As filed with the Securities and Exchange Commission
on June 12, 1997
Registration No. 333-
======================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
Del Monte Corporation
(Exact name of registrant as specified in its charter)
New York 2033 56-1221479
(State or other (Primary standard (I.R.S. employer
jurisdiction of industrial classification identification
incorporation or code number) number)
organization)
One Market
San Francisco, California 94105
(415) 247-3000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Del Monte Foods Company
(Exact name of registrant as specified in its charter)
Maryland 6719 13-3542950
(State or other (Primary standard (I.R.S. employer
jurisdiction of industrial classification identification
incorporation or code number) number)
organization)
One Market
San Francisco, California 94105
(415) 247-3000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
----------------------
William R. Sawyers, Esq.
Vice President, General Counsel and Secretary
Del Monte Foods Company
One Market
San Francisco, California 94105
(415) 247-3000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies of correspondence to:
Paul J. Shim, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
----------------------
<PAGE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC: As soon as practicable after the Registration Statement
becomes effective.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the
following box: |_|
CALCULATION OF REGISTRATION FEE
==========================================================================
Proposed Proposed
Title of maximum maximum
each class of Amount offering aggregate Amount of
securities to to be price offering registration
be registered registered per unit price(1) fee
- --------------------------------------------------------------------------
Series B 12 1/4%
Senior Subordinated
Notes due 2007 $150,000,000 100% $150,000,000 $45,455.00
- --------------------------------------------------------------------------
(1) Estimated solely for the purposes of calculating the
registration fee pursuant to Rule 457 under the Securities
Act of 1933, as amended.
==========================================================================
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 THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
==========================================================================
<PAGE>
DEL MONTE CORPORATION
DEL MONTE FOODS COMPANY
Registration Statement on Form S-4
(Cross Reference Sheet Furnished Pursuant to Item 501(b) of
Regulation S-K )
Item Location in Prospectus
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus................................ Facing Page of the
Registration Statement;
Cross Reference
Sheet; Outside Front Cover
Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus....................... Available Information;
Incorporation of Certain
Documents by Reference;
Outside Back Cover Page
of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............. Prospectus Summary; Risk
Factors; Selected Financial
Data
4. Terms of the Transaction.................. Prospectus Summary; Risk
Factors; The Exchange Offer;
Description of the New
Notes; Plan of Distribution;
Certain U.S. Federal
Income Tax Considerations
5. Pro Forma Financial Information.......... Pro Forma Capitalization;
Unaudited Pro Forma Financial
Data
6. Material Contracts With the Company
Being Acquired........................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters................ Not Applicable
8. Interests of Named Experts
and Counsel............................ Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Not Applicable
10. Information with Respect to S-3
Registrants............................ Not Applicable
11. Incorporation of Certain Information by
Reference............................. Not Applicable
12. Information with Respect to S-2 or S-3
Registrants........................... Not Applicable
13. Incorporation of Certain Information by
Reference............................ Not Applicable
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants.... Outside Front Cover of
Prospectus; Prospectus
Summary; Selected
Consolidated Financial Data;
Management's Discussion and
Analysis of Financial
Condition and Results of
Operation; Business;
Consolidated
Financial Statements
15. Information with Respect to S-3
Companies.......................... Not Applicable
16. Information with Respect to S-2 or S-3
Companies.......................... Not Applicable
17. Information with Respect to Companies
Other Than S-3 or S-2 Companies.... Not Applicable
18. Information if Proxies, Consents or
Authorizations Are To Be Solicited.. Not Applicable
19. Information if Proxies, Consents or
Authorizations Are Not To Be
Solicited or in an Exchange Offer... Prospectus Summary;
Management; Capital
Stock of DMC and
DMFC; Certain Relationships
and Related Transactions
<PAGE>
***********************************************************************
* Information contained herein is subject to completion or *
* amendment. A registration statement relating to these securities *
* has been filed with the Securities and Exchange Commission. These *
* securities may not be sold nor may offers to buy be accepted *
* prior to the time the registration statement becomes effective. *
* This prospectus shall not constitute an offer to sell or the *
* solicitation of an offer to buy nor shall there be any sale of *
* these securities in any State in which such offer, solicitation *
* or sale would be unlawful prior to registration or qualification *
* under the securities laws of any such State. *
***********************************************************************
SUBJECT TO COMPLETION-DATED JUNE 12, 1997
PROSPECTUS
Del Monte Corporation
Del Monte Foods Company
Offer to Exchange Series B 12 1/4% Senior Subordinated Notes
due 2007, which have been registered under the Securities
Act of 1933, as amended, for any and all outstanding
12 1/4% Senior Subordinated Notes due 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON __________, 1997, UNLESS EXTENDED.
Del Monte Corporation, a New York Corporation ("DMC"),
and Del Monte Foods Company, a Maryland Corporation ("DMFC"),
hereby offer, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying letter of
transmittal (the "Letter of Transmittal" and such offer being the
"Exchange Offer"), to exchange Series B 12 1/4% Senior
Subordinated Notes due 2007 of DMC (the "New Notes"), which are
guaranteed by DMFC and which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which this Prospectus is
a part, for an equal principal amount of outstanding 12 1/4%
Senior Subordinated Notes due 2007 of DMC (the "Old Notes"),
which are guaranteed by DMFC and of which $150,000,000 aggregate
principal amount is outstanding as of the date hereof. The New
Notes and the Old Notes are collectively referred to herein as
the "Notes."
Any and all Old Notes that are validly tendered and
not withdrawn on or prior to 5:00 P.M., New York City time, on
the date the Exchange Offer expires, which will be _________,
1997 (30 calendar days following the commencement of the Exchange
Offer) unless the Exchange Offer is extended (such date,
including as extended, the "Expiration Date"), will be accepted
for exchange. Tenders of Old Notes may be withdrawn at any time
prior to 5:00 P.M., New York City time on the Expiration Date.
The Exchange Offer is not conditioned upon any minimum principal
amount of Old Notes being tendered for exchange. However, the
Exchange Offer is subject to certain customary conditions, which
may be waived by DMC or DMFC, and to the terms of the
Registration Rights Agreement, dated as of April 18, 1997, by and
among DMC, DMFC and BT Securities Corporation, Bankers Trust
International plc, BancAmerica Securities, Inc. and Bear, Stearns
& Co. Inc. (the "Initial Purchasers") (the "Registration Rights
Agreement"). Old Notes may be tendered only in integral multiples
of $1,000. See "The Exchange Offer."
The New Notes will be entitled to the benefits of the
same Indenture (as defined herein) that governs the Old Notes and
that will govern the New Notes. The form and terms of the New
Notes are the same in all material respects as the form and terms
of the Old Notes, except that the interest rate step-up
provisions will be inoperative and that the New Notes have been
registered under the Securities Act and therefore will not bear
legends restricting the transfer thereof. See "The Exchange
Offer" and "Description of the New Notes."
The New Notes will be represented by permanent global
notes in fully registered form and will be deposited with, or on
behalf of, The Depository Trust Company ("DTC") and registered in
the name of a nominee of DTC. Beneficial interests in the
permanent global notes will be shown on, and transfers thereof
will be effected through, records maintained by DTC and its
participants.
Based on interpretations by the staff of the
Securities and Exchange Commission (the "Commission"), as set
forth in no-action letters issued to third parties, including
Exxon Capital Holdings Corporation, SEC No-Action Letter
(available May 13, 1988), Morgan Stanley & Co. Incorporated, SEC
No-Action Letter (available June 5, 1991) and Shearman &
Sterling, SEC No-Action Letter (available July 2, 1993)
(collectively, the "Exchange Offer No-Action Letters"), DMC and
DMFC believe that the New Notes issued pursuant to the Exchange
Offer may be offered for resale, resold or otherwise transferred
by each holder (other than a broker-dealer who acquires such New
Notes directly from DMC or DMFC for resale pursuant to Rule 144A
under the Securities Act or any other available exemption under
the Securities Act and other than any holder that is an
"affiliate" (as defined in Rule 405 under the Securities Act) of
DMC or DMFC) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such
holder's business and such holder is not engaged in, and does not
intend to engage in, a distribution of such New Notes and has no
arrangement with any person to participate in a distribution of
such New Notes. By tendering Old Notes in exchange for New Notes,
each holder, other than a broker-dealer, will represent to DMC
and DMFC that: (i) it is not an affiliate (as defined in Rule 405
under the Securities Act) of DMC or DMFC; (ii) it is not a
broker-dealer tendering Old Notes acquired for its own account
directly from DMC or DMFC; (iii) any New Notes to be received by
it will be acquired in the ordinary course of its business; and
(iv) it is not engaged in, and does not intend to engage in, a
distribution of such New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. If a
holder of Old Notes is engaged in or intends to engage in a
distribution of New Notes or has any arrangement or understanding
with respect to the distribution of New Notes to be acquired
pursuant to the Exchange Offer, such holder may not rely on the
applicable interpretations of the staff of the Commission and
must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any
secondary resale transaction.
(continued on next page)
---------------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK
FACTORS" BEGINNING ON PAGE 18 OF THIS PROSPECTUS.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------
THE DATE OF THIS PROSPECTUS IS _________, 1997
<PAGE>
(continued from cover page)
Each broker-dealer that receives New Notes for its own
account pursuant to the Exchange Offer (a "Participating
Broker-Dealer") must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The
Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not
be deemed to admit that it is an "underwriter" within the meaning
of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such
Participating Broker-Dealer as a result of market-making
activities or other trading activities. Pursuant to the
Registration Rights Agreement, DMC and DMFC have agreed that they
will make this Prospectus available to any Participating
Broker-Dealer for a period of time not to exceed 180 days after
the Registration Statement is declared effective (subject to
extension under certain circumstances) for use in connection with
any such resale. See "Plan of Distribution."
Neither DMC nor DMFC will receive any proceeds from
this offering. DMC and DMFC have agreed to pay the expenses of
the Exchange Offer. No underwriter is being utilized in
connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL DMC
OR DMFC ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES
IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES AND BLUE
SKY LAWS OF SUCH JURISDICTION.
The Old Notes have been designated as eligible for
trading in the Private Offerings, Resale and Trading through
Automated Linkages market. Prior to this Exchange Offer, there
has been no public market for the New Notes. If such a market
were to develop, the New Notes could trade at prices that may be
higher or lower than their principal amount. Neither DMC nor DMFC
intends to apply for listing of the New Notes on any securities
exchange or for quotation of the New Notes on The Nasdaq Stock
Market's National Market or otherwise. The Initial Purchasers
have previously made a market in the Old Notes, and DMC and DMFC
have been advised that the Initial Purchasers currently intend to
make a market in the New Notes, as permitted by applicable laws
and regulations, after consummation of the Exchange Offer. The
Initial Purchasers are not obligated, however, to make a market
in the Old Notes or the New Notes and any such market making
activity may be discontinued at any time without notice at the
sole discretion of the Initial Purchasers. There can be no
assurance as to the liquidity of the public market for the New
Notes or that any active public market for the New Notes will
develop or continue. If an active public market does not develop
or continue, the market price and liquidity of the New Notes may
be adversely affected. See "Risk Factors--Absence of a Public
Market for the New Notes."
2
<PAGE>
AVAILABLE INFORMATION
Neither DMC nor DMFC is currently subject to the periodic
reporting and other informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). DMC and
DMFC will become subject to such requirements upon the
effectiveness of the Registration Statement (as defined herein).
Pursuant to the indenture by and among DMC (as issuer), DMFC (as
guarantor) and Marine Midland Bank (as trustee), dated as of
April 18, 1997, DMC has agreed to file with the Commission and
provide to the holders of the Old Notes annual reports and the
information, documents and other reports which are required to be
delivered pursuant to Sections 13 and 15(d) of the Exchange Act.
This Prospectus constitutes a part of a registration
statement on Form S-4 (together with all amendments and exhibits,
the "Registration Statement") filed by DMC and DMFC with the
Commission, through the Electronic Data Gathering, Analysis and
Retrieval System ("EDGAR"), under the Securities Act, with
respect to the New Notes offered hereby. This Prospectus omits
certain of the information contained in the Registration
Statement, and reference is hereby made to the Registration
Statement for further information with respect to DMC, DMFC and
the securities offered hereby. Although statements concerning and
summaries of certain documents are included herein, reference is
made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission.
These documents may be inspected without charge at the office of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies may be obtained at fees and
charges prescribed by the Commission. Copies of such materials
may also be obtained from the Web site that the Commission
maintains at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and any definitive proxy or information
statements filed by DMC or DMFC pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the
New Notes offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated herein by
reference, or contained in this Prospectus, shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE
MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE
NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED
THROUGHOUT THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE
REQUIRES, "DMC" MEANS DEL MONTE CORPORATION, A NEW YORK
CORPORATION, "DMFC" MEANS DEL MONTE FOODS COMPANY, A MARYLAND
CORPORATION AND THE PARENT OF DMC, AND THE "COMPANY" OR "DEL
MONTE" MEANS DMC AND DMFC, TOGETHER WITH EACH OF THEIR DIRECT AND
INDIRECT SUBSIDIARIES. REFERENCES HEREIN TO FISCAL YEARS AND
QUARTERS ARE TO THE COMPANY'S FISCAL YEAR (WHICH ENDS ON JUNE 30)
AND RELATED FISCAL QUARTERS (WHICH END ON THE LAST SUNDAY OF
SEPTEMBER, DECEMBER AND MARCH). UNLESS OTHERWISE INDICATED,
REFERENCES HEREIN TO U.S. MARKET SHARE DATA ARE TO CASE VOLUME
AND ARE BASED UPON DATA PROVIDED TO THE COMPANY BY A.C. NIELSEN &
CO. ("NIELSEN"), AN INDEPENDENT MARKET RESEARCH FIRM. MARKET
SHARE DATA FOR CANNED VEGETABLES AND CUT TOMATO PRODUCTS INCLUDE
ONLY THOSE CATEGORIES IN WHICH THE COMPANY COMPETES. SUCH DATA
FOR CANNED FRUIT INCLUDE THOSE CATEGORIES IN WHICH THE COMPANY
COMPETES OTHER THAN THE "SPECIALTY" CATEGORY. SEE
"BUSINESS--GENERAL." WITH RESPECT TO MARKET SHARE DATA USED
HEREIN, THE TERM CALENDAR 1996 REFERS TO THE 52-WEEK PERIOD ENDED
DECEMBER 28, 1996.
The Company
General
The Company is the largest producer and distributor of
canned vegetables and canned fruit in the United States with net
sales in excess of $1 billion in fiscal 1996. In calendar 1996,
the Company had domestic market shares of 20.1% of canned
vegetable products and 38.1% of canned fruit products. The
Company's market share in canned vegetables is larger than the
market share of the Company's two largest branded competitors
combined and its market share of canned fruit is larger than the
fruit market share of all other branded competitors combined. In
addition, the Company enjoys strong market shares in various cut
tomato product categories.
The Del Monte brand name, which has been in existence since
1892, is one of the leading brand names in the food industry and
maintains a reputation for premium quality. Del Monte brand
products are found in substantially all chains and independent
grocery stores throughout the United States, with the average
supermarket carrying approximately 100 Del Monte brand items. The
Company estimates that Del Monte brand products are purchased by
over 80% of U.S. households and that the Del Monte brand is
recognized by 96% of all consumers of products in the Company's
categories. The Del Monte brand has the highest unaided brand
awareness of any canned food brand in the United States. As the
brand leader in three major processed food categories (canned
vegetables, fruit and cut tomato products), the Company has a
multi-category presence that management believes provides it with
a competitive advantage in selling to the retail grocery
industry.
The Company sells its products to national chains and
wholesalers through a nationwide sales network consisting
primarily of independent food brokers. The Company's direct sales
force also sells Del Monte products to warehouse club stores
("Warehouse Clubs"), selected mass merchandisers such as Wal-Mart
and Kmart ("Mass Merchandisers") and larger mass merchandising
outlets that include full grocery sections ("Supercenters"). In
addition, the Company sells its products to the foodservice
industry, food processors and the military through different
independent food brokers. The Company also exports a small
percentage of its products to certain foreign countries directly
and through independent exporters based in the United States.
The Company has over 2,500 contracts to purchase vegetables
and fruit from individual growers and cooperatives located in
various geographic regions of the United States, principally the
Midwest, the Northwest, California and Texas. This diversity of
sourcing helps insulate the Company from localized disruptions
during the growing season, such as weather conditions, that can
affect the price and supply of vegetables and fruit.
The Company owns a number of registered and unregistered
trademarks that it uses in conjunction with its business,
including the trademarks Del Monte(R), FreshCut(TM), Snack
Cups(R), Fruit Cup(R), Fruit Naturals(R) and Del Monte LITE(R).
In connection with and subsequent to the acquisition of the
Company from RJR Nabisco Inc. ("RJR Nabisco") in 1990 (the "RJR
Nabisco Sale"), the Company granted various perpetual,
royalty-free licenses for the
4
<PAGE>
use of the Del Monte name and trademark, generally outside of the
United States. The licensees of the Del Monte name and trademark
include Del Monte Foods International Limited ("Del Monte
Europe"), Kikkoman Corporation ("Kikkoman"), Fresh Del Monte
Produce, N.V. ("Fresh Del Monte"), affiliates of RJR Nabisco and
Yorkshire Dried Fruit & Nuts, Inc. ("Yorkshire"). Neither Del
Monte Europe nor Fresh Del Monte is an affiliate of the Company.
In fiscal 1994, 1995 and 1996, the Company invested an
aggregate of approximately $55 million of capital in its domestic
operating facilities. The Company believes that the efficiency of
its fully-integrated production facilities, its proprietary seed
varieties and its bulk supply agreements make it one of the
lowest-cost producers of canned vegetables, fruit and cut tomato
products in the United States.
DMC was incorporated under the laws of the State of New
York in 1978. DMFC, then known as DMPF Holdings Corp., was
incorporated under the laws of the State of Maryland in 1989. DMC
and DMFC each maintains its principal executive office at One
Market, San Francisco, California 94105, and their telephone
number is (415) 247-3000. DMC is a wholly owned subsidiary of
DMFC.
Competitive Strengths
Management believes that the following elements contribute
to the Company's position as a leading producer and distributor
of canned vegetables, fruit and cut tomato products in the United
States and provide a solid foundation for the Company's business
strategy.
- Significant Market Share and Strong Brand Name
Recognition--In calendar 1996, the Company had domestic
market shares of 20.1% of canned vegetable products and
38.1% of canned fruit products. The Company's market
share in canned vegetables is larger than the market
share of the Company's two largest branded competitors
combined and its market share in canned fruit is larger
than the market share of all other branded competitors
combined. In addition, the Company had a 25.4% market
share in the fastest growing segment of the solid tomato
market, the cut tomato segment. The Del Monte brand name,
which has been in existence since 1892, is one of the
leading brand names in the food industry, and has the highest
unaided brand awareness of any canned food brand in the United
States. As a result of its brand leadership, the Company has
a multi-category presence that management believes provides
it with a competitive advantage in selling to the grocery
industry. Del Monte brand products are found in
substantially all grocery chains in the United States,
with the average supermarket carrying approximately 100
Del Monte brand items. The Company estimates that Del
Monte brand products are purchased by over 80% of U.S.
households and that the Del Monte brand name is
recognized by 96% of all consumers of products in the
Company's categories.
Calendar 1996 Market Share
----------------------------------------------------
Market Next Leading Branded
Category Position(a) Percentage Competitor's Percentage(a)
- -------- ----------- ---------- --------------------------
Canned Vegetables... #1 20.1% 12.5% (Green Giant)
Canned Fruit........ #1 38.1% 12.0% (Libby's)
Canned Cut Tomato
Products............ #1 25.4% 10.8% (Hunt's)
----------------------
(a) Excludes private label.
- Improving EBITDA and EBITDA Margins--The Company's
established market position, strong brand recognition,
pricing strategy and significant cost reduction efforts
have allowed it to achieve consistent and improving
EBITDA (as defined) and EBITDA margins. EBITDA (giving
effect to the sale of the Divested Operations (as
defined)) for fiscal 1994, 1995 and 1996 was $63 million,
$76 million and $92 million, respectively. EBITDA margins
for the same periods were 5.7%, 6.9% and 8.6%,
respectively.
5
<PAGE>
- Extensive National Sales and Distribution System--The
Company's extensive sales and distribution network, which
is responsible for the distribution of finished goods to
over 2,400 customer destinations nationwide, gives Del
Monte a nationwide presence. The Company's national sales
and distribution network enables it to compete with other
national brands and regional competitors, and to
introduce new products on a regional or national basis.
The Company operates six strategically-situated
distribution centers offering customers a variety of
services. Management believes that the Company's
distribution system is an important contributor to the
Company's success and provides the Company with a
competitive advantage over regional and private label
competitors.
- Low Cost Producer--Management believes that the Company
is one of the lowest cost producers of canned vegetables,
fruit and cut tomatoes in the United States as a result
of its raw product sourcing diversity, proprietary seed
varieties, modern processing equipment, labeling,
packaging, warehousing and distribution efficiencies and
strategic alliances with suppliers.
- Agricultural Expertise and Grower Relationships--The
Company has developed proprietary vegetable seed
varieties in order to increase agricultural and cannery
yields and to improve product flavor and quality. The
Company contracts with experienced growers who cultivate
these varieties on prime agricultural land proximate to
the Company's processing facilities. In many cases, the
Company has had and continues to have long-term
relationships with such growers.
- Experienced Management Team--In connection with the
Recapitalization (as defined herein), two veteran
managers with extensive food industry experience, Richard
G. Wolford and Wesley J. Smith, joined the Company as
Chief Executive Officer and Chief Operating Officer,
respectively. The Company's prior Co-Chief Executive
Officers will remain with the Company as consultants
during a transition period following the
Recapitalization. Mr. Wolford has 30 years of experience
in the food industry, 20 of which were with Dole Foods.
He was president of Dole Packaged Foods from 1982 to
1987. During Mr. Wolford's tenure at Dole, Dole
experienced increased profitability, sales volume and
market share. Mr. Wolford played a key role in redefining
the Dole brand and expanding the range of products sold
under the brand. From 1988 to 1996, he was Chief
Executive Officer of HK Acquisition Corp. where he
developed food industry investments with venture capital
investors and managed the investor-owned companies. Mr.
Smith has 25 years of experience in the food industry, 23
of which were at Dole Foods, where he oversaw the
building of Dole's domestic fresh pineapple business and
the restructuring of Dole's sizable Hawaiian operations.
In addition, Mr. Smith was responsible for establishing
Dole's juice business with minimal capital investment.
Business Strategy
In fiscal 1996, the Company began development of a new
business strategy designed to improve profitability, enhance the
Company's leadership position in the industry, increase spending
efficiencies and strengthen the Company's ability to manage
anticipated future growth. The key elements of this new business
strategy are discussed below.
- New Pricing--In the retail grocery market, pricing tends
to be set by the branded leader with other brand and
private label price levels being set using the leading
brand as the benchmark. Responding in part to relatively
balanced levels of supply and demand, the Company
increased prices on its core fruit products in fiscal
1996 and on its core vegetable products in fiscal 1996
and 1997. As anticipated, price increases were initially
not matched by competitors, and the Company's market
shares in many of its core product categories were eroded
by both private label and branded competition. Market
shares have now stabilized or improved relative to the
lower levels reached after such price increases.
Specifically, branded fruit competitors have matched the
Company's prices and branded vegetable competitors have
increased their prices to more closely approach the
Company's higher prices. Management believes that its
price levels are sustainable in view of the current price
levels of branded competition.
6
<PAGE>
- Trade Promotion Programs--Over the last twelve months,
the Company has implemented a significant change in its
trade promotion strategy. Historically, the Company
marketed its products through aggressive periodic trade
promotions that represented discounts off list prices for
retailers. Many of these promotions required little or no
retailer support or performance, resulted in the buildup
of retailers' inventories through advance buying, and
were not regularly passed through to the consumer in
shelf price reductions. Currently, under the Company's
"Go-to-Market" strategy, trade spending is based on
accruals generated by retailers for each case purchased.
These accrued amounts are then paid for retail
merchandising events based on each case actually sold to
the consumer. Management believes that this
performance-based strategy, combined with coordinated
promotional efforts undertaken with the retailer,
provides more efficient spending that to date has
resulted in more efficient merchandising of the Company's
products.
- Consumer Promotion--The Company has also substantially
increased its marketing spending targeted directly at
consumers and expects to spend $56 million on such
marketing in fiscal 1997 (a $44 million increase from
fiscal 1996). This strategy, which primarily takes the
form of free-standing insert couponing, has helped the
Company recapture some of the volume and market share
declines that occurred following the price increases.
- New Product Introductions and Product Line
Extensions--The Company has focused on developing
products designed to take advantage of the Company's
presence in existing categories, emphasize existing
manufacturing capabilities and leverage the Del Monte
brand name. Specifically, the Company recently has
introduced Del Monte D'Italia(TM) pasta sauces, flavored
diced tomatoes and flavored fruits. The Company has also
repositioned certain of its tomato and vegetable products
using its FreshCut brand, which emphasizes the freshness
of the raw ingredients in these products. In fiscal 1997,
the Company introduced the FreshCut line of vegetables
and two new FreshCut tomato products. Management believes
that the FreshCut concept for vegetables has increased
brand perceptions for ingredient freshness, overall
quality and taste. In the future, the Company will seek
to develop value-added products that reflect consumer
demands, such as convenience and quality, and that will
benefit from the Del Monte brand and the Company's
distribution infrastructure.
- Increased Penetration of High-Growth Channels of
Distribution--Changes in the retail grocery environment
have resulted in substantial growth of alternative
retailers such as Warehouse Clubs, Mass Merchandisers and
Supercenters. The Company believes it is well-positioned
to benefit from these changes because these vendors
generally seek brand name products with high turnover
from category leaders. In addition, vendors in this
category generally are attracted to large,
technologically sophisticated suppliers such as the
Company that have the ability to meet their stringent
inventory and shelf management requirements. The Company
believes it is currently the leading supplier of canned
vegetables and fruits to Wal-Mart's Sam's Club, and is a
major supplier to Price/Costco. The Company also believes
it is Wal-Mart Supercenters' leading supplier of canned
vegetables, fruit and cut tomato products as a group.
- Customer Alliances--Competitive pressures in the retail
food industry are causing many retailers to form
alliances with large suppliers such as the Company that
are able to provide sophisticated inventory and category
management programs. Management believes that the Company
is well situated to take advantage of this trend due to
the scope of its product offerings and efficient national
distribution system, as well as its size and
technological capabilities. The Company has formed
technological alliances with several key customers and
intends to pursue additional alliances. To support these
alliances, Del Monte has developed proprietary software
systems and programs in category management which enable
its customers to free shelf space for higher-margin
products, improve inventory management by eliminating
redundant or slow-moving products and optimize product
positioning on store shelves. Substantially all of the
Company's customers that have employed the Company's
category management system have increased the Company
product sales and shelf space while reducing overall
shelf space dedicated to the canned vegetable, fruit and
cut tomato categories as a whole. In addition, the
Company has developed a proprietary vendor-managed
7
<PAGE>
inventory software system through which the Company
directly manages its customers' inventories of Del Monte
branded products. This inventory software is designed to
reduce customers' overhead and to enable them to achieve
lower average inventory levels while enhancing the
Company's opportunities to sell Del Monte products.
Cost Savings and Inventory Management
In fiscal 1993, the Company instituted a reengineering plan
designed to reduce operating costs and enhance the Company's
ability to produce and distribute its products. The Company
realized approximately $41 million in cumulative cost savings in
fiscal 1994 and 1995, principally as a result of this plan. In
connection with the Recapitalization, the Company has developed a
capital expenditure program that is designed to generate an
additional $29 million in annual cost savings to be achieved over
the next four years as the initiatives discussed below are
completed. In addition, the Company has identified $45 million of
potential inventory reductions that it intends to effect. There
can be no assurance, however, that such cost savings or inventory
reductions will be realized.
- Manufacturing Improvements--Management currently plans to
introduce new processing equipment such as modern
high-speed fillers, optical sorting equipment and
packaging machinery, each of which is intended to
generate cost savings and to help the Company maintain
its position as a low cost producer. Such savings would
result primarily from decreased labor costs and general
production efficiencies.
- Facility Consolidation--The Company closed two vegetable
plants and two distribution centers in fiscal 1994 and
another vegetable plant in fiscal 1995. The Company plans
to close an additional facility by fiscal 1999, which is
expected to generate additional annual savings from
reduced hauling charges, improved recoveries and a
reduction of fixed costs.
- Improved Inventory Management--Keeping inventory levels
as low as possible will be a key strategic focus of the
Company. The Company intends to significantly reduce
excess inventories beginning with the 1997 pack,
primarily by reducing contracted acreage. The Company is
also evaluating a counter-seasonal production strategy
comprised of importing fruits from the Southern
hemisphere during the North American winter and increased
sourcing of vegetables from the Southwest during periods
other than the Midwestern harvest season.
The Recapitalization
Pursuant to the Agreement and Plan of Merger, dated as of
February 21, 1997 and amended and restated as of April 14, 1997
(the "Merger Agreement"), entered into among TPG Partners, L.P.,
a Delaware partnership ("TPG"), TPG Shield Acquisition
Corporation, a Maryland corporation ("Shield"), and DMFC, Shield
merged with and into DMFC (the "Merger"), with DMFC being the
surviving corporation. By virtue of the Merger, shares of DMFC's
preferred stock having an implied value of approximately $14
million held by certain of DMFC's stockholders were cancelled and
were converted into the right to receive common stock of the
surviving corporation. All other shares of DMFC stock were
cancelled and were converted into the right to receive cash
consideration, all as set forth in the Merger Agreement. In
connection with the Merger, DMC repaid substantially all of its
funded debt obligations existing immediately before the closing
of the Merger (the "Debt Retirement"). At March 31, 1997, the
aggregate principal amount of DMC's funded indebtedness was $310
million.
Cash funding requirements for the Recapitalization (which
was consummated on April 18, 1997), including the Initial
Purchasers' discount in connection with the issuance and sale of
the Old Notes and other fees and expenses, totalled $809 million,
and were satisfied through the following: (i) a cash equity
investment by TPG and other investors of $126 million (the
"Common Equity Contribution") in the common stock of Shield; (ii)
a cash equity investment by TPG and other investors of $35
million (the "Preferred Equity Contribution," and together with
the Common Equity Contribution, the "Equity Contribution") in
shares of redeemable preferred stock of Shield (the "Preferred
Stock") having the preferences, rights and other terms described
under "Capital Stock of DMC and
8
<PAGE>
DMFC"; (iii) $380 million of borrowings under a senior secured
term loan facility among the Company, Bank of America National
Trust and Savings Association ("BofA") and Bankers Trust Company
("BTCo.") (the "Term Loan Facility"); (iv) $119 million of
borrowings under a senior secured revolving credit facility among
the Company, BofA and BTCo. (the "Revolving Credit Facility" and,
together with the Term Loan Facility, the "Bank Financing"); (v)
$147 million from the net proceeds of the offering of the Old
Notes (the "Old Note Offering"); and (vi) $2 million of proceeds
from the sale of a surplus property. In the Merger, the common
stock and the Preferred Stock of Shield were converted into new
shares of common stock and preferred stock, respectively, of
DMFC.
The Recapitalization was accounted for as a
recapitalization transaction for accounting purposes. The Merger,
the Debt Retirement, the Equity Contribution, the Bank Financing
and the Old Note Offering are herein referred to collectively as
the "Recapitalization." See "The Recapitalization."
Texas Pacific Group
Texas Pacific Group was founded by David Bonderman, James
G. Coulter and William S. Price in 1993 to pursue public and
private investment opportunities through a variety of methods,
including leveraged buyouts, joint ventures, restructurings,
bankruptcies and strategic public securities investments. Texas
Pacific Group, through TPG and another investment fund, manages
over $3 billion in committed equity capital.
Prior to the formation of TPG, certain of its principals
oversaw the successful investment of more than $1 billion of
equity capital from 1982 to 1992 on behalf of Keystone, Inc.
(formerly the Robert M. Bass Group), including such transactions
as the acquisition of American Savings Bank, Wometco Cable,
National Reinsurance Corp. and Bell & Howell. In addition, TPG's
principals led the $9 billion reorganization of Continental
Airlines in 1993. TPG currently has eleven investments in its
portfolio, which, in addition to Del Monte Foods, includes
America West Airlines, Allied Waste Industries, Beringer Wine
Estates, Favorite Brands International, Denbury Resources, Ducati
Motor, Paradyne and Virgin Cinemas.
The acquisition of the Company was TPG's third major
investment in the food and beverage industry in the last two
years. In September 1995, TPG acquired the North American
marshmallow and confections business of Kraft, which is now
called Favorite Brands International. Since the acquisition,
Favorite Brands International has acquired five other businesses,
quintupling its revenues and making it the fourth largest candy
and confections company in the United States. Additionally, in
January 1996, TPG acquired Beringer Wine Estates from Nestle,
which includes Meridian Vineyards, Napa Ridge and Chateau
Souverain. Subsequently, Beringer acquired Chateau St. Jean and
Stags' Leap Winery, giving Beringer one of the nation's largest
portfolios of premium wineries.
