately 8,700 of our hourly and seasonal employees. Of these
employees, none are under agreements that will expire in the remainder of
calendar 2001. Two collective bargaining agreements expire in calendar 2002, and
two expire in calendar 2003.
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
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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.
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
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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
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
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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.
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.
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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 Region
Richard L. French.................... 44 Senior Vice President, Chief Accounting Officer and
Controller
Thomas E. Gibbons.................... 53 Senior Vice President and Treasurer
Marc D. Haberman..................... 38 Senior Vice President, Marketing
Irvin R. Holmes...................... 49 Senior Vice President, Customer Marketing and Sales
Development
Robert P. Magrann.................... 57 Senior Vice President, Sales
William J. Spain..................... 59 Senior Vice President and Chief Corporate Affairs
Officer
David L. Withycombe.................. 49 Senior Vice President, Western Region
Richard G. Wolford, Chairman, President and Chief Executive Officer. Mr.
Wolford joined us as President, Chief Executive Officer and a director in April
1997. He was elected President in February 1998 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 Region. Mr. Berg joined us
in 1976 and was elected to his current position in October 2000. Mr. Berg was
Vice President, Eastern Manufacturing from 1995 to October 2000 and has held a
variety of manufacturing positions with us.
Richard L. French, Senior Vice President, Chief Accounting Officer and
Controller. 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, Marketing. Mr. Haberman joined us
in January 1999 and was elected to his current position in July 2001. From
February 2000 until July 2001, Mr. Haberman was
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Senior Vice President, Strategic Planning and Business Development. From January
1999 until February 2000, Mr. Haberman was Vice President, Strategic Planning
and Business Planning. Prior to that he was with Sunbeam Corporation from 1996
until 1998 where he was Category Leader for Sunbeam's appliance business. From
1992 to 1996, Mr. Haberman was a consultant with McKinsey & Co.
Irvin R. Holmes, Senior Vice President, Customer Marketing and Sales
Development. Mr. Holmes joined us in November 1990 and was elected to his
current position in July 2001. From November 1999 until July 2001, Mr. Holmes
was Senior Vice President, Marketing. From May 1998 to November 1999 he was
Senior Vice President, Marketing Vegetables and Tomatoes. Since joining us in
1990, Mr. Holmes has held a variety of marketing positions.
Robert P. Magrann, Senior Vice President, Sales. Mr. Magrann joined us in
May 2001 as Senior Vice President, Sales. Prior to that he was with The
Couponbasket, Inc. where he was President and Chief Executive Officer since July
2000. From March 2000 to July 2000, Mr. Magrann was Executive Vice President,
Worldwide Sales for Kenosia Marketing Corporation. He was Senior Vice President,
Sales and Marketing at Tetley USA from 1996 until March 2000.
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 Region. Mr. Withycombe
joined us in 1974 and was elected to his current position in October 2000. Mr.
Withycombe was Vice President, Western Manufacturing from 1992 to October 2000
and has held a variety of manufacturing positions with us.
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.
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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
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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
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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.
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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
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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.
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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
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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),
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(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
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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;
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(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),
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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
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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.
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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)
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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.
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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.
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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."
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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;
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(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.
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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
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(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;
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(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;
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(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;
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(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
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(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;
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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
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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.
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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;
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(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;
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(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.
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"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,
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(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;
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(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,
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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.
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"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;
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(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.
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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
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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
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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
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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
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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
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(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;
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(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
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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
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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.
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"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.
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"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.
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"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.
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"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.
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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.
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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
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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.
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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
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114
- 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."
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115
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.
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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
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117
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.
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118
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).
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119
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.
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120
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 115).
*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.
-------------------------
* Exhibit previously filed.
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.
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121
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Del Monte Foods
Company has duly caused this amendment to 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 September 11, 2001.
This registration statement has been signed by such persons true and lawful
attorney in fact on behalf of the following persons in the capacities indicated
as of September 11, 2001.
DEL MONTE FOODS COMPANY
By: /s/ RICHARD G. WOLFORD
------------------------------------
Richard G. Wolford
Chairman, President and Chief
Executive Officer
SIGNATURE TITLE
--------- -----
/s/ RICHARD G. WOLFORD Chairman, President and Chief Executive
------------------------------------------ Officer (Principal Executive Officer)
Richard G. Wolford
/s/ RICHARD G. WOLFORD Executive Vice President, Administration
------------------------------------------ and Chief Financial Officer
David L. Meyers (Principal Financial Officer)
/s/ RICHARD G. WOLFORD Senior Vice President and Chief Accounting
------------------------------------------ Officer (Principal Accounting Officer)
Richard L. French
/s/ RICHARD G. WOLFORD Director
------------------------------------------
Richard W. Boyce
/s/ RICHARD G. WOLFORD Director
------------------------------------------
Timothy G. Bruer
Director
------------------------------------------
Al Carey
/s/ RICHARD G. WOLFORD Director
------------------------------------------
Patrick Foley
/s/ RICHARD G. WOLFORD Director
------------------------------------------
Brian E. Haycox
/s/ RICHARD G. WOLFORD Director
------------------------------------------
Denise M. O'Leary
/s/ RICHARD G. WOLFORD Director
------------------------------------------
William S. Price, III
/s/ RICHARD G. WOLFORD Director
------------------------------------------
Jeffrey A. Shaw
/s/ RICHARD G. WOLFORD Director
------------------------------------------
Wesley J. Smith
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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
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 115).
*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.
-------------------------
* Exhibit previously filed.
EX-5.1
3
f73660a1ex5-1.txt
OPINION OF GIBSON, DUNN & CRUTCHER LLP
1
EXHIBIT 5.1
September 18, 2001
C 22632-00025
Del Monte Corporation
Del Monte Foods Company
One Market @ The Landmark
P.O. Box 193575
San Francisco, California 94105
Re: Exchange of 9 1/4% Senior Subordinated Notes due 2011
Ladies and Gentlemen:
We have acted as special counsel for Del Monte Corporation, a New York
corporation (the "Company"), and Del Monte Foods Company, a Delaware corporation
(together with the Company, the "Registrants"), in connection with the Company's
proposed offer to exchange (the "Exchange Offer") all of its Series B 9 1/4%
Senior Subordinated Notes due 2011 registered under the Securities Act of 1933,
as amended (the "Exchange Notes"), of the Company for a like amount of 9 1/4%
Senior Subordinated Notes due 2011 issued May 15, 2001 (the "Outstanding
Notes"). The Exchange Notes will be unconditionally guaranteed on an unsecured,
senior subordinated basis (the "Note Guarantee") by Del Monte Foods Company (the
"Guarantor"). The Exchange Notes will be issued under the Indenture dated as of
May 15, 2001 (the "Indenture"), by and among the Company, the Guarantor and
Bankers Trust Company, as trustee (in such capacity, the "Trustee"). Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Indenture.