The Exchange Offer
Registration Rights
Agreement.................... The Old Notes were issued on April 18,
1997 to the Initial Purchasers. The
Initial Purchasers placed the Old Notes
with institutional investors. In
connection therewith, DMC, DMFC and
the Initial Purchasers entered into
the Registration Rights Agreement,
providing, among other things, for
the Exchange Offer. See "The
Exchange Offer."
The Exchange Offer........... New Notes are being offered in exchange
for an equal principal amount of Old Notes.
As of the date hereof, $150,000,000
aggregate principal amount of Old Notes
is outstanding. Old Notes may be tendered
only in integral multiples of $1,000.
9
<PAGE>
Resale of New Notes.......... Based on interpretations
by the staff of the
Commission, as set forth in
no-action letters issued to third
parties, including the Exchange
Offer No-Action Letters, DMC and
DMFC believe that the New Notes
issued pursuant to the Exchange
Offer may be offered for resale,
resold or otherwise transferred by
each holder thereof (other than a
broker-dealer who acquires such New
Notes directly from DMC or DMFC for
resale pursuant to Rule 144A under
the Securities Act or any other
available exemption under the
Securities Act and other than any
holder that is an "affiliate" (as
defined under Rule 405 of the
Securities Act) of DMC or DMFC)
without compliance with the
registration and prospectus
delivery provisions of the
Securities Act, provided that such
New Notes are acquired in the
ordinary course of such holder's
business and such holder is not
engaged in, and does not intend to
engage in, a distribution of such
New Notes and has no arrangement
with any person to participate in a
distribution of such New Notes. By
tendering the Old Notes in exchange
for New Notes, each holder, other
than a broker-dealer, will
represent to DMC and DMFC that: (i)
it is not an affiliate (as defined
in Rule 405 under the Securities
Act) of DMC or DMFC; (ii) it is not
a broker-dealer tendering Old Notes
acquired for its own account
directly from DMC or DMFC; (iii)
any New Notes to be received by it
were acquired in the ordinary
course of its business; and (iv) it
is not engaged in, and does not
intend to engage in, a distribution
of such New Notes and has no
arrangement or understanding to
participate in a distribution of
the New Notes. If a holder of Old
Notes is engaged in or intends to
engage in a distribution of the New
Notes or has any arrangement or
understanding with respect to the
distribution of the New Notes to be
acquired pursuant to the Exchange
Offer, such holder may not rely on
the applicable interpretations of
the staff of the Commission and
must comply with the registration
and prospectus delivery
requirements of the Securities Act
in connection with any secondary
resale transaction. Each
Participating Broker-Dealer that
receives New Notes for its own
account pursuant to the Exchange
Offer must acknowledge that it will
deliver a prospectus in connection
with any resale of such New Notes.
The Letter of Transmittal states
that by so acknowledging and by
delivering a prospectus, a
Participating Broker-Dealer will
not be deemed to admit that it is
an "underwriter" within the meaning
of the Securities Act. This
Prospectus, as it may be amended or
supplemented from time to time, may
be used by a Participating
Broker-Dealer in connection with
resales of New Notes received in
exchange for Old Notes where such
Old Notes were acquired by such
Participating Broker-Dealer as a
result of market-making activities
or other trading activities. DMC
and DMFC have agreed that they will
make this Prospectus available to
any Participating Broker-Dealer for
a period of time not to exceed 180
days after the Registration
Statement is declared effective
(subject to extension under certain
circumstances) for use in
connection with any such resale.
See "Plan of Distribution." To
comply with the securities laws of
certain jurisdictions, it may be
10
<PAGE>
necessary to qualify for sale or
register the New Notes prior to
offering or selling such New Notes.
DMC and DMFC have agreed, pursuant
to the Registration Rights
Agreement and subject to certain
specified limitations therein, to
register or qualify the New Notes
for offer or sale under the
securities or "blue sky" laws of
such jurisdictions as may be
necessary to permit the holders of
New Notes to trade the New Notes
without any restrictions or
limitations under the securities
laws of the several states of the
United States.
Consequences of Failure to
Exchange Old Notes........... Upon consummation of the Exchange Offer,
subject to certain exceptions, holders of
Old Notes who do not exchange their Old
Notes for New Notes in the Exchange
Offer will no longer be
entitled to registration rights and
will not be able to offer or sell
their Old Notes, unless such Old Notes
are subsequently registered
under the Securities Act (which,
subject to certain limited
exceptions, the Company will have
no obligation to do), except
pursuant to an exemption from, or
in a transaction not subject to,
the Securities Act and applicable
state securities laws. See "Risk
Factors--Risk Factors Relating to the
Notes and the Old Note
Offering--Consequences of Failure to Exchange"
and "The Exchange Offer--Terms of the
Exchange Offer."
Expiration Date.............. 5:00 p.m., New York City time, on _________,
1997 (30 calendar days following the
commencement of the Exchange Offer), unless
the Exchange Offer is extended, in which case
the term "Expiration Date" means the latest
date and time to which the
Exchange Offer is extended.
Interest on the New Notes.... The New Notes will accrue
interest at the applicable
per annum rate set forth
on the cover page of this
Prospectus, from (A) the later of
(i) the last interest payment date
on which interest was paid on the
Old Notes surrendered in exchange
therefor or (ii) if the Old Notes
are surrendered for exchange on a
date subsequent to the record date
for an interest payment date to
occur on or after the date of such
exchange and as to which interest
will be paid, the date of such
interest payment or (B) if no
interest has been paid on the Old
Notes, from the Issue Date (as
defined herein) of such Old Notes.
Interest on the New Notes is
payable on April 15 and October 15
of each year.
Conditions to the
Exchange Offer................The Exchange Offer is not conditioned
upon any minimum principal amount of Old
Notes being tendered for exchange.
However, the Exchange Offer is
subject to certain customary
conditions, which may be waived by
DMC or DMFC. See "The Exchange
Offer--Conditions." Except for the
requirements of applicable federal
and state securities laws, there
are no federal or state regulatory
requirements to be complied with or
obtained by DMC or DMFC in
connection with the Exchange Offer.
11
<PAGE>
Procedures for Tendering
Old Notes.....................Each holder of Old Notes wishing to accept
the Exchange Offer must complete, sign
and date the Letter of Transmittal,
or a facsimile thereof, in
accordance with the instructions
contained herein and therein, and
mail or otherwise deliver such
Letter of Transmittal, or such
facsimile, together with the Old
Notes to be exchanged and any other
required documentation to the
Exchange Agent (as defined herein)
at the address set forth herein or
effect a tender of Old Notes
pursuant to the procedures for
book-entry transfer as provided for
herein. See "The Exchange
Offer--Procedures for Tendering"
and "--Book Entry Transfer."
Guaranteed Delivery
Procedures....................Holders of Old Notes who wish to tender
their Old Notes and whose Old Notes are not
immediately available or who cannot
deliver their Old Notes and a
properly completed Letter of
Transmittal or any other documents
required by the Letter of
Transmittal to the Exchange Agent
prior to the Expiration Date may
tender their Old Notes according to
the guaranteed delivery procedures
set forth in "The Exchange
Offer--Guaranteed Delivery
Procedures."
Withdrawal Rights............ Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time,
on the Expiration Date. To withdraw
a tender of Old Notes, a written or
facsimile transmission notice of
withdrawal must be received by the
Exchange Agent at its address set
forth herein under "The Exchange
Offer--Exchange Agent" prior to
5:00 p.m., New York City time, on
the Expiration Date.
Acceptance of Old Notes
and Delivery of
New Notes.................... Subject to certain conditions, any and
all Old Notes that are properly tendered
in the Exchange Offer prior to 5:00
p.m., New York City time, on the
Expiration Date will be accepted
for exchange. The New Notes issued
pursuant to the Exchange Offer will
be delivered promptly following the
Expiration Date. See "The Exchange
Offer--Terms of the Exchange
Offer."
Certain Tax Considerations... The exchange of New Notes for Old Notes
should not be a sale or exchange or
otherwise a taxable event for
Federal income tax purposes. See
"Certain U.S. Federal Income Tax
Considerations."
Exchange Agent............... Bankers Trust Company is serving as exchange
agent (the "Exchange Agent") in connection
with the Exchange Offer.
Fees and Expenses............ All expenses incident to consummation
of the Exchange Offer and
compliance with the Registration
Rights Agreement will be borne by
DMC and DMFC. See "The Exchange
Offer--Fees and Expenses."
Use of Proceeds.............. There will be no cash proceeds payable
to DMC or DMFC from the issuance of
the New Notes pursuant to the
Exchange Offer. See "Use of
Proceeds."
12
<PAGE>
Summary of Terms of New Notes
The Exchange Offer relates to the exchange of up to
$150,000,000 aggregate principal amount of Old Notes for up to an
equal aggregate principal amount of New Notes. The New Notes will
be entitled to the benefits of the same Indenture that governs
the Old Notes and that will govern the New Notes. The form and
terms of the New Notes are the same in all material respects as
the form and terms of the Old Notes, except that interest rate
step-up provisions will be inoperative and that the New Notes
have been registered under the Securities Act and therefore will
not bear legends restricting the transfer thereof. See
"Description of the New Notes."
Maturity Date............. April 15, 2007.
Interest Rate and
Payment Date ............. The New Notes will bear interest at a
rate of 12 1/4% per annum. Interest will
be payable semi-annually on each April
15 and October 15.
Optional Redemption....... The New Notes will be redeemable, in whole
or in part, at the option of DMC on
or after April 15, 2002 at the
redemption prices set forth herein,
plus accrued and unpaid interest to
the date of redemption. In
addition, prior to April 15, 2000,
DMC, at its option, may redeem up
to 35% of the aggregate principal
amount of the New Notes originally
issued with the net cash proceeds
of one or more Public Equity
Offerings (as defined herein) at
the redemption price equal to
112.625% of the principal amount
thereof, plus accrued and unpaid
interest to the date of redemption;
provided that at least 65% of the
aggregate principal amount of the
New Notes originally issued remains
outstanding immediately after any
such redemption. See "Description
of the New Notes--Redemption."
Change of Control......... Upon a Change of Control (as defined
herein), (i) DMC will have the option,
at any time on or prior to April 15,
2002, to redeem the New Notes, in
whole but not in part, at a
redemption price equal to 100% of
the principal amount thereof, plus
the Applicable Premium (as defined
herein), together with accrued and
unpaid interest, if any, to the
date of redemption, and (ii) if DMC
does not so redeem the New Notes or
if such Change of Control occurs
after April 15, 2002, each holder
of the New Notes will have the
right to require DMC to repurchase
such holder's New Notes at a price
equal to 101% of the principal
amount thereof plus accrued and
unpaid interest to the date of
repurchase. See "Description of the
New Notes--Certain
Covenants--Purchase of Notes Upon a
Change of Control Triggering
Event."
Ranking................... The New Notes will be general
unsecured obligations of DMC and
will be subordinated in right of
payment to all existing and future
Senior Debt (as defined herein) of
DMC. The New Notes will rank pari
passu with any present and future
senior subordinated indebtedness of
DMC and will rank senior to all
other subordinated indebtedness of
DMC. See "Description of the New
Notes." As of March 31, 1997, on a
pro forma basis and after giving
effect to the Recapitalization, DMC
would have had approximately $511
million of Senior Debt outstanding
(exclusive of unused commitments of
$194 million).
13
<PAGE>
Covenants................. The Indenture under which the New Notes
will be issued will contain certain
covenants that limit the ability of
DMC and its subsidiaries to, among
other things, incur additional
indebtedness, pay dividends or make
certain other restricted payments,
consummate certain asset sales,
enter into certain transactions
with affiliates, incur indebtedness
that is subordinate in right of
payment to any Senior Debt and
senior in right of payment to the
New 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 the assets of
DMC. See "Description of the New
Notes--Certain Covenants."
Use of Proceeds
There will be no cash proceeds payable to DMC or DMFC from
the issuance of the New Notes pursuant to the Exchange Offer. The
proceeds from the sale of the Old Notes were used for the
retirement of debt, to consummate the other components of the
Recapitalization and to pay related fees and expenses. See "Use
of Proceeds" and "The Recapitalization."
Risk Factors
See "Risk Factors" for a discussion of certain factors that
should be considered in evaluating an investment in the Notes.
14
<PAGE>
Summary Historical Financial Data
The following table presents summary historical
consolidated financial data of the Company. The historical
unaudited financial data presented below as of March 31, 1996 and
1997 and for the nine months then ended was derived from interim
consolidated financial statements of the Company as of such dates
which, in the opinion of management, 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 the Company's audited financial statements for
the fiscal year ended June 30, 1996. Operating results for the
nine months ended March 31, 1997 are not necessarily indicative
of results to be expected for the full fiscal year. The summary
historical consolidated financial data presented below as of June
30, 1992, 1993, 1994, 1995 and 1996 and for the twelve months
then ended were derived from the June 30, 1996 and prior fiscal
years' audited consolidated financial statements of the Company
and should be read in conjunction with, and are qualified by
reference to, the information set forth under "Selected
Consolidated Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements of the Company and the
related notes thereto, in each case included elsewhere in this
Prospectus.
Nine Months
Ended
March 31,
Fiscal Year Ended June 30, (unaudited)
1992 1993 1994
(Dollars in millions, except per share amounts)
Statement of Operations
Data:
Net sales........... $1,431 $1,555 $1,499
Cost of sales....... 1,180 1,326 1,275
------ ----- -----
Gross profit........ 251 229 224
Selling, advertising,
administrative
and general expenses 173 172 157
Special charges(a).. 15 140 --
---- ---- ----
Operating income(loss) 63 (83) 67
Other (income) expense (7) 4 8
Loss (gain) on sale of
assets(b)........... -- (13) (13)
Interest expense.... 74 68 61
--- --- ---
Income (loss) before
income taxes, minority
interest, extraordinary
item and cumulative
effect of accounting
change(c)(d)........ (4) (142) 11
Provision for
income taxes........ 10 10 3
Minority interest in
earnings of
subsidiary.......... 9 8 5
--- --- ---
Income (loss)
before extraordinary
item and cumulative
effect of accounting
change(c)(d)........ (23) (160) 3
Extraordinary loss(c) 35 -- --
Cumulative effect of
accounting change(d) -- 28 --
--- --- ---
Net income (loss)... $(58) $(188) $3
=== ==== ===
Income (loss) per
common share:
Income (loss) before
extraordinary
item and cumulative
effect of
accounting change
per common
share(e)......... $(159.99) $(504.36) $(143.08)
Extraordinary loss.. (82.65) -- --
Cumulative effect
of accounting
change............ -- (67.34) --
---- ------ ----
Net income (loss)
per common
share............. $(242.64) $(571.70) $(143.08)
======== ======= =========
1995 1996 1996 1997
(Dollars in millions, except per share amounts)
Statement of Operations
Data:
Net sales........... $1,526 $1,304 $1,018 $934
Cost of sales....... 1,289 1,084 858 733
----- ----- ---- ---
Gross profit........ 237 220 160 201
Selling, advertising,
administrative
and general expenses 157 138 116 132
Special charges(a).. -- -- -- --
---- ---- ---- ---
Operating income(loss) 80 82 44 69
Other (income) expense (11) 3 1 --
Loss (gain) on sale of
assets(b)........... -- (107) (107) 5
Interest expense.... 76 67 54 37
--- --- --- ---
Income (loss) before
income taxes, minority
interest, extraordinary
item and cumulative
effect of accounting
change(c)(d)........ 15 119 96 27
Provision for
income taxes........ 2 11 13 2
Minority interest in
earnings of
subsidiary.......... 1 3 3 --
--- --- --- ---
Income (loss)
before extraordinary
item and cumulative
effect of accounting
change(c)(d)........ 12 105 80 25
Extraordinary loss(c) 7 10 9 4
Cumulative effect of
accounting change(d) -- 7 3 --
--- --- --- ---
Net income (loss)... $5 $88 $68 $21
=== === === ===
Income (loss) per
common share:
Income (loss) before
extraordinary
item and cumulative
effect of
accounting change
per common
share(e)......... $(145.35) $559.40 47.75 $(117.36)
Extraordinary loss.. (18.34) (26.39) (22.17) (9.77)
Cumulative effect
of accounting
change............ -- (18.14) (7.60) --
------- ----- ---- -----
Net income (loss)
per common
share............. $(163.69) $14.87 $17.98 $(127.13)
========== ======= ======= =========
21
<PAGE>
Nine Months
Ended
March 31,
Fiscal Year Ended June 30, (unaudited)
1992 1993 1994 1995 1996 1996 1997
(Dollars in millions)
Other Data:
EBITDA(f)........... $79 $ 62 $63 $76 $92 $51 $87
Depreciation and
amortization (g).... 55 59 35 35 26 19 18
Capital expenditures 42 34 36 24 16 8 12
Selected Ratios:
Ratio of earnings
to fixed charges(h)
.................... -- -- 1.2x 1.2x 2.6x 2.6x 1.6x
Deficiency of earnings to cover
fixed charges(h).. $4 $142 -- -- -- -- --
At March 31,
(unaudited)
At June 30,
1992 1993 1994 1995 1996 1996 1997
(Dollars in millions)
Balance Sheet Data:
Working capital.... $135 $ 92 $88 $99 $207 $186 $184
Total assets....... 1,215 1,066 936 960 736 763 739
Total debt, including
current maturities.. 653 624 569 576 373 396 310
Redeemable preferred
stock............... 216 216 215 215 213 213 213
Redeemable common
stock............... 2 2 2 2 2 2 2
Stockholders' equity
(deficit)........... (195) (385) (384) (393) (304) (324) (257)
- ----------------------
(a) In March 1992, the Company discontinued its Vegetable
Classics line resulting in a $15 million charge to
operations. In June 1993, the Company recorded special
charges of $140 million, which included $115 million for
permanent impairment of acquisition-related intangible
assets, including goodwill, and $25 million for facility
consolidations.
(b) The Company sold its equity investment in Del Monte Europe
in the fiscal quarter ended March 31, 1993 and recognized
a $13 million gain. The Company sold its can manufacturing
operations in the fiscal quarter ended December 31, 1993 and
recognized a $13 million gain. In November 1995, the Company sold
its pudding business for $89 million, net of $4 million of
related transaction fees. The sale resulted in a gain of $71
million. In March 1996, the Company sold its 50.1% ownership
interest in Del Monte Pacific Resources, Ltd. ("Del Monte
Philippines") for $100 million, net of $2 million of related
transaction fees. The sale resulted in a gain of $52 million, of
which $16 million was deferred and $36 million was recognized in
fiscal 1996. The purchase price included a premium paid to the
Company as consideration for an eight-year supply agreement. The
gain associated with the value of the premium was deferred and
will be amortized over the term of the agreement. In the fiscal
quarter ended December 1996, the Company sold its Mexican
subsidiary, Productos Del Monte, S.A. de C.V. and its Central
American and Caribbean subsidiaries (collectively, "Del Monte
Latin America"). The combined sales price of $50 million, reduced
by $1 million of related transaction expenses, resulted in a loss
of $5 million. The sales price for Del Monte Latin America is
subject to adjustment based on the final balance sheet. The
amount of any adjustment to the purchase price is currently in
dispute but is not expected to be material. See "Business--Legal
Proceedings."
(c) In August 1991, the Company refinanced its then-outstanding
term loan and senior subordinated increasing rate note
debt. In conjunction with the debt retirement, capitalized
debt issue costs of $35 million were written off and
accounted for as an extraordinary loss. In June 1995, the
Company refinanced its then-outstanding revolving credit
facility, term loan and senior secured floating rate notes.
In conjunction
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with this debt retirement, capitalized debt issue costs of
$7 million were written off and accounted for as an
extraordinary loss. In December 1995 and April 1996, the
Company prepaid part of its term loan and senior secured
notes. In conjunction with that early debt retirement, the
Company recorded an extraordinary loss of $10 million for
the early retirement of debt. The extraordinary loss
consisted of a $5 million prepayment premium and a $5
million write-off of capitalized debt issue costs related
to the early retirement of debt. In September 1996, the
Company repurchased its outstanding Subordinated Guaranteed
PIK Notes due 2002 (the "PIK Notes") in an aggregate
principal amount of $102 million and concurrently exchanged
essentially all remaining PIK Notes for new notes in an
aggregate principal amount of $156 million (the "1996 PIK
Notes"). In conjunction with this repurchase and exchange,
capitalized debt issue costs of $4 million, net of a
discount on the PIK Notes, were written off and accounted
for as an extraordinary loss.
(d) Effective July 1, 1992, the Company adopted SFAS No. 106,
"Employers' Accounting for Post-Retirement Benefits Other
Than Pensions." The Company elected to recognize this
change in accounting on the immediate recognition basis.
The cumulative effect of adopting SFAS No. 106 resulted in
a charge to fiscal 1993 net earnings of $28 million.
Effective July 1, 1995, the Company 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 million, of which $3 million had
been recognized through March 31, 1996.
(e) Net income (loss) attributed to common shares is computed
as net income (loss) reduced by the cash and in-kind
dividends for the period on redeemable preferred stock.
(f) EBITDA represents income (loss) before provision for income
taxes, minority interest, extraordinary item, and cumulative
effect of accounting change, plus interest expense and
special charges, depreciation and amortization expense and other
one-time and non-cash charges, less gains (losses) on sales of
assets and the results of the Divested Operations (as defined).
EBITDA is not presented as an alternative measure of operating
income or cash flow from operations (both as determined in
accordance with generally accepted accounting principles) but
rather to provide additional information related to the ability
of the Company to service debt. In fiscal 1992, other one-time
and non-cash charges included $9 million related to insurance
settlement proceeds and $18 million of amortization associated
with intangible assets subsequently written off. In fiscal 1993,
non-cash charges of $19 million represented amortization of
intangible assets subsequently written off. In fiscal 1994, other
one-time and non-cash charges included $1 million of fees related
to a terminated transaction, $1 million related to write-offs of
labels due to new labeling laws and $6 million of benefit plan
charges. For fiscal 1995, EBITDA excludes $26 million received in
connection with a terminated transaction, $4 million paid by the
Company to terminate its alliance with Pacific Coast Producers
("PCP") and $7 million related to the termination of a management
equity plan. For fiscal 1996 and for the nine months ended March
31, 1996, other one-time charges included $3 million for
relocation costs and $6 million of costs associated with a
significant headcount reduction.
(g) Depreciation and amortization exclude amortization of $5
million, $8 million, $5 million, $5 million and $5 million
of deferred debt issue costs for fiscal 1992, 1993, 1994,
1995 and 1996, respectively. Depreciation and amortization
exclude amortization of $4 million of deferred debt issue
costs in both of the nine-month periods ended March 31,
1996 and 1997. Depreciation and amortization for the
nine-month period ended March 31, 1996 and for the year
ended June 30, 1996 excludes $5 million in depreciation with
respect to Del Monte Philippines, one of the Divested Operations.
(h) 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,
minority interest and provision 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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<PAGE>
RISK FACTORS
Prospective purchasers of the New Notes should carefully
review the information contained and incorporated by reference in
this Prospectus and should particularly consider the following
matters:
Risk Factors Relating to the Company
Substantial Leverage
DMC is highly leveraged. In connection with the
Recapitalization, DMC incurred a significant amount of additional
indebtedness. As of March 31, 1997, on a pro forma basis and
after giving effect to the Recapitalization, DMC would have had
approximately $658 million of indebtedness and its stockholders'
equity (deficit) would have been $(418) million excluding the
Preferred Equity Contribution attributable to Preferred Stock. In
addition, subject to the restrictions in the Bank Financing and
the Indenture, DMC may incur additional senior or other
indebtedness from time to time to finance acquisitions or capital
expenditures or for other general corporate purposes. As a result
of seasonal working capital requirements, DMC's borrowings under
the Revolving Credit Facility will fluctuate significantly during
the year, generally peaking in September and October. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
The degree to which DMC is leveraged could have important
consequences to the holders of the New Notes, including, but not
limited to, the following: (i) DMC's ability to obtain additional
financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes or other
purposes may be impaired; (ii) a significant portion of DMC's
cash flow from operations must be dedicated to the payment of
principal and interest on its indebtedness, thereby reducing the
funds available to DMC for its operations; (iii) significant
amounts of DMC's borrowings, including all borrowings under the
Bank Financing, will be at variable rates of interest, which
could result in higher interest expense in the event of increases
in interest rates; (iv) the Indenture and the Bank Financing
contain financial and restrictive covenants, the failure to
comply with which may result in an event of default which, if not
cured or waived, could have a material adverse effect on DMC; (v)
the indebtedness outstanding under the Bank Financing is secured
and matures prior to the maturity of the New Notes; (vi) DMC may
be substantially more leveraged than certain of its competitors,
which may place DMC at a competitive disadvantage; and (vii)
DMC's substantial degree of leverage may limit its flexibility to
adjust to changing market conditions, reduce its ability to
withstand competitive pressures and make it more vulnerable to a
downturn in general economic conditions or its business. See "The
Bank Financing" and "Description of the New Notes."
Ability to Service Debt
DMC's ability to make scheduled payments or to refinance
its debt obligations will depend upon its future financial and
operating performance, which will be affected by prevailing
economic conditions and financial, business and other factors,
certain of which are beyond its control. There can be no
assurance that DMC's operating results, cash flow and capital
resources will be sufficient for payment of its indebtedness in
the future. In the absence of such operating results and
resources, DMC could face substantial liquidity problems and
might be required to dispose of material assets or operations to
meet its debt service and other obligations, and there can be no
assurance as to the timing of such sales or the proceeds that DMC
could realize therefrom. In addition, because DMC's obligations
under the Bank Financing bear interest at floating rates, an
increase in interest rates could adversely affect, among other
things, DMC's ability to meet its debt service obligations. DMC
will be required to make scheduled principal payments under the
Bank Financing commencing in the third quarter of fiscal 1998. If
DMC is unable to service its indebtedness, it will be forced to
adopt an alternative strategy that may include actions such as
reducing or delaying planned expansion and capital expenditures,
selling assets, restructuring or refinancing its indebtedness or
seeking additional equity capital. There can be no assurance that
any of these strategies could be effected on satisfactory terms,
if at all.
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<PAGE>
Pricing Strategy
In fiscal 1996, the Company began the implementation of a
significant change in its pricing and promotional strategies.
These new strategies were designed to allow the Company to
achieve generally higher list prices for many of its products and
increased funding for consumer promotion activities (such as
couponing and advertising). The success of these new approaches
will depend in large part on the actions of the Company's branded
and private label competitors. See "Business--Business Strategy."
In implementing the Company's new pricing strategy, the
Company increased prices for many of its fruit and vegetable
products. Certain key competitors initially elected not to
increase their prices on competing products. As a result, the
difference between the Company's prices and those of its
competitors became significantly higher than it had been in
recent years. The Company's sales volume in the affected product
categories dropped significantly. Market shares in these
categories also fell. While key competitors subsequently
increased their prices and the Company's market share stabilized
for fruits and vegetables, there can be no assurance that
competitors will maintain their prices or will increase their
prices in response to, or in anticipation of, future Del Monte
price increases. Additionally, even if recent and future price
increases are maintained across the industry, there can be no
assurance that the Company's sales volume or market shares would
not be adversely affected by negative consumer reaction to higher
prices, nor can there be any assurance that the Company's sales
volumes or market shares will not be adversely impacted as a
result of its pricing actions. In addition, there can be no
assurance that consumer demand will remain at existing levels
given higher industry pricing as compared to prior years, or that
supply factors, such as crop supply levels and processing
capacity, will not change so as to create an imbalance of supply
and demand in future periods. If the Company is unable to
maintain its current pricing levels, there can be no assurance
that it will be able to generate gross profit consistent with
historical levels, or that it will be able to deliver positive
earnings over future periods. Any significant reduction in
profitability could have a material adverse impact on the Company
and its ability to meet its debt service requirements.
Risks Relating to Implementation of Business Strategy
The Company currently intends to pursue a business strategy
of increasing cash flow and revenue through a combination of cost
savings, consumer-focused promotions, marketing efforts and
expansion of certain markets and lines of business. No assurance
can be given that the Company will be successful in implementing
this strategy or that if implemented, such strategy will generate
the intended results. See "Business--Business Strategy." While
acquisitions are not a part of the Company's current core
business strategy, that strategy may change or the Company may be
presented with acquisition opportunities in the future that it
will decide to pursue. There can be no assurance that the Company
will pursue any such acquisitions or that, if undertaken, they
will be successful.
Adverse Weather Conditions
Severe weather conditions, such as floods, droughts or
frosts, may affect the supply of one or more of the Company's
products. Competing manufacturers of canned vegetable, fruit or
tomato products may be affected differently, however, depending
on the location of their principal sources of supply. If the
supply of any of the Company's products is adversely affected by
adverse weather conditions, there can be no assurance that the
Company will be able to obtain sufficient supplies from other
sources.
Competition
While many companies compete in the domestic canned
vegetable, fruit and cut tomato product categories, market share
is concentrated among a small number of well-established
companies that operate on both a national and a regional basis
with single or multiple branded product lines. The Company faces
substantial competition throughout its product lines from these
companies. Certain of these competitors have greater financial
resources and flexibility than the Company. Several product lines
are sensitive to competition from regional brands and many Del
Monte product lines compete with private label products and fresh
alternatives. While no single private label competitor has
greater market share than the Company in its principal product
categories, in calendar 1996, as a
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<PAGE>
group private label competition represented 42.2%, 43.7% and
30.3% of the markets for canned vegetables, fruit and cut tomato
products, respectively. See "Business--Competition."
Governmental Regulation; Environmental Compliance
As a result of its agricultural, food processing and
canning activities, the Company is subject to numerous foreign
and domestic environmental laws and regulations. Many of these
laws and regulations, both foreign and domestic, are becoming
increasingly stringent and compliance with them is becoming
increasingly expensive. See "Business--Environmental Compliance."
The Company has been named as a potentially responsible party
("PRP") and may be liable for environmental investigation and
remediation costs at certain designated "Superfund Sites" under
the federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA") or under similar state laws.
There can be no assurance that the Company's defenses will
prevail in any litigation with respect to the foregoing, that the
Company's financial condition will not be adversely affected by
the imposition of liability for Superfund or contaminated sites
for which the Company has been named as a PRP or that the Company
will not be identified as a PRP at additional sites in the future
or that additional remediation requirements will not be imposed
on properties currently owned or operated by the Company. In
addition, there can be no assurance that other sites to which the
Company has sent waste will not be identified for investigation
or proposed for listing under CERCLA or similar state laws. In
addition, the U.S. Environmental Protection Agency (the "EPA")
has been involved in a number of actions relating to the use of
pesticides in the food industry, and there can be no assurance
that the effect of such actions and any future actions on the
availability of pesticides would not have a material adverse
impact on the Company's financial position or results of
operations. See "Business--Governmental Regulation" and
"Environmental Compliance."
Control of the Company
TPG and its affiliates, through their ownership of the
voting stock or through other contractual arrangements, control
the Company and have the power to elect all directors of the
Company, approve all amendments to the Company's charter
documents and effect fundamental corporate transactions such as
mergers and asset sales. See "Capital Stock of DMC and DMFC."
Risk Factors Relating to the Notes and the Old Note Offering
Consequences of Failure to Exchange
Holders of Old Notes who do not exchange their Old Notes
for New Notes pursuant to the Exchange Offer will continue to be
subject to the restrictions on transfer of such Old Notes as set
forth in the legend thereon as a consequence of the issuance of
the Old Notes pursuant to exemptions from, or in transactions not
subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes
may not be offered or sold, unless registered under the
Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not currently anticipate
that it will register the Old Notes under the Securities Act. To
the extent that Old Notes are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered
but unaccepted Old Notes could be adversely affected.
Absence of a Public Market for the New Notes
Prior to the Exchange Offer, there has been no public
market for the New Notes. If such a market were to develop, the
New Notes could trade at prices that may be higher or lower than
their principal amount. Neither DMC nor DMFC intends to apply for
listing of the New Notes on any securities exchange or for
quotation of the New Notes on The Nasdaq Stock Market's National
Market or otherwise. DMC and DMFC have been advised by the
Initial Purchasers that they currently intend to make a market in
the New Notes, as permitted by applicable laws and regulations,
after consummation of the Exchange Offer. The Initial Purchasers
are not obligated, however, to make a market in the New Notes,
and any such market making activity may be discontinued at any
time without notice at the sole discretion of the Initial
Purchasers. There can be no assurance as to the liquidity of the
public market for the
20
<PAGE>
New Notes or that any active public market for the New Notes will
develop or continue. If an active public market does not develop
or continue, the market price and liquidity of the New Notes may
be adversely affected.
Subordination of Notes; Asset Encumbrance
The New Notes will be subordinated in right of payment to
all existing and future Senior Debt of DMC, including the Bank
Financing. In the event of bankruptcy, liquidation or
reorganization of DMC, the assets of DMC will be available to pay
obligations on the New Notes only after all Senior Debt has been
paid in full, and there may not be sufficient assets remaining to
pay amounts due on any or all of the New Notes then outstanding.