As such counsel, we have examined, among other things, (i) the
Registration Statement on Form S-4 (File No. 333-64802) filed by the Registrants
with the Securities and Exchange Commission ("Commission") to register under the
Securities Act of 1933, as amended, the issuance of the Exchange Notes and the
Note Guarantee; (ii) the Indenture; (iii) the form of the Exchange Notes to be
issued in the Exchange Offer; and (iv) the form of the Note Guarantee. The
Indenture, the Exchange Notes and the Note Guarantee are sometimes referred to
herein collectively as the "Documents." We have also made such other inquiries
and examined, among
2
Del Monte Corporation
September 18, 2001
Page 2
other things, originals or copies, certified or otherwise identified to our
satisfaction, of such records, agreements, certificates, instruments and other
documents as we have considered necessary or appropriate for the purposes of
this opinion.
In rendering this opinion, we have assumed:
(a) Each party to the Documents (i) has all requisite power and
authority to execute, deliver and perform its obligations thereunder, (ii) has
duly authorized, by all necessary action on such party's part, the execution and
delivery of each such Document and the performance of such obligations and (iii)
has duly executed and delivered each such Document;
(b) Each of the Documents is the legal, valid and binding obligation of,
and is enforceable against, each party thereto (other than the Company and the
Guarantor, as to which the assumptions in this clause (b) do not apply) in
accordance with its terms;
(c) The signatures on all documents examined by us are genuine, all
individuals executing such documents had all requisite legal capacity and
competency and the documents submitted to us as originals are authentic and the
documents submitted to us as certified or reproduction copies conform to the
originals; and
(d) The Company is a corporation duly organized and validly existing
under the laws of the State of New York.
(e) Guarantor is a corporation duly organized and validly existing under
the laws of the State of Delaware.
Based upon the foregoing and in reliance thereon, and subject to the
assumptions, exceptions, qualifications and limitations contained herein, we are
of the opinion that:
1. The Exchange Notes, when executed and authenticated in accordance
with the provisions of the Indenture in exchange for the Outstanding Notes, will
be duly issued and will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
2. When the Exchange Notes have been executed and authenticated in
accordance with the provisions of the Indenture, the Note Guarantee will be a
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in accordance with its terms.
The foregoing opinions are subject to the following exceptions,
qualifications and limitations:
A. We are admitted to practice in the States of California and New York
and express no opinion as to matters governed by any laws other than the laws of
the States of California and
3
Del Monte Corporation
September 18, 2001
Page 3
New York and the federal laws of the United States of America and, for the
limited purpose of the opinion given in numbered paragraph 2 above, Delaware
General Corporation Law (the "DGCL"). We are not admitted to practice in the
State of Delaware. However, for the limited purpose of the opinion given in
numbered paragraph 2 above, we are generally familiar with the DGCL as presently
in effect and did not feel it necessary to obtain the opinion of Delaware
counsel. This opinion is limited to the effect of the present state of the laws
of the States of California, New York and for the limited purpose set out above,
Delaware, and of the United States of America and the facts as they presently
exist. We assume no obligation to revise or supplement this opinion in the event
of future changes in such laws or the interpretations thereof or such facts.
B. Our opinions are subject to (i) the effect of any bankruptcy,
insolvency, reorganization, moratorium, arrangement or similar laws affecting
any rights and remedies of creditors generally (including, without limitation,
the effect of statutory or other laws regarding fraudulent transfers or
preferential transfers) and (ii) general principles of equity, including without
limitation concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance, injunctive relief or
other equitable remedies regardless of whether enforceability is considered in a
proceeding in equity or at law.
C. Our opinions are subject to (i) the effectiveness of any waiver
(whether or not stated as such) under the Documents of, or any consent
thereunder relating to, any unknown future rights or the rights of any party
thereto existing, or duties owing to it, as a matter of law; (ii) the
effectiveness of any waiver (whether or not stated as such) contained in the
Documents of rights of any party, or duties owing to it, that is broadly or
vaguely stated or does not describe the right or duty purportedly waived with
reasonable specificity; (iii) provisions relating to indemnification,
exculpation or contribution, to the extent such provisions may be held
unenforceable as contrary to public policy or federal or state securities laws
or due to the negligence or willful misconduct of the indemnified party; (iv)
the effect on the enforceability of the Note Guarantee against the Guarantor of
any facts or circumstances occurring after the date hereof that would constitute
a defense to the obligation of a surety, unless such defense has been waived
effectively by the Guarantor; (v) any provisions of the Documents that may be
construed as penalties or forfeitures; or (vi) the effectiveness of any
covenants (other than covenants relating to the payment of principal, interest,
make whole premium, indemnities and expenses) to the extent they are construed
to be independent requirements as distinguished from conditions to the
declaration or occurrence of a default or any event of default.
D. We express no opinion with respect to the legality, validity, binding
nature or enforceability of any provision of the Documents (i) to the effect
that rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to any other right or remedy, that
the election of some particular remedy does not preclude recourse to one or more
others or that failure to exercise or delay in exercising rights or remedies
will not operate as a waiver of any such right or remedy or (ii) requiring
written amendments or waivers of such
4
Del Monte Corporation
September 18, 2001
Page 4
documents insofar as it suggests that oral or other modifications, amendments or
waivers could not be effectively agreed upon by the parties or that the doctrine
of promissory estoppel might not apply.
E. We have assumed that there are no agreements or understandings
between or among the parties to the Documents or third parties that would
expand, modify or otherwise affect the terms of the Documents or the respective
rights or obligations of the parties thereunder.
F. We express no opinion as to the applicability to, or the effect of
noncompliance by, the Trustee with any state or federal laws applicable to the
transactions contemplated by the Documents because of the nature of the business
of such party.
This opinion is rendered solely for your benefit and the benefit of
those persons participating in the Exchange Offer. We hereby consent to the
filing of this opinion as an exhibit to the Registration Statement, and we
further consent to the use of our name under the caption "Legal Matters" in the
Prospectus forming a part of said Registration Statement. Except as stated
above, without our prior written consent, this may not be furnished or quoted
to, or relied upon by, and other person or entity or any purpose.
Very truly yours,
/s/Gibson, Dunn & Crutcher LLP
-----------------------------------------
GIBSON, DUNN & CRUTCHER LLP
DDS/jwc/mls
EX-10.1
4
f73660a1ex10-1.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
================================================================================
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
-i-
3
TABLE OF CONTENTS
(continued)
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.
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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
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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
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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
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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
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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).
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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
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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
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(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
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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
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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
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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));
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(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.
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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
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(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).
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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
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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,
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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.
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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).
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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.
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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.
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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:
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(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.
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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.
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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.
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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.
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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
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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
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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
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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.
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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
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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
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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
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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.
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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
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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
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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
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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.
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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
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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.
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(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
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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
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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.
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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
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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.
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(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
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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
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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
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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.
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(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
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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
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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
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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
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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
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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,
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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
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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
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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
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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
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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
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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;
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(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
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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.
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(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.
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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
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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.
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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;
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(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
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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:
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(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.
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(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.
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(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;
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(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
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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.
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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.
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(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
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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.
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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
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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:
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(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;
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(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;
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(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.
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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.
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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
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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
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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;
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(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 $20,000,000;
(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
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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 $10,000,000 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
$25,000,000 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 $25,000,000); and
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(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
$10,000,000;
(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 $10,000,000;
(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
$20,000,000 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;
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(h) other investments in an aggregate amount not exceeding
$10,000,000 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) $150,000,000
plus (y) an amount
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equal to the aggregate amount received by the Company as
capital contributions from Parent after the Restatement
Date (provided that no more than $100,000,000 (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) $150,000,000 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;
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(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 $25,000,000 at any one time outstanding;
(f) Indebtedness up to $20,000,000 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 $40,000,000 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 $10,000,000.
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
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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 $10,000,000 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 $20,000,000;
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;
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(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 1.10:1
6/30/03 through 3/31/05 1.25:1
6/30/05 and thereafter 1.50:1.
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 2.00:1
6/30/03 through 3/31/04 2.20:1
6/30/04 through 3/31/05 2.40:1
6/30/05 and thereafter 2.50:1.
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 3.75:1
9/30/02 through 3/31/03 3.50:1
6/30/03 through 3/31/04 3.25:1
6/30/04 through 3/31/05 2.75:1
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6/30/05 and thereafter 2.25:1.
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 5.50:1
9/30/02 through 3/31/03 5.25:1
6/30/03 through 3/31/04 5.00:1
6/30/04 through 3/31/05 4.50:1
6/30/05 and thereafter 4.00:1.
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) $25,000,000 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), $50,000,000 and (y) with
respect to the fiscal year ending June 30, 2002, $60,000,000.
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
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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 $10,000,000 in any fiscal year or $15,000,000 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 1.50:1;
(g) 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 up to $10,000,000 of New Subordinated Notes or Qualified
Notes (provided that in the event a Permitted Liability Management Swap is in
effect, the amount of New Subordinated Notes or Qualified Notes that the
Company may repurchase or redeem pursuant to this clause (g) shall be reduced
by the amount of New Subordinated Notes or Qualified Notes subject to such
Permitted Liability Management Swap);
(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 $1,000,000 per fiscal year to reimburse Parent for expenses incurred by
Parent in the ordinary course of business; and
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(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).
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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
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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).
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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
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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.
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(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.
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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
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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
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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
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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;
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(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
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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
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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
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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;
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(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
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(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
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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.
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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
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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
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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
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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.
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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
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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;
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(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.
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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.
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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:
-----------------------------------
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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-23.2
5
f73660a1ex23-2.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
September 11, 2001
1
EX-99.1
6
f73660a1ex99-1.txt
FORM OF LETTER OF TRANSMITTAL
1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
DEL MONTE CORPORATION
OFFER TO EXCHANGE
ALL OF ITS OUTSTANDING
9 1/4% SENIOR SUBORDINATED NOTES DUE 2011
FOR
SERIES B 9 1/4% SENIOR SUBORDINATED NOTES DUE 2011
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
PURSUANT TO THE PROSPECTUS DATED SEPTEMBER 19, 2001
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
THURSDAY, OCTOBER 18, 2001, UNLESS THE EXCHANGE OFFER IS EXTENDED.
TO: EXCHANGE AGENT
BANKERS TRUST COMPANY
By Mail: By Overnight Mail or Courier:
BT Services Tennessee, Inc. BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Services
P.O. Box 292737 Reorganization Unit
Nashville TN 37229-2737 648 Grassmere Road
Nashville TN 37211
By Facsimile (for Eligible Institutions Only):
FAX: 615-835-3701
Confirm Facsimile by Telephone:
615-835-3572
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN
SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned acknowledges receipt of the prospectus dated September 19,
2001 ("Prospectus"), of Del Monte Corporation, a New York corporation (the
"Company"), relating to the offer by the Company, upon the terms and subject to
the conditions set forth in the Prospectus and in this Letter of Transmittal and
the instructions hereto (which together with the Prospectus and the instructions
hereto constitute the "Offering Materials"), to exchange Series B 9 1/4% Senior
Subordinated Notes due 2011 which have been registered under the Securities Act
of 1933 ("Exchange Notes") for any and all of its outstanding 9 1/4% Senior
Subordinated Notes due 2011 issued on May 15, 2001 ("Outstanding Notes"), at the
rate of $1,000 principal amount of the Exchange Notes for each $1,000 principal
amount of the Outstanding Notes (the "Offer").
Capitalized terms used but not defined herein have the meanings given to
them in the Prospectus.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE CHECKING ANY
BOXES.
2
This Letter of Transmittal is to be used if the Outstanding Notes are to be
physically delivered herewith, or if guaranteed delivery procedures are being
used, pursuant to the procedures set forth under "The Exchange Offer" in the
Prospectus. No alternative, conditional or contingent tender of Outstanding
Notes will be accepted. A tendering holder, by execution of this Letter of
Transmittal or facsimile hereof, waives all rights to receive notice of
acceptance of such holder's Outstanding Notes for purchase.
Holders of Outstanding Notes that are tendering by book-entry transfer to
the Depositary's account at The Depository Trust Company ("DTC") can execute the
tender through ATOP. DTC participants that are accepting the Offer must transmit
their acceptance to DTC which will verify the acceptance and execute a
book-entry delivery to the Depositary's account at DTC. DTC will then send an
agent's message to the Depositary for its acceptance. Delivery of the agent's
message by DTC will satisfy the terms of the Offer as to execution and delivery
of a Letter of Transmittal by the participant identified in the agent's message.