In addition, under certain circumstances, no payments may be made
with respect to principal of or interest on the New Notes if a
default exists with respect to Senior Debt. In addition,
indebtedness outstanding under the Bank Financing is secured by
substantially all of the assets of DMC. As of March 31, 1997, on
a pro forma basis and after giving effect to the
Recapitalization, DMC would have had approximately $511 million
of Senior Debt (exclusive of unused commitments of $194 million).
Additional Senior Debt may be incurred by DMC from time to time
subject to certain restrictions contained in the Bank Financing
and the Indenture. See "--Restrictive Debt Covenants," "The Bank
Financing" and "Description of the New Notes."
Certain Fraudulent Conveyance Considerations
If a court, in a lawsuit brought by an unpaid creditor or
representative of creditors, such as a trustee in bankruptcy or
DMC as a debtor in possession, were to find that, either (a) DMC
incurred indebtedness with the intent of hindering, delaying or
defrauding creditors or (b) DMC received less than a reasonably
equivalent value or fair consideration for incurring
indebtedness, and DMC (i) was insolvent or rendered insolvent by
reason of such transactions, (ii) was engaged, or about to
engage, in a business or transaction for which its assets
constituted unreasonably small capital or (iii) intended to
incur, or believed that it would incur, debts beyond its ability
to pay as they matured (as the foregoing terms are defined in or
interpreted under the applicable fraudulent conveyance statutes),
such court could, subject to applicable statutes of limitation,
subordinate the Old Notes to presently existing and future
indebtedness of DMC or take other action detrimental to the
holders of the Old Notes, including, in certain circumstances,
invalidating the Old Notes.
The measure of insolvency for purposes of the foregoing
considerations will vary depending upon the federal or local law
that is being applied in any such proceeding. Generally, however,
DMC would be considered insolvent if, at the time DMC incurred or
incurs the indebtedness constituting the Old Notes, either (i)
the fair market value (or fair saleable value) of the assets of
DMC was or is less than the amount required to pay the probable
liability on their total existing liabilities (including
contingent liabilities) as they become absolute and matured or
(ii) DMC was or is incurring obligations beyond its ability to
pay as such obligations mature.
DMC believes that the indebtedness evidenced by the Old
Notes was incurred for proper purposes and in good faith, that it
received reasonably equivalent value or fair consideration for
the Old Notes and that at the time of the incurrence of such
indebtedness, DMC was solvent, had sufficient capital to carry on
its business and did not intend to incur or believe that it would
incur debts beyond its ability to pay as they mature or become
due. In reaching the foregoing conclusions, DMC has relied upon
its analyses of internal cash flow projections and estimated
value of assets and liabilities of DMC. No assurance can be
given, however, that a court would concur with such beliefs.
A holder of Old Notes cannot eliminate or reduce the
exposure to the fraudulent conveyance risks set forth above by
participating in the Exchange Offer. If a holder of Old Notes
participates in the Exchange Offer and receives New Notes in
exchange for Old Notes, a court could take action detrimental to
such holder of New Notes, based on the fraudulent conveyance
considerations set forth above, to the same extent that a court
could take action detrimental to any holder of Old Notes.
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Restrictive Debt Covenants
The Indenture and the Bank Financing contain a number of
significant covenants that, among other things, restrict the
ability of DMC and its subsidiaries to dispose of assets, incur
additional indebtedness, incur guarantee obligations, repay other
indebtedness or amend other debt instruments, pay dividends,
create liens on assets, enter into leases, make investments,
loans or advances, make acquisitions, engage in mergers or
consolidations, make capital expenditures, engage in certain
transactions with subsidiaries and affiliates and otherwise
restrict corporate activities. In addition, under the Bank
Financing, DMC is required to comply with specified financial
ratios and tests, including minimum EBITDA, minimum net worth,
minimum fixed charge coverage and maximum leverage ratios. See
"The Bank Financing" and "Description of the New Notes."
DMC's ability to comply with such agreements may be
affected by events beyond its control, including prevailing
economic, financial and industry conditions. The breach of any of
such covenants or restrictions could result in a default under
the Bank Financing and/or the Indenture, which would permit the
senior lenders, or the holders of the New Notes, or both, as the
case may be, to declare all amounts borrowed thereunder to be due
and payable, together with accrued and unpaid interest, and the
commitments of the senior lenders to make further extensions of
credit under the Bank Financing could be terminated. If DMC were
unable to repay its indebtedness to its senior lenders, such
lenders could proceed against the collateral securing such
indebtedness as described under "The Bank Financing." See
"--Subordination of Notes; Asset Encumbrance."
Limitation on Change of Control
Upon a Change of Control, (i) DMC will have the option, at
any time on or prior to April 15, 2002, to redeem the New 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 through the date of
redemption, and (ii) if DMC does not so redeem the New Notes or
if such Change of Control occurs after April 15, 2002, each
holder of the New Notes will have the right to require DMC to
repurchase such holder's New Notes at a price equal to 101% of
the principal amount thereof to the date of repurchase plus
accrued and unpaid interest, if any. The Change of Control
purchase feature of the New Notes may in certain circumstances
discourage or make more difficult a sale or takeover of DMC. In
particular, a Change of Control may cause an acceleration of, or
require an offer to repurchase under, the Bank Financing and
other indebtedness, if any, of DMC and its subsidiaries, in which
case such indebtedness would be required to be repaid in full
before repurchase of the New Notes. See "The Bank Financing" and
"Description of the New Notes--Change of Control." The inability
to repay such indebtedness, if accelerated, and to purchase all
of the tendered New Notes would constitute an event of default
under the Indenture. There can be no assurance that DMC will have
funds available to repurchase the New Notes upon the occurrence
of a Change of Control.
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THE RECAPITALIZATION
Pursuant to the Merger Agreement, entered into among TPG,
Shield and DMFC, Shield merged with and into DMFC, with DMFC
being the surviving corporation. By virtue of the Merger, shares
of DMFC's preferred stock having an implied value of
approximately $14 million held by certain of DMFC's stockholders
were cancelled and were converted into the right to receive
common stock of the surviving corporation. All other shares of
DMFC stock were cancelled and were converted into the right to
receive cash consideration, all as set forth in the Merger
Agreement. In connection with the Merger, DMC repaid
substantially all of its funded debt obligations existing
immediately before the closing of the Merger. At March 31, 1997,
the aggregate principal amount of DMC's funded indebtedness was
$310 million.
Cash funding requirements for the Recapitalization,
including the Initial Purchasers' discount in connection with the
issuance and sale of the Notes and other fees and expenses,
totalled $809 million, and were satisfied through the following:
(i) the Common Equity Contribution of $126 million by TPG and
other investors; (ii) the Preferred Equity Contribution by TPG
and other investors of $35 million; (iii) $380 million of
borrowings under the Term Loan Facility; (iv) $119 million of
borrowings under the Revolving Credit Facility; (v) $147 million
from the net proceeds of the Old Note Offering; and (vi) $2
million of proceeds from the sale of a surplus property. In the
Merger, the common stock and the Preferred Stock of Shield were
converted into new shares of common stock and preferred stock,
respectively, of DMFC.
The Recapitalization was accounted for as a
recapitalization transaction for accounting purposes. All of the
components of the Recapitalization were effected on the same day.
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USE OF PROCEEDS
There will be no cash proceeds payable to the Company from
the issuance of the New Notes pursuant to the Exchange Offer. In
consideration for issuing the New Notes as contemplated in this
Prospectus, the Company will receive in exchange Old Notes in
like principal amount, the terms of which are identical in all
material respects to the New Notes. The Old Notes surrendered in
exchange for the New Notes will be retired and cancelled and
cannot be reissued. Accordingly, the issuance of the New Notes
will not result in any increase in the indebtedness of the
Company.
TEXAS PACIFIC GROUP
Texas Pacific Group was founded by David Bonderman, James
G. Coulter and William S. Price in 1993 to pursue public and
private investment opportunities through a variety of methods,
including leveraged buyouts, joint ventures, restructurings,
bankruptcies and strategic public securities investments. Texas
Pacific Group, through TPG and another investment fund, manages
over $3 billion in committed equity capital.
Prior to the formation of TPG, certain of its principals
oversaw the successful investment of more than $1 billion of
equity capital from 1982 to 1992 on behalf of Keystone, Inc.
(formerly the Robert M. Bass Group), including such transactions
as the acquisition of American Savings Bank, Wometco Cable,
National Reinsurance Corp. and Bell & Howell. In addition, TPG's
principals led the $9 billion reorganization of Continental
Airlines in 1993. TPG currently has eleven investments in its
portfolio, which, in addition to Del Monte Foods, includes
America West Airlines, Allied Waste Industries, Beringer Wine
Estates, Favorite Brands International, Denbury Resources, Ducati
Motor, Paradyne and Virgin Cinemas.
The acquisition of the Company was TPG's third major
investment in the food and beverage industry in the last two
years. In September 1995, TPG acquired the North American
marshmallow and confections business from Kraft, which is now
called Favorite Brands International. Since the acquisition,
Favorite Brands International has acquired five other businesses,
quintupling its revenues and making it the fourth largest candy
and confections company in the United States. Additionally, in
January 1996, TPG acquired Beringer Wine Estates from Nestle,
which includes Meridian Vineyards, Napa Ridge and Chateau
Souverain. Beringer subsequently acquired Chateau St. Jean and
Stags' Leap Winery, giving Beringer one of the nation's largest
portfolios of premium wineries.
The principal executive office of TPG is located at 201
Main Street, Suite 2420, Fort Worth, Texas 76102 and its
telephone number is (817) 871-4000.
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PRO FORMA CAPITALIZATION
The following table sets forth the unaudited capitalization
of the Company on a pro forma basis giving effect to the
Recapitalization as if it had occurred on March 31, 1997. This
table should be read in conjunction with the "Selected
Consolidated Financial Data" and "Unaudited Pro Forma Financial
Data" included elsewhere in this Prospectus. For a description of
the capital stock of DMFC, see "Capital Stock of DMC and DMFC."
Since the Recapitalization, DMFC does not have any material
indebtedness other than intercompany liabilities and guarantees
of the obligations of the Company under the Bank Financing and
the Notes.
Pro Forma
March 31, 1997
(Dollars in millions)
Total Debt:
Revolving Credit Facility(a)....................... $130
Term Loan Facility................................. 380
Old Notes.......................................... 147
Other.............................................. 1
---
Total indebtedness............................... 658
Preferred Stock(b).................................. 32
Stockholders' equity (deficit)(b)................... (418)
----
Total capitalization................................ $272
====
- ----------------------
(a) Reflects borrowings under the Revolving Credit Facility in
the amounts necessary to consummate the other components of
the Recapitalization as if the Recapitalization had
occurred on March 31, 1997. The total capacity under the
Revolving Credit Facility is $350 million. See "Unaudited
Pro Forma Financial Data" and "The Bank Financing."
(b) The Preferred Equity Contribution resulted in the issuance
of 35,000 shares of preferred stock and the receipt of
warrants to purchase shares of DMFC common stock
representing 2% of the outstanding shares of DMFC common
stock on a fully diluted basis. A value of $3 million was
placed on the warrants, and such amount is reflected in the
paid-in-capital within stockholders' equity. The remaining
$32 million is reflected as preferred stock.
25
<PAGE>
UNAUDITED PRO FORMA FINANCIAL DATA
The following Unaudited Pro Forma Consolidated Balance
Sheet as of March 31, 1997 was prepared as if the
Recapitalization had occurred on such date. The following
Unaudited Pro Forma Statements of Operations were prepared as if
the Recapitalization and the divestiture of the Divested
Operations had occurred as of the beginning of the fiscal period
presented. The Unaudited Pro Forma Consolidated Statements of
Operations do not purport to represent what the Company's results
of operations actually would have been if the Recapitalization
had occurred and the Divested Operations had been divested as of
the dates indicated or what such results will be for any future
periods.
The unaudited pro forma financial data are based on the
historical financial statements of the Company and the
assumptions and adjustments described in the accompanying notes.
The Company believes that such assumptions are reasonable. The
unaudited pro forma financial data should be read in conjunction
with the consolidated financial statements of the Company and the
accompanying notes thereto appearing elsewhere in this
Prospectus.
26
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1997
Recapitalization
Historical Adjustments Pro Forma
(Dollars in millions)
ASSETS
Current Assets:
Cash and cash equivalents ........ $ 6 $ 6
Restricted Cash .................. 2 (2)(a) --
Trade accounts receivable,
net of allowance.................. 84 84
Other receivables................. 3 3
Inventories....................... 381 381
Prepaid expenses and
other current assets.............. 4 4
-- -- ---
TOTAL CURRENT ASSETS 480 (2) 478
Property, plant and
equipment, net..................... 229 229
Other assets....................... 30 (c) 30
--- --- ---
TOTAL ASSETS $739 $(2) $737
==== === ====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and
accrued expenses.................. $238 $(1)(a) $237
Short-term borrowings............... 42 88 (a) 130
Current portion of long-term debt 16 (15)(a) 1
--- --- ---
TOTAL CURRENT LIABILITIES 296 72 368
Long-term debt...................... 252 275(a) 527
Other noncurrent liabilities........ 233 (5)(a),(b) 228
Redeemable common stock............. 2 (2)(b) --
Redeemable preferred stock.......... 213 (213)(b) --
Preferred Stock..................... 32 (b) 32
Stockholders' equity:
Common stock........................ --
Paid-in capital..................... 3 126 (b) 129
Retained earnings (deficit)........ (260) (287)(b) (547)
---- ---- ----
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) (257) (161) (418)
---- ---- ----
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY $739 $(2) $737
==== === ====
See accompanying notes.
27
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
The unaudited Pro Forma Consolidated Balance Sheet reflects
the Recapitalization as if it had occurred as of March 31, 1997.
(a) Reflects the issuance of the Old Notes and the Bank
Financing, as well as the repayment of the existing bank debt and
1996 PIK Notes:
(Dollars
in millions)
------------
Issuance of Old Notes..................... $147
Bank Financing............................ 510
Proceeds of asset sale.................... 2
Existing bank debt........................ (154)
1996 PIK Notes............................ (155)
Accrued short-term interest............... (1)
Accrued long-term interest................ (2)
---
$347
(b) Represents the following redeemable stock and equity
transactions, or transactions affecting retained earnings
(deficit) or noncurrent liabilities related to the
Recapitalization:
(Dollars
in millions)
------------
Equity purchase price..................... $(422)
Recapitalization expenses................. (45)
Accrued long-term compensation payments... (3)
Write-off of deferred financing fees...... (19)
Term loan make-whole and 1996 PIK
Note premium ........................... (19)
Preferred Equity Contribution-preferred
stock .................................. 32
Preferred Equity Contribution-warrants.... 3
Common Equity Contribution................ 126
----
$(347)
====
Recapitalization expenses include $20 million for
management incentive payments and $25 million in other
transaction fees and expenses.
The Preferred Equity Contribution resulted in the issuance
of 35,000 shares of preferred stock and the receipt of warrants
to purchase shares of DMFC common stock representing 2% of the
outstanding shares of DMFC common stock on a fully diluted basis.
A value of $3 million was placed on the warrants, and such amount
is reflected in the paid-in-capital within stockholders' equity.
The remaining $32 million is reflected as preferred stock.
(c) The write-off of deferred debt issue costs on existing bank
debt was offset by the capitalization of debt issue costs related
to the Recapitalization. Accordingly, no adjustment to "other
assets" is reflected under Recapitalization Adjustments.
28
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1996
Divested Recapital-
Operations ization
Adjust- Adjust-
Historical ments(a) ments(b) Pro Forma
---------- ---------- -------- ---------
(Dollars in millions, except per share amounts)
Net sales.................... $1,304 $(233) $1,071
Cost of sales................ 1,084 (195) 889
----- ----- ------
Gross profit.............. 220 (38) 182
Selling, advertising,
administrative and general
expenses................... 138 (17) 121
----- ----- ------
OPERATING INCOME......... 82 (21) 61
Other expense................ 3 (1) 2
Gain on sale of
divested assets............. (107) 107 --
Interest expense............. 67 (15)(c) $ 16(c) 68
----- ----- ----- ------
INCOME (LOSS) BEFORE INCOME
TAXES, MINORITY INTEREST,
EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE.......... 119 (112) (16) (9)
Provision for income taxes... 11 (11) --
Minority interest in
earnings of subsidiary..... 3 (3) --
----- ----- ----- ------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE.......... $105 $ (98) $ (16) $ (9)
===== ===== ===== ======
Net income (loss) per share.. $59.40 $(101.16)
====== =========
Weighted average number
of common shares
outstanding................ 391,806 140,000
======= =======
Other Data:
EBITDA(d):
Operating income........... $ 82 $ 61
Other expense.............. (3) (2)
Depreciation and
amortization(e).......... 26 24
One-time and non-cash
charges.................. 9 9
Other(g)................... 5 --
------ ------
$ 119 $ 92
====== ======
Ratio of earnings to
fixed charge.............. 2.6x --
Deficiency of earnings to
cover fixed charges(f).... -- $ 9
See accompanying notes.
29
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1996
Divested Recapital-
Operations ization
Adjust- Adjust-
Historical ments(a) ments(b) Pro Forma
---------- ----------- -------- ---------
(Dollars in millions, except per share amounts)
Net sales..................... $1,018 $(209) $809
Cost of sales................. 858 (175) 683
------ ----- ----
Gross profit............... 160 (34) 126
Selling, advertising,
administrative and general
expenses.................... 116 (14) 102
------ ----- ----
OPERATING INCOME.............. 44 (20) 24
Other expense................. 1 (1) --
Gain on sale of divested
assets...................... (107) 107 --
Interest expense.............. 54 (14)(c) $11(c) 51
------ ----- ----
INCOME (LOSS) BEFORE INCOME
TAXES, MINORITY INTEREST,
EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE........... 96 (112) (11) (27)
Provision for income taxes.... 13 (13) --
Minority interest in
earnings of subsidiary...... 3 (3) --
------ ----- ----
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE........... $ 80 $(96) $(11) $(27)
====== ===== ====
Net income (loss) per share... $47.75 $(227.18)
====== ========
Weighted average number
of common shares
outstanding................. 394,790 140,000
======= =======
Other Data:
EBITDA(d):
Operating income............ $ 44 $ 24
Other expense............... (1) -
Depreciation and
amortization(e)........... 19 18
One-time and non-cash
charges................... 9 9
Other (g)................... 5 -
------ ----
$ 76 $51
======= =======
Ratio of earnings to
fixed charges(f)............ 2.6x --
Deficiency of earnings
to cover fixed charges(f)... - $27
See accompanying notes.
30
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1997
Divested Recapital-
Operations ization
Adjust- Adjust-
Historical ments(a) ments(b) Pro Forma
---------- ----------- -------- ---------
(Dollars in millions, except per share amounts)
Net sales................... $934 $(43) $891
Cost of sales............... 733 (40) 693
------ ------ ------
Gross profit............. 201 (3) 198
Selling, advertising,
administrative and general
expenses.................. 132 (3) 129
------ ------ ------
OPERATING INCOME......... 69 -- 69
- --
Other expense............... -- -- --
Loss on sale of divested
assets.................... 5 (5) --
Interest expense............ 37 (1)(c) $15(c) 51
------ ------ ------ ------
INCOME (LOSS) BEFORE
INCOME TAXES, MINORITY
INTEREST, EXTRAORDINARY
ITEM AND CUMULATIVE
EFFECT OF ACCOUNTING
CHANGE.................... 27 6 (15) 18
Provision for income taxes.. 2 -- 2
------ ------ ------ ------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM
AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE......... $25 $ 6 $(15) $ 16
====== ====== ====== ======
Net income (loss) per
share.................... $(117.36) $101.39
====== ======
Weighted average number
of common shares
outstanding.............. 382,854 140,000
======= =======
Other Data:
EBITDA(d):
Operating income......... $ 69 $ 69
Depreciation and
amortization(e)........ 18 18
------- ------
$87 $ 87
======= =======
Ratio of earnings to
fixed charges(f)......... 1.6x 1.3x
See accompanying notes.
31
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The Pro Forma Consolidated Statements of Operations reflect
the adjustments for the Recapitalization and the Divested
Operations as if such events had occurred as of the beginning of
the fiscal period presented. Net proceeds from sales of assets of
certain Divested Operations are reflected as reductions of
indebtedness at the beginning of the fiscal period presented.
(a) Divested Operations adjustments include the results of
operations and gain or loss from sale of the Divested
Operations.
(b) Excludes one-time charges related to the Recapitalization
of $20 million for management incentive payments and $25
million in other transaction fees and expenses. In
addition, the write-off of $19 million of deferred debt
issue costs related to the existing debt and the term loan
make-whole and 1996 PIK Note premium of $19 million are
classified as extraordinary items and, accordingly, are
excluded.
(c) Represents interest adjustments due to the absence of
direct interest expense related to the Divested Operations,
pro forma interest adjustments related to the
Recapitalization and application of asset sale proceeds.
(d) EBITDA represents income (loss) before provision for
income taxes, minority interest, extraordinary item and
cumulative effect of accounting change, plus interest expense and
special charges, depreciation and amortization expense and other
one-time and non-cash charges, less gains (losses) on sales of
assets and the results of the Divested Operations. Pro forma
EBITDA represents income (loss) before provision for income
taxes, extraordinary item and cumulative effect of accounting
change, plus interest expense and special charges, depreciation
and amortization expense and other one-time and non-cash charges,
less gains (losses) on sales of assets, the results of the
Divested Operations and any charges resulting from the
Recapitalization. EBITDA is not presented as an alternative
measure of operating income or cash flow from operations (both as
determined in accordance with generally accepted accounting
principles) but rather to provide additional information related
to the ability to service debt. For the nine-month period ended
March 31, 1996 and fiscal 1996, other one-time charges included
$3 million for relocation costs and $6 million of costs
associated with a significant headcount reduction.
(e) Historical depreciation and amortization exclude
amortization of $5 million of deferred debt issue costs for
fiscal 1996. Historical depreciation and amortization exclude
amortization of $4 million of deferred debt issue costs in both
of the nine-month periods ended March 31, 1996 and 1997.
Historical depreciation and amortization for the year ended June
30, 1996 and the nine-month period ended March 31, 1997, exclude
$5 million in each period with respect to Del Monte Philippines,
one of the Divested Operations. Pro forma depreciation and
amortization exclude amortization of $3 million of pro forma
deferred debt issue costs for fiscal 1996 and $2 million of pro
forma deferred debt issue costs in both of the nine-month periods
ended March 31, 1996 and 1997.
(f) 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 items, minority interest, cumulative effect
of accounting change and provision 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.
(g) Represents depreciation expense associated with Del Monte
Philippines. This expense was included as a component of
operating income. The Company's basis in its investment in
Del Monte Philippines was adjusted to include a reduction
due to this depreciation expense thereby increasing the
gain on sale and resulting in an offset to net income.
32
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth historical consolidated
financial information of the Company. The historical unaudited
financial data presented below as of March 31, 1996 and 1997 and
for the nine months then ended were derived from interim
consolidated financial statements of the Company as of such dates
which, in the opinion of management, 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 the Company's audited financial statements for
the fiscal year ended June 30, 1996. Operating results for the
nine months ended March 31, 1997 are not necessarily indicative
of results to be expected for the full fiscal year. The statement
of operations data for each of the fiscal years in the five-year
period ended June 30, 1996 and the balance sheet data as of June
30, 1992, 1993, 1994, 1995 and 1996 have been derived from
consolidated financial statements of the Company audited by Ernst
& Young LLP, independent auditors. The table should be read in
conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the consolidated
financial statements of the Company and related notes and other
financial information included elsewhere in this Prospectus.
Nine Months
Ended
March 31,
Fiscal Year Ended June 30, (unaudited)
-------------------------- -----------
1992 1993 1994
---- ---- ----
(Dollars in millions, except per share amounts)
Statement of Operations
Data:
Net sales........... $1,431 $1,555 $1,499
Cost of sales....... 1,180 1,326 1,275
------ ----- -----
Gross profit........ 251 229 224
Selling, advertising,
administrative
and general expenses 173 172 157
Special charges(a).. 15 140 --
---- ---- ----
Operating income(loss) 63 (83) 67
Other (income) expense (7) 4 8
Loss (gain) on sale of
assets(b)........... -- (13) (13)
Interest expense.... 74 68 61
--- --- ---
Income (loss) before
income taxes, minority
interest, extraordinary
item and cumulative
effect of accounting
change(c)(d)........ (4) (142) 11
Provision for
income taxes........ 10 10 3
Minority interest in
earnings of
subsidiary.......... 9 8 5
--- --- ---
Income (loss)
before extraordinary
item and cumulative
effect of accounting
change(c)(d)........ (23) (160) 3
Extraordinary loss(c) 35 -- --
Cumulative effect of
accounting change(d) -- 28 --
--- --- ---
Net income (loss)... $(58) $(188) $3
=== ==== ===
Income (loss) per
common share:
Income (loss) before
extraordinary
item and cumulative
effect of
accounting change
per common
share(e)......... $(159.99) $(504.36) $(143.08)
Extraordinary loss.. (82.65) -- --
Cumulative effect
of accounting
change............ -- (67.34) --
---- ------ ----
Net income (loss)
per common
share............. $(242.64) $(571.70) $(143.08)
======== ======= =========
Other Data:
Gross margin........ 17.5% 14.7% 14.9%
EBITDA(f)........... $ 79 $ 62 $ 63
Selected Ratios:
Ratio of earnings
to fixed
charges(g)......... -- -- 1.2x
Deficiency of
earnings to cover
fixed charges(g).. $ 4 $ 142 --
1995 1996 1996 1997
---- ---- ---- ----
(Dollars in millions, except per share amounts)
Statement of Operations
Data:
Net sales........... $1,526 $1,304 $1,018 $934
Cost of sales....... 1,289 1,084 858 733
----- ----- ---- ---
Gross profit........ 237 220 160 201
Selling, advertising,
administrative
and general expenses 157 138 116 132
Special charges(a).. -- -- -- --
---- ---- ---- ---
Operating income(loss) 80 82 44 69
Other (income) expense (11) 3 1 --
Loss (gain) on sale of
assets(b)........... -- (107) (107) 5
Interest expense.... 76 67 54 37
--- --- --- ---
Income (loss) before
income taxes, minority
interest, extraordinary
item and cumulative
effect of accounting
change(c)(d)........ 15 119 96 27
Provision for
income taxes........ 2 11 13 2
Minority interest in
earnings of
subsidiary.......... 1 3 3 --
--- --- --- ---
Income (loss)
before extraordinary
item and cumulative
effect of accounting
change(c)(d)........ 12 105 80 25
Extraordinary loss(c) 7 10 9 4
Cumulative effect of
accounting change(d) -- 7 3 --
--- --- --- ---
Net income (loss)... $5 $88 $68 $21
=== === === ===
Income (loss) per
common share:
Income (loss) before
extraordinary
item and cumulative
effect of
accounting change
per common
share(e)......... $(145.35) $59.40 47.75 $(117.36)
Extraordinary loss.. (18.34) (26.39) (22.17) (9.77)
Cumulative effect
of accounting
change............ -- (18.14) (7.60) --
------- ----- ---- -----
Net income (loss)
per common
share............. $(163.69) $14.87 $17.98 $(127.13)
========== ======= ======= =========
Other Data:
Gross margin........ 15.5% 16.9% 15.7% 21.5%
EBITDA(f)........... $ 76 $ 92 $ 51 $ 87
Selected Ratios:
Ratio of earnings
to fixed
charges(g)......... 1.2x 2.6x 2.6x 1.6x
Deficiency of
earnings to cover
fixed charges(g)... -- -- -- --
33
<PAGE>
Nine Months Ended
March 31,
Fiscal Year Ended June 30, (unaudited)
1992 1993 1994 1995 1996 1996 1997
(Dollars in millions)
Balance Sheet Data:
Working capital.. $135 $ 92 $ 88 $99 $ 207 $186 $184
Total assets.....1,215 1,066 936 960 736 763 739
Total debt....... 653 624 569 576 373 396 310
Redeemable
preferred
stock............ 216 216 215 215 213 213 213
Redeemable
common stock..... 2 2 2 2 2 2 2
Stockholders'
equity
(deficit) ....... (195) (385) (384) (393) (304) (324) (257)
Cash Flow Data:
Depreciation
and
amortization .... $60 $ 67 $ 40 $40 $31 $23 $22
Capital
expenditures .... 42 34 36 24 16 8 12
Other non-cash
charges:
Extraordinary
loss from debt
retirement(c) ... $35 -- -- $ 7 $ 5 $ 9 $ 4
Special
charges(a) ...... 15 $140 -- -- -- -- --
Cumulative
effect of
accounting
change(d) ....... -- 28 -- -- 7 3 --
Other(h) ........ 5 19 $12 9 5 4 4
--- ---- ------ --- --- --- ---
Total other
non-cash
charges ......... $55 $187 $ 12 $16 $ 17 $16 $ 8
=== ==== === === === === ===
- ----------------------
(a) In March 1992, the Company discontinued its Vegetable
Classics line resulting in a $15 million charge to
operations. In June 1993, the Company recorded special
charges of $140 million, which included $115 million for
permanent impairment of acquisition-related intangible
assets, including goodwill, and $25 million for facility
consolidations.
(b) The Company sold its equity investment in Del Monte
Europe in the fiscal quarter ended March 31, 1993 and recognized
a $13 million gain. The Company sold its can manufacturing
operations in the fiscal quarter ended December 31, 1993 and
recognized a $13 million gain. In November 1995, the Company sold
its pudding business for $89 million, net of $4 million of
related transaction fees. The sale resulted in a gain of $71
million. In March 1996, the Company sold its 50.1% ownership
interest in Del Monte Philippines for $100 million, net of $2
million of related transaction fees. The sale resulted in a gain
of $52 million of which $16 million was deferred and $36 million
was recognized in fiscal 1996. The purchase price included a
premium paid to the Company as consideration for an eight year
supply agreement. The gain associated with the value of the
premium was deferred and will be amortized over the term of the
agreement. In the fiscal quarter ended December 1996, the Company
sold Del Monte Latin America. The combined sales price of $50
million, reduced by $1 million of related transaction expenses,
resulted in a loss of $5 million. The sales price for Del Monte
Latin America is subject to adjustment based on the final balance
sheet. The amount of any adjustment to the purchase price is
currently in dispute but is not expected to be material. See
"Business--Legal Proceedings."
(c) In August 1991, the Company refinanced its
then-outstanding term loan and senior subordinated increasing
rate note debt. In conjunction with the debt retirement,
capitalized debt issue costs of $35 million were written off and
accounted for as an extraordinary loss. In June 1995, the Company
refinanced its then-outstanding revolving credit facility, term
loan and senior secured floating rate notes. In conjunction with
this debt retirement, capitalized debt issue costs of $7 million
were written off and accounted for as an extraordinary loss. In
December 1995 and April 1996, the Company prepaid part of its
term loan and senior secured notes. In conjunction with the early
debt retirement, the Company recorded an extraordinary loss of
$10 million for the early retirement of debt. The extraordinary
loss consisted of a $5 million prepayment premium and a $5
million write-off of capitalized debt issue costs related to the
early
34
<PAGE>
retirement of debt. In September 1996, the Company
repurchased PIK Notes in an aggregate principal amount of
$102 million and, concurrently, exchanged essentially all
remaining PIK Notes for 1996 PIK Notes. In conjunction with
this repurchase and exchange, capitalized debt issue costs
of $4 million, net of a discount on the PIK Notes, were
written off and accounted for as an extraordinary loss.
(d) Effective July 1, 1992, the Company adopted SFAS No. 106,
"Employers' Accounting for Post-Retirement Benefits Other
Than Pensions." The Company elected to recognize this
change in accounting on the immediate recognition basis.
The cumulative effect of adopting SFAS No. 106 resulted in
a charge to fiscal 1993 net earnings of $28 million.
Effective July 1, 1995 the Company 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 million, of which $3 million had
been recognized through March 31, 1996.
(e) Net income (loss) attributed to common shares is computed
as net income (loss) reduced by the cash and in-kind
dividends for the period on redeemable preferred stock.
(f) EBITDA represents income (loss) before provision for income
taxes, minority interest, extraordinary item and cumulative
effect of accounting change, plus interest expense and
special charges, depreciation and amortization expense and
other one-time and non-cash charges, less gains (losses) on
sales of assets and the results of the Divested Operations.
EBITDA is not presented as an alternative measure of operating
income or cash flow from operations (both as determined in
accordance with generally accepted accounting principles)
but rather to provide additional information related to the
ability to service debt. In fiscal 1992, other one-time and
non-cash charges included $9 million related to insurance
settlement proceeds and $18 million of amortization
associated with intangible assets subsequently written off.
In fiscal 1993, non-cash charges of $19 million represent
amortization of intangible assets subsequently written off.
In fiscal 1994, other one-time and non-cash charges
included $1 million of fees related to a terminated
transaction, $1 million related to write-offs of labels due
to new labeling laws and $6 million of benefit plan
charges. For fiscal 1995, EBITDA excludes $26 million
received in connection with a terminated transaction, $4
million paid by the Company to terminate its alliance with
PCP and $7 million related to the termination of a
management equity plan. For fiscal 1996 and for the nine
months ended March 31, 1996, other one-time charges
included $3 million for relocation costs and $6 million of
costs associated with a significant headcount reduction.