Only Holders are entitled to tender their Notes in the Offer. Any financial
institution that is a participant in the Book-Entry Transfer Facility's system
and whose name appears on a security position listing as the record owner of
Notes and who wishes to make book-entry delivery of such Outstanding Notes as
described above must complete and execute a participant's letter (which will be
distributed to participants by the book-entry transfer facility) instructing the
book-entry transfer facility's nominee to complete and sign the proxy attached
thereto. Persons who are beneficial owners of Notes but are not Holders and who
seek to tender Outstanding Notes should (i) contact the Holder of such
Outstanding Notes and instruct such Holder to tender on its behalf prior to the
Expiration Time, (ii) obtain and include with this Letter of Transmittal
Outstanding Notes properly endorsed for transfer by the Holder or accompanied by
a properly completed bond power from the Holder, together with a properly
completed irrevocable proxy that authorizes such person to tender on behalf of
such Holder, with signatures on the endorsement or bond power guaranteed by a
firm that is a member of a registered national securities exchange, a member of
the National Association of Securities Dealers, Inc. or a commercial bank or
trading company having an office in the United States (each, an "Eligible
Institution") or (iii) effect a record transfer of such Outstanding Notes from
the Holder to such beneficial owner and comply with the requirements applicable
to Holders for tendering Outstanding Notes. Persons who are beneficial owners of
Outstanding Notes but are not Holders and who seek only to tender Outstanding
Notes prior to the Expiration Time should (i) contact the Holder of such
Outstanding Notes and instruct such Holder to tender on its behalf prior to the
Expiration Time, (ii) obtain and include with this Letter of Transmittal
Outstanding Notes properly endorsed for transfer by the Holder or accompanied by
a properly completed bond power from the Holder, together with a properly
completed irrevocable proxy that authorizes such person to tender Outstanding
Notes on behalf of such Holder prior to the Expiration Time, with signatures on
the endorsement or bond power guaranteed by an Eligible Institution or (iii)
effect a record transfer of such Outstanding Notes from the Holder to such
beneficial owner and comply with the requirements applicable to Holders for
tendering Outstanding Notes prior to the Expiration Time.
If a "Registered Holder" (which term, for the purposes of this document,
shall include the person in whose name the Outstanding Notes are registered on
the Company's books and any participant tendering by book-entry transfer)
desires to tender Outstanding Notes and such Outstanding Notes are not
immediately available or time will not permit all documents required by the
Offer to reach the Exchange Agent (or such Registered Holder is unable to
complete the procedure for book-entry transfer on a timely basis) prior to 5:00
p.m., New York City time, on Thursday, October 18, 2001, unless the Offer is
extended (the "Expiration Date") a tender may be effected in accordance with the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Procedures for Tendering Outstanding Notes -- Guaranteed
Delivery Procedures." See Instruction 1.
During any extension of the Offer, all Outstanding Notes previously
tendered and not withdrawn or revoked pursuant to the Offer that have not been
accepted for purchase will remain subject to the Offer and may be accepted
thereafter for purchase by the Company.
2
3
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Offer, the undersigned
hereby tenders to the Company the principal amount of the Outstanding Notes
indicated below. Subject to, and effective upon, the acceptance for exchange of
the Outstanding Notes tendered hereby, the undersigned hereby irrevocably sells,
assigns and transfers to or upon the order of the Company all right, title and
interest in and to such Outstanding Notes, and hereby irrevocably constitutes
and appoints the Exchange Agent the true and lawful agent and attorney-in-fact
of the undersigned (with full knowledge that said Exchange Agent also acts as
the agent of the Company) with respect to such Outstanding Notes, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to take such further action as may be required
in connection with the delivery, tender and exchange of the Outstanding Notes.
The undersigned acknowledges that this Offer is being made in reliance on
an interpretation by the staff of the Securities and Exchange Commission (the
"SEC") that the Exchange Notes issued pursuant to the Offer in exchange for the
Outstanding Notes may be offered for resale, resold and otherwise transferred by
holders thereof (other than (i) a broker-dealer who purchased Outstanding Notes
directly from the Company for resale pursuant to Rule 144A under the Securities
Act of 1933, as amended (the "Securities Act"), or (ii) a person that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and, except for broker-dealers
that have acquired the Outstanding Notes as a result of market making or other
trading activities, prospectus delivery provisions of the Securities Act,
provided that such Exchange Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of such Exchange Notes. See Morgan Stanley & Co.
Incorporated, SEC No-Action Letter (available June 5, 1991) and "The Exchange
Offer -- Resale of the Exchange Notes" in the Exchange Offer.
THE UNDERSIGNED UNDERSTANDS AND AGREES THAT THE COMPANY RESERVES THE RIGHT
NOT TO ACCEPT TENDERED OUTSTANDING NOTES FROM ANY TENDERING HOLDER IF THE
COMPANY DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT SUCH ACCEPTANCE
COULD RESULT IN A VIOLATION OF APPLICABLE SECURITIES LAWS.
The undersigned, if the undersigned is a beneficial holder, represents, or,
if the undersigned is a broker, dealer, commercial bank, trust company or other
nominee, represents that it has received representations from the beneficial
owners of the Outstanding Notes (as defined in the Prospectus) stating that (i)
the Exchange Notes to be acquired in connection with the Prospectus by the
holder (as such term is defined in the Offer under the caption "The Exchange
Offer -- Procedures for Tendering Outstanding Notes") and each beneficial owner
of the Outstanding Notes are being acquired by the holder and each beneficial
owner in the ordinary course of business of the holder and each beneficial
owner, (ii) the holder and each beneficial owner are not participating, do not
intend to participate, and have no arrangement or understanding with any person
to participate, in the distribution of the Exchange Notes, (iii) the holder and
each beneficial owner acknowledge and agree that any person participating in the
Offer for the purpose of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction of the Exchange Notes acquired by
such person and cannot rely on the position of the staff of the Commission set
forth in no-action letters that are discussed in the Prospectus under the
caption "The Exchange Offer -- Resale of the Exchange Notes," (iv) that if the
holder is a broker-dealer that acquired Outstanding Notes as a result of market
making or other trading activities, it will deliver a prospectus in connection
with any resale of Exchange Notes acquired in the Exchange Offer, (v) the holder
and each beneficial owner understand that a secondary resale transaction
described in clause (iii) above should be covered by an effective registration
statement containing the selling security holder information required by Item
507 of Regulations S-K of the Securities Act and (vi) neither the holder nor any
beneficial owner is an "affiliate," as defined under Rule 405 of the Securities
Act, of the Company except as otherwise disclosed to the Company in writing.
In addition, if the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes. If the undersigned is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Outstanding Notes, it
represents that the Outstanding Notes to be exchanged for Exchange Notes were
acquired by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus in connection with
any resale of such Exchange Notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
3
4
The undersigned understands and acknowledges that the Company reserves the
right in its sole discretion to purchase or make offers for any Outstanding
Notes that remain outstanding subsequent to the Expiration Date or, as set forth
in the Prospectus under the caption "The Exchange Offer -- Conditions to the
Offer," to terminate the Offer and, to the extent permitted by applicable law,
purchase Outstanding Notes in the open market, in privately negotiate
transactions or otherwise. The term of any such purchases or offers could differ
from the terms set forth the Offering Materials.
The undersigned hereby represents and warrants that the undersigned accepts
the terms and conditions of the Offer, has full power and authority to tender,
exchange, assign and transfer the Outstanding Notes tendered hereby, and that
when the same are accepted for exchange by the Company, the Company will acquire
good and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim or right. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Exchange Agent or the Company to be reasonably necessary or
desirable to complete the sale, assignment and transfer of the Outstanding Notes
tendered hereby.
The undersigned agrees that all authority conferred or agreed to be
conferred by this Letter of Transmittal and every obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned.
The undersigned understands that tenders of the Outstanding Notes pursuant
to any one of the procedures described under "The Exchange Offer -- Procedures
for Tendering Outstanding Notes" in the Prospectus and in the instructions
hereto will constitute a binding agreement between the undersigned and the
Company in accordance with the terms and subject to the conditions of the Offer.
The undersigned understands that by tendering Outstanding Notes pursuant to
one of the procedures described in the Prospectus and the instructions thereto,
the tendering holder will be deemed to have waived the right to receive any
payment in respect of interest on the Outstanding Notes accrued up to the date
of issuance of the Exchange Notes.
The undersigned recognizes that, under certain circumstances set forth in
the Offering Materials, the Company may not be required to accept for exchange
any of the Outstanding Notes tendered. Outstanding Notes not accepted for
exchange or withdrawn will be returned to the undersigned at the address set
forth below unless otherwise indicated under "Special Delivery Instructions"
below.
Unless otherwise indicated under the box entitled "Special Exchange
Instructions" below, please deliver Exchange Notes in the name of the
undersigned. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send Exchange Notes to the
undersigned at the address shown below the signature of the undersigned. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Exchange Instructions" to transfer any Outstanding Notes from the name
of the Registered Holder thereof if the Company does not accept for exchange any
of the principal amount of such Outstanding Notes so tendered.
4
5
THE UNDERSIGNED BY COMPLETING THE BOX "DESCRIPTION OF OUTSTANDING NOTES"
BELOW AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OUTSTANDING
NOTES AND MADE CERTAIN REPRESENTATIONS DESCRIBED HEREIN AND IN THE EXCHANGE
OFFER.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(SEE INSTRUCTIONS 1 AND 3 AND THE FOLLOWING PARAGRAPH)
(IMPORTANT: ALSO COMPLETE SUBSTITUTE FORM W-9 HEREIN)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated:
------------------------------ , 2001
If the holder(s) is/are tendering any Outstanding Notes, this Letter of
Transmittal must be signed by the Registered Holder(s) as the name(s) appear(s)
on the Outstanding Notes or on a security position listing or by person(s)
authorized to become Registered Holder(s) by endorsements and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, officer or other person acting in a fiduciary or representative
capacity, please set forth full title. See Instruction 3.
Name(s):
--------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
--------------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------------
Area Code and Telephone Number:
--------------------------------------------------------------------------------
Tax Identification or
Social Security No(s).:
--------------------------------------------------------------------------------
(SEE INSTRUCTIONS 5 AND 6 AND COMPLETE SUBSTITUTE FORM W-9
HEREIN)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by an Eligible Institution:
Authorized Signature:
--------------------------------------------------------------------------------
Printed Name:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
Name of Firm:
--------------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
Dated:
------------------------------ , 2001
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE OUTSTANDING
NOTES OR A NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS) MUST
BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
5
6
List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
principal amounts should be listed on a separate signed schedule attached
thereto. See Instruction 7. The minimum permitted tender is $1,000 principal
amount of Outstanding Notes; all other tenders must be in integral multiples of
$1,000.
---------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES
---------------------------------------------------------------------------------------------------------------------------
(i) (ii) (iii) (iv)
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE AGGREGATE PRINCIPAL PRINCIPAL AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S) AMOUNT REPRESENTED TENDERED
---------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
TOTAL
---------------------------------------------------------------------------------------------------------------------------
(ii) and (iii) Need not be completed by Holders who tender by book-entry or in accordance with DTC's ATOP procedures
for transfer.
* Unless otherwise indicated in the column labeled "Principal Amount Tendered" and subject to the terms and conditions of
the Offer, the undersigned will be deemed to have tendered the entire aggregate principal amount represented by the
Outstanding Notes indicated in the column labeled "Aggregate Principal Amount Represented." See Instruction 8.
---------------------------------------------------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING (See Instructions 1 and 3):
Name(s) of Registered Holder(s):
Date of Execution of Notice of Guaranteed Delivery:
Name of Eligible Institution that Guaranteed Delivery:
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER NOTES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
DTC Account Number:
Date Tendered:
Transaction Code Number:
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
Address:
If delivery of Outstanding Notes is to be made by book-entry transfer to
the account maintained by the Exchange Agent at DTC, then tenders of Outstanding
Notes must be effected in accordance with the procedures mandated by DTC and the
procedures set forth in the Exchange Offer under the caption "The Exchange
Offer -- Procedures for Tendering Outstanding Old Notes."
6
7
SPECIAL EXCHANGE INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if Outstanding Notes in a principal amount not
exchanged and/or Exchange Notes are to be registered in the name of or issued to
someone other than the person or persons whose signature(s) appear(s) on this
Letter of Transmittal above.
Issue and mail: (check appropriate box(es)):
[ ] Exchange Notes to: [ ] Outstanding Notes to:
Name(s)
---------------------------------------------
(PLEASE TYPE OR PRINT)
---------------------------------------------------------
(PLEASE TYPE OR PRINT)
---------------------------------------------------------
Address
----------------------------------------------
---------------------------------------------------------
(INCLUDE ZIP CODE)
---------------------------------------------------------
EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(COMPLETE THE SUBSTITUTE FROM W-9)
SPECIAL EXCHANGE INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if Outstanding Notes in a principal amount not
exchanged and/or Exchange Notes are to be sent to someone other than the person
or persons whose signature(s) appear(s) on this Letter of Transmittal above or
to such person or persons at an address other than that shown in the box
entitled "Descriptions of Outstanding Notes" on this Letter of Transmittal
above.
Mail or deliver: (check appropriate box(es)):
[ ] Exchange Notes to: [ ] Outstanding Notes to:
Name(s)
---------------------------------------------
(PLEASE TYPE OR PRINT)
---------------------------------------------------------
(PLEASE TYPE OR PRINT)
---------------------------------------------------------
Address
----------------------------------------------
---------------------------------------------------------
(INCLUDE ZIP CODE)
---------------------------------------------------------
EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
7
8
TO BE COMPLETED BY ALL EXCHANGING HOLDERS
(SEE INSTRUCTION 5)
PAYEE'S NAME AND ADDRESS:
----------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE TIN _____________________________
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND SOCIAL SECURITY NUMBER OR
DEPARTMENT OF THE TREASURY DATING BELOW. If awaiting TIN, please EMPLOYER IDENTIFICATION NUMBER
INTERNAL REVENUE SERVICE check the box in Part 4 and complete the
PAYER'S REQUEST FOR TAXPAYER "Certificate of Awaiting Taxpayer
IDENTIFICATION NUMBER (TIN) Identification Number" below.