(g) 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 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.
(h) Represents non-cash charges related to the RJR Nabisco Sale
and non-cash accretions for Postretirement Benefits Other
Than Pensions. Also included are non-cash charges for
certain employee benefits and amortization of deferred debt
issue costs.
35
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion summarizes the significant factors
affecting the consolidated operating results, financial condition
and liquidity of the Company during the nine-month periods ended
March 31, 1996 and 1997, and the three-year period ended June 30,
1996. This discussion should be read in conjunction with the
unaudited consolidated financial statements of the Company for
the nine-month periods ended March 31, 1996 and 1997 and the
audited consolidated financial statements of the Company for the
three-year period ended June 30, 1996 and notes thereto included
elsewhere in this Prospectus.
General
The Company reports its financial results on a July 1 to
June 30 fiscal year basis to coincide with its business 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 canned products drops, reflecting, in part, the
availability of fresh alternatives. This situation impacts
operating results as sales volumes, revenues and profitability
decline during this period. Results over the remainder of the
fiscal year are impacted by many factors including industry
supply and the Company's share of that supply.
The annual production volume of fruits and vegetables is
impacted by general seasonal fluctuations primarily due to
weather and overall growing conditions. During the early 1990s,
the markets for the Company's principal products of canned
vegetables and canned fruit were in a position of stable demand
and excess supply. This excess supply primarily resulted from
overplanting and abundant harvests of raw product, combined with
processing overcapacity. During such periods of industry
oversupply, pressure was placed on absolute volumes and gross
margins. The Company, as well as certain of its competitors,
implemented vegetable plant closures in an attempt to reduce
processing overcapacity. The summer 1993 pack and the summer 1995
pack were reduced by weather related fluctuations. Yields from
the summer 1993 pack were lower than normal due to flooding in
the Midwest. However, the overall industry supply situation
remained in excess due to higher than usual inventories
attributable to the summer 1992 pack. The summer 1995 pack was
below average for both vegetables and fruit due to flooding in
the Midwest and heavy rains in California during the winter and
spring of 1995. As a result, inventory levels during fiscal 1996
were lower than in previous years, leaving industry supply for
vegetables and fruit in a balanced-to-tight position. The summer
1996 pack was slightly below average for both vegetables and
fruit, while tomato production was slightly higher than expected.
Vegetable production was below average due to adverse weather,
while heavy rains in the Northwest significantly reduced the pear
crop. Inventory supplies of vegetables, fruit and tomatoes are
expected to be sufficient to meet demand during fiscal 1997.
The weather conditions which existed during the summer of
1995 resulted in reduced acreage yields and production recoveries
of fruits and vegetables which negatively impacted the Company's
gross margin in fiscal 1996. During fiscal 1996, the Company's
management developed a strategy to increase prices. These price
increases resulted in volume and market share decreases for the
Company during fiscal 1996 as competitors sold greater volume
because their prices remained below the Company's. Despite the
reduced market share, the Company's profitability was
significantly higher in the fourth quarter as a result of higher
net selling prices.
In fiscal 1996, the Company also developed a new marketing
strategy which emphasizes consumption-driven trade promotion
programs as well as consumer-targeted promotions such as
advertising and coupons in an effort to build brand preference
and stimulate consumption. This strategy encourages retailers to
use ad displays and consumer-targeted promotions and discourages
the use of periodic price-only promotions. Historically, the
Company has relied primarily upon periodic price-only trade
promotions, rather than consumer promotion.
Beginning in fiscal 1993, the Company has taken various
actions to reduce its operating costs while enhancing its ability
to produce and distribute its products. Among these actions were
the closing of production plants and distribution centers,
changes in selection of freight carriers and reduction in can
sizes for certain fruit and vegetable products. Management
believes that these cost reduction initiatives have generated
cost savings that have
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enhanced the Company's competitive position within the industry.
Since fiscal 1993, management estimates that the Company's
production costs have experienced a cumulative increase of less
than 2% through fiscal 1996. The Company is continuing to
evaluate cost saving initiatives as it reviews its operations.
In fiscal 1995, Del Monte terminated an exclusive supply
agreement with PCP to purchase substantially all of PCP's tomato
and fruit production. During fiscal 1996 and the first half of
fiscal 1997, the Company sold its pudding business, its 50.1%
interest in Del Monte Philippines and all of its interest in Del
Monte Latin America. At the end of fiscal 1997, a distribution
agreement under which Del Monte sold certain products for
Yorkshire at cost will expire.
Results of Operations
The following table sets forth, for the periods indicated,
certain items from the Company's consolidated statements of
operations, expressed as percentages of the Company's net sales
for such fiscal period:
Fiscal Year Nine Months Ended
Ended June 30, March 31,
------------------ ------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
Net sales ............... 100% 100% 100% 100% 100%
Cost of sales ........... 85 85 83 84 78
--- --- --- --- ---
Gross margin .......... 15 15 17 16 22
Selling, advertising,
administrative and
general expenses ...... 11 10 11 12 14
--- --- --- --- ---
Operating income ...... 4% 5% 6% 4% 8%
=== === === === ===
Interest expense ........ 4% 5% 5% 5% 4%
=== === === === ===
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The following table sets forth, for the periods indicated, the
Company's net sales by product categories, expressed in dollar
amounts and as a percentage of the Company's total net sales for
such period:
Fiscal Year Nine Months Ended
Ended June 30, March 31,
------------------ ------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(Dollars in millions)
Net Sales:
Canned vegetables(a) $ 427 $440 $401 $306 $336
Canned fruit(a) 401 394 367 276 334
Tomato products(a) 194 211 217 160 168
Canned pineapple(a) 68 66 72 55 50
Other(b) 230 219 89 83 32
----- ----- ----- ----- -----
Subtotal domestic 1,320 1,330 1,146 880 920
Latin America 69 65 55 40 17
Philippines 162 180 142 136 --
Intercompany sales (52) (49) (39) (38) (3)
----- ----- ----- ----- -----
Total Net Sales $1,499 $1,526 $1,304 $1,018 $934
===== ===== ===== ===== =====
As a Percentage of
Net Sales:
Canned vegetables(a) 28% 29% 31% 30% 36%
Canned fruit(a) 27 26 28 27 36
Tomato products(a) 13 14 16 16 18
Canned pineapple(a) 5 4 6 6 5
Other(b) 15 14 7 8 3
----- ----- ----- ----- -----
Subtotal domestic 88 87 88 87 98
Latin America 5 4 4 4 2
Philippines 11 12 11 13 --
Intercompany sales (4) (3) (3) (4) --
----- ----- ----- ----- -----
Total 100% 100% 100% 100% 100%
===== ===== ===== ===== =====
- ----------------------
(a) Includes sales of the entire product line across each
channel of distribution, including sales to grocery chains,
Warehouse Clubs, Supercenters, Mass Merchandisers and other
grocery retailers, as well as the Company's foodservice,
food ingredients, export and vegetable private label
businesses and military sales.
(b) Includes dried fruit, gel and pudding cups, and certain
other retail products, as well as the Company's private
label fruit and tomato businesses which were discontinued
in fiscal 1995 with the termination of the alliance with
PCP.
Nine Months Ended March 31, 1997 vs. Nine Months Ended March 31, 1996
Net Sales. Consolidated net sales for the nine months ended
March 31, 1997 decreased by $84 million compared to the prior
year period. This decrease was attributable to the absence of the
Divested Operations. Net sales for the domestic operations, after
adjusting for the effect of the Divested Operations, were $891
million for the nine months ended March 31, 1997 as compared to
$809 million for the nine months ended March 31, 1996. The
increase of $82 million was due primarily to higher prices across
all product lines. The retail vegetable and fruit businesses led
with increased prices in the second half of fiscal 1996. The
export and foodservice businesses each increased fruit prices at
the beginning of fiscal 1997. Generally balanced industry
supplies of fruit and vegetables and the Company's emphasis on
consumer promotions were contributing factors towards realizing
the higher prices. Volume increases in the fruit business have
been slightly offset by volume decreases in the vegetable
business. The volume decrease in the Company's vegetable business
reflects an overall decline in canned vegetable consumption.
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Cost of Sales and Gross Profit. Gross profit for the nine
months ended March 31, 1997 increased by $41 million from the
prior year period despite the absence of $31 million of gross
profit contributed by the Divested Operations. Domestic gross
profit for the continuing businesses increased by $72 million and
gross margin increased from 15.6% to 22.2%. The increase in gross
profit and gross margin is due to the price increases discussed
above coupled with relatively flat costs.
During fiscal 1996, the Company implemented a new marketing
strategy which is aimed at improving profitability by raising
product prices, structuring consumption-driven trade promotion
programs and increasing the number of consumer promotions to
build brand preference and stimulate consumption. The Company
believes that the increase in gross margin is in part due to this
marketing strategy.
Selling, Advertising, Administrative and General Expenses.
Selling, advertising, administrative and general expenses
increased by $16 million ($27 million after adjusting for the
absence of the Divested Operations) versus the prior year period.
Administrative and general expenses have decreased by almost $14
million compared to the same period in the prior year due to a
reduction in employee headcount during the last half of fiscal
1996. Marketing spending increased by approximately $41 million
as the Company began placing more emphasis on consumer promotion
programs.
Loss (Gain) on Sale of Assets. The sale of the Company's
Mexican subsidiary for $38 million was completed on October 28,
1996 and the sale of the Central American and Caribbean
subsidiaries for $12 million was completed on November 13, 1996.
The sales price for the Mexican subsidiary is subject to
adjustment based on the final balance sheet. The amount of any
adjustment to the purchase price is currently in dispute but is
not expected to be material. See "Business--Legal Proceedings."
The combined sales prices of $50 million, reduced by $1 million
of related transaction expenses, resulted in a loss of $5
million.
Interest Expense. Interest expense has decreased by $17
million as compared to the prior year nine month period due to
lower outstanding debt balances resulting from the application of
proceeds from asset sales to reduce debt and the absence of
interest expense related to the Divested Operations.
Fiscal 1996 vs. Fiscal 1995 vs. Fiscal 1994
Net Sales. Consolidated net sales for fiscal 1996 decreased
$222 million or 15% from the prior year due to lower volumes in
domestic operations. Net sales for the domestic operations, after
adjusting for the effect of Divested Operations, were $1,071
million for fiscal 1996 as compared to $1,109 million for fiscal
1995, a decrease of $38 million or 3%. The Company increased
retail fruit and vegetable prices. However, these price increases
were not immediately followed by the competition and resulted in
lower sales volumes as compared to the prior year. In fiscal
1996, the Company's market share for Del Monte branded vegetables
was 20.4% versus 24.1% for the previous year and the Company's
market share for Del Monte branded fruit was 35.6% versus 38.8%
for the previous year.
Del Monte Philippines' net sales for the first nine months
of fiscal 1996, until the Company's sale of its interest in this
joint venture, accounted for 8% of consolidated net sales for the
year ended June 30, 1996. Del Monte Latin America's net sales for
fiscal 1996 (4% of consolidated sales in fiscal 1996) decreased
$10 million or 15% even though volumes were at approximately the
same level as the prior year period. This decrease was primarily
due to the significant Mexican peso devaluation.
Consolidated net sales for fiscal 1995 increased by $27
million or 2% from the prior fiscal year. Domestic net sales
(adjusted for the absence of the Divested Operations) increased
$9 million to $1,109 million in fiscal 1995 from $1,100 million
in fiscal 1994 due primarily to volume growth within vegetables
and tomatoes, partially offset by lower fruit cup volume and
lower pricing on vegetables and fruit. Vegetable case volume
experienced growth of 5% related directly to an increased supply
of corn and other vegetable products compared to a previous short
crop year when flooding in the Midwest resulted in a decline in
production. Within the tomato segment, revised pricing strategies
on ketchup and sauce, along with the national launch of the
chunky spaghetti sauce line extension and regional introduction
of salsa/picante sauces, resulted in a 13% growth in volume. The
growth in the vegetable and
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<PAGE>
tomato businesses was partially offset by the volume decline in
fruit cups due to pricing competition from private label as well
as branded products. The lower pricing on vegetables in fiscal
1995 resulted from aggressive, competitive pricing while lower
fruit pricing was closely related to the industry oversupply. In
fiscal 1995, the Company's market share for Del Monte branded
vegetables was 24.1% versus 25.6% in the previous year, while the
Company's market share for Del Monte branded fruit was 38.8%
compared to 40.2% for the previous year.
Net sales by Del Monte Philippines and Del Monte Latin
America accounted for 14% of consolidated net sales in fiscal
1995. Sales by Del Monte Philippines increased by 11% from fiscal
1994 primarily due to a favorable sales mix which was partially
offset by lower export prices. Sales by Del Monte Latin America
decreased by 6%. Although Del Monte Latin America's sales in
pesos increased, the growth was eliminated when measured in
dollars due to the significant devaluation of the Mexican peso in
the last half of the fiscal year.
Cost of Sales and Gross Profit. Gross margin was 16.9%,
15.5% and 14.9% in fiscal 1996, 1995 and 1994, respectively.
Domestic gross margin (adjusted for the absence of the Divested
Operations) was 17.0%, 16.8% and 15.3% in fiscal 1996, 1995 and
1994, respectively. Higher manufacturing costs and introductory
allowances incurred to expand Del Monte salsa distribution
nationally were more than offset by price increases across all
major product lines in fiscal 1996. Higher net pricing in the
solid tomato and pineapple businesses in fiscal 1995 contributed
to the improvement over fiscal 1994, but the primary reason for
the higher margin was the Company's cost reduction efforts. The
Company believes significant cost savings were realized in fiscal
1995 through the closing of one vegetable plant and the
downsizing of two other facilities and downsizing vegetable
containers. Also, further savings were achieved in the area of
logistics in fiscal 1995.
Del Monte Philippines' gross margins were 17.4%, 11.8% and
19.8% in fiscal 1996, 1995 and 1994, respectively. The 1995
decrease was attributable to lower sales prices and higher
production costs as compared to fiscal 1994. Gross margins for
Del Monte Latin America were 24.3%, 23.8% and 20.3% in fiscal
1996, 1995 and 1994, respectively. The increases in fiscal 1996
resulted primarily from opportunistic price increases due to
inflationary conditions in Mexico with a lag in increases of cost
of goods sold due to seasonal packing.
Selling, Advertising, Administrative and General Expenses.
Selling, advertising, administrative and general expense as a
percentage of net sales (excluding the Divested Operations) were
11.3%, 12.2% and 12.1% in fiscal 1996, 1995 and 1994,
respectively.
Included in general and administrative expenses are
research and development costs of $6 million, $6 million and $5
million for fiscal 1996, 1995 and 1994, respectively. Research
and development spending in fiscal 1996, 1995 and 1994 remained
focused on strategic spending to maintain the existing business
and to develop product line extensions.
Interest Expense. The 12% decrease in interest expense for
fiscal 1996 compared to fiscal 1995 resulted from lower net
borrowings under the Company's revolving credit facility and
lower outstanding debt balances resulting in part from the sale
of the Divested Operations. The 25% increase in the Company's
interest expense from fiscal 1994 to fiscal 1995 was due to
higher interest rates and higher revolver borrowings due to a
return to normal processed tonnage for canned vegetables.
Other (Income) Expense. Other income for fiscal 1995
reflects the Company's receipt of the proceeds of a $30 million
letter of credit (reduced by $4 million of related transaction
expenses) as a result of the termination of the merger agreement
with Grupo Empacador de Mexico, S.A. de C.V. in September 1994.
Provision for Income Taxes. The tax provision increased to
$11 million in fiscal 1996 from $2 million in fiscal 1995
primarily due to alternative minimum tax and state income tax as
a result of the sales of divested assets. As of June 30, 1996,
the Company had $45 million in net operating loss carryforwards
for tax purposes, which will expire between 2008 and 2010. The
Company has deferred tax assets of $98 million which have been
fully-offset by a valuation allowance.
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<PAGE>
Extraordinary Loss. The net proceeds of the pudding business sale
and proceeds of the Del Monte Philippines sale were used for the
early retirement of debt. In conjunction with this early debt
retirement, in the second and fourth quarters of fiscal 1996, $5
million in capitalized debt issue costs were written off and $5
million primarily related to a prepayment premium was charged to
income, both of which have been accounted for as an extraordinary
item. In June 1995, the Company refinanced its outstanding
revolving credit facility, term loan and senior notes. In
conjunction with the debt retirement, capitalized debt issue
costs of $7 million were written off and accounted for as an
extraordinary loss as required by generally accepted accounting
principles.
Cumulative Effect of Accounting Change. Effective July 1,
1995, the Company 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 million.
Liquidity and Capital Resources
The Company's primary cash requirements are to fund debt
service, finance seasonal working capital needs and make capital
expenditures. Internally generated funds and amounts available
under its revolving credit and other short-term borrowing
facilities are the Company's primary sources of liquidity.
Historical
On September 11, 1996, the Company repurchased the
outstanding PIK Notes in an aggregate principal amount of $102
million for a cash payment of $100 million and, concurrently,
exchanged essentially all remaining PIK Notes for 1996 PIK Notes
in an aggregate principal amount of $156 million. Funding for the
exchange offer was accomplished through the application of $30
million from a collateral account held by certain lenders,
additional borrowing in an aggregate amount of $55 million under
the then existing term loan, and borrowing of approximately $36
million from the then existing revolving credit facility. In
addition, $13 million senior notes outstanding were repaid. In
conjunction with the exchange offer, capitalized debt issue costs
of approximately $4 million, net of a discount on the PIK Notes,
were charged to net income and accounted for as an extraordinary
loss.
In June 1995, the Company refinanced its term loan, senior
secured floating rate notes and revolving credit facility with a
new term loan, new senior notes and a new revolving credit
facility (all such indebtedness hereinafter collectively the
"1995 Senior Debt" and such agreements collectively the "1995
Senior Debt Agreements"). The refinancing provided the Company
with increased liquidity through reduced principal repayments on
outstanding debt and reduced cash interest payments. The 1995
Senior Debt Agreements require prepayments and redemptions in the
case of certain events, including the purchase or issuance of
subordinated indebtedness. The 1995 Senior Debt was repaid in
full in the Recapitalization from the proceeds of, and was
replaced by, the Bank Financing and the Notes.
The working capital position of the Company is seasonally
affected by the growing cycle of the vegetables, fruit and
tomatoes it processes. Substantially all inventories are produced
during the harvesting and packing months of June through October
and depleted through the remaining seven months. Accordingly,
working capital requirements fluctuate significantly. The Company
has used funds from a 1995 revolving credit facility, which
provided for a $400 million line of credit, and expects to use
funds from the Revolving Credit Facility, which replaced the 1995
revolving credit facility, as part of the Recapitalization. The
Revolving Credit Facility provides for a $350 million line of
credit to finance the seasonal working capital needs of the
Company and other general corporate purposes. Consistent with its
seasonal cycle, inventories increased during fiscal 1996 from
$302 million at June 30, 1995 to $564 million at September 30,
1995 and thereafter decreased to $291 million at June 30, 1996.
Borrowings under the Company's revolving credit facility followed
a similar pattern in fiscal 1996, rising from $121 million at
June 30, 1995 to $252 million at September 30, 1995 and
thereafter declining to $43 million at June 30, 1996.
The increase in inventories at March 31, 1997 from June 30,
1996 reflects seasonal inventory buildup. The increase in
accounts payable and accrued expenses from June 30, 1996 to March
31, 1997 primarily reflects accrued
41
<PAGE>
expenses resulting from higher levels of consumer and trade
promotions. As of March 31, 1997, $42 million was outstanding
under the 1995 revolving credit facility, compared to $43 million
at June 30, 1996. The outstanding balance on the 1995 revolving
credit facility at March 31, 1997 reflects the application of the
proceeds of the sale of Del Monte Latin America.
The Company earned net income of $21 million for the
nine-month period ended March 31, 1997. This amount includes
noncash expenses of $31 million, including depreciation and
amortization of $22 million, loss on sale of divested assets of
$5 million, and an extraordinary loss from the PIK Note exchange
offer of $4 million. This income, when combined with the changes
in working capital accounts, resulted in cash provided by
operating activities of $19 million. The Company generated cash
proceeds of $51 million principally from the sale of Del Monte
Latin America. These asset sales, coupled with capital
expenditures of $12 million, resulted in net cash provided from
investing activities of $39 million. Net cash used in financing
activities of $58 million reflects scheduled principal payments
of $12 million, borrowings of $929 million and repayments of $930
million under the Company's 1995 revolving credit facility.
Included in net financing was the refinancing activity related to
the PIK Note exchange offer whereby an additional $55 million of
debt was incurred under an amendment to the 1995 term loan, $30
million of Del Monte Philippines sale proceeds from a specific
collateral account were applied, and $102 million aggregate value
of PIK Notes were redeemed for a cash payment of $100 million. In
addition, the remaining balance of $13 million in senior notes
was repaid. Proceeds from the sale of Del Monte Latin America
were used to repay $10 million of the 1996 PIK Notes. Industrial
development revenue bonds in the amount of $5 million were
redeemed. Proceeds of $2 million from the sale of a surplus
property were deposited into a collateral account pending final
application.
The Company earned net income of $88 million for the fiscal
year ended June 30, 1996. This amount includes noncash expenses
of $45 million, including depreciation and amortization of $31
million, a cumulative effect of accounting change of $7 million,
and an extraordinary loss from early debt retirement of $5
million. This income, when combined with the changes in working
capital accounts, resulted in cash provided by operating
activities of $53 million. The Company generated cash proceeds of
$186 million principally from the sale of its pudding business
($85 million) and the sale of its interest in Del Monte
Philippines ($98 million). These asset sales, coupled with
capital expenditures of $16 million, resulted in a net source of
cash from investing activities of $170 million. Net cash used in
financing activities of $217 million reflects principal payments
of $108 million, borrowings of $1,276 million and repayments of
$1,354 million under the revolving credit facility, the deposit
of $30 million of Del Monte Philippines sale proceeds into a
collateral account until agreement was reached with certain
lenders as to final application, and a repurchase of common and
preferred shares totaling $1 million.
The Company earned net income of $5 million for the fiscal
year ended June 30, 1995. Included in this amount are noncash
expenses of $51 million, including depreciation and amortization
of $40 million and an extraordinary loss on the refinancing of
debt of $7 million. This income, when combined with the changes
in the working capital accounts which included the capitalization
of $23 million in fees paid by the Company to refinance its
existing debt, as discussed above, resulted in net cash generated
from operations of $39 million. Net cash used in investing
activities was $21 million resulting from $24 million in capital
expenditures offset by proceeds from sales of fixed assets. Net
cash used in financing activities of $20 million reflects
principal payments of $50 million, borrowings of $1,901 million
and repayments of $1,867 million under the Company's short-term
borrowing facilities, and dividends paid to a minority
stockholder in Del Monte Philippines of $1 million, as well as
redemptions of preferred stock in Del Monte Philippines of $3
million. Included in net financing was the refinancing activity
consisting of the issuance of $188 million in a new term loan and
senior notes in order to repay $188 million of a term loan,
senior floating rate notes and a capital lease.
The Company earned net income of $3 million for the fiscal
year ended June 30, 1994. This amount includes noncash expenses,
including depreciation and amortization of $40 million and other
non-cash charges of $11 million. This income, when combined with
the changes in the working capital accounts, resulted in cash
generated from operating activities of $28 million. The Company
realized $91 million from the proceeds of divested assets;
principally the sale of the Company's can manufacturing and dried
fruit operations. These asset sales, when combined with capital
expenditures of $36 million, resulted in a net source of cash
from investing activities during fiscal 1994 of $55 million. The
Company used borrowings under its revolving credit facility and
other short-term
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<PAGE>
borrowings to finance its daily operations including its annual
pack. The Company borrowed and subsequently repaid $909 million
under its short-term borrowing facilities during the year. During
fiscal 1994, the combined impact of principal payments on
long-term debt of $78 million, and dividends paid to a minority
stockholder by, and redemptions of preferred stock in, Del Monte
Philippines of $5 million, resulted in net cash used in financing
activities of $83 million.
After the Recapitalization
Concurrent with the Recapitalization, the Company entered
into the Credit Agreement (as defined) with respect to the Bank
Financing. The Term Loan Facility provides for term loans in the
aggregate amount of $380 million, consisting of a Tranche A term
loan of $200 million and a Tranche B term loan of $180 million.
The Revolving Credit Facility will provide for revolving loans in
an aggregate amount of $350 million, including a $70 million
Letter of Credit subfacility. The Revolving Credit Facility will
expire in fiscal 2003, the Tranche A term loan will mature in
fiscal 2003, and the Tranche B term loan will mature in fiscal
2005. Scheduled principal payments on the Tranche A term loan
begin in the first quarter of fiscal 1999 and continue quarterly
through maturity. Initial quarterly amortization of Tranche A is
approximately $7.5 million per quarter, rising periodically at
approximately $1.25 million per quarter to a final quarterly
amortization, beginning in the first quarter of fiscal 2003, of
approximately $17 million through maturity. Scheduled principal
payments on the Tranche B term loan begin in the third quarter of
fiscal 1998 and continue quarterly through maturity. Initial
quarterly amortization is nominal, amounting to approximately
$1.8 million per year. Substantial amortization begins in the
fourth quarter of fiscal 2004, with quarterly amortization of
approximately $42 million. In conjunction with the Bank
Financing, previously capitalized debt issue costs of
approximately $19 million and a 1996 PIK Note premium and a term
loan make-whole aggregating $19 million were charged to net
income and accounted for as an extraordinary loss.
Management believes that after the Recapitalization, cash
flow from operations and availability under the Term Loan
Facility and Revolving Credit Facility will provide adequate
funds for the Company's foreseeable working capital needs,
planned capital expenditures and debt service obligations. The
Company's ability to fund its operations and make planned capital
expenditures, to make scheduled debt payments, to refinance its
indebtedness and to remain in compliance with all of the
financial covenants under its debt agreements depends on its
future operating performance and cash flow, which, in turn, are
subject to prevailing economic conditions and to financial,
business and other factors, some of which are beyond its control.
Capital expenditures for fiscal 1996 were $16 million
including approximately $1 million for environmental compliance.
The Company expects that capital expenditures during fiscal 1997
will be approximately $20 million. Capital expenditures are
expected to be funded from internally generated cash flows and by
borrowing from available financing sources.
The agreements with respect to the Bank Financing and the
Indenture contain restrictive covenants with respect to the
operation of the Company's business.
The Company's defined benefit retirement plans have been
determined to be underfunded under federal ERISA guidelines. It
has been the Company's policy to fund the Company's retirement
plans in an amount consistent with the funding requirements of
federal law and regulations and not to exceed an amount that
would be deductible for federal income tax purposes. Due to the
combination of these circumstances, total contributions during
fiscal 1996 for the defined benefit plan decreased to $13 million
as compared to $16 million in fiscal 1995. Fiscal 1997
contributions are expected to be approximately $25 million. In
connection with the Recapitalization, the Company has made
certain commitments to the U.S. Pension Benefit Guaranty
Corporation with respect to the funding of the Company's defined
benefit retirement plans. See "Business--Pension Contributions."
Pension plan funding requirements are expected to be funded from
internally generated cash flows and by borrowing under the
Revolving Credit Facility.
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<PAGE>
Tax Net Operating Loss Carryforwards
As of June 30, 1996, the Company had $45 million in net
operating loss carryforwards for tax purposes, which will expire
between 2008 and 2010.
Inflation
The Company's costs are affected by inflation and the
effects of inflation may be experienced by the Company in future
periods. However, the Company has historically mitigated the
inflationary impact of increases in its costs by controlling its
overall cost structure.
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BUSINESS
General
The Company was originally incorporated in 1916 and
remained a publicly-traded company for over sixty years until its
acquisition in 1979 by the predecessor of RJR Nabisco. In
December 1989, RJR Nabisco sold the Company's fresh produce
operations, Del Monte Fresh Fruit, to Polly Peck International.
In January 1990, an investor group led by Merrill Lynch purchased
the Company and certain of its subsidiaries in the RJR Nabisco
Sale for $1.5 billion. Following such sale, the Company divested
several of its non-core businesses.
The Company is the largest producer and distributor of
canned vegetables and canned fruit in the United States, with net
sales to its customers in excess of $1 billion in fiscal 1996.
The Company's primary domestic channel of distribution is retail
outlets, which accounted for approximately $800 million (or 71%)
of the Company's fiscal 1996 domestic sales. In calendar 1996,
the Company had domestic market shares of 20.1% of canned
vegetable products and 38.1% of canned fruit products. The
Company's market share in vegetables is larger than the market
share of the Company's two largest branded competitors combined
and its market share of canned fruit is larger than the fruit
market share of all other branded competitors combined. In
addition, the Company enjoys strong market shares in various cut
tomato product categories.
The Del Monte brand name, which has been in existence since
1892, is one of the leading brand names in the food industry and
maintains a reputation for premium quality. Del Monte brand
products are found in substantially all chains and independent
grocery stores throughout the United States, with the average
supermarket carrying approximately 100 Del Monte brand items. The
Company estimates that Del Monte brand products are purchased by
over 80% of U.S. households and that the Del Monte brand is
recognized by 96% of all consumers of products in the Company's
categories. The Del Monte brand has the highest unaided brand
awareness of any canned food brand in the United States. As the
brand leader in three major processed food categories (canned
vegetables, fruit and cut tomato products), the Company has a
multi-category presence that management believes provides it with
a competitive advantage in selling to the retail grocery
industry.
The Company sells it products to national chains and
wholesalers through a nationwide sales network consisting
primarily of independent food brokers. The Company's direct sales
force also sells Del Monte products to Warehouse Clubs, Mass
Merchandisers and Supercenters. In addition, the Company sells
its products to the foodservice industry, food processors and the
military through different independent food brokers. The Company
also exports a small percentage of its products to certain
foreign countries directly and through independent exporters
based in the United States.
The Company has over 2,500 contracts to purchase vegetables
and fruit from individual growers and cooperatives located in
various geographic regions of the United States, principally the
Midwest, the Northwest, California and Texas. This diversity of
sourcing helps insulate the Company from localized disruptions
during the growing season, such as weather conditions, that can
affect the price and supply of vegetables and fruit. See "Risk
Factors--Adverse Weather Conditions."
The Company owns a number of registered and unregistered
trademarks that it uses in conjunction with its business,
including the trademarks Del Monte(R), FreshCut(TM), Snack
Cups(R), Fruit Cup(R), Fruit Naturals(R), and Del Monte LITE(R).
In connection with and subsequent to the RJR Nabisco Sale, the
Company granted various perpetual, royalty-free licenses for the
use of the Del Monte name and trademark, generally outside of the
United States. The licensees of the Del Monte name and trademark
include Del Monte Europe, Kikkoman, Fresh Del Monte, affiliates
of RJR Nabisco and Yorkshire. Neither Del Monte Europe nor Fresh
Del Monte is an affiliate of the Company.
In fiscal 1994, 1995 and 1996, the Company invested an
aggregate of approximately $55 million of capital in its domestic
operating facilities. The Company believes that the efficiency of
its fully-integrated production facilities, its proprietary seed
varieties and its bulk supply agreements make it one of the
lowest-cost producers of canned vegetables, fruit and cut tomato
products in the United States.
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DMC was incorporated under the laws of the State of New York
in 1978. DMFC, then known as DMPF Holdings Corp., was
incorporated under the laws of the State of Maryland in 1989. DMC
and DMFC each maintains its principal executive office at One
Market, San Francisco, California 94105, and their telephone
number is (415) 247-3000. DMC is a wholly owned subsidiary of
DMFC.
Competitive Strengths
Management believes that the following elements contribute
to the Company's position as a leading producer and distributor
of canned vegetables, fruit and cut tomato products in the United
States and provide a solid foundation for the Company's business
strategy.
- Significant Market Share and Strong Brand Name
Recognition--In calendar 1996, the Company had domestic
market shares of 20.1% of canned vegetable products and
38.1% of canned fruit products. The Company's market
share in canned vegetables is larger than the market
share of the Company's two largest branded competitors
combined and its market share in canned fruit is larger
than the market share of all other branded competitors
combined. In addition, the Company had a 25.4% market
share in the fastest growing segment of the solid tomato
market, the cut tomato segment. The Del Monte brand name,
which has been in existence since 1892, is one of the
leading brand names in the food industry, and has the
highest unaided brand awareness of any canned food brand
in the United States. As a result of its brand
leadership, the Company has a multi-category presence
that management believes provides it with a competitive
advantage in selling to the grocery industry. Del Monte
brand products are found in substantially all grocery
chains in the United States, with the average supermarket
carrying approximately 100 Del Monte brand items. The
Company estimates that Del Monte brand products are
purchased by over 80% of U.S. households and that the Del
Monte brand name is recognized by 96% of all consumers of
products in the Company's categories.
Calendar 1996 Market Share
----------------------------------------------------
Market Next Leading Branded
Category Position(a) Percentage Competitor's Percentage(a)
- -------- ----------- ---------- --------------------------
Canned Vegetables... #1 20.1% 12.5% (Green Giant)
Canned Fruit........ #1 38.1% 12.0% (Libby's)
Canned Cut Tomato
Products............ #1 25.4% 10.8% (Hunt's)
----------------------
(a) Excludes private label.