----------------------------------------------------------------------------------------------------------------------------
PART 2 -- FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING PLEASE WRITE "EXEMPT"
HERE (SEE INSTRUCTIONS) __________
----------------------------------------------------------------------------------------------------------------------------
PART 3 -- CERTIFICATION -- Under penalties of perjury, I certify that: (1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup
withholding because: (a) I am exempt from backup withholding (see enclosed guidelines), or (b) I have not been notified by
the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are currently
subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are
no longer subject to backup withholding, do not cross out such item (2).
----------------------------------------------------------------------------------------------------------------------------
SIGNATURE DATE _____________________ , 2001 PART 4 --
Awaiting TIN #
----------------------------------------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 4 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number within sixty days, 31% of
all reportable payments made to me thereafter will be withheld until I provide a
Taxpayer Identification Number.
SIGNATURE: DATE: ________________________, 2001
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU WITH RESPECT TO
THE EXCHANGE NOTES THAT ARE ACQUIRED PURSUANT TO THE EXCHANGE OFFER. IN
ADDITION, FAILURE TO PROVIDE SUCH INFORMATION MAY RESULT IN A PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE. PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
8
9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Delivery of this Letter of Transmittal and Outstanding Notes: Guaranteed
Delivery Procedures. To be effectively tendered pursuant to the Offer, the
Outstanding Notes, together with a properly completed Letter of Transmittal (or
manually signed facsimile hereof) duly executed by the Registered Holder
thereof, and any other documents required by this Letter of Transmittal, must be
received by the Exchange Agent at the address set forth on the front page of
this Letter of Transmittal and tendered Outstanding Notes must be received by
the Exchange Agent at such address at or prior to 5:00 p.m., New York City time,
on the Expiration Date; provided, however, that book-entry transfers of
Outstanding Notes may be affected in accordance with the procedures set forth in
the Prospectus under the caption "The Exchange Offer -- Procedures For Tendering
Outstanding Notes." If the beneficial owner of any Outstanding Notes is not the
Registered Holder, then such person may validly tender such person's Outstanding
Notes only by obtaining and submitting to the Exchange Agent a properly
completed Letter of Transmittal from the Registered Holder. LETTERS OF
TRANSMITTAL OF OUTSTANDING NOTES SHOULD BE DELIVERED ONLY BY HAND OR BY COURIER,
OR TRANSMITTED BY MAIL, AND ONLY TO THE EXCHANGE AGENT AND NOT TO THE COMPANY OR
TO ANY OTHER PERSON.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND ALL OTHER REQUIRED
DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER, AND
IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY
INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IF OUTSTANDING NOTES ARE
SENT BY MAIL, IT IS SUGGESTED THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
If a holder desires to tender Outstanding Notes and such holder's
Outstanding Notes are not immediately available or time will not permit such
holder to complete the procedures for book-entry transfer on a timely basis or
time will not permit such holder's Letter of Transmittal and other required
documents to reach the Exchange Agent on or before the Expiration Date, such
holder's tender may be effected if:
(a) such tender is made by or through an Eligible Institution;
(b) on or prior to the Expiration Date, the Exchange Agent has
received a facsimile transmission or letter from such Eligible Institution
setting forth the name and address of the holder of such Outstanding Notes,
the certificate number(s) of such Outstanding Notes (except in the case of
book-entry tenders) and the principal amount of Outstanding Notes tendered
and stating that the tender is being made thereby and guaranteeing that,
within three business days after the Expiration Date, a duly executed
Letter of Transmittal, or facsimile thereof, together with the certificate
representing the Outstanding Notes, unless the book-entry transfer
procedures are to be used, and any other documents required by this Letter
of Transmittal and Instructions, will be deposited by such Eligible
Institution with the Exchange Agent; and
(c) this Letter of Transmittal, or a manually signed facsimile hereof,
and Outstanding Notes, in proper form for transfer (or a book-entry
confirmation with respect to such Outstanding Notes), and all other
required documents are received by the Exchange Agent within three business
days after the Expiration Date.
2. Withdrawal of Tenders. Tendered Outstanding Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must (i) be timely received by the Exchange Agent at its address set
forth on the first page of this Letter of Transmittal before the Exchange Agent
receives notice of acceptance from the Company, (ii) specify the name of the
person who tendered the Outstanding Notes, (iii) contain the description of the
Outstanding Notes to be withdrawn, the certificate number(s) of such Outstanding
Notes (except in the case of book-entry tenders) and the aggregate principal
amount represented by such Outstanding Notes or a Book-Entry Confirmation with
respect to such Outstanding Notes, and (iv) be signed by the holder of such
Outstanding Notes in the same manner as the original signature appears on this
Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence satisfactory to the Company that the person withdrawing
the tender has succeeded to the beneficial ownership of the Outstanding Notes.
The signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in Instruction 3 of this Letter of Transmittal) unless
such Outstanding Notes have been tendered (i) by a Registered Holder of
Outstanding Notes who
9
10
has not completed either the box entitled "Special Exchange Instructions" or the
box entitled "Special Delivery Instructions" on this Letter of Transmittal or
(ii) for the account of an Eligible Institution. If the Outstanding Notes have
been tendered pursuant to the procedure for book-entry tender set forth under
the caption "The Exchange Offer -- Procedures for Tendering Outstanding Notes,"
a notice of withdrawal is effective immediately upon receipt by the Exchange
Agent of a written, telegraphic or facsimile transmission notice of withdrawal
even if physical release is not yet effected. In addition, such notice must
specify, in the case of Outstanding Notes tendered by delivery of such
Outstanding Notes, the name of the Registered Holder (if different from that of
the tendering holder) to be credited with the withdrawn Outstanding Notes.
Withdrawals may not be rescinded, and any Outstanding Notes withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. However,
properly withdrawn Outstanding Notes may be retendered by following one of the
procedures described under "The Exchange Offer -- Procedures for Tendering
Outstanding Notes" in the Prospectus at any time on or prior to the applicable
Expiration Date.
3. Signatures on this Letter of Transmittal, Bond Powers and Endorsements;
Guarantee of Signatures. If this Letter of Transmittal is signed by the
Registered Holder of the Outstanding Notes tendered hereby, the signature must
correspond exactly with the name as written on the face of the Outstanding Notes
without any change whatsoever.
If any Outstanding Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any Outstanding Notes tendered hereby are registered in different names,
it will be necessary to complete, sign and submit as many separate copies of
this Letter of Transmittal as there are different registrations of Outstanding
Notes.
When this Letter of Transmittal is signed by the Registered Holder(s)
specified herein and tendered hereby, no endorsements of such Outstanding Notes
or separate bond powers are required. If, however, Exchange Notes are to be
issued, or any untendered principal amount of Outstanding Notes are to be
reissued to a person other than the Registered Holder, then endorsements of any
Outstanding Notes transmitted hereby or separate bond powers are required.
If this Letter of Transmittal is signed by a person other than the
Registered Holder(s), such Outstanding Notes must be endorsed or accompanied by
appropriate bond powers, in either case signed exactly as the name or names of
the Registered Holder or holders appear(s) on the Outstanding Notes.
If this Letter of Transmittal or a Notice of Guaranteed Delivery 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, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Except as described in this paragraph, signatures on this Letter of
Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by
an Eligible Institution, which is a firm which is a member of a registered
national securities exchange or the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States, a participant in a recognized medallion signature guarantee
program or which is otherwise an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act. Signatures on this Letter of
Transmittal or a notice of withdrawal, as the case may be, need not be
guaranteed if the Outstanding Notes tendered pursuant hereto are tendered (i) by
a Registered Holder of Outstanding Notes who has not completed either the box
entitled "Special Exchange Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) for the account of an
Eligible Institution.
Endorsement on Outstanding Notes or signatures on bond forms required by
this Instruction 3 must be guaranteed by an Eligible Institution.
4. Special Issuance and Delivery Instructions. Tendering holders should
indicate in the applicable box the name and address to which Exchange Notes
and/or substitute Outstanding Notes for the principal amounts not exchanged are
to be issued or sent, if different from the name and address of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the employer identification or social security number of the person named must
also be indicated. If no such instructions are given, such Outstanding Notes not
exchanged will be returned to the name and address of the person signing this
Letter of Transmittal.
5. Tax Identification Number and Backup Withholding. Federal income tax law
of the United States requires that a holder of Outstanding Notes whose
Outstanding Notes are accepted for exchange, or such holder's assignee (in
either
10
11
case, the "Payee") provide the Company with such Payee's correct taxpayer
identification number, which, in the case of a Payee who is an individual, is
the Payee's social security number, or otherwise establish an exemption from
backup withholding. If the Company is not provided with the Payee's correct
taxpayer identification number or an adequate basis for an exemption, the Payee
may be subject to a penalty imposed by the Internal Revenue Service. In
addition, cash payments on the Exchange Notes acquired pursuant to the Offer may
be subject to backup withholding in an amount equal to 31 percent of any such
payment. Backup withholding is not an additional tax. If withholding occurs and
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
To prevent backup withholding, each Payee must provide its correct taxpayer
identification number by completing the Substitute Form W-9 provided in this
Letter of Transmittal, certifying that the taxpayer identification number
provided is correct (or that the Payee is awaiting a taxpayer identification
number) and that either (a) the Payee is exempt from backup withholding, (b) the
Payee has not been notified by the Internal Revenue Service that it is subject
to backup withholding as a result of failure to report all interest or dividends
or (c) the Internal Revenue Service has notified the Payee that it is no longer
subject to backup withholding.
If the Payee does not have a TIN, such Payee should consult the enclosed
W-9 Guidelines for instructions on applying for a TIN, check the box in Part 4
of the Substitute Form W-9, and sign and date the Substitute Form W-9 and the
Certificate of Awaiting Taxpayer Identification Number set forth herein. Note:
Checking the box in Part 4 on the form means that the Payee has already applied
for a TIN or that such Payee intends to apply for one in the near future. If the
box in Part 4 of the Substitute Form W-9 has been checked, the Payor may
withhold 31% of all cash payments made to the Payee pursuant to the Offer until
a TIN is provided to the Payor.
If the Note is held in more than one name or is not in the name of the
actual owner, consult the W-9 Guidelines for information on which TIN to report.
Certain Payees (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. An exempt Payee should write "Exempt" in Part 2 of the Substitute
Form W-9. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions. For a
nonresident alien or foreign entity to qualify as exempt, such person must
submit a completed Form W-8BEN, "Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding." Such form may be obtained from the
Internal Revenue Service.
6. Transfer Taxes. Holders tendering pursuant to the Offer will not be
obligated to pay brokerage fees or commissions or to pay transfer taxes with
respect to their exchange under the Offer unless the box entitled "Special
Exchange Instructions" in this Letter of Transmittal has been completed. If the
box entitled "Special Exchange Instructions" has been completed, the amount of
any transfer taxes (whether imposed on the holder(s) or such other person
indicated on that box) payable on account of the transfer will be deducted from
the payment unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted. The Company will pay all other charges or
expenses in connection with the Offer. If holders tender Outstanding Notes for
exchange and the Offer is not consummated, such Outstanding Notes will be
returned to the holders at the Company's expense.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Outstanding Notes specified in this
Letter of Transmittal.
7. Inadequate Space. If the space provided herein is inadequate, the
aggregate principal amount of the Outstanding Notes being tendered and the
security numbers (if available) should be listed on a separate schedule attached
hereto and separately signed by all parties required to sign this Letter of
Transmittal.
8. Partial Tenders. Tenders of Outstanding Notes will be accepted only in
integral multiples of $1,000. If tenders are to be made with respect to less
than the entire principal amount of any Outstanding Notes, fill in the principal
amount of Outstanding Notes which are tendered in column (iv) of the
"Description of Outstanding Notes." In the case of partial tenders, the
Outstanding Notes in fully registered form for the remainder of the principal
amount of the Outstanding Notes will be sent to the person(s) signing this
Letter of Transmittal, unless otherwise indicated in the appropriate place on
this Letter of Transmittal, as promptly as practicable after the expiration or
termination of the Offer.
Unless otherwise indicated in column (iv) in the box labeled "Description
of Outstanding Notes," and subject to the terms and conditions of the Offer,
tenders made pursuant to this Letter of Transmittal will be deemed to have been
made
11
12
with respect to the entire aggregate principal amount represented by the
Outstanding Notes indicated in column (iii) of such box.
9. Mutilated, Lost, Stolen or Destroyed Outstanding Notes. Any holder whose
Outstanding Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated above for further instructions.
10. Validity and Acceptance of Tenders. All questions as to the validity,
form, eligibility (including time of receipt), acceptance and withdrawal of
Outstanding Notes tendered for exchange will be determined by the Company in its
sole discretion, which determination shall be final and binding. The Company
reserves the absolute right to reject any and all Outstanding Notes not properly
tendered and to reject any Outstanding Notes the Company's acceptance of which
might, in the judgment of the Company or its counsel, be unlawful. The Company
also reserves the absolute right to waive any defects or irregularities or
conditions of the Exchange Offer as to particular Outstanding Notes either
before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Outstanding Notes in the Offer).
The interpretation of the terms and Conditions of the Offering Materials by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Outstanding Notes for exchange must
be cured within such period of time as the Company shall determine. The Company
will use reasonable efforts to give notification of defects or irregularities
with respect to tenders of Outstanding Notes for exchange but shall not incur
any liability for failure to give such notification. Tenders of the Outstanding
Notes will not be deemed to have been made until such irregularities have been
cured or waived.