- Improving EBITDA and EBITDA Margins--The Company's
established market position, strong brand recognition,
new pricing strategy and significant cost reduction
efforts have allowed it to achieve consistent and
improving EBITDA and EBITDA margins. EBITDA (giving
effect to the sale of the Divested Operations) for fiscal
1994, 1995 and 1996 was $63 million, $76 million and $92
million, respectively. EBITDA margins for the same
periods were 5.7%, 6.9% and 8.6%, respectively.
- Extensive National Sales and Distribution System--The
Company's extensive sales and distribution network which
is responsible for the distribution of finished goods to
over 2,400 customer destinations nationwide, gives Del
Monte a nationwide presence. The Company's national sales
and distribution network enables it to compete with other
national brands and regional competitors, and to
introduce new products on a regional or national basis.
The Company operates six strategically-situated
distribution centers offering customers a variety of
services. Management believes that the Company's
distribution system is an important contributor to the
Company's success and provides the Company with a
competitive advantage over regional and private label
competitors.
- Low Cost Producer--Management believes that the Company
is one of the lowest cost producers of canned vegetables,
fruit and cut tomatoes in the United States as a result
of its raw product sourcing
46
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diversity, proprietary seed varieties, modern processing
equipment, labeling, packaging, warehousing and
distribution efficiencies and strategic alliances with
suppliers.
- Agricultural Expertise and Grower Relationships--The
Company has developed proprietary vegetable seed
varieties in order to increase agricultural and cannery
yields and to improve product flavor and quality. The
Company contracts with experienced growers who have
cultivated these varieties on prime agricultural land
proximate to the Company's processing facilities. In many
cases, the Company has had and continues to have
long-term relationships with such growers.
- Experienced Management Team--In connection with the
Recapitalization, two veteran managers with extensive
food industry experience, Richard G. Wolford and Wesley
J. Smith, joined the Company as Chief Executive Officer
and Chief Operating Officer, respectively. The Company's
prior Co-Chief Executive Officers will remain with the
Company as consultants during a transition period
following the Recapitalization. Mr. Wolford has 30 years
of experience in the food industry, 20 of which were with
Dole Foods. He was president of Dole Packaged Foods from
1982 to 1987. During Mr. Wolford's tenure at Dole, Dole
experienced increased profitability, sales volume and
market share. Mr. Wolford played a key role in redefining
the Dole brand and expanding the range of products sold
under the brand. From 1988 to 1996, he was Chief
Executive Officer of HK Acquisition Corp. where he
developed food industry investments with venture capital
investors and managed the investor-owned companies. Mr.
Smith has 25 years of experience, 23 of which were with
Dole Foods, where he oversaw the building of Dole's
domestic fresh pineapple business and the restructuring
of Dole's sizable Hawaiian operations. In addition, Mr.
Smith was responsible for establishing Dole's juice
business at Dole with minimal capital investment.
Business Strategy
In fiscal 1996, the Company began development of a new
business strategy designed to improve profitability, enhance the
Company's leadership position in the industry, increase spending
efficiencies and strengthen the Company's ability to manage
anticipated future growth. The key elements of this new business
strategy are discussed below.
- New Pricing--In the retail grocery market, pricing tends
to be set by the branded leader with other brand and
private label price levels being set using the leading
brand as the benchmark. Responding in part to relatively
balanced levels of supply and demand, the Company
increased prices on its core fruit products in fiscal
1996 and on its core vegetable products in fiscal 1996
and 1997. As anticipated, price increases were initially
not matched by competitors and the Company's market
shares in many of its core product categories were eroded
by both private label and branded competition. Market
shares have now stabilized or improved relative to the
lower levels reached after such price increases.
Specifically, branded fruit competitors have matched the
Company's prices and branded vegetable competitors have
increased their prices to more closely approach the
Company's higher prices. Management believes that its
price levels are sustainable in view of the current price
levels of branded competition. See "Risk Factor--Pricing
Strategy."
- Trade Promotion Programs--Over the last twelve months,
the Company has implemented a significant change in its
trade promotion strategy. Historically, the Company
marketed its products through aggressive periodic trade
promotions that represented discounts off list price for
retailers. Many of these promotions required little or no
retailer support or performance, resulted in the buildup
of retailers' inventories through advance buying, and
were not regularly passed through to the consumer in
shelf price reductions. Currently, under the Company's
"Go-to-Market" strategy, trade spending is based on
accruals generated by retailers for each case purchased.
These accrued amounts are then paid for retail
merchandising events based on each case actually sold to
the consumer. Management believes that this
performance-based strategy, combined with coordinated
promotional
47
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efforts undertaken with the retailer, provides much more
efficient spending that to date has resulted in more efficient
merchandising of the Company's products.
- Consumer Promotion--The Company has also substantially
increased its marketing spending targeted directly at
consumers and expects to spend $56 million on such
marketing in fiscal 1997 (a $44 million increase from
fiscal 1996). This strategy, which primarily takes the
form of free-standing insert couponing, has helped the
Company recapture some of the volume and market share
declines that occurred following the fiscal 1996 price
increases.
- New Products and Product Line Extensions--The Company has
focused on developing products designed to take advantage
of the Company's presence in existing categories,
emphasize existing manufacturing capabilities and
leverage the Del Monte brand name. Specifically, the
Company recently has introduced Del Monte D'Italia(TM)
pasta sauces, diced tomatoes and flavored fruits. The
Company has also repositioned certain of its tomato and
vegetable products using its FreshCut brand, which
emphasizes the freshness of the raw ingredients in those
products. In fiscal 1997, the Company introduced the
FreshCut line of vegetables and two new FreshCut tomato
products. See "Business--Legal Proceedings." Management
believes that the FreshCut concept for vegetables has
increased brand perceptions for ingredient freshness,
overall quality and taste. In the future, the Company
will seek to develop value-added products that reflect
consumer demands, such as convenience and quality, and
that will benefit from the Del Monte brand and the
Company's distribution infrastructure.
- Increased Penetration of High-Growth Channels of
Distribution--Changes in the retail grocery environment
have resulted in substantial growth of alternative
retailers such as Warehouse Clubs, Mass Merchandisers and
Supercenters. The Company believes it is well-positioned
to benefit from these changes because these vendors
generally seek brand name products with high turnover
from category leaders. In addition, vendors in this
category generally are attracted to large,
technologically sophisticated suppliers such as the
Company that have the ability to meet their stringent
inventory and shelf-management requirements. The Company
believes it is currently the leading supplier of canned
vegetables and fruit to Wal-Mart's Sam's Club and is a
major supplier to Price/Costco. The Company also believes
it is Wal-Mart Supercenters' leading supplier of canned
vegetables, fruit and cut tomato products as a group.
- Customer Alliances--Competitive pressures in the retail
food industry are causing many retailers to form
alliances with large suppliers such as the Company that
are able to provide sophisticated inventory and category
management programs. Management believes that the Company
is well situated to take advantage of this trend due to
the scope of its product offerings and efficient national
distribution system, as well as its size and
technological capabilities. The Company has formed
technological alliances with several key customers and
intends to pursue additional alliances. To support these
alliances, Del Monte has developed proprietary software
systems and programs in category management which enable
its customers to free shelf space for higher-margin
products, improve inventory management by eliminating
redundant or slow-moving products and optimize product
positioning on store shelves. Substantially all of the
Company's customers that have employed the Company's
category management system have increased Del Monte
product sales and shelf space while reducing overall
shelf space dedicated to the canned vegetables, fruit and
cut tomato categories as a whole. In addition, the
Company has developed a proprietary vendor-managed
inventory software system through which the Company
directly manages its customers' inventories of Del Monte
branded products. This inventory software is designed to
reduce customers' overhead and to enable them to achieve
lower average inventory levels while enhancing the
Company's opportunities to sell Del Monte products.
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<PAGE>
Cost Savings and Inventory Management
In fiscal 1993, the Company instituted a reengineering plan
designed to reduce operating costs and enhance the Company's
ability to produce and distribute its products. The Company
realized approximately $41 million in cumulative cost savings in
fiscal 1994 and 1995 principally as a result of this plan. In
connection with the Recapitalization, the Company has developed a
capital expenditure program that is designed to generate an
additional $29 million in annual cost savings to be achieved over
the next four years as the initiatives discussed below are
completed. In addition, the Company has identified $45 million of
potential inventory reductions that it intends to effect. There
can be no assurance, however, that such cost savings or inventory
reductions will be realized.
- Manufacturing Improvements--Management currently plans to
introduce new processing equipment such as modern
high-speed fillers, optical sorting equipment and
packaging machinery, each of which is intended to
generate cost savings and to help the Company maintain
its position as a low cost producer. Such savings would
result primarily from decreased labor and general
production efficiencies.
- Facility Consolidation--The Company closed two vegetable
plants and two distribution centers in fiscal 1994 and
another vegetable plant in fiscal 1995. The Company plans
to close an additional facility by fiscal 1999, which is
expected to generate additional annual savings from
reduced hauling charges, improved recoveries and a
reduction of fixed costs.
- Improved Inventory Management--Keeping inventory levels
as low as possible will be a key strategic focus of the
Company. The Company intends to significantly reduce
excess inventories beginning with the 1997 pack,
primarily by reducing contracted acreage. The Company is
also evaluating a counter-seasonal production strategy
comprised of importing fruits from the Southern
hemisphere during the North American winter and increased
sourcing of vegetables from the Southwest during periods
other than the Midwestern harvest season.
The Canned Food Industry
The domestic canned food industry is characterized by
relatively stable growth based on modest price and population
increases. Over the last ten years, the industry has experienced
consolidation as competitors have shed non-core business lines
and made strategic acquisitions to complement category positions,
maximize economies of scale in raw material sourcing and
production and expand retail distribution. Sustaining strong
relationships with retailers has become a critical success factor
for food companies and is driving initiatives such as category
management. Food companies with category leadership positions and
strong retail relationships have increasingly benefited from
these initiatives as a way to maintain shelf space and maximize
distribution efficiencies.
Each product segment of the canned food industry is
typically comprised of a few dominant branded players who control
one third to more than one half of total industry market share
and a large, fragmented private label segment. Leading brands are
generally able to command a pricing premium over private label
competitors. Although private label products have held
significant market shares in the aggregate for canned fruit
(43.7% in calendar 1996), vegetables (42.2% in calendar 1996) and
cut tomato products (30.3% in calendar 1996) for some time, their
market shares have remained relatively stable over the past
decade. Since the canned food industry is mature and capital
intensive, there have been few new entrants into the major
product markets in recent years. Moreover, the industry has
experienced plant closures and consolidation over the past
decade.
Company Products
The Company has a multi-category presence with products in
four major processed food categories: canned vegetables, fruit,
tomato products and pineapple.
49
<PAGE>
Canned Vegetables. The canned and jarred vegetable industry
in the United States generated approximately $3.2 billion in
sales in fiscal 1996. The domestic canned vegetable industry is a
mature segment characterized by high household penetration.
Industry sales of canned and jarred vegetables have remained
stable in recent years, as illustrated in the following table:
Fiscal Year Ended June 30,
---------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
(Dollars in billions)
All Canned/Jarred Vegetables ....... $3.1 $3.0 $3.0 $3.1 $3.2
The canned retail vegetable market consists of three
distinct segments: major, flanker, and specialty products. The
major segment consists of corn, green beans and peas and
represents the largest volume segment, accounting for $732
million or approximately 66% of fiscal 1996 canned vegetable
supermarket case sales (excluding pickles and tomato products).
The flanker segment, which includes mixed vegetables, spinach,
beets, carrots, potatoes and sauerkraut, accounted for $234
million or approximately 17% of fiscal 1996 supermarket case
sales of canned vegetables. The specialty segment, comprised of
asparagus, zucchini, baby beets and a variety of corn and bean
offerings, represents $270 million or approximately 12% of the
overall canned vegetable market. A cross-segment, buffet
products, includes all of the above varieties in smaller can
sizes. The Company also offers a no-salt product line across most
of its core varieties. The Company competes in each of the major,
flanker, buffet and specialty categories of canned vegetables.
Within these categories, the Del Monte brand accounted for $323
million in retail sales in fiscal 1996. During calendar 1996, Del
Monte brand vegetable products enjoyed an average premium of
17(cent) (32%) per item over private label products and the
Company held a 20.1% share of the canned vegetable market for
that year.
The canned vegetable market is concentrated among a small
universe of branded players and a large, fragmented pool of
private label competitors. In the major vegetable market, the
Company is the branded market share leader and in calendar 1996
held a 23.4% market share in beans, a 20.6% market share in corn
and a 16.4% market share in peas. The Company also is the branded
market share leader in the flanker category and is the overall
market share leader in the buffet market. Private label products
taken as a whole command the largest share of the canned
vegetable market (42.2% in calendar 1996), but their market share
has remained relatively stable over the past decade. The primary
branded competitors in the market include Del Monte, and Green
Giant nationally, and regional brands such as Freshlike, Stokely
and Libby's in addition to private label producers.
1996 Canned Vegetable Market Share
Del Monte ........................................... 20.1%
Green Giant ......................................... 12.5%
Stokely ............................................. 2.6%
Libby's (Seneca) .................................... 3.7%
Freshlike (Dean Foods) .............................. 2.4%
All private label combined .......................... 42.2%
- ----------------------
Source: Nielsen Scantrack, calendar 1996 (based on equivalent cases).
The Company has relationships with approximately 900
vegetable growers located primarily in Wisconsin, Illinois,
Minnesota, Washington, and Texas.
Canned Fruit. The processed canned and jarred fruit
industry in the United States, including pineapple, generates
approximately $2.2 billion in sales per year. The domestic canned
fruit industry is a mature segment characterized by high
household penetration. Industry sales of canned and jarred fruit
have remained virtually flat in recent years, as illustrated in
the following table.
50
<PAGE>
Fiscal Year Ended June 30,
---------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
(Dollars in billions)
All Canned/Jarred Fruit ............... $2.3 $2.3 $2.3 $2.3 $2.2
The Company competes in three distinct segments of the
canned fruit industry: major, specialty, and pineapple products.
These three distinct segments account for over 60% of the canned
fruit industry's total sales. The major segment consists of cling
peaches, pears and fruit cocktail/mixed fruit and fruit cups. The
specialty segment includes apricots, freestone and spiced
peaches, mandarin oranges and cherries. The pineapple segment is
discussed separately below.
The Company is the largest processor of branded canned
fruit in the United States. The Company competes in the major
fruit and specialty fruit segments of the canned fruit market
which together accounted for $1 billion of total canned fruit
industry sales in fiscal 1996.
Major fruit accounted for sales by retailers of $611
million in fiscal 1996. Sales by retailers of Del Monte brand
major fruit products totaled $262 million in fiscal 1996. For
calendar 1996, the Company was the branded share leader with a
38.1% market share. The Company is also the share leader in every
major sub-segment of the major category. In single serve sizes,
the Company has over a 60% market share. The Company's major
fruit and fruit cup businesses are distributed in substantially
all grocery outlets, with the average store stocking 27 Del Monte
major fruit items.
The Company is the branded leader 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 the Company's brand recognition.
Del Monte apricots and freestone peaches are distributed in over
73% and 57% of grocery outlets, respectively. Mandarin oranges
and cherries are distributed in 19% and 7% of grocery outlets,
respectively.
The Company competes in the canned 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 (15-16
oz.), the Del Monte brand commanded an average 11(cent) (13%) per
item premium. The Company faces competition in the canned fruit
segment primarily from Tri-Valley Growers and PCP, both of which
are grower co-operatives that produce private label products.
Tri-Valley Growers also packs the Libby's and S&W brands. Libby's
holds an overall canned fruit market share of 12%. Forty-four
percent of industry sales are generated primarily by private
label producers including Tri-Valley Growers and PCP.
The Company increased fruit prices in fiscal 1996 to cover
higher raw product costs and to improve margins. Higher prices
put the Company at a significant price disadvantage in the
marketplace for most of the year as competition did not raise
prices until late in the fiscal year. As a result, the Company
experienced a short-term volume loss and market share erosion.
However, the Company's significantly increased margins generally
offset the effects of the lower volume. The Company's market
share in the major canned fruit category increased in the seven
month period ended January 25, 1997 to 40.9%, a level experienced
prior to the price increases. See "Risk Factors--Pricing
Strategy."
1996 Canned Major Fruit Market Share
Del Monte ............................................ 38.1%
Libby's (Tri-Valley) ................................. 12.0%
All private label combined ........................... 43.7%
- ----------------------
Source: Nielsen Scantrack, calendar 1996 (based on equivalent cases).
The Company has relationships with approximately 600 fruit
growers located in California, Oregon and Washington.
51
<PAGE>
Canned Tomato Products. Tomato products generated fiscal
1996 industry-wide sales of $5.3 billion, an increase of almost
4% from 1995. Total sales of tomato products have grown steadily
in recent years, achieving a five-year compound annual growth
rate of 3.6% per year. The diced and chunky segment of the retail
solid tomato category grew 27% during calendar 1996. The
following table presents total industry sales of all processed
tomato products in recent years.
Fiscal Year Ended June 30,
---------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
(Dollars in billions)
Processed Tomato Products ............. $4.6 $4.7 $4.8 $5.1 $5.3
The processed tomato market can be separated into more than
ten distinct product categories which differ widely in terms of
profitability, price sensitivity and growth potential. Consumers
use tomato products for a variety of purposes ranging from
ingredients to condiments, beverages and main dishes.
The highest growth is taking place in value-added
categories such as spaghetti/pasta sauce and diced tomatoes.
These products are generally the least price sensitive and,
consequently, can support higher margins. Growth in spaghetti
sauce and in the value-added diced and chunky segment of the
solids category is anticipated to remain strong as a result of
the shift in consumer preferences towards convenience-oriented
items.
The tomato products major market segments generated grocery
sales by retailers of $3.7 billion in fiscal 1996, including
sales of $246 million in the Company's key category of cut tomato
products. Sales by retailers of Del Monte branded cut tomato
products in fiscal 1996 accounted for $70 million. The Company's
tomato product offerings include four major segments: cut
tomatoes (stewed, diced, chunky and wedges), ketchup, tomato
sauce and paste, and value-added products such as spaghetti/pasta
sauce, salsa and sloppy joe sauce.
In fiscal 1995, the Company exited the whole-peeled tomato
segment to focus on cut tomato products, which is generally a
less price sensitive and higher-margin segment. The Company's
sales in the diced and chunky segment grew 60% during the same
period and as of December 28, 1996, the Company was the branded
leader with a 22.1% share. The Company increased prices
significantly on its cut tomato products in April 1995, at the
same time as it repositioned the line under the FreshCut brand.
The diced and chunky category is the fastest growing category in
the tomato products group.
The Company is active in the value-added tomato product
segment with its pasta and spaghetti sauces, salsas and sloppy
joe sauces. This segment has enjoyed significant growth over the
last four years, with retail sales of $2.2 billion in calendar
1996 compared to retail sales of $1.8 billion in calendar 1993.
The Company entered the value-added tomato product segment in
fiscal 1993, when the Company introduced a new, six-flavor line
of canned spaghetti sauce into the $1.1 billion retail spaghetti
sauce market. The Company employed a strategy to deliver high
quality product in a can at an everyday shelf price well below
that of the jarred competition. The Company currently offers two
styles of spaghetti sauce and four flavors of Del Monte D'Italia
pasta sauces.
The Company offers products in nearly every canned tomato
product category, and faces competition in the tomato product
market from brand name competitors including S&W, Contadina, Red
Gold and Hunt's in the cut tomato category; Heinz and Hunt's in
the ketchup category; Campbell Soup's Prego, Van Den Bergh's Ragu
and Hunt's in the spaghetti sauce category; Hunt's and Hormel in
the sloppy joe sauce category; and Campbell Soup's Pace, Frito
Lay's Tostito's and Pillsbury's Old El Paso in salsa and picante.
In addition, the Company faces competition from private label
products in all major categories. While the Company has a small
share of the overall tomato product market (with market shares in
calendar 1996 of 4.1% in spaghetti sauce, 3.8% in salsa and 7.8%
in tomato sauce), it is the largest branded competitor in the
high-margin cut tomato segment with market share of 25.4% in
calendar 1996. Hunt's, the next largest branded processor,
possessed a 10.8% share for this period. In other key categories,
for calendar 1996, Heinz was the market leader in ketchup with a
48.6% market share, Hunt's was the leader in tomato sauce with a
34.7% market share, and Pace was the market leader in
salsa/picante sauces with a 29.6% market share.
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1996 Canned Cut Tomato Products(a)
Market Share
Del Monte ................................... 25.4%
Hunt's ...................................... 10.8%
S&W ......................................... 9.6%
Contadina ................................... 5.8%
All private label combined .................. 30.3%
- ----------------------
(a) Excludes whole peeled and crushed tomatoes, ketchup,
tomato sauce and paste, spaghetti sauce and sloppy joe, salsa and
picante sauces.
Source: Nielsen Scantrack, calendar 1996 (based on equivalent cases).
The Company has relationships with approximately 40 tomato
growers located primarily in California where approximately 95%
of domestic tomatoes are produced.
Canned Pineapple. The canned pineapple products industry in
the United States generated approximately $329 million in sales
in fiscal 1996. The domestic pineapple industry is a mature
segment of the canned fruit industry that has generated stable
sales. Industry sales of canned pineapple products have remained
virtually flat in recent years, as illustrated in the following
table.
Fiscal Year Ended June 30,
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
(Dollars in millions)
Canned Pineapple Products ........... $334 $334 $329 $317 $329
Individual pineapple items are differentiated by cut style,
with varieties including sliced, chunk, tidbits and crushed.
Currently, 84% of pineapple product sold is packed in juice, with
the remaining 16% packed in heavy syrup. Size offerings include
the 20 oz. size, which accounts for 74% of category sales. Other
sizes offered include the 8 oz. and 15 oz. varieties.
The Company's retail pineapple line consists of sliced,
chunk, crushed and juice products in a variety of container
sizes. In addition to sales by retailers, which totaled $36
million in fiscal 1996, the Company sells a significant amount of
juice concentrate and crushed pineapple through the food
ingredients channel and also sells pineapple solids and juice
products to foodservice customers.
The Company is the second leading brand of canned
pineapple, with a 14.9% market share in calendar 1996. Dole is
the industry leader with a market share of 43.9%. Private label
and foreign pack brands comprise the low-price segment of this
category and hold market shares of 28.0% and 11.8%, respectively.
The five major foreign pack brands, Geisha, Libby's, Liberty
Gold, Empress, and 3-Diamond, have regional distribution and are
supplied by Thai and Indonesian packers. Certain foreign brands
grew through 1995 by "dumping" product in the United States at
below cost prices which depressed category pricing. In 1995, the
U.S. government imposed anti-dumping tariffs on Thai packers
which allowed the domestic industry to recover some of its
margins and volume.
1996 Canned Pineapple Market Share
Del Monte ........................................... 14.9%
Dole ................................................ 43.9%
Foreign pack ........................................ 11.8%
All private label combined .......................... 28.0%
- ----------------------
Source: Nielsen Scantrack, calendar 1996 (based on equivalent cases).
53
<PAGE>
The Company sources virtually 100% of its pineapple
requirements from its former subsidiary, Del Monte Philippines,
under a long-term supply agreement. The agreement provides for a
guaranteed supply of quality pineapple and a steady profit stream
due to pricing based on fixed retail and foodservice margins.
Sales, Marketing and Distribution
Sales. The Company's sales organization for retail products
is divided into four groups: (i) a retail broker network (which
consists of 100% independent broker representation at the market
level, managed by Company sales managers); (ii) national
accounts; (iii) Warehouse Clubs, Mass Merchandisers and
Supercenters; and (iv) customer marketing. Retail brokers are
independent, commissioned sales organizations which represent
multiple manufacturers. The Company's broker network represents
the Company to a broad range of grocery retailers. The national
accounts group maintains relationships with the corporate
headquarters of key national chain and wholesaler accounts such
as Fleming, Kroger, Super Valu and Winn-Dixie. The Company's
Warehouse Club, Mass Merchandiser and Supercenter group 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,
Price/Costco, Kmart and Target. The fourth group, customer
marketing, is responsible for managing internal customer oriented
resources including order management, logistics, trade promotion,
strategic initiatives and sales information and administration.
Foodservice, food ingredients, private label and military sales
are accomplished through both direct sales and brokers.
Marketing. Marketing includes product development, pricing
strategy, consumer and trade promotion, advertising, publicity
and package design. Consumer advertising and promotion support
are used, together with trade spending, to support awareness of
new items and initial trial by consumers, and to build
recognition of the Del Monte name.
Distribution. The Company's distribution organization is
responsible for the distribution of finished goods to over 2,400
customer destinations. Customers can order products to be
delivered via truck, rail or on a customer pickup basis. The
Company's distribution centers provide, among other services,
casing, labeling, special packaging, cold storing, pallet
repairing and fleet trucking services. Other services the Company
provides to customers include One Purchase Order/One Shipment, in
which the Company's 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), in which products are
shipped directly to stores.
Supply and Production
The Company owns virtually no agricultural land. Each year,
the Company buys over one million tons of fresh vegetables and
fruits pursuant to over 2,500 contracts with individual growers
and cooperatives located primarily in the United States. The
Company enters into individual fixed price contracts with growers
of vegetables, fruits and tomatoes. The vegetable growers are
located in Wisconsin, Illinois, Minnesota, Washington, Texas and
Arizona. The Company provides the growers with planting
schedules, seeds, insecticide management and hauling capabilities
and actively participates in agricultural management and quality
control with respect to all sources of supply. The vegetable
contracts are generally for a one-year term.
The Company's fruit and tomato growers are located
primarily in California; pear growers are also located in Oregon
and Washington. The fruit contracts range from one to ten years
each and as of June 30, 1996 the Company had purchase commitments
outstanding of approximately $322 million. Prices are generally
negotiated with grower associations. The Company actively
participates in agricultural management and quality control and
provides insecticide management and hauling capabilities. Where
appropriate, the Company manages the growers' agricultural
practices.
Thirteen Company-owned plants, located throughout the
United States, process the Company's products. Generally located
near growing areas, vegetable processing plants are located in
Illinois, Wisconsin, Minnesota, Texas and Washington, while fruit
and tomato plants are located in California, Indiana and
Washington. The
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Company produces the majority of its products between June
and October. Most of the Company's seasonal plants operate at
close to full capacity during the packing season.
Co-packers are used for pickles and certain other non-core
products and to supplement supplies of certain canned vegetables,
fruit and tomato products.
Prior to December 1993, the Company produced almost all of
the cans used to package its products in the United States at its
nine can manufacturing facilities located throughout the United
States. In December 1993, the Company sold substantially all the
assets (and certain related liabilities) of the Company's can
manufacturing business to Silgan Container Corporation
("Silgan"). The transaction included the sale or lease of the
Company's nine can manufacturing facilities. In connection with
this agreement, Silgan and the Company entered into a ten-year
supply agreement, with optional successive five year extensions
under which Silgan agreed to supply all of the Company's
requirements for metal food and beverage containers in the United
States. The Company's total annual can usage is approximately two
billion cans, representing approximately 5.5% of total domestic
food can volume in the United States.
Foreign Operations
The Company has sold all of its non-U.S. operations and now
conducts all of its business domestically.
Customers
The Company's customer base is broad and diverse and no
single customer accounted for more than 10% of fiscal 1996 net
sales. The Company's 15 largest customers during fiscal 1996
represented approximately 48.4% of the Company's net sales. These
companies have all been Del Monte customers for at least ten
years and in most cases for twenty years or more.
Competition
The Company faces substantial competition throughout its
product lines from numerous well-established businesses operating
nationally or regionally with single or multiple branded product
lines. In general, the Company competes on the basis of quality,
breadth of product line and price. See "--Company Products."
Information Services
In November 1992, the Company entered into an agreement
with Electronic Data Systems Corporation ("EDS") to provide
services and administration to the Company in support of its
information services functions for all domestic operations.
Payments under the terms of the agreement are based on scheduled
monthly base charges subject to various adjustments based on such
factors as production levels and inflation. Base charge payments
under the agreement total $137 million, to be paid over the
ten-year term of the contract. The agreement expires in November
2002 with optional successive one-year extensions. As a part of
the agreement, the Company sold EDS certain of its information
technology equipment and software for approximately $6 million.
The Company periodically reviews its general information system
needs.
Research and Development
The Company's research and development ("R&D") organization
provides product, packaging and process development and
analytical and microbiological services, as well as agricultural
research and seed production. In fiscal 1996, 1995 and 1994, R&D
expenditures (net of revenue for services to third parties) were
$6 million, $6 million and $5 million, respectively. The Company
maintains an R&D facility in Walnut Creek, California where it
conducts research in a number of areas related to its business
including seed production, packaging, pest management, food and
nutrition science and plant breeding.
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Employees
At March 31, 1997, the Company had approximately 2,100
full-time employees. An additional 12,000 individuals are hired
on a temporary basis during the pack season. The Company
considers its relations with its employees to be satisfactory.
The Company has eight collective bargaining agreements with
seven unions covering approximately 9,850 of its hourly and
seasonal employees. Four collective bargaining agreements expire
in calendar 1997, covering seven canneries and one distribution
center. The remaining agreements expire in calendar 1998 and
1999. The Company believes that each of these agreements will be
successfully renegotiated, but there can be no assurance that
negotiations will be successful.
Trademarks and Licenses
The Company owns a number of registered and unregistered
trademarks for use in connection with various food products.
These trademarks are important to the Company because brand name
recognition is a key factor in the success of the Company's
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
the Company, as the registered owner, and its licensees, where
applicable, comply with all applicable laws. The Company is not
aware of any material challenge to the ownership by the Company
of its major trademarks.
In connection with the RJR Nabisco Sale and the
divestitures of certain operations subsequent to that sale, the
Company granted various perpetual, royalty-free licenses for use
of certain trade secrets, trademarks, patents and other
intellectual property to the acquiring companies. With respect to
processed food products, affiliates of RJR Nabisco hold the
rights to use Del Monte trademarks in Canada and South America;
Kikkoman holds the rights to use Del Monte trademarks in the Far
East (excluding the Philippines); Del Monte Europe holds the
rights in Europe, Africa, the Middle East and the Indian
Subcontinent; and Dewey Limited (an affiliate of Del Monte
Europe) owns the rights in the Philippines to the Del Monte brand
name. Fresh Del Monte holds the rights to use the Del Monte
trademark with respect to fresh produce and certain chilled and
frozen products related thereto throughout the world. With
respect to dried fruit and snack products, Yorkshire holds the
rights to use Del Monte trademarks in the United States, Mexico,
Central America and the Caribbean. In connection with the sale of
its pudding business, the Company licensed Kraft to use the Del
Monte name on a royalty-free basis in connection with
single-serving pudding products for a period of two years from
November 1995. In connection with agreements to sell Del Monte
Latin America, Hicks, Muse, Tate & Furst acquired the right to
use the Del Monte trademarks with respect to processed foods in
Mexico and Donald W. Dickerson, Inc. acquired such right in
Central America and the Caribbean. The Company retains the right
to review the quality of the licensee's products under each of
its license agreements. The Company generally may inspect the
licensees' facilities for quality and the licensees must
periodically submit samples to the Company for inspection.
Licensees may grant sublicenses but all sublicensees are bound by
these quality control standards and other terms of the license.
The Company has also granted various security interests in its
trademarks and related trade names, patents and trade secrets to
its creditors in connection with the Bank Financing and to its
licensees.
Governmental Regulation
The Company's operating businesses are subject to
regulation and inspection by various federal, state and local
governmental agencies which enforce strict standards of
sanitation, product composition, packaging and labeling, work
place safety and environmental compliance. The Company believes
it is in substantial compliance with such regulations. New
nutrition labeling and health claim requirements proposed by the
U.S. Food and Drug Administration (the "FDA") were passed by
Congress in 1990 and became effective on August 4, 1994. The
Company believes it is in substantial compliance with such
regulations.
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Pension Contributions
As described more fully in Note F to the audited
consolidated financial statements of the Company for the year
ended June 30, 1996, the Company's defined benefit pension plans
are underfunded. In connection with the Recapitalization, the
Company has entered into an agreement with the U.S. Pension
Benefit Guaranty Corporation dated April 7, 1997 whereby the
Company will contribute the following amounts to its defined
benefit pension plans: $15 million within 30 days after the
consummation of the Recapitalization, $15 million in calendar
1998, $9 million in calendar 1999, $8 million in calendar 2000
and $8 million in calendar 2001, for a total of $55 million. The
contributions required to be made in 1999, 2000 and 2001 will be
secured by a $20 million letter of credit to be obtained by the
Company by August 31, 1998. The contributions required to be made
in 1997 and 1998 will be paid prior to any scheduled amortization
under the Bank Financing in excess of $1 million, and the Company
has agreed not to make voluntary prepayments of the loans under
the Bank Financing prior to making the contributions required to
be made in 1997 and 1998 or prior to obtaining the letter of
credit. The Company estimates that the total contributions
required to be made from 1997 through 2001 under this agreement
will be approximately $15 million more than the amount the
Company would have been required to contribute to the pension
plans under applicable law in the absence of the agreement.
Legal Proceedings
The Company is involved in various legal proceedings
incidental to its business, including claims with respect to
product liability, worker's compensation, tort and other general
liability and automobile liability, for which the Company carries
insurance or is self-insured, as well as trademark, copyright and
related litigation, and wrongful discharge and other
employer/employee claims and litigation. The Company believes
that no such legal proceedings will have a material adverse
effect on the business or financial condition of the Company. See
"--Environmental Compliance" for a description of certain
environmental litigation to which the Company is a party.
During fiscal years 1993, 1994 and 1995, the Company had
exclusive supply arrangements (the "PCP Agreement") with PCP to
purchase substantially all of PCP's tomato and fruit production.
PCP continued to own and operate its production facilities, as
well as purchase raw products through its established grower
network. The PCP Agreement was to expire in June 1998. During
fiscal 1995, the U.S. Federal Trade Commission ("FTC") conducted
an investigation to determine whether the supply arrangement was
in violation of certain United States antitrust laws. In January
1995, the Company and PCP agreed to terminate the PCP Agreement
and other supply and purchase option agreements in settlement of
the FTC investigation. The Company negotiated a consent order
with the FTC which was issued on April 11, 1995. Pursuant to this
consent order, the PCP Agreement was terminated in late fiscal
1995. The order imposes restrictions on the Company's ability to
acquire existing domestic canned fruit businesses and assets.
On January 30, 1996, the Company received an inquiry from
the FDA concerning the Company's FreshCut brand labeling on
certain tomato and vegetable products. The Company is in the
process of developing its response to the FDA inquiry. The
Company does not believe that the resolution of this inquiry will
have a material adverse impact on the Company's use of its
FreshCut brand or marketing concept.
On March 25, 1997, the entities that purchased the
Company's Mexican subsidiary in October 1996 commenced an action
in Texas state court entitled HMTF Acquisition Corp. et al v. Del
Monte Corporation, alleging, among other things, that the Company
breached the agreement with respect to the purchase because the
financial statements of the Mexican subsidiary did not fairly
present its financial condition and results of operations in
accordance with U.S. generally accepted accounting principles.
The purchasers have claimed damages in excess of $10 million as a
result of these alleged breaches. In connection with this action,
$8 million of the cash proceeds payable to current shareholders
and certain members of senior management of DMFC in the
Recapitalization will be held in escrow and applied to fund the
Company's costs and expenses in defending the action, with any
remaining amounts available to pay up to 80% of any ultimate
liability of the Company to the purchasers. Separately, the
purchasers claim that they are entitled to receive from the
Company as a purchase price adjustment an additional
approximately $2.6 million pursuant to provisions of the purchase
agreement. The Company does not believe that
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these claims, in the aggregate, will have a material adverse
effect on the Company's financial position or results of
operations.
Environmental Compliance
As a result of its agricultural, food processing and canning
activities, the Company is subject to numerous environmental laws
and regulations. Many of these laws and regulations, both foreign
and domestic, are becoming increasingly stringent and compliance
with them is becoming increasingly expensive. The Company
believes that it is in substantial compliance with all such laws
and regulations. The Company is engaged in a continuing program
to maintain its compliance with existing laws and regulations and
to establish compliance with anticipated future laws and
regulations. The Company spent an aggregate of $5 million on
domestic environmental expenditures from fiscal 1994 through
fiscal 1996, and projects that it will spend an aggregate of
approximately $4 million in fiscal 1997 and 1998 on capital
projects and other expenditures in connection with environmental
compliance.
In addition, in connection with the Company's divestiture
of owned or operated properties, the Company may be required to
remediate environmental conditions at such properties. The
Company has also identified certain conditions that require
remediation at properties it continues to own or operate. The
Company does not expect that such remediation costs will have a
material adverse effect on the Company's financial condition or
results of operations.
The Company has been notified by governmental authorities
and private claimants that it may be a potentially responsible
party ("PRP") for environmental investigation and remediation
costs at certain designated "Superfund Sites" under CERCLA or
under similar state laws. The Company is currently involved as a
PRP at five Superfund Sites. The Company resolved its liability
at three Superfund Sites in fiscal 1996 and at one Superfund Site
in early fiscal 1997. In addition, the Company obtained an
indemnification for any liabilities in connection with another
site from its former waste hauler. The Company has, in the past,
been identified as a PRP at five other sites, but has had no
active involvement at any of these sites for several years. At
several of these sites, the Company believes it has no liability.
Generally, the Company is considered a PRP because it sent
certain wastes (in most cases, non-hazardous materials) from its
operations to these sites for disposal. The exception is one site
that the Company formerly operated (but did not own). For the
formerly operated site, however, the Company has been indemnified
for any liability it may have. The five Superfund Sites at which
the Company is currently involved are at various stages of
environmental investigation and remediation. Because the
investigation and remediation process is usually long and
complicated, it is sometimes difficult to predict the ultimate
extent of the Company's liability. However, at most Superfund
Sites, the Company has a de minimis share of liability. There can
be no assurance that the Company will not be identified as a PRP
at additional sites in the future or that additional remediation
requirements will not be imposed on properties currently owned
and operated. In addition, there can be no assurance that other
sites to which the Company has sent waste will not be identified
for investigation or proposed for listing under CERCLA or similar
state laws. The Company believes that its CERCLA and other
environmental liabilities, if any, will not have a material
adverse effect on the Company's financial position or results of
operations.
Backlog
The Company does not experience significant backlog.
Properties
As of March 31, 1997, the Company operated 13 production
facilities and six distribution centers. The Company's production
facilities are owned properties, while the distribution centers
are owned or leased and the Company's various warehousing/storage
facilities are primarily leased facilities. Virtually all of the
Company's properties, whether owned or leased, are subject to
liens or security interests pursuant to the Bank Financing.
The following table summarizes the Company's production
facilities:
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Del Monte Production Facilities
Location Primary Product Line Square Footage
- -------- -------------------- --------------
Kingsburg, CA .... Peaches, Zucchini, Corn 121,000
Modesto, CA ...... Peeled Tomatoes, Ketchup, Tomato Sauce,
Salsa, Spaghetti Sauce, Bulk Paste,
Snap-E-Tom 220,000
San Jose, CA ..... Apricots, Fruit Cups, Fruit Cocktail,
Chunky Fruit, Diced Pears 371,000
Stockton, CA ..... Peaches, Cocktail Cherries, Fruit
Cocktail, Concentrate 446,000
Mendota, IL ...... Peas, Corn, Lima Beans, Mixed
Vegetables, Prune Juice, Carrots,
Peas & Carrots 246,000
Plymouth, IN ..... Snap-E-Tom, Ketchup, Tomato Sauce &
Juice, Pineapple Juice, Spaghetti
Sauce, Sloppy Joe 156,000
Sleepy Eye, MN ... Peas, Corn 230,000
Crystal City, TX . Green Beans, Spinach, Carrots, Beets,
Potatoes 362,000
Toppenish, WA .... Asparagus, Corn, Lima Beans, Peas 228,000
Yakima, WA ....... Cherries and Pears 214,000
Arlington, WI .... Peas, Corn, Sauerkraut 209,000
Markesan, WI ..... Green Beans, Wax Beans, Italian Beans 291,000
Plover, WI ....... Beans, Carrots, Beets, Potatoes 250,000
The Company's principal administrative headquarters are
located in leased office space in San Francisco, California. The
Company owns its primary research and development facility in
Walnut Creek, California.
In fiscal 1996, the Company entered into agreements
providing for the sale of real property and the construction and
lease of three new plant warehouses and one new ripening room
facility (located at Toppenish, Washington; Plover, Wisconsin;
Mendota, Illinois; and Yakima, Washington, respectively),
totaling approximately 739,000 square feet. The Company will
lease the facilities for an initial term of 20 years, at a total
annual rent of approximately $3 million (net of operating
expense).
The Company also holds a 50% interest in a limited
liability company which has developed a 160,000 square foot
retail shopping center in Oakland, California. The shopping
center development is located at the site of a former production
plant of the Company. The center opened in October 1996 and was
approximately 85% leased at that time.
The Company holds certain excess properties for sale and
periodically disposes of excess land and facilities through
sales.
Management considers its facilities to be suitable and
adequate for the business conducted therein, and to have
sufficient production capacity for the purposes for which they
are presently intended.
Working Capital
The inventory position of the Company is seasonally
affected by the growing cycle of the vegetables, fruits and
tomatoes it processes. Substantially all inventories are produced
during the harvesting and packing months of June through October
and depleted through the remaining seven months. The Company
maintains a revolving line of credit to fund its seasonal working
capital needs. See "The Bank Financing."
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CORPORATE HISTORY
The Company was acquired in 1979 by the predecessor of RJR
Nabisco. In 1990, the Company and certain of its subsidiaries and
affiliates were sold in the RJR Nabisco Sale for $1.5 billion to
DMFC and DMPF Corp., a Delaware corporation ("DMPF Corp."), which
were organized by Merrill Lynch & Co. ("ML&Co.") and capitalized
by ML&Co. and certain other investors including Court Square
Capital, L.P., an affiliate of Citibank, N.A., Kikkoman, Polly
Peck International PLC ("Polly Peck"), W.R. Huff Asset Management
Co., Charterhouse Equity Partners, L.P. and certain present and
former members of management of the Company. The RJR Nabisco Sale
excluded certain businesses that were retained by RJR Nabisco
such as the Del Monte processed foods operations in Canada and
South America. Certain other Del Monte businesses were not
acquired, including the Del Monte fresh foods business (currently
operated by Fresh Del Monte), which was sold by RJR Nabisco to
Polly Peck. In connection with and subsequent to the RJR Nabisco
Sale, the Company granted various perpetual, royalty-free
licenses for the use of the Del Monte name and trademark. The
licensees of the Del Monte name and trademark include Del Monte
Europe, Kikkoman, Fresh Del Monte and Yorkshire. Neither Del
Monte Europe nor Fresh Del Monte is an affiliate of the Company.
Following the RJR Nabisco Sale, the Company sold certain of
its properties, including the Company's processed foods
operations in the Far East (other than the Philippines) to
Kikkoman for approximately $104 million; the Hawaiian Punch
business to Procter & Gamble for approximately $147 million; and
Del Monte Europe to Gravelgrove Limited for approximately $360
million, and applied substantially all of the proceeds from such
sales to the partial repayment of the bank financing used to
finance the RJR Nabisco Sale. In connection with the sale of Del
Monte Europe, the Company acquired an 8.35% equity investment in
Del Monte Europe. Subsequently, in the fiscal quarter ended March
31, 1993, the Company sold its equity investment in Gravelgrove
Limited for approximately $23 million.
In January 1991, the Company completed the sale of a 49.9%
interest in Del Monte Philippines. As a result of this
transaction, the Company received $16.7 million in cash, $17.9
million in notes (which were subsequently repaid), $8.7 million
in a future purchase price adjustment (all of which has been
paid) and $1.3 million of preferred stock of a subsidiary of Del
Monte Philippines (20% of which was redeemed in May 1994 and 20%
redeemed in May 1995). The Company retained a 50.1% interest in
Del Monte Philippines. In March 1996, the Company sold its 50.1%
interest in Del Monte Philippines and the remaining preferred
stock to a joint venture affiliated with Del Monte Europe for
$100 million. In connection with the sale of its interest in Del
Monte Philippines, the Company signed an eight-year supply
agreement under which the Company is required to source
substantially all of its pineapple requirements from Del Monte
Philippines over the term of the agreement.
In August 1993, the Company sold its dried fruit and snack
operation to Yorkshire for cash and stock totaling $22.6 million.
The Company will continue to distribute certain of the former Del
Monte dried fruit and snack products as a service to and for the
benefit of Yorkshire through June 1997, pursuant to a service
agreement with Yorkshire. As part of the asset sale transaction,
the Company acquired 20% of the outstanding common stock and
1,000 shares of 7% preferred stock of Yorkshire. Following the
expiration of a standstill agreement in July, 1996, the Company
granted a right of first refusal to Yorkshire to acquire the
Company's equity interest in Yorkshire, and Yorkshire Foods,
Inc., the parent of Yorkshire ("YFI"), granted a right of co-sale
to the Company in the event that YFI proposed to sell its equity
interest in Yorkshire.
In December 1993, the Company sold substantially all of the
assets and certain related liabilities of its can manufacturing
operations in the United States to Silgan for $72 million. At the
same time, the Company entered into a ten-year supply agreement
under which Silgan would, effective immediately after the sale,
provide the Company with substantially all of its domestic can
requirements and at least 65% of the can requirements of the
Company's then-existing Mexican facilities. The supply agreement
provides the Company with a long-term supply of cans at
competitive prices that adjust over time for normal manufacturing
cost increases or decreases. See "Business--Production."
On June 27, 1994, DMFC entered into an Agreement and Plan of
Merger (the "1994 Merger Agreement") with Grupo Empacador de
Mexico, S.A. de C.V. and CCP Acquisition Company of Maryland,
Inc., which were
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formed by an investor group led by Mr. Carlos Cabal Peniche for
the purpose of effecting an acquisition (the "Proposed
Acquisition") of the Company. The Merger Agreement provided that
DMFC was entitled to terminate the 1994 Merger Agreement if the
effective date of the Proposed Acquisition failed to occur on or
prior to September 19, 1994. The effective date of the Proposed
Acquisition did not occur on or prior to such date and, on
September 21, 1994, DMFC terminated the 1994 Merger Agreement in
accordance with its terms. Pursuant to the 1994 Merger Agreement,
because the Proposed Acquisition failed to occur by September 19,
1994, DMFC drew $30 million under a letter of credit issued by
Banco Union, S.A., a bank affiliated with Mr. Cabal. Such amount
was applied to the repayment of indebtedness then-outstanding
under the Company's then-existing revolving credit agreement.
In November 1995, the Company sold its pudding business to
Kraft for $89 million. The purchase agreement allows Kraft to use
the Del Monte name on single-serve products for up to two years
from the time of the sale.
In October 1996, the Company sold its Mexican subsidiary
for $38 million, and, in November 1996, sold its Central American
and Caribbean operations for $12 million. The purchasers of the
Company's Mexican subsidiary have made certain claims in
connection with the purchase. See "Business--Legal Proceedings."
On February 21, 1997, TPG, Shield and DMFC entered into the
Merger Agreement with respect to the Recapitalization. The Merger
Agreement was amended and restated as of April 14, 1997. See "The
Recapitalization."
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MANAGEMENT
Directors and Executive Officers
The following table sets forth the name, age and position
of individuals who are serving as directors and executive
officers of each of DMC and DMFC. TPG anticipates that it will
cause to be elected additional individuals, including individuals
unaffiliated with either TPG or DMC, to serve as directors of DMC
and DMFC. Each director will hold office until the next annual
meeting of shareholders or until his successor has been elected
and qualified. Officers of DMC and DMFC are elected by their
respective Boards of Directors and serve at the discretion of
such Boards.
Name Age Positions
- ---- --- ---------
Richard G. Wolford ..... 52 Chief Executive Officer; Director
Wesley J. Smith ........ 50 Chief Operating Officer; Director
James G. Coulter ....... 36 Director
Brian E. Haycox ........ 55 Director
Jeffrey A. Shaw ........ 32 Director
David L. Meyers ........ 51 Executive Vice President, Administration
and Chief Financial Officer
Glynn M. Phillips ...... 59 Executive Vice President, Sales
Thomas E. Gibbons ...... 49 Senior Vice President and Treasurer
William J. Spain ....... 55 Senior Vice President, Technology
Richard L. French ...... 39 Vice President and Chief Accounting Officer
William R. Sawyers ..... 34 Vice President, General Counsel and Secretary
Richard G. Wolford, Chief Executive Officer; Director. Mr.
Wolford joined both DMC and DMFC as Chief Executive Officer and a
director upon consummation of the Recapitalization. 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; Director. Mr.
Smith joined both DMC and DMFC as Chief Operating Officer and a
director upon consummation of the Recapitalization. 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.
James G. Coulter, Director. Mr. Coulter became a director of
both DMC and DMFC following consummation of the Recapitalization.
Mr. Coulter was a founding partner of Texas Pacific Group in
1992. From 1986 to 1992, Mr. Coulter was a Vice President of the
Robert M. Bass Group, Inc. Mr. Coulter is Co-Chairman of the
Board of Beringer Wine Estates. He also serves on the Boards of
Directors of America West Airlines, Inc., Virgin Cinemas Limited
and Paradyne Partners, L.P.
Brian E. Haycox, Director. Mr. Haycox was elected to the
Board of Directors of both DMC and DMFC in June 1995. He was
elected as Co-Chairman and Co-Chief Executive Officer of both DMC
and DMFC in December 1995, and he served in those capacities
until the consummation of the Recapitalization. Mr. Haycox served
as President and Chief Executive Officer of Del Monte Tropical
Fruit Company from 1988 until 1993. Prior to that time Mr. Haycox
served in a variety of management positions within the Del Monte
organization.
Jeffrey A. Shaw, Director. Mr. Shaw became a director of
both DMC and DMFC following consummation of the Recapitalization.
Mr. Shaw has been an executive of TPG since 1993. Prior to
joining TPG, Mr. Shaw was a principal of Acadia Partners, L.P.,
an investment partnership, for three years. Mr. Shaw serves as a
director of Continental Micronesia, Inc., Favorite Brands
International, Inc., Ryanair PLC, Ducati Motors S.p.A and Ducati
North America, Inc.
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David L. Meyers, Executive Vice President, Administration
and Chief Financial Officer. Mr. Meyers joined the Company in
1989. He was elected Chief Financial Officer of both DMC and DMFC
in December 1992 and served as a member of the Board of Directors
of both DMC and DMFC from January 1994 until consummation of the
Recapitalization. Prior to joining the Company, 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).
Glynn M. Phillips, Executive Vice President, Sales. Mr.
Phillips joined the Company in October 1994. Prior to joining the
Company, Mr. Phillips was Vice President, Sales of The Clorox
Company where he also held various sales and marketing positions
from 1973 to 1994.
Thomas E. Gibbons, Senior Vice President and Treasurer. Mr.
Gibbons joined the Company in 1969 and was elected to his current
position in February 1995. He was elected Vice President and
Treasurer of both DMC and DMFC in January 1990. Mr. Gibbons'
prior experience also includes a variety of positions within the
Company's and RJR Nabisco's tax and financial organizations.
William J. Spain, Senior Vice President, Technology. Mr.
Spain joined the Company in 1966 and was elected to his current
position in February 1995. Previously, he was Vice President,
Research, Government and Industry Relations of both DMC and DMFC.
Mr. Spain has also held various positions within the Company in
corporate affairs, production management, quality assurance,
environmental and energy management, and consumer services.
Richard L. French, Vice President and Chief Accounting
Officer. Mr. French joined the Company in 1980 and was elected to
his current position in August 1993. Mr. French was Controller
and Chief Accounting Officer of both DMC and DMFC from March 1990
through August 1993 and has held a variety of positions within
the Company's financial organization.
William R. Sawyers, Vice President, General Counsel and
Secretary. Mr. Sawyers joined both DMC and DMFC in November 1993
as Associate General Counsel and was appointed to his current
position in 1995. Prior to joining the Company, Mr. Sawyers was
an associate with the law firm of Shearman & Sterling from 1987
to 1993.
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Executive Compensation
The following table sets forth compensation paid by the
Company for fiscal years 1994, 1995 and 1996 to each individual
serving as its Chief Executive Officer during fiscal 1996 and to
each of the four other most highly compensated executive officers
of the Company as of the end of fiscal 1996.
Other
Annual
Name and Principal Fiscal Salary(1) Bonus Comp.(2)
Positions Year ($) ($) ($)
- ----------------- ------ --------- ----- --------
Brian E. Haycox 1996 420,673 -- --
Co-Chairman/Co-CEO(5)
Paul H. Mullan 1996 420,673 -- --
Co-Chairman/Co-CEO(5)
Robert W. D'Ornellas 1996 215,417 329,000 --
President and Chief
Executive 1995 530,000 -- --
Officer(6) 1994 366,250 315,000 --
David M. Little 1996 286,650 150,150 --
Executive Vice President 1995 309,500 -- --
Worldwide Operations 1994 200,000 97,500 --
David L. Meyers 1996 273,000 143,000 55,386
Executive Vice President 1995 302,500 -- --
Administration and Chief 1994 175,000 91,400 --
Financial Officer
Glynn M. Phillips 1996 225,750 118,250 --
Executive Vice President,
Sales 1995 158,907 -- --
1994 -- -- --
Thomas E. Gibbons 1996 175,600 63,900 --
Senior Vice President 1995 161,702 53,600 --
Treasurer 1994 153,033 69,100 --
Long Term
Compensation(3)
LTIP All Other
Name and Principal Fiscal Payouts Comp.(4)
Positions Year ($) ($)
- ----------------- ------ --------------- ---------
Brian E. Haycox 1996 -- 251,144
Co-Chairman/Co-CEO(5)
Paul H. Mullan 1996 -- 820,385
Co-Chairman/Co-CEO(5)
Robert W. D'Ornellas 1996 2,243,000 1,632,182
President and Chief
Executive 1995 1,122,000 19,880
Officer(6) 1994 -- 10,939
David M. Little 1996 421,000 10,660
Executive Vice President 1995 421,000 10,302
Worldwide Operations 1994 -- 7,620
David L. Meyers 1996 421,000 11,241
Executive Vice President 1995 421,000 139,624
Administration and Chief 1994 -- 6,522
Financial Officer
Glynn M. Phillips 1996 280,000 9,206
Executive Vice President,
Sales 1995 280,000 52,724
1994 -- --
Thomas E. Gibbons 1996 54,600 4,717
Senior Vice President 1995 50,400 4,500
Treasurer 1994 -- 4,500
- ----------------------
(1) Reflects actual base earnings for the fiscal year specified.
(2) Reflects certain perquisites, including moving expenses
($33,091) and company car ($15,500).
(3) Reflects payments under the Company's Management Equity Plan
and Long Term Incentive Plan.
(4) Reflects Company contributions to the Del Monte Corporation
Savings Plan, payment of term life insurance premiums,
payments under the Del Monte Corporation Additional Benefits
Plan, signing bonuses, relocation expenses and termination
payments.
(5) Mr. Haycox and Mr. Mullan became Co-Chairmen/Co-CEOs as of
December 11, 1995. Their service in this capacity terminated
with the consummation of the Recapitalization.
(6) Mr. D'Ornellas' employment as President and CEO was terminated
as of December 11, 1995.
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Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Number of Securities
Underlying Unexercised
Options At Fiscal Year End(1)
(#)
Name Exercisable/Unexercisable
---- -------------------------
Brian E. Haycox ................... ---
Paul H. Mullan .................... ---
Robert W. D'Ornellas .............. ---
David M. Little ................... 0/122
David L. Meyers ................... 0/122
Glynn M. Phillips ................. ---
Thomas E. Gibbons ................. 0/122
(1) Representing non-qualified options granted pursuant to the
Del Monte Corporation Management Stock Option Plan (the
"MSOP") with respect to shares of Class A Common Stock of the
Company. All options granted under the MSOP were
out-of-the-money as of the end of fiscal year 1996, and all
options under the plan expired on August 31, 1996.
Employment and Other Arrangements
The Management Equity Plan. Established beginning in fiscal
1995 and modified in March 1996, the Company's Management Equity
Plan ("MEP") provides awards to certain key executives upon the
sale of the Company or upon the public offering of the Company's
common stock. Under the terms of the MEP, the "Base Value" of the
Company's preferred and common stock is established at $125
million. To the extent that proceeds from the sale of the Company
to preferred and common stockholders (after repayment of debt but
without reduction for payment to executives under the MEP) exceed
the $125 million Base Value, an award pool of 6% of such excess
has been set aside for payment to the Company's executive
officers. The MEP was terminated concurrent with the
Recapitalization.
In connection with the Recapitalization, the Company made
payments aggregating $20 million pursuant to the MEP. This amount
was allocated as follows:
(Dollars in millions)
---------------------
Mr. Haycox ........................ $5
Mr. Mullan ........................ 5
Mr. Little ........................ 3
Mr. Meyers ........................ 3
Mr. Phillips ...................... 2
Other officers(1) ................. 2
- ----------------------
(1) Other officers includes Mr. Gibbons and 17 other senior officers.
Messrs. D'Ornellas, Meyers, Little and Phillips were
participants in the MEP prior to its modification in March 1996,
and as such became eligible for awards for fiscal 1995 based on
the annual equity growth formula in effect under the MEP for such
year. Messrs. Meyers, Little and Phillips were paid installment
payments of the pre-modification MEP awards in the amounts of
$421,000, $421,000 and $280,000, respectively, in June 1996 and
remained eligible for installment payment of the pre-modification
MEP awards in the amounts of $421,000, $421,000 and $280,000,
respectively, for fiscal 1997. The Company was obligated to pay
these fiscal 1997 awards at the time of the Recapitalization. Due
to his termination, Mr. D'Ornellas received the balance of his
MEP award of $2,243,000 in December 1995. Mr. D'Ornellas's right
to such additional installments terminated when he left the
Company's employ.
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Long Term Incentive Plan. Established on July 1, 1990,
amended and restated on July 1, 1995, the Long Term Incentive
Plan ("LTIP") provides certain key management employees with a
long-term incentive program based on Company performance. The
LTIP has a performance cycle of three (3) fiscal years with
interim award payments at the end of each fiscal year based on
employee's target award. The three year target award is
determined by multiplying (i) the executive's base pay by (ii) a
percentage based on salary grade level, and multiplying the
result by (iii) three (for each fiscal year in the performance
cycle). Interim awards are determined by comparing actual
financial performance compared to target goals and subject to a
percentage payout schedule. Mr. Gibbons received fiscal 1995 and
fiscal 1996 awards of $50,400 and $54,600, respectively. Mr.
Gibbons received the final fiscal 1997 award in the amount of
$210,000 at the time of the Recapitalization.
The Annual Incentive Award Plan. The Annual Incentive Award
Plan ("AIAP") provides annual cash bonuses to certain management
employees, including certain of the named senior executives. The
target bonus for each eligible employee is based on a percentage
of base salary. Actual payment amounts are based on the Company's
achievement of annual earnings objectives and individual
performance objectives at fiscal year end. The targeted
percentage of base salary is as follows: Mr. D'Ornellas - 70%,
Mr. Little - 50%, Mr. Meyers - 50%, Mr. Phillips - 50% and Mr.
Gibbons - 30%. For fiscal 1996, each of Messrs. Little, Meyers
and Phillips received 50% of his respective annual base salary as
a guaranteed payment under the AIAP. Mr. Haycox and Mr. Mullan
are not eligible for the AIAP.
Stock Purchase Plan. The Company intends to implement a
stock purchase plan under which specified key employees will be
permitted to purchase an aggregate amount of approximately $5
million in DMFC common stock at a price per share equal to the
purchase price paid by TPG.
Stock Option Plan. The Company intends to implement an
employee stock option plan providing for grants to employees of
options to purchase an aggregate of approximately 6% of the
outstanding common stock of DMFC.
The Del Monte Retirement Plan for Salaried Employees. The
Del Monte Corporation Retirement Plan for Salaried Employees (the
"Del Monte Corporation Retirement Plan"), which became effective
as of January 1, 1990, is a non-contributory defined benefit
retirement plan covering salaried employees of the Company and
its subsidiaries. Credits are made monthly to each participant's
personal retirement account ("PRA") consisting of a percentage of
that month's eligible compensation, plus interest on his or her
account balance. A participant is fully vested upon completion of
five years of service.
The percentage of monthly compensation credited varies
according to age as follows:
Monthly Compensation
All Monthly Above
Participant Age Compensation Social Security Base
- --------------- ------------ --------------------
Below 35 ........................... 4.0% 3.0%
35 but below 45 .................... 5.0% 3.0%
45 but below 55 .................... 6.0% 3.0%
55 and over ........................ 7.0% 3.0%
A participant's annual retirement benefit will be
determined by dividing the participant's account balance at
retirement by an annuity conversion factor of 8.2 if retirement
occurs at age 55 or older, with somewhat higher factors
applicable to retirement at ages 50-54. Alternatively, a
participant at retirement or other termination of employment may
elect a lump sum distribution of his or her account balance.
Participants who, as of January 1, 1988, were at least age
40 with ten or more years' service, or at least age 55 with five
or more years' service, are eligible to receive an alternative
retirement benefit that is based on the terms of the prior Del
Monte Corporation plan. For credited service after December 31,
1981, such participants have accrued an annual benefit of 1.75%
of average final compensation multiplied by years of credited
service. Average final compensation is the participant's highest
five years' average compensation during his or her last ten years
of
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credited service; compensation generally includes base salary and
awards under the AIAP but not other forms of incentive
compensation. The amount determined by this alternative benefit
formula is reduced by .75% of the participant's Social Security
benefit multiplied by years of credited service. For credited
service prior to January 1, 1982, a similar benefit formula is
applied.
The Del Monte Corporation Retirement Plan was amended
effective April 30, 1992 to cease recognition of any future
credited service or average final compensation under the
alternative retirement benefit. At retirement, a participant who
was eligible for the alternative retirement benefit will receive
an annual retirement benefit equal to the greater of the
retirement benefit determined by his or her PRA, or his or her
alternative retirement benefit based on compensation and credited
service to April 30, 1992. Alternatively, a participant may elect
the greater of a lump sum distribution of his or her PRA account
balance or the actuarial equivalent of his or her annual age 65
retirement benefit.
Nonqualified Retirement Plans. Effective January 1, 1990,
the Company established the Del Monte Corporation Additional
Benefits Plan and the Del Monte Corporation Supplemental Benefits
Plan (the "Nonqualified Retirement Plans"). The Nonqualified
Retirement Plans are "excess" and "top hat" benefit plans
designed to provide benefits in excess of those otherwise
permitted under the Del Monte Corporation Retirement Plan and the
Del Monte Corporation Savings Plan (which is qualified under
Section 401(k)) of the Internal Revenue Code) by Sections
401(a)(17) and 415 of the Internal Revenue Code. The Nonqualified
Retirement Plans also provide benefits in respect of certain
amounts of deferred compensation and severance not taken into
account under the Del Monte Corporation Retirement Plan or the
Del Monte Corporation Savings Plan. Employees who participate in
the Del Monte Corporation Retirement Plan or the Del Monte
Corporation Savings Plan are generally eligible to participate in
the Nonqualified Retirement Plans. Benefits under the
Nonqualified Retirement Plans are unfunded and paid from the
general assets of the Company.
Set forth below are the estimated annual benefits payable
at age 65 (assuming lump sum payments are not elected) under the
Del Monte Corporation Retirement Plan and the Nonqualified
Retirement Plans:
Year Attaining Estimated Annual
Participant Age 65 Retirement Benefit(a)
- ----------- ------ ---------------------
Mr. Haycox .................... 2007 $134,835
Mr. Mullan .................... 2010 194,605
Mr. Little .................... 2013 279,716
Mr. Phillips .................. 2002 37,288
Mr. Meyers .................... 2010 206,768
Mr. Gibbons ................... 2012 195,163
- ----------------------
(a) The estimated annual retirement benefits shown assumes no
increase in compensation or AIAP and interest credits (as defined
in the plans) of 5.5%.
Employment Arrangements. During fiscal 1996, the Company
had employment agreements with each of Messrs. Haycox, Mullan,
Meyers, Little, Phillips and Gibbons. The following summaries of
the material provisions of the employment agreements with Messrs.
Haycox and Mullan (each, a "CEO Agreement" and collectively, the
"CEO Agreements"), the employment agreements with Messrs. Meyers
and Little (each, an "EVP Employment Agreement" and collectively,
the "EVP Employment Agreements") and the employment agreement
with Mr. Phillips (the "Phillips Employment Agreement") do not
purport to be complete and are qualified in their entirety by
reference to such agreements. The employment of Messrs. Haycox
and Mullan pursuant to the CEO Agreements was terminated
effective as of April 18, 1997. The employment of Mr. Little
pursuant to his EVP Employment Agreement was terminated effective
as of April 30, 1997.
The CEO Agreements provide for an initial term ending on
December 31, 1997. Under the terms of the CEO Agreements, if an
executive is terminated for any reason other than for Cause (as
defined), if he resigns for
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<PAGE>
Good Reason (as defined), or if his employment is terminated upon
a sale of the Company, he shall be entitled to a lump sum
payment, within 10 days of his termination, equal to the base
salary that he would have earned through December 31, 1997. The
executive will also receive any amounts due under the MEP, and
will continue to participate in any employee benefit plans and
programs maintained by the Company until the earlier of (1)
December 31, 1997, or (2) such time as he is covered by
comparable programs of a subsequent employer.
Each of the EVP Employment Agreements is for an indefinite
term and contains virtually identical terms. Specifically, each
EVP Employment Agreement provides that if the executive's
employment terminates for any reason other than for Cause (as
defined) or if the executive resigns for Good Reason (as
defined), such executive would receive as severance, subject to
the executive's not competing with the Company or disclosing
confidential information or trade secrets of the Company,
severance payments over a three-year period commencing on the
date of such termination or resignation. The aggregate amount of
the severance payable to the executive over such three-year
period would equal two times the sum of: (a) the executive's
highest annual base salary in effect during the twelve-month
period prior to such termination or resignation and (b) the
target award (50% of annual base salary) under the AIAP (or
successor thereto) for the year in which such termination or
resignation occurs (or, if greater, the amount of the award for
the next preceding year). In addition, the executive would
receive a pro rata annual bonus under the AIAP for the year in
which such termination or resignation occurs and would be
entitled to participate in the employee benefit plans and
programs maintained by the Company in which the executive
participates until the earlier of (i) the end of the three-year
period and (ii) such time as the executive is covered by
comparable programs of a subsequent employer.
The Phillips Employment Agreement is for an indefinite
term. The Phillips Employment Agreement provides that if Mr.
Phillips' employment terminates for any reason other than for
Cause (as defined) or if Mr. Phillips resigns for Good Reason (as
defined), Mr. Phillips would receive as severance three months of
his then current base pay. In addition, if Mr. Phillips executes
and delivers to the Company a written agreement confirming his
commitment not to compete with the Company and not to disclose
confidential information or trade secrets of the Company, the
Company would then provide Mr. Phillips severance payments over
an eighteen-month period commencing on the date of such
termination or resignation. The aggregate amount of the severance
payable to Mr. Phillips over such eighteen-month period would
equal the sum of (a) Mr. Phillips' highest annual rate of base
salary in effect during the twelve-month period prior to such
termination or resignation, and (b) the target award under the
AIAP (or successor thereto) for the year in which such
termination or resignation occurs (or, if greater, the amount of
the award for the next preceding year of employment). In
addition, Mr. Phillips would receive a pro rata annual bonus
under the AIAP for the year in which such termination or
resignation occurs and would be entitled to participate in the
employee benefit plans and programs maintained by the Company in
which Mr. Phillips participates until the earlier of (i) the end
of the eighteen-month period or (ii) such time as Mr. Phillips is
covered by comparable programs of a subsequent employer.
Mr. Gibbons' employment agreement is similar to that of Mr.
Phillips except that it does not require Mr. Gibbons to execute
an agreement not to compete or disclose confidential information
in order to receive severance payments over an eighteen-month
period.
The Company also intends to enter into an employment
agreement with each of Mr. Wolford and Mr. Smith, the terms of
which have not yet been set.
Under the Company policy in effect on June 30, 1996, each
non-employee director who was not affiliated with a shareholder
of the Company received $7,500 per quarter plus $1,000 for each
Board of Directors meeting attended in person.
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CAPITAL STOCK OF DMC AND DMFC
DMC is a wholly owned subsidiary of DMFC. DMFC does not
have any material assets other than the stock of DMC.
Immediately following the consummation of the
Recapitalization, the charter of DMFC authorized DMFC to issue
capital stock consisting of 1,000,000 shares of new common stock,
$.01 par value, and 1,000,000 shares of new preferred stock which
may be issued in multiple series, the terms, provisions and
preferences of which may be designated from time to time by the
Board of Directors of DMFC.
Immediately following the consummation of the
Recapitalization, DMFC issued and had outstanding 140,000 shares
of common stock, and 35,000 shares of Preferred Stock. TPG and
certain of its affiliates or partners hold 109,248 shares of
DMFC's common stock, certain investors who held shares of DMFC
stock prior to the Recapitalization currently hold 14,252 shares
of DMFC's common stock, and other investors hold 16,500 shares of
DMFC's common stock (including Westar Capital, which holds 5,000
shares, TCW Capital Investment Corporation ("TCW"), which holds
1,500 shares, BT Investment Partners, Inc., which holds 5,000
shares, BankAmerica Investment Corporation, which holds 4,500
shares and MIG Partners III, an affiliate of BankAmerica
Investment Corporation, which holds 500 shares). DMFC and the
holders of its common stock, in connection with the
Recapitalization, entered into a stockholders' agreement dated as
of April 18, 1997. See "Certain Relationships and Related
Transactions."
In addition, TPG and certain of its affiliates purchased
17,500 outstanding shares of Preferred Stock and TCW purchased
17,500 outstanding shares of Preferred Stock for aggregate
consideration of $35 million. The Preferred Stock will accumulate
dividends at the rate of 14% per annum, which dividends will be
payable in cash or additional shares of Preferred Stock, at the
option of DMFC, subject to availability of funds and the terms of
its loan agreements. The Preferred Stock has an initial
liquidation preference of $1,000 per share, and may be redeemed
at the option of DMFC, in whole at any time or in part from time
to time, at a redemption price equal to the liquidation
preference thereof plus accumulated and unpaid dividends to the
redemption date. DMFC will be required to redeem all outstanding
shares of Preferred Stock on April 18, 2008 at such redemption
price. DMFC also will be required to redeem shares of Preferred
Stock in certain other circumstances, including the occurrence of
a change of control of DMFC. Holders of Preferred Stock will not
have any voting rights with respect thereto, except for such
rights as are provided under applicable law, the right to elect,
as a class, two directors of DMFC in the event that six
consecutive quarterly dividends are in arrears and class voting
rights with respect to transactions adversely affecting the
rights, preferences or powers of the Preferred Stock. The initial
purchasers of the Preferred Stock have agreed with the Initial
Purchasers not to sell, assign or transfer such shares, for a
period of six months following their issuance, subject to certain
specified exceptions. In connection with the issuance and sale of
the Preferred Stock, the initial purchasers received a
transaction fee in an amount equal to 1% of the purchase price
paid by them for such shares, and warrants to purchase, at a
nominal exercise price, shares of DMFC common stock representing
2% of the outstanding shares of DMFC common stock on a fully
diluted basis.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Recapitalization, the Company
entered into a ten-year agreement (the "Management Advisory
Agreement") with TPG pursuant to which TPG is entitled to receive
from the Company (but, at its discretion, may waive) an annual
fee for management advisory services equal to the greater of
$500,000 and 0.05% of the budgeted consolidated net sales of the
Company. In addition, the Company has agreed to indemnify TPG,
its affiliates and shareholders, and their respective directors,
officers, agents, employees and affiliates from and against all
claims, actions, proceedings, demands, liabilities, damages,
judgments, assessments, losses and costs, including fees and
expenses, arising out of or in connection with the services
rendered by TPG thereunder. The Management Advisory Agreement
makes available the resources of TPG concerning a variety of
financial and operational matters. The services that will be
provided by TPG cannot otherwise be obtained by the Company
without the addition of personnel or the engagement of outside
professional advisors. In management's opinion, the fees provided
for under the Management Advisory Agreement reasonably reflect
the benefits to be received by the Company.
In connection with the Recapitalization, the Company also
entered into an agreement (the "Transaction Advisory Agreement")
with TPG pursuant to which TPG received a cash financial advisory
fee of approximately $8.4 million upon the closing of the
Recapitalization as compensation for its services as financial
advisor for the Recapitalization. TPG also is entitled to receive
(but, at its discretion, may waive) fees of up to 1.5% of the
"transaction value" for each subsequent transaction in which the
Company is involved. The term "transaction value" means the total
value of any subsequent transaction, including, without
limitation, the aggregate amount of the funds required to
complete the subsequent transaction (excluding any fees payable
pursuant to the Transaction Advisory Agreement and fees, if any,
paid to any other person or entity for financial advisory,
investment banking, brokerage or any other similar services
rendered in connection with such transaction) including the
amount of any indebtedness, preferred stock or similar items
assumed (or remaining outstanding). In management's opinion, the
fees provided for under the Transaction Advisory Agreement
reasonably reflect the benefits received and to be received by
the Company.
Also in connection with the Recapitalization, DMFC and the
holders of its common stock, including TPG and 399 Venture
Partners, Inc. ("399 Venture Partners"), entered into a
stockholders' agreement dated as of April 18, 1997 (the
"Stockholders' Agreement"). Among other things, the Stockholders'
Agreement (i) imposes certain restrictions on the transfer of
shares of DMFC common stock and (ii) gives such holders
registration rights under certain circumstances. DMFC will bear
the costs of preparing and filing any such registration statement
and will indemnify and hold harmless, to the extent customary and
reasonable, holders selling shares covered by such a registration
statement.
As set forth in the Merger Agreement, an affiliate of 399
Venture Partners, and certain current and former employees of an
affiliate of 399 Venture Partners, received approximately $7.9
million, and $215,000, respectively, in return for shares of DMFC
preferred stock which were surrendered and were cancelled by
virture of the Merger. Since the beginning of fiscal 1996, in
connection with the PIK Note exchange offer and the refinancing
activity relating to the 1995 Senior Debt, the Company has also
paid fees and made other payments to affiliates of 399 Venture
Partners totaling approximately $442,000. In addition, in
connection with the Recapitalization, the Company paid to 399
Venture Partners a transaction fee of approximately $900,000.
The employment of Mr. Haycox pursuant to the CEO Agreement
was terminated effective as of April 18, 1997. Mr. Haycox will
continue to receive the salary that he would have earned pursuant
to the CEO Agreement until August 1997. In August 1997, the
Company will pay to Mr. Haycox a lump sum payment of salary. Such
lump sum payment will be in an amount equal to the base salary
that Mr. Haycox would have earned pursuant to the CEO Agreement
between the date the lump sum payment is made and December 31,
1997.
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THE BANK FINANCING
General
DMC entered into the Credit Agreement concurrently with the
Recapitalization. Proceeds of the Term Loan Facility and the
Revolving Credit Facility were used to satisfy the funding
requirements of the Recapitalization and to provide for the
working capital and other general corporate requirements of DMC.
Most of DMC's existing indebtedness was repaid in the
Recapitalization and, except as otherwise noted, was replaced by
the Revolving Credit Facility and Term Loan Facility summarized
below.
The Term Loan Facility provides for term loans in the
aggregate amount of $380 million, consisting of a $200 million
Tranche A term loan and a $180 million Tranche B term loan. The
Revolving Credit Facility provides for revolving loans in an
aggregate amount of $350 million, and includes 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
also 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
eligible inventory.
Interest Rates; Fees
The interest rates per annum applicable to amounts
outstanding under the Tranche A term loan and the Revolving
Credit Facility are, at DMC's option, either (i) the base rate as
defined in the Credit Agreement (the "Base Rate") plus 1.25% per
annum (the "Applicable Base Rate Margin") or (ii) the reserve
adjusted offshore rate as defined in the Credit Agreement (the
"Offshore Rate") plus 2.25% per annum (the "Applicable Offshore
Rate Margin"). Upon attainment of certain leverage ratios, as set
forth in the Credit Agreement, such Applicable Base Rate Margin
and Applicable Offshore Rate Margin, as well as the Commitment
Fee (as defined) and the Letter of Credit Fees (as defined), will
be adjusted.
Interest rates on the Tranche B loan are, at DMC's option,
either (i) the Base Rate plus 2.00% per annum or (ii) the
Offshore Rate plus 3.00% per annum. 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 (as
defined in the Credit Agreement) will accrue at the Base Rate
plus the applicable margin plus an additional 2.00% per annum,
and will be payable on demand.
In addition, DMC is required to pay the lenders under the
Revolving Credit Facility a commitment fee (the "Commitment Fee")
of 0.50% 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 letter of credit fees
(collectively, the "Letter of Credit Fees") of 1.75% per annum
for commercial letters of credit and 2.25% per annum for all
other letters of credit, as well as an additional fee in the
amount of 0.25% per annum to the bank issuing such letters of
credit.
Amortization; Prepayments
The Tranche A loan matures six years after the consummation
of the Recapitalization (the "Closing") and is subject to
amortization, commencing in the first quarter of fiscal 1999, on
a quarterly basis of $7.50 million per quarter during fiscal
1999, $8.75 million per quarter during fiscal 2000, $10.00
million per quarter during fiscal 2001, $11.25 million per
quarter during fiscal 2002 and $16.67 million per quarter for the
first three quarters of fiscal 2003. The Tranche B loan matures
eight years following the Closing. The Tranche B loan is subject
to amortization commencing at the end of DMC's third quarter in
fiscal 1998, in the amount of $450,000 per quarter, with such
payments increasing to $42.19 million per quarter in the fourth
quarter of fiscal 2004 and the first three quarters of fiscal
2005. The Revolving Credit Facility will mature six years after
the Closing. DMC will be required to make certain prepayments,
subject to certain exceptions, of the outstanding amounts under
the Term Facility and the Revolving Credit Facility from excess
cash flow, asset sales, issuances of debt and equity securities
and insurance or condemnation proceeds. Amounts under the Credit
Agreement may be prepaid at DMC's option without premium or
penalty.
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Guarantees and Collateral
DMFC has guaranteed DMC's obligations under the Credit
Agreement. DMC's obligations are secured by substantially all
personal property of DMC. DMFC's guarantee is secured by a pledge
of the stock of DMC. DMC's obligations also are secured by first
priority liens on certain of its unencumbered real property fee
interests.
Covenants
Pursuant to the terms of the Credit Agreement, DMC is
required to meet certain financial tests, including minimum
levels of consolidated EBITDA (as defined in the Credit
Agreement), minimum fixed charge coverage, minimum adjusted net
worth and maximum leverage ratios. In addition, DMC has
covenanted 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. See "Risk
Factors--Restrictive Debt Covenants."
Events of Default
The Credit Agreement contains customary events of default,
including payment defaults, breach of representations and
warranties, covenant defaults, cross-defaults, certain events of
bankruptcy and insolvency, ERISA judgment defaults, failure of
any guaranty or security agreement supporting DMC's obligations
under the Credit Agreement to be in full force and effect and a
change of control of DMFC or DMC.
Other Long-Term Debt
DMC's other significant long-term debt consists of a $1
million obligation due December 1, 1997, in connection with a
1977 warehouse financing using industrial development bonds
issued by the Village of Plover, Wisconsin which bears interest,
paid semiannually, at 6.0% per annum.
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THE EXCHANGE OFFER
The summary herein of certain provisions of the
Registration Rights Agreement does not purport to be complete and
reference is made to the provisions of the Registration Rights
Agreement, which has been filed as an exhibit to the Registration
Statement and a copy of which is available as set forth under the
heading "Available Information."
Terms of the Exchange Offer
General
In connection with the issuance of the Old Notes pursuant
to a Purchase Agreement dated as of April 15, 1997, by and among
DMC, DMFC and the Initial Purchasers, the Initial Purchasers and
their respective assignees became entitled to the benefits of the
Registration Rights Agreement.
Under the Registration Rights Agreement, DMC and DMFC are
required to file within 60 days after April 18, 1997 (the date
the Old Notes were issued (the "Issue Date")) the Registration
Statement of which this Prospectus is a part for a registered
exchange offer with respect to an issue of new notes identical in
all material respects to the Old Notes except that the new notes
shall contain no restrictive legend thereon. Under the
Registration Rights Agreement, DMC and DMFC are required to use
their respective best efforts to (i) cause the Registration
Statement to become effective within 135 days after the Issue
Date, (ii) keep the Exchange Offer open for at least 30 days (or
longer if required by applicable law) after the date that notice
of the Exchange Offer is mailed to holders of the Old Notes and
(iii) consummate the Exchange Offer on or prior to the 60th day
following the date on which the Registration Statement is
declared effective by the Commission. The Exchange Offer being
made hereby, if commenced and consummated within the time periods
described in this paragraph, will satisfy those requirements
under the Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in
this Prospectus and in the Letter of Transmittal, all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York
City time, on the Expiration Date will be accepted for exchange.
New Notes of the same class will be issued in exchange for an
equal principal amount of outstanding Old Notes accepted in the
Exchange Offer. Old Notes may be tendered only in integral
multiples of $1,000. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders as of
_______ __, 1997. The Exchange Offer is not conditioned upon any
minimum principal amount of Old Notes being tendered in exchange.
However, the obligation to accept Old Notes for exchange pursuant
to the Exchange Offer is subject to certain conditions as set
forth herein under "--Conditions."
Old Notes shall be deemed to have been accepted as validly
tendered when, as and if the Trustee has given oral or written
notice thereof to the Exchange Agent. The Exchange Agent will act
as agent for the tendering holders of Old Notes for the purposes
of receiving the New Notes and delivering New Notes to such
holders.
Based on interpretations by the staff of the Commission, as
set forth in no-action letters issued to third parties, including
the Exchange Offer No-Action Letters, DMC and DMFC believe that
the New Notes issued pursuant to the Exchange Offer may be
offered for resale, resold or otherwise transferred by each
holder thereof (other than a broker-dealer who acquires such New
Notes directly from DMC or DMFC for resale pursuant to Rule 144A
under the Securities Act or any other available exemption under
the Securities Act and other than any holder that is an
"affiliate" (as defined in Rule 405 under the Securities Act) of
DMC or DMFC) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such
holder's business and such holder is not engaged in, and does not
intend to engage in, a distribution of such New Notes and has no
arrangement with any person to participate in a distribution of
such New Notes. By tendering the Old Notes in exchange for New
Notes, each holder, other than a broker-dealer, will represent to
DMC and DMFC that: (i) it is not an affiliate (as defined in Rule
405 under the Securities Act) of DMC or DMFC; (ii) it is not a
broker-dealer tendering Old Notes acquired for its own account
directly from DMC or DMFC; (iii) any New Notes to be received by
it will be acquired in the ordinary course of its business; and
(iv) it is not engaged in, and does not intend to engage in, a
distribution of such New Notes and has no
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arrangement or understanding to participate in a distribution of
the New Notes. If a holder of Old Notes is engaged in or intends
to engage in a distribution of the New Notes or has any
arrangement or understanding with respect to the distribution of
the New Notes to be acquired pursuant to the Exchange Offer, such
holder may not rely on the applicable interpretations of the
staff of the Commission and must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. Each
Participating Broker-Dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such
New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection
with resales of New Notes received in exchange for Old Notes
where such Old Notes were acquired by such Participating
Broker-Dealer as a result of market-making activities or other
trading activities. DMC and DMFC have agreed that they will make
this Prospectus available to any Participating Broker-Dealer for
a period of time not to exceed 180 days after the Registration
Statement is declared effective (subject to extension under
certain circumstances) for use in connection with any such
resale. See "Plan of Distribution."
In the event that (i) any changes in law or the applicable
interpretations of the staff of the Commission do not permit DMC
and DMFC to effect the Exchange Offer, (ii) the Exchange Offer is
not consummated with 180 days of the Issue Date, (iii) in certain
circumstances, certain holders of unregistered New Notes so
request, or (iv) in the case of any of holder of Old Notes that
participates in the Exchange Offer, such holder does not receive
New Notes on the date of the exchange that may be sold without
restriction under the federal securities laws (other than due
solely to the status of such holder as an affiliate of DMC or
DMFC within the meaning of the Securities Act), then in the case
of clauses (i) through (iv) of this sentence, DMC and DMFC shall
(x) promptly deliver to the holders of Old Notes and the Trustee
written notice thereof and (y) at their sole expense, (a) as
promptly as practicable, file with the Commission a shelf
registration statement (the "Shelf Registration Statement")
covering resales of the Old Notes, (b) use their best efforts to
cause the Shelf Registration Statement to be declared effective
under the Securities Act and (c) use their best efforts to keep
effective the Shelf Registration Statement until the earlier of
three years after Issue Date (subject to extension under certain
circumstances) or such time as all of the applicable Old Notes
have been sold thereunder. DMC will, in the event that a Shelf
Registration Statement is filed, provide to each holder of the
Old Notes copies of the prospectus that is a part of the Shelf
Registration Statement, notify each such holder when the Shelf
Registration Statement has become effective and take certain
other actions as are required to permit unrestricted resales of
the New Notes. A holder that sells Old Notes pursuant to the
Shelf Registration Statement 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 rights and
obligations).
If DMC and DMFC fail to comply with the above provision or
if the Registration Statement or the Shelf Registration Statement
fails to become effective, then, as liquidated damages,
additional interest (the "Additional Interest") shall become
payable in respect of the Old Notes as follows:
(i) if (A) neither the Registration Statement nor the
Shelf Registration Statement is filed with the Commission
within 60 days following the Issue Date or (B)
notwithstanding that DMC and DMFC have consummated or will
consummate an Exchange Offer, DMC and DMFC are required to
file a Shelf Registration Statement and such Shelf
Registration Statement is not filed on or prior to the date
required by the Registration Rights Agreement, then
commencing on the day after either such required filing
date, Additional Interest shall accrue on the principal
amount of the Old Notes at a rate of .50% per annum for the
first 90 days immediately following each such filing date,
such Additional Interest rate increasing by an additional
.50% per annum at the beginning of each subsequent 90-day
period; or
(ii) if (A) neither the Registration Statement nor a
Shelf Registration Statement is declared effective by the
Commission within 135 days following the Issue Date or (B)
notwithstanding that DMC and DMFC have consummated or will
consummate an Exchange Offer, DMC and DFMC are required to
file a Shelf Registration Statement and such Shelf
Registration Statement is not declared effective by the
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Commission on or prior to the 60th day following the date
such Shelf Registration Statement was filed, then,
commencing on the day after either such required effective
date, Additional Interest shall accrue on the principal
amount of the Old Notes at a rate of .50% per annum for the
first 90 days immediately following such date, such
Additional Interest rate increasing by an additional .50%
per annum at the beginning of each subsequent 90-day
period; or
(iii) if (A) DMC and DMFC have not exchanged New Notes
for all Old Notes validly tendered in accordance with the
terms of the Exchange Offer on or prior to the 45th day
after the date on which the Registration Statement was
declared effective or (B) if applicable, the Shelf
Registration Statement has been declared effective and such
Shelf Registration Statement ceases to be effective at any
time prior to the third anniversary of the Issue Date
(other than after such time as all Old Notes have been
disposed of thereunder), then Additional Interest shall
accrue on the principal amount of the Old Notes at a rate
of .50% per annum for the first 90 days commencing on (x)
the 46th day after such effective date, in the case of (A)
above, or (y) the day such Shelf Registration Statement
ceases to be effective in the case of (B) above, such
Additional Interest rate increasing by an additional .50%
per annum at the beginning of each subsequent 90-day
period;
provided, however, that the Additional Interest rate on the Old
Notes may not exceed in the aggregate 1.0% per anum; provided,
further, however, that (1) upon the filing of the Registration
Statement or a Shelf Registration Statement (in the case of
clause (i) above), (2) upon the effectiveness of the Registration
Statement or a Shelf Registration Statement (in the case of
clause (ii) above), or (3) upon the exchange of New Notes for all
Old Notes tendered (in the case of clause (iii)(A) above), or
upon the effectiveness of the Shelf Registration Statement which
had ceased to remain effective (in the case of clause (iii)(B)
above), Additional Interest on the Old Notes as a result of such
clause (or the relevant subclause thereof), as the case may be,
shall cease to accrue.
Any amounts of Additional Interest due pursuant to clause
(i), (ii) or (iii) above will be payable in cash on the original
interest payment dates specified with respect to the Old Notes.
Upon consummation of the Exchange Offer, subject to certain
exceptions, holders of Old Notes who do not exchange their Old
Notes for New Notes in the Exchange Offer will no longer be
entitled to registration rights and will not be able to offer or
sell their Old Notes, unless such Old Notes are subsequently
registered under the Securities Act (which, subject to certain
limited exceptions, the Company will have no obligation to do),
except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities
laws. See "Risk Factors--Risk Factors Relating to the
Notes--Consequences of Failure to Exchange."
Expiration Date; Extensions; Amendments; Termination
The term "Expiration Date" shall mean _________, 1997 (30
calendar days following the commencement of the Exchange Offer),
unless the Exchange Offering is extended if and as required by
applicable law, in which case the term "Expiration Date" shall
mean the latest date to which the Exchange Offer is extended.
In order to extend the Expiration Date, the Company will
notify the Exchange Agent of any extension by oral or written
notice and will notify the holders of the Old Notes by means of a
press release or other public announcement prior to 9:00 A.M.,
New York City time, on the next business day after the previously
scheduled Expiration Date.
DMC and DMFC reserve the right (i) to delay acceptance of
any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer and not permit acceptance of Old Notes not
previously accepted if any of the conditions set forth herein
under "-- Conditions" shall have occurred and shall not have been
waived by DMC and DMFC, by giving oral or written notice of such
delay, extension or termination to the Exchange Agent, or (ii) to
amend the terms of the Exchange Offer in any manner deemed by it
to be advantageous to the holders of the Old Notes. Any such
delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice
thereof to the Exchange Agent. If the Exchange Offer is amended
in a manner
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determined by DMC to constitute a material change, DMC will
promptly disclose such amendment in a manner reasonably
calculated to inform the holders of the Old Notes of such
amendment.
Without limiting the manner in which DMC and DMFC may
choose to make public announcement of any delay, extension,
amendment or termination of the Exchange Offer, DMC and DMFC
shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement.
Interest on the New Notes
The New Notes will accrue interest at the applicable per
annum rate set forth on the cover page of this Prospectus, from
(A) the later of (i) the last interest payment date on which
interest was paid on the Old Notes surrendered in exchange
therefor or (ii) if the Old Notes are surrendered for exchange on
a date subsequent to the record date for an interest payment date
to occur on or after the date of such exchange and as to which
interest will be paid, the date of such interest payment or (B)
if no interest has been paid on the Old Notes, from the Issue
Date of such Old Notes. Interest on the New Notes is payable on
April 15 and October 15 of each year.
Procedures for Tendering
To tender in the Exchange Offer, a holder must complete,
sign and date the Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter
of Transmittal, and mail or otherwise deliver such Letter of
Transmittal or such facsimile, together with any other required
documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, either (i)
certificates for such Old Notes must be received by the Exchange
Agent along with the Letter of Transmittal, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if such procedure is available,
into the Exchange Agent's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedure
for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date or (iii) the holder
must comply with the guaranteed delivery procedures described
below. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION
AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL
OR OLD NOTES SHOULD BE SENT TO THE COMPANY. Delivery of all
documents must be made to the Exchange Agent at its address set
forth below. Holders may also request their respective brokers,
dealers, commercial banks, trust companies or nominees to effect
such tender for such holders.
The tender by a holder of Old Notes will constitute an
agreement between such holder and DMC in accordance with the
terms and subject to the conditions set forth herein and in the
Letter of Transmittal.
Only a holder of Old Notes may tender such Old Notes in the
Exchange Offer. The term "holder" with respect to the Exchange
Offer means any person in whose name Old Notes are registered on
the books of DMC or any other person who has obtained a properly
completed bond power from the registered holder.
Any beneficial owner whose Old Notes are registered in the
name of a broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender should contact such registered
holder promptly and instruct such registered holder to tender on
his behalf. If such beneficial owner wishes to tender on his own
behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Old Notes,
either make appropriate arrangements to register ownership of the
Old Notes in such owner's name or obtain a properly completed
bond power from the registered holder. The transfer of registered
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 any 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
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guarantor" institution within the meaning of Rule 17Ad-15 under
the Exchange Act (each an "Eligible Institution") unless the Old
Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other
than the registered holder of any Old Notes listed therein, such
Old Notes must be endorsed or accompanied by bond powers and a
proxy which authorizes such person to tender the Old Notes on
behalf of the registered holder, in each case as the name of the
registered holder or holders appears on the Old Notes.
If the Letter of Transmittal or any Old 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 DMC,
evidence satisfactory to DMC of their authority to so act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility
(including time of receipt) and withdrawal of the tendered Old
Notes will be determined by DMC in its sole discretion, which
determination will be final and binding. DMC reserves the
absolute right to reject any and all Old Notes not properly
tendered or any Old Notes which, if accepted, would, in the
opinion of counsel for DMC, be unlawful. DMC also reserves the
absolute right to waive any irregularities or conditions of
tender as to particular Old Notes. DMC's 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 Old Notes must be
cured within such time as DMC shall determine. Neither DMC, DMFC,
the Exchange Agent nor any other person shall be under any duty
to give notification of defects or irregularities with respect to
tenders of Old Notes, nor shall any of them incur any liability
for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such irregularities have
been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned
without cost to such holder by the Exchange Agent to the
tendering holders of Old Notes, unless otherwise provided in the
Letter of Transmittal, as soon as practicable following the
Expiration Date.
In addition, DMC reserves the right in its sole discretion,
subject to the provisions of the Indenture, to (i) purchase or
make offers for any Old Notes that remain outstanding subsequent
to the Expiration Date or, as set forth under "-- Conditions", to
terminate the Exchange Offer in accordance with the terms of the
Registration Rights Agreement and (ii) to the extent permitted by
applicable law, purchase Old Notes in the open market, in
privately negotiated transactions or otherwise. The terms of any
such purchases or offers could differ from the terms of the
Exchange Offer.
Acceptance of Old Notes for Exchange; Delivery of New Notes
Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, all Old Notes properly tendered will be accepted,
promptly after the Expiration Date, and the New Notes will be
issued promptly after acceptance of the Old Notes. See
"--Conditions" below. For purposes of the Exchange Offer, Old
Notes shall be deemed to have been accepted as validly tendered
for exchange when, as and if DMC has given oral or written notice
thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are
accepted for exchange pursuant to the Exchange Offer will be made
only after timely receipt by the Exchange Agent of certificates
for such Old Notes or a timely Book-Entry Confirmation of such
Old Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility, a properly completed and duly executed Letter
of Transmittal and all other required documents. If any tendered
Old Notes are not accepted for any reason set forth in the terms
and conditions of the Exchange Offer or if Old Notes are
submitted for a greater principal amount than the holder desires
to exchange, such unaccepted or nonexchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in
the case of Old Notes tendered by book-entry transfer procedures
described below, such nonexchanged Old Notes will be credited to
an account
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maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange
Offer.
Book-Entry Transfer
The Exchange Agent will make a request to establish an
account with respect to the Old Notes at the Book-Entry Transfer
Facility for purposes of the Exchange Offer within two business
days after the date of this Prospectus. Any financial institution
that is a participant in the Book-Entry Transfer Facility's
systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in
accordance with such Book-Entry Transfer Facility's procedures
for transfer. However, although delivery of Old Notes may be
effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal or facsimile thereof with any
required signature guarantees and any other required documents
must, in any case, be transmitted to and received by the Exchange
Agent at one of the addresses set forth below under "-- Exchange
Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
Guaranteed Delivery Procedures
If a registered holder of the Old Notes desires to tender
such Old Notes, and the Old Notes are not immediately available,
or time will not permit such holder's Old Notes or other required
documents to reach the Exchange Agent before the Expiration Date,
or the procedures for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if (i) the tender is
made through an Eligible Institution, (ii) prior to the
Expiration Date, the Exchange Agent receives from such Eligible
Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by DMC (by facsimile
transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered
Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents
required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent and (iii) the
certificates for all physically tendered Old Notes, in proper
form for transfer, or a Book-Entry Confirmation, as the case may
be, and all other documents required by the Letter of Transmittal
are received by the Exchange Agent within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
Withdrawal of Tenders
Tenders of Old Notes may be withdrawn at any time prior to
5:00 p.m., New York City time on the Expiration Date.
For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent prior to 5:00
p.m., New York City time on the Expiration Date at one of the
addresses set forth below under "--Exchange Agent." Any such
notice of withdrawal must specify the name of the person having
tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes)
and (where certificates for Old Notes have been transmitted)
specify the name in which such Old Notes are registered, if
different from that of the withdrawing holder. If certificates
for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates,
the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of
withdrawal with signatures guaranteed by an Eligible Institution
unless such holder is an Eligible Institution. If Old Notes have
been tendered pursuant to the procedure for book-entry transfer
described above, any notice of withdrawal must specify the name
and number of the account at the Book-Entry Transfer Facility to
be credited with the withdrawn Old Notes and otherwise comply
with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of
such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old
Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old
Notes which have been tendered for exchange but
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which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder (or, in the case of
Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to
the book-entry transfer procedures described above, such Old
Notes will be credited to an account maintained with such
Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination
of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under
"--Procedures for Tendering" and "--Book-Entry Transfer" above at
any time on or prior to the Expiration Date.
Conditions
Notwithstanding any other term of the Exchange Offer, Old
Notes will not be required to be accepted for exchange, nor will
New Notes be issued in exchange for any Old Notes, and DMC or
DMFC may terminate or amend the Exchange Offer as provided herein
before the acceptance of such Old Notes, if because of any change
in law, or applicable interpretations thereof by the Commission,
DMC or DMFC determines that it is not permitted to effect the
Exchange Offer. DMC and DMFC have no obligation to, and will not
knowingly, permit acceptance of tenders of Old Notes from
affiliates of DMC or DMFC (within the meaning of Rule 405 under
the Securities Act) or from any other holder or holders who are
not eligible to participate in the Exchange Offer under
applicable law or interpretations thereof by the Commission, or
if the New Notes to be received by such holder or holders of Old
Notes in the Exchange Offer, upon receipt, will not be tradable
by such holder without restriction under the Securities Act and
the Exchange Act and without material restrictions under the
"blue sky" or securities laws of substantially all of the states
of the United States.
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 Mail: By Hand:
-------- --------
BT Services Tennessee, Inc. Bankers Trust Company
Reorganization Unit Receipt & Delivery Window
P.O. Box 292737 123 Washington Street, 1st Floor
Nashville, TN 37229-2737 New York, NY 10006
By Overnight Mail or Courier:
-----------------------------
BT Services Tennessee, Inc.
Corporate Trust and Agency Group
Reorganization Unit
648 Grassmere Park Road
Nashville, TN 37211
For information call:
(800) 735-7777
Confirm: (615) 835-3572
Facsimile: (615) 835-3701
Fees and Expenses
The expenses of soliciting tenders pursuant to the Exchange
Offer will be borne by DMC and DMFC. The principal solicitation
for tenders pursuant to the Exchange Offer is being made by mail;
however, additional solicitations may be made by telegraph,
telephone, telecopy or in person by officers and regular
employees of the Company.
Neither DMC nor DMFC will make any payments to brokers,
dealers or other persons soliciting acceptances of the Exchange
Offer. DMC and DMFC, however, will pay the Exchange Agent
reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. DMC and DMFC may also pay brokerage houses
and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of
the Prospectus and related documents to the beneficial owners of
the Old Notes, and in handling or forwarding tenders for
exchange.
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The expenses to be incurred in connection with the Exchange
Offer will be paid by DMC and DMFC, including fees and expenses
of the Exchange Agent and Trustee and accounting, legal, printing
and related fees and expenses.
DMC and DMFC will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange
Offer. If, however, certificates representing New Notes or Old
Notes for principal amounts 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 Old
Notes tendered, or if tendered Old Notes are registered in the
name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other
than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by
the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
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DESCRIPTION OF THE NEW NOTES
The Old Notes were issued, and the New Notes offered hereby
will be issued under an indenture dated as of April 18, 1997 (the
"Indenture") by and among DMC (as issuer), DMFC (as guarantor)
and Marine Midland Bank (as trustee, the "Trustee"), a copy of
the form of which is available from the Trustee. The following
summary of the material provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its
entirety by reference to, the Trust Indenture Act of 1939, as
amended (the "TIA"), and the provisions of the Indenture,
including the definitions of certain terms contained therein. For
definitions of certain capitalized terms used in the following
summary, see "Certain Definitions." For purposes of this section,
references to DMC include only Del Monte Corporation and not its
Subsidiaries.
General
The New Notes will be issued in fully registered form only,
without coupons, in denominations of $1,000 and integral
multiples thereof. Initially, Bankers Trust Company will act as
Paying Agent and Registrar for the New Notes. The New Notes may
be presented for registration or transfer and exchange at the
offices of the Registrar, which initially will be at Bankers
Trust Company's office at 4 Albany Street, New York, New York
10006. DMC may change any Paying Agent and Registrar without
notice to holders of the New Notes (the "Holders"). DMC will pay
principal (and premium, if any) on the New Notes at Bankers Trust
Company's office at the above address. At DMC's option, interest
may be paid at Bankers Trust Company's office at the above
address or by check mailed to the registered address of Holders.
Any Old Notes that remain outstanding after the completion of the
Exchange Offer, together with the New Notes issued in connection
with the Exchange Offer, will be treated as a single class of
securities under the Indenture.
The New Notes will be general unsecured obligations of DMC
and will be subordinated in right of payment to all existing and
future Senior Debt of DMC. As of March 31, 1997, on a pro forma
basis and after giving effect to the Recapitalization, DMC would
have had approximately $511 million of Senior Debt outstanding
(exclusive of unused commitments of $194 million).
Principal, Maturity and Interest
The New Notes are limited in aggregate principal amount to
$150 million and will mature on April 15, 2007. Interest on the
New Notes will accrue at the rate of 12 1/4% per annum and will be
payable semiannually in cash on each April 15 and October 15, to
the persons who are registered Holders at the close of business
on the April 1 and October 1 immediately preceding the applicable
interest payment date. Interest on the New Notes will accrue from
(A) the later of (i) the last interest payment date on which
interest was paid on the Old Notes surrendered in exchange
therefor or (ii) if the Old Notes are surrendered for exchange on
a date subsequent to the record date for an interest payment date
to occur on or after the date of such exchange and as to which
interest will be paid, the date of such interest payment or (B)
if no interest has been paid on the Old Notes, from the Issue
Date (as defined herein) of such Old Notes.
The New Notes will not be entitled to the benefit of any
mandatory sinking fund.
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Redemption
Optional Redemption. The New Notes will be redeemable, at
DMC's option, in whole at any time or in part from time to time,
on and after April 15, 2002, upon not less than 30 nor more than
60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during
the twelve-month period commencing on April 15 of the year set
forth below, plus, in each case, accrued and unpaid interest
thereon, if any, to the date of redemption:
Year Percentage
---- ----------
2002 ............................. 106.313%
2003 ............................. 104.734%
2004 ............................. 103.156%
2005 ............................. 101.578%
2006 and thereafter .............. 100.000%
Optional Redemption upon Public Equity Offerings. At any
time, or from time to time, on or prior to April 15, 2000, DMC
may, at its option, use the net cash proceeds of one or more
Public Equity Offerings to redeem up to 35% of the aggregate
principal amount of New Notes originally issued at a redemption
price equal to 112.625% of the principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date of
redemption; provided that at least 65% of the principal amount of
New Notes originally issued remains outstanding immediately after
any such redemption. In order to effect the foregoing redemption
with the proceeds of any Public Equity Offering, DMC will make
such redemption not more than 120 days after the consummation of
any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity
Offering" means an underwritten public offering of Qualified
Capital Stock of DMFC or DMC pursuant to a registration statement
filed with the Commission in accordance with the Securities Act;
provided that, in the event of a Public Equity Offering by DMFC,
DMFC contributes to the capital of DMC the portion of the net
cash proceeds of such Public Equity Offering necessary to pay the
aggregate redemption price (plus accrued interest to the
redemption date) of the New Notes to be redeemed pursuant to the
preceding paragraph.
Optional Redemption upon a Change of Control on or prior to
April 15, 2002. At any time on or prior to April 15, 2002, the
New Notes may also be redeemed as a whole at the option of DMC
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 thereof
plus the Applicable Premium as of, and accrued and unpaid
interest, if any, to the date of redemption (the "Redemption
Date") (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest
payment date).
"Applicable Premium" means, with respect to a New Note at
any Redemption Date, the greater of (i) 1.0% of the principal
amount of such New Note and (ii) the excess of (A) the present
value at such time of (1) the redemption price of such New Note
at April 15, 2002 (such redemption price being described under
"--Optional Redemption") plus (2) all required interest payments
due on such New Note through April 15, 2002, computed using a
discount rate equal to the Treasury Rate plus 1.0% per annum,
over (B) the principal amount of such New 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 Redemption Date (or, if such
Statistical Release is no longer published, any publicly
available source or similar market data)) closest to the period
from the Redemption Date to April 15, 2002, provided, however,
that if the period from the Redemption Date to April 15, 2002, 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
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Redemption Date to April 15, 2002, 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 New Notes are to be
redeemed at any time, selection of such New Notes for redemption
will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which
such New Notes are listed or, if such New 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 New 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 a Public Equity Offering, selection of the New Notes or
portions thereof for redemption shall be made by the Trustee only
on a pro rata basis or on as nearly a pro rata basis as is
practicable (subject to applicable 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 New Notes to be
redeemed at its registered address. If any New Note is to be
redeemed in part only, the notice of redemption that relates to
such New 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 thereof will be issued in the name of the
Holder thereof upon cancellation of the original New Note. On and
after the redemption date, interest will cease to accrue on New
Notes or portions thereof called for redemption as long as DMC
has deposited with the Paying Agent funds in satisfaction of the
applicable redemption price pursuant to the Indenture.
Guarantee
The obligations of DMC pursuant to the New Notes, including
the repurchase obligation resulting from a Change in Control,
will be unconditionally guaranteed on a senior subordinated basis
(the "Guarantee") by DMFC. Pursuant to the Indenture, DMFC 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 Sales of Assets of Guarantor;" provided, however, that if
such other Person is not DMC, DMFC's obligations under the
Guarantee must be expressly assumed by such other Person.
However, upon the sale or other disposition (including by way of
consolidation or merger) of DMFC or the sale or disposition of
all or substantially all the assets of DMFC (in each case other
than to DMC or an Affiliate of DMC) permitted by the Indenture,
DMFC will be released and relieved from all its obligations under
the Guaranty.
The only material asset of DMFC is the stock of DMC.
In addition, Restricted Subsidiaries may be required to
issue Guarantees to the extent described below under "--Certain
Covenants--Limitation on Guarantees by Restricted Subsidiaries."
Ranking
The New Notes will be unsecured senior obligations of DMC,
and the indebtedness evidenced by the New Notes will rank pari
passu in right of payment with all other existing and future
unsubordinated obligations of DMC and senior in right of payment
to all existing and future obligations of DMC expressly
subordinated in right of payment to the New Notes. The payment of
all Obligations on the New 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 DMC 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 DMC or in
a bankruptcy, reorganization, insolvency, receivership or other
similar proceeding relating to DMC 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 New Notes, or for the acquisition of any of
the New Notes for cash or property or otherwise.
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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 Senior Debt, no payment of any kind or
character shall be made by or on behalf of DMC or any other
Person on its or their behalf with respect to any Obligations on
the New 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 the event
of default to the Trustee and each Paying Agent (a "Default
Notice"), then, unless and until all events of default have been
cured or waived or have ceased to exist or the Trustee and each
Paying Agent 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
DMC nor any other Person on its behalf shall (x) make any payment
of any kind or character with respect to any Obligations on the
New Notes or (y) acquire any of the New Notes for cash or
property or otherwise. Notwithstanding anything herein to the
contrary, in no event will a Blockage Period extend beyond 180
days from the date the payment on the New 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 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 obligations of DMFC under the Guarantee, and the
obligations of the Restricted Subsidiaries under any Guarantees
that may be issued, are subordinated in right of payment to the
obligations of such Persons under any Senior Debt (including any
guarantees constituting Senior Debt) on terms substantially
identical to those described above.
By reason of such subordination, in the event of the
insolvency of DMC, creditors of DMC who are not holders of Senior
Debt, including the Holders of the New Notes, may recover less,
ratably, than holders of Senior Debt.
As of March 31, 1997, on a pro forma basis after giving
effect to the Recapitalization (other than the Offering), DMC
would have had approximately $511 million of Senior Debt
outstanding (exclusive of unused commitments of $194 million).
Change of Control
The Indenture will provide that upon the occurrence of a
Change of Control, if DMC does not redeem the New Notes as
provided under the heading "Optional Redemption upon Change of
Control prior to April 15, 2002," above, DMC shall make the
"Change of Control Offer" and each Holder will have the right to
require that DMC purchase all or a portion of such Holder's New
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.
The occurrence of certain of the events that would
constitute a Change of Control would constitute a default under
the Credit Agreement. Future Senior Debt of DMC and its
Subsidiaries may also contain prohibitions of certain events that
would constitute a Change of Control or require such Senior Debt
to be repurchased upon a Change of Control. Moreover, the
exercise by the Holders of their right to require DMC to
repurchase the New Notes could cause a default under such Senior
Debt, even if the Change of Control itself does not, due to the
financial effect of such repurchase on DMC.
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The Indenture will provide that, prior to the mailing of the
notice referred to below, but in any event within 30 days
following any Change of Control, DMC covenants to (i) repay in
full and terminate all commitments under Indebtedness under the
Credit Agreement and all other Senior Debt 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 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 and all other Senior Debt to permit the
repurchase of the New Notes as provided below. DMC shall first
comply with the covenant in the immediately preceding sentence
before it shall be required to repurchase New Notes pursuant to
the provisions described below. DMC's failure 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 30 days following the date upon which the Change of
Control occurred, unless DMC has mailed a notice with respect to
a redemption described under the heading "Optional Redemption
upon Change of Control prior to April 15, 2002" above with
respect to all the New Notes in connection with a Change of
Control occurring on or prior to April 15, 2002, DMC 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 a New Note
purchased pursuant to a Change of Control Offer will be required
to surrender the New Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the New 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.
If a Change of Control Offer is made, there can be no
assurance that DMC will have available funds sufficient to pay
the Change of Control purchase price for all the New Notes that
might be delivered by Holders seeking to accept the Change of
Control Offer. In the event DMC is required to purchase
outstanding New Notes pursuant to a Change of Control Offer, DMC
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 DMC would be able to
obtain such financing.
Neither the Board of Directors of DMC nor the Trustee may
waive the covenant relating to a Holder's right to redemption
upon a Change of Control. Restrictions in the Indenture described
herein on the ability of DMC and its Restricted Subsidiaries to
incur additional Indebtedness, to grant Liens on its property, to
make Restricted Payments and to make Asset Sales may also make
more difficult or discourage a takeover of DMC, whether favored
or opposed by the management of DMC. Consummation of any such
transaction in certain circumstances may require redemption or
repurchase of the New Notes, and there can be no assurance that
DMC or the acquiring party will have sufficient financial
resources to effect such redemption or repurchase. Such
restrictions and the restrictions on transactions with Affiliates
may, in certain circumstances, make more difficult or discourage
any leveraged buyout of DMC or any of its Subsidiaries by the
management of DMC. While such 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 New Notes protection in all circumstances from the
adverse aspects of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction.
DMC 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 New 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, DMC 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 DMC and the Initial Purchasers. Management
has no present intention to engage in a transaction involving a
Change of Control (other than the recently completed
Recapitalization), although it is possible that DMC would decide
to do so in the future. Subject to the limitations discussed
below, DMC could, in the future, enter into certain transactions,
including
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acquisitions, refinancings or other recapitalizations, that would
not constitute a Change of Control under the Indenture, but that
could increase the amount of indebtedness outstanding at such
time or otherwise affect DMC'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 New Notes to require that DMC repurchase the
New Notes in the event of a takeover, recapitalization or similar
transaction.
Certain Covenants
The Indenture will contain, among others, the following
covenants:
Limitation on Incurrence of Additional Indebtedness. DMC
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, DMC may
incur Indebtedness (including, without limitation, Acquired
Indebtedness), and the Restricted Subsidiaries of DMC may incur
Acquired Indebtedness, in each case if on the date of the
incurrence of such Indebtedness, after giving effect to the
incurrence thereof, the Consolidated Fixed Charge Coverage Ratio
of DMC is greater than 2.0 to 1.0.
Limitation on Restricted Payments. DMC 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 DMC or in options, warrants or
other rights to purchase such Qualified Capital Stock) on or in
respect of shares of DMC's Capital Stock to holders of such
Capital Stock, (b) purchase, redeem or otherwise acquire or
retire for value any Capital Stock of DMC 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 DMC or options, warrants or other rights to
purchase such Qualified Capital Stock), (c) make any principal
payment on, purchase, defease, redeem, prepay, decrease or
otherwise acquire or retire for value, prior to any scheduled
final maturity, scheduled repayment or scheduled sinking fund
payment, any Indebtedness of DMC 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)
DMC 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 DMC) shall exceed the sum of: (v)
$10,000,000; plus (w) 50% of the cumulative Consolidated Net
Income (or if cumulative Consolidated Net Income shall be a loss,
minus 100% of such loss) of DMC earned subsequent to the Issue
Date 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 (x) 100% of the
aggregate net cash proceeds received by DMC from any Person
(other than a Subsidiary of DMC) from the issuance and sale
subsequent to the Issue Date and on or prior to the Reference
Date of Qualified Capital Stock of DMC (including by conversion
of Indebtedness into Qualified Capital Stock) and, subject to the
limitation set forth in clause (8) of the immediately succeeding
paragraph, 100% of the fair market value of non-cash
consideration received in any such issuance and sale; plus (y)
without duplication of any amounts included in clause (iii)(x)
above, 100% of the aggregate net cash proceeds of any equity
contribution received by DMC from a holder of DMC's Capital Stock
and, subject to the limitation set forth in clause (8) of the
immediately succeeding paragraph, 100% of the fair market value
of non-cash consideration of any equity contribution received by
DMC from a holder of DMC's Capital Stock; plus (z) without
duplication, the sum of (1) the aggregate amount returned in cash
on or with respect to Investments (other than Permitted
Investments) made subsequent to the Issue Date whether through
interest payments, principal payments, dividends or other
distributions or payments, (2) the net cash proceeds
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received by DMC or any Restricted Subsidiary from the disposition
of all or any portion of such Investments (other than to a
Subsidiary of DMC) and, subject to the limitations set forth in
clause (8) of the immediately succeeding paragraph, 100% of the
fair market value of non-cash consideration received in any such
disposition, and (3) upon redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the fair market value of
such Subsidiary; 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 DMC, either (i) solely in exchange for
shares of Qualified Capital Stock of DMC or (ii) through the
application of net proceeds of a substantially concurrent sale
for cash (other than to a Subsidiary of DMC) of shares of
Qualified Capital Stock of DMC; (3) if no Default or Event of
Default shall have occurred and be continuing, the acquisition of
any Indebtedness of DMC that is subordinate or junior in right of
payment to the New Notes either (i) solely in exchange for shares
of Qualified Capital Stock of DMC or Indebtedness of DMC that is
subordinate or junior in right of payment to the New Notes at
least to the extent of the subordination provisions contained in
the Indenture and having no maturity, sinking fund payment or
scheduled mandatory redemption prior to maturity of the New
Notes, or (ii) through the application of net proceeds of a
substantially concurrent sale for cash (other than to a
Subsidiary of DMC) of (A) shares of Qualified Capital Stock of
DMC 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 DMFC to redeem or repurchase Common Stock of DMFC or
options in respect thereof from employees or officers of DMFC or
any of its Subsidiaries or their estates or authorized
representatives upon the death, disability or termination of
employment of such employees or officers in an aggregate amount
not to exceed $10 million; (5) the making of distributions, loans
or advances in an amount not to exceed $1 million per annum
sufficient to permit DMFC to pay the ordinary operating expenses
of DMFC related to DMFC's ownership of Capital Stock of DMC; (6)
the payment of any amounts pursuant to the Tax Sharing Agreement;
(7) aggregate payments of not more than $835 million pursuant to
the Recapitalization and made within 30 days of the date of the
consummation of the Recapitalization; and (8) in the event that
DMC has not realized cash from the proceeds of the payment, sale
or disposition of any non-cash consideration referred to in
clause (iii)(x), (iii)(y) and (iii)(z)(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 (8) shall be included
in such calculation and amounts expended pursuant to clauses (2),
(3), (5), (6) and (7) shall be excluded from such calculation.
Not later than the date of making any Restricted Payment,
DMC 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 DMC's 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. DMC will not, and will not
permit any of its Restricted Subsidiaries to, consummate an Asset
Sale unless (i) DMC 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 DMC's Board of Directors), (ii) at least 75% of the
consideration received by DMC or the Restricted Subsidiary, as
the case may be, from such Asset Sale shall be in the form of
cash or Cash Equivalents (provided that (A) the amount of any
liabilities (as shown on DMC's or such Restricted Subsidiary's
most recent balance sheet) of DMC or any such Restricted
Subsidiary (other than liabilities that are by their terms
subordinated to the New Notes) that are assumed by the transferee
of any such assets and (B) the fair market value of any
marketable securities received by DMC or a Restricted Subsidiary
in exchange for any such assets that are promptly converted into
cash shall be deemed to be cash for purposes of this provision)
and is received at the time of such disposition, provided that
DMC and its Restricted Subsidiaries may make Asset Sales
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not exceeding $2 million in the aggregate in each year for
non-cash consideration; and (iii) upon the consummation of an
Asset Sale, DMC shall apply, or cause such Restricted Subsidiary
to apply, the Net Cash Proceeds relating to such Asset Sale prior
to the date occurring 360 days following the receipt thereof
either (A) to prepay any Senior Debt and, in the case of any
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 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 DMC and its Restricted
Subsidiaries as it exists on the date of such Asset Sale or in
businesses the same, 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). 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 DMC 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 next preceding sentence (each, a "Net Proceeds Offer
Trigger Date"), such aggregate amount of Net Cash Proceeds which
have not been applied on or before such Net Proceeds Offer
Trigger Date as permitted in clauses (iii)(A), (iii)(B) and
(iii)(C) of the next preceding sentence (each a "Net Proceeds
Offer Amount") shall be applied by DMC 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 45 days following the applicable Net
Proceeds Offer Trigger Date, from all Holders on a pro rata
basis, that amount of Notes equal to the Net Proceeds Offer
Amount at a price equal to 100% of the principal amount of the
New Notes to be purchased, plus accrued and unpaid interest
thereon, if any, to the date of purchase; provided, however, that
if at any time any non-cash consideration received by DMC or any
Restricted Subsidiary of DMC, as the case may be, in connection
with any Asset Sale is converted into or sold or otherwise
disposed of for cash (other than interest received with respect
to any such non-cash consideration), then such conversion or
disposition shall be deemed to constitute an Asset Sale hereunder
and the Net Cash Proceeds thereof shall be applied in accordance
with this covenant. DMC 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).
In the event of the transfer of substantially all (but not
all) of the property and assets of DMC 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 DMC and
its Restricted Subsidiaries not so transferred for purposes of
such covenant, and shall comply with the provisions of such
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 DMC or its Restricted Subsidiaries deemed to be sold
shall be deemed to be Net Cash Proceeds for purposes of such
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 New Notes in whole or in part
in integral multiples of $1,000 in exchange for cash. To the
extent Holders properly tender New Notes in an amount exceeding
the Net Proceeds Offer Amount, New Notes of tendering Holders
will be purchased on a pro rata basis (based on amounts
tendered). To the extent that the aggregate amount of the New
Notes tendered pursuant to a Net Proceeds Offer is less than the
Net Proceeds Offer Amount, DMC 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.
DMC 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 New 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, DMC 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.
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Notwithstanding the foregoing, DMC 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, (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 DMC, and (iii) in the event
such Asset Swap involves an aggregate amount in excess of $50
million, DMC has received a written opinion from an Independent
Financial Advisor that such Asset Swap is fair to DMC or such
Restricted Subsidiary, as the case may be, from a financial point
of view.
Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries. DMC 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 DMC 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 DMC or any other Restricted Subsidiary
of DMC; or (c) transfer any of its property or assets to DMC or
any other Restricted Subsidiary of DMC, except for such
encumbrances or restrictions existing under or by reason of: (1)
applicable law; (2) the Indenture; (3) customary non-assignment
provisions of any contract or lease governing a leasehold or
ownership interest of any Restricted Subsidiary of DMC; (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" and
"--Limitation on Liens" above that limit the right of the debtor
to dispose of the assets securing such Indebtedness; (7)
customary net worth 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 DMC as
determined by the Board of Directors of DMC 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.
DMC 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 DMC or to a Wholly Owned
Restricted Subsidiary of DMC) or permit any Person (other than
DMC or a Wholly Owned Restricted Subsidiary of DMC) to own any
Preferred Stock of any Restricted Subsidiary of DMC (other than a
Receivables Subsidiary or a Special Purpose Vehicle).
Limitation on Liens. DMC 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
DMC 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 New Notes, the
New Notes are secured by a Lien on such property, assets or
proceeds that is senior in priority to such Liens and (ii) in all
other cases, the New 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 New Notes; (D) Liens of DMC or a Wholly Owned
Restricted Subsidiary of DMC on assets of any Restricted
Subsidiary of DMC; (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
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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 DMC or any of
its Restricted Subsidiaries not securing the Indebtedness so
Refinanced; and (F) Permitted Liens.
Prohibition on Incurrence of Senior Subordinated Debt. DMC
will not incur or suffer to exist Indebtedness that is senior in
right of payment to the New Notes and subordinate in right of
payment to any other Indebtedness of DMC.
Restriction of Lines of Business to Food, Food Distribution
and Related Businesses. DMC shall not, and shall not permit any
Restricted Subsidiary to, engage in any material business
activity except for food, food distribution and related
businesses.
Merger, Consolidation and Sale of Assets of DMC. DMC 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 DMC to sell, assign,
transfer, lease, convey or otherwise dispose of) all or
substantially all of DMC's assets (determined on a consolidated
basis for DMC and its Restricted Subsidiaries), whether as an
entirety or substantially as an entirety, to any Person unless:
(i) either (1) DMC shall be the surviving or continuing
corporation or (2) the Person (if other than DMC) formed by such
consolidation or into which DMC is merged or the Person which
acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of DMC and its
Restricted Subsidiaries 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 on all of the New Notes and the
performance of every covenant of the New Notes, the Indenture
and, if applicable, the Registration Rights Agreement on the part
of DMC 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), DMC 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 after giving effect
to such transaction, DMC or such Surviving Entity, as the case
may be, will have Consolidated Net Worth in an amount that is not
less than the Consolidated Net Worth of DMC immediately prior to
such transaction; (iv) 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 (v) DMC 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 DMC with an
Affiliate incorporated solely for the purpose of reincorporating
DMC in another jurisdiction shall be permitted without regard to
clauses (ii) and (iii) 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 DMC the Capital
Stock of which constitutes all or substantially all of the
properties and assets of DMC, shall be deemed to be the transfer
of all or substantially all of the properties and assets of DMC.
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The Indenture will provide that upon any consolidation,
combination or merger or any transfer of all or substantially all
of the assets of DMC in accordance with the foregoing in which
DMC is not the continuing corporation, the successor Person
formed by such consolidation or into which DMC is merged or to
which such conveyance, lease or transfer is made shall succeed
to, and be substituted for, and may exercise every right and
power of, DMC under the Indenture and the New Notes with the same
effect as if such surviving entity had been named as such;
provided, however, that solely for purposes of computing amounts
described in subclause (iii) of the first paragraph of the
covenant described under "--Limitation on Restricted Payments"
above, any such surviving entity shall only be deemed to have
succeeded to and be substituted for DMC with respect to periods
subsequent to the effective time of such merger, consolidation or
transfer of assets.
Merger, Consolidation and Sale of Assets of a Guarantor. A
Guarantor (including DMFC) 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 all or substantially all of such Guarantor's assets,
whether as an entirety or substantially as an entirety, to any
Person unless: (i) either (1) such Guarantor shall be the
surviving or continuing corporation or (2) the Person (if other
than such Guarantor) formed by such consolidation or into which
such Guarantor is merged or the Person which acquires by sale,
assignment, transfer, lease, conveyance or other disposition the
properties and assets of such Guarantor substantially as an
entirety (the "Surviving Guarantor 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 such
Guarantor of the due and punctual payment of the principal of and
premium, if any, and interest on the New Notes and all of such
Guarantor's obligations under the Indenture; (ii) such Guarantor
or such Surviving Guarantor Entity, as the case may be, shall
not, immediately after giving effect to such transaction or
series of transactions herein default in the performance of any
covenants or obligations of such Guarantor or Surviving Guarantor
Entity under the Indenture; and (iii) such Guarantor or such
Surviving Guarantor 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 Shield with
and into DMFC and the merger of DFMC with and into DMC shall be
permitted; provided that, with respect to the Merger of DMFC with
and into DMC, such merger shall be permitted pursuant to the
covenant described under "--Merger, Consolidation and Sale of
Assets of DMC."
The Indenture will provide that upon any consolidation,
combination or merger or any transfer of all or substantially all
of the assets of a Guarantor in accordance with the foregoing, in
which such Guarantor is not the continuing corporation, the
Surviving Guarantor Entity shall succeed to, and be substituted
for, and may exercise every right and power of, such Guarantor
under the Indenture and the New Notes with the same effect as if
such Surviving Guarantor Entity had been named as such.
Limitations on Transactions with Affiliates. (a) DMC 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 DMC 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 DMC 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
$1 million shall be approved by the Board of Directors of DMC 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 DMC or any Restricted Subsidiary of DMC
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
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payments to an Affiliate, as the case may be, of more than $10
million, DMC 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 DMC 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 DMC or any Restricted Subsidiary of
DMC as determined in good faith by DMC's Board of Directors or
senior management; (ii) transactions between or among DMC 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) payments made in
connection with the Recapitalization, including transaction fees
to stockholders of DMFC not exceeding $10,000,000; (vi) the
issuance of Qualified Capital Stock of DMC; (vii) any obligations
of DMC pursuant to the Management Advisory Agreement and the
Transaction Advisory Agreement; (viii) transactions permitted by,
and complying with, the provisions of the covenants described
under "Certain Covenants--Merger, Consolidation and Sale of
Assets of DMC" and "--Merger, Consolidation and Sale of Assets of
a Guarantor"; (ix) 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 DMC in the good
faith determination of the Board of Directors of DMC 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 (x) Qualified Receivables Transactions.
Limitation on Guarantees by Restricted Subsidiaries. DMC
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 DMC or any
other Restricted Subsidiary (other than Permitted Indebtedness of
a Restricted Subsidiary), unless, in any such case (a) such
Restricted Subsidiary executes and delivers a supplemental
indenture to the Indenture, providing a Guarantee by such
Restricted Subsidiary and (b) (x) if any such assumption,
guarantee or other liability of such Restricted Subsidiary is
provided in respect of Senior Debt, the guarantee or other
instrument provided by such Restricted Subsidiary in respect of
such Senior Debt may be superior to such Guarantee pursuant to
subordination provisions no less favorable to the Holders of the
New Notes than those contained in the Indenture and (y) if such
assumption, guarantee or other liability of such Restricted
Subsidiary is provided in respect of Indebtedness that is
expressly subordinated to the New Notes, the guarantee or other
instrument provided by such Restricted Subsidiary in respect of
such subordinated Indebtedness shall be subordinated to such
Guarantee pursuant to subordination provisions no less favorable
to the Holders of the New Notes than those contained in the
Indenture.
Each Guarantee will be limited in amount to an amount not
to exceed the maximum amount that can be guaranteed by a
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 preceding paragraph; or (ii) any
sale or other disposition (by merger or otherwise) to any Person
which is not a Restricted Subsidiary of DMC of all of DMC'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 will provide that so long
as the New Notes are outstanding DMC 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 DMC is
required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act. The Indenture will further provide
that, notwithstanding that DMC may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange
Act, so long as the New Notes are outstanding DMC 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. DMC will also comply with the provisions of TIA
ss.314(a).
Events of Default
The following events are defined in the Indenture as
"Events of Default":
(i) the failure to pay interest on any New 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);
(ii) the failure to pay the principal on any New
Notes, when such principal becomes due and payable, at
maturity, upon redemption or otherwise (including the
failure to make a payment to purchase New 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);
(iii) a default 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 DMC from the
Trustee or by DMC and the Trustee from the Holders of at
least 25% of the outstanding principal amount of the New
Notes;
(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 DMC or any Restricted
Subsidiary of DMC 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 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;
(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
DMC 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;
(vi) the failure of a guaranty of the New Notes given
by a Guarantor to be in full force and effect (except as
contemplated by the terms thereof) or the denial or
disaffirmation of such obligations by a Guarantor; and
(vii) certain events of bankruptcy affecting DMC
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 DMC) shall occur
and be continuing, the Trustee or the Holders of at least 25% in
principal amount of outstanding New Notes may declare the
principal of and accrued interest on all the New Notes to be due
and payable by notice in writing to DMC 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 DMC 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 DMC occurs and is continuing,
then all unpaid
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principal of and premium, if any, and accrued and unpaid interest
on all of the outstanding New 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 will provide that, at any time after the
delivery of an Acceleration Notice with respect to the New Notes
as described in the preceding paragraph, the Holders of a
majority in principal amount of the New Notes may, on behalf of
the Holders of all of the New Notes, rescind and cancel such
declaration and its consequences (i) if the rescission would not
conflict with any judgment or decree, (ii) if all existing Events
of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is
lawful, interest on overdue installments of interest and overdue
principal which has become due otherwise than by such declaration
of acceleration has been paid, (iv) if DMC 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 New
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 New Notes.
Holders of the New Notes may not enforce the Indenture or
the New Notes except as provided in the Indenture and under the
TIA. 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 New 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, DMC 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 DMC, as
such, shall have any liability for any obligations of DMC under
the New 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 New Notes by accepting a New Note waives and
releases all such liability. The waiver and release are part of
the consideration for issuance of the New Notes. The foregoing
provisions do not relate to the liability of DMFC as a Guarantor.
Legal Defeasance and Covenant Defeasance
DMC may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding New Notes
("Legal Defeasance"). Such Legal Defeasance means that DMC shall
be deemed to have paid and discharged the entire indebtedness
represented by the outstanding New Notes, except for (i) the
rights of Holders to receive payments in respect of the principal
of, premium, if any, and interest on the New Notes when such
payments are due, (ii) DMC's obligations with respect to the New
Notes concerning issuing temporary New Notes, registration of New
Notes, mutilated, destroyed, lost or stolen New Notes and the
maintenance of an office or agency for payments, (iii) the
rights, powers, trust, duties and immunities of the Trustee and
DMC's obligations in connection therewith and (iv) the Legal
Defeasance provisions of the Indenture. In addition, DMC may, at
its option and at any time, elect to have the obligations of DMC
released with respect to certain covenants that are described in
the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not
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constitute a Default or Event of Default with respect to the New
Notes. In the event Covenant Defeasance occurs, certain events
(not including non-payment, bankruptcy, receivership,
reorganization and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with
respect to the New Notes.
In order to exercise either Legal Defeasance or Covenant
Defeasance, (i) DMC 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 New
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, DMC shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee
confirming that (A) DMC 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, DMC 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 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; (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 DMC or any of its Subsidiaries
is a party or by which DMC or any of its Subsidiaries is bound;
(vi) DMC shall have delivered to the Trustee an officers'
certificate stating that the deposit was not made by DMC with the
intent of preferring the Holders over any other creditors of DMC
or with the intent of defeating, hindering, delaying or
defrauding any other creditors