11. Requests for Assistance or Additional Copies. Requests for assistance
may be directed to the Exchange Agent at the address set forth below or from the
tendering Holder's broker, dealer, commercial bank or trust company. Additional
copies of the Offer to Purchase, this Letter of Transmittal, the Notice of
Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 may be obtained from the
Information Agent.
By Mail: By Overnight Mail or Courier:
BT Services Tennessee, Inc. BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust & Agency Services
P.O. Box 292737 Reorganization Unit
Nashville, TN 37229-2737 648 Grassmere Road
Nashville, TN 39211
12
EX-99.2
7
f73660a1ex99-2.txt
FORM OF NOTICE OF GUARANTEED DELIVERY
1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
DEL MONTE CORPORATION
OFFER TO EXCHANGE
ALL OF ITS OUTSTANDING
9 1/4% SENIOR SUBORDINATED NOTES DUE 2011
FOR
SERIES B 9 1/4% SENIOR SUBORDINATED NOTES DUE 2011
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
As set forth in the Prospectus described below, this Notice of Guaranteed
Delivery, or one substantially equivalent hereto, must be used to tender for
exchange any and all outstanding 9 1/4% Senior Subordinated Notes due 2011
("Outstanding Notes") of Del Monte Corporation, a New York corporation (the
"Company"), pursuant to the Exchange Offer (as defined below) if certificates
for Outstanding Notes are not immediately available or if such certificates for
Outstanding Notes and all other required documents cannot be delivered to the
Exchange Agent on or prior to the Expiration Date (as defined in the
Prospectus), or if the procedures for delivery by book-entry transfer cannot be
completed on a timely basis. This instrument may be delivered by hand or
transmitted by facsimile transmission or mail to the Exchange Agent.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
BANKERS TRUST COMPANY
By Mail:
BT Services Tennessee, Inc.
Reorganization Unit
P.O. Box 292737
Nashville TN 37229-2737
By Overnight Mail or Courier:
BT Services Tennessee, Inc.
Corporate Trust & Agency Services
Reorganization Unit
648 Grassmere Road
Nashville TN 37211
By Facsimile (for Eligible Institutions Only):
FAX: 615-835-3701
Confirm Facsimile by Telephone:
615-835-3572
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the Instructions to the Letter of
Transmittal, such signature guarantee must appear in the applicable space
provided in the signature box in the Letter of Transmittal.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON THURSDAY, OCTOBER 18, 2001 UNLESS THE EXCHANGE OFFER IS EXTENDED.
2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus dated September 19, 2001
("Prospectus") and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Exchange
Offer"), receipt of each of which is hereby acknowledged, the principal amount
of Outstanding Notes indicated below pursuant to the guaranteed deliver,
procedures set forth in the Prospectus under the caption "The Exchange
Offer -- Procedures for Tendering Outstanding Notes -- Guaranteed Delivery
Procedures."
Signature(s):
Name(s) of Registered Holder(s) of Outstanding
Notes:
Please Type or Print
Principal Amount of Outstanding Notes Tendered
for Exchange: $
Outstanding Note Certificate No(s). (If available):
Dated: , 2001
Address(es):
Zip Code
Area Code and Tel. No.(s):
(Check box if Shares will be tendered by book-entry transfer)
[ ] The Depository Trust Company
Account Number:
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as defined in the Exchange
Offer), having an office or correspondent in the United States, hereby (a)
represents that the above named persons) "own(s)" the Outstanding Notes tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender
of Outstanding Notes complies with Rule 14e-4 and (c) guarantees either to
deliver to the Exchange Agent the certificates representing all the Outstanding
Notes tendered hereby, in proper form for transfer and together with a properly
completed and duly executed Letter of Transmittal, or a facsimile thereof, or to
deliver such Outstanding Notes pursuant to the procedure for book-entry transfer
into the Exchange Agent's account at The Depository Trust Company ("DTC"),
together with a confirmation of a book-entry transfer of the tendered
Outstanding Notes into the Exchange Agent's account at DTC, and, in either case,
to deliver any other required documents, all within three business days after
the Expiration Date.
NAME OF FIRM AUTHORIZED SIGNATURE
Name
ADDRESS PLEASE TYPE OR PRINT
Title
ZIP CODE
Date , 2001
Area Code and Tel. No.
NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS NOTICE.
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
3
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payor.
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GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
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1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if
combined funds, any one of the individuals(1)
3. Husband and wife (joint account) The actual owner of the account or, if joint
funds, either person(1)
4. Custodian account of a minor (Uniform The minor(2)
Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the only
contributor, the minor(1)
6. Account in the name of guardian or The ward, minor, or incompetent person(3)
committee for a designated ward, minor,
or in competent person
7. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is not a The actual owner(1)
legal or valid trust under State law
8. Sole Proprietorship accounts The Owner(4)
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GIVE THE
EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
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9.A valid trust, estate, or pension trust Legal entity (Do not furnish the identifying
number of the personal representative or
trustee unless the legal entity itself is not
designated in the account title)(5)
10.Corporate account The corporation
11.Religious, charitable, or educational The organization
organization account
12.Partnership account held in the name of The partnership
the business
13.Association, club, or other tax-exempt The organization
organization
14.A broker or registered nominee The broker or nominee
15.Account with the Department of Agriculture The public entity
in the name of a public entity (such as a
State or local government, school district
or prison) that receives agricultural
program payments
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(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) You must show your individual name, but you may also enter your business
name or "doing business as" name. You may use either your social security
number or employer identification number (if you have one). However, the IRS
prefers that you use your Social Security Number.
(5) List first and circle the name of the valid trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name listed, the number
will be considered to be that of the first name listed.
4
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE)
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number, obtain Form SS-5,
Application for a Social Security Number Card, or Form SS-4, Application for an
Employer Identification Number, at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities required to register in the
United States, the District of Columbia, or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust described in Section 664, or a non-exempt
trust described in Section 4947(a)(1).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under Section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident alien partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payor or have provided an
incorrect taxpayer identification number to the payor.
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- Payments described in Section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under Section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 2 OF THE FORM, AND RETURN IT TO
THE PAYOR.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A and the
regulations issued thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other items of income to give taxpayer identification numbers to
payors who must file information returns with the IRS to report those payments.
The IRS uses the numbers for identification purposes. Payors must be given the
numbers whether or not recipients are required to file tax returns. Payors must
generally withhold 31% of taxable interest, dividend, and certain other payments
to a payee who does not furnish a taxpayer identification number to a payor.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payor, you are subject to a
penalty of $50 for such failure unless your failure is due to reasonable cause
and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in a decrease in
the amount of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION
CONTACT YOUR TAX CONSULTANT OR
THE INTERNAL REVENUE SERVICE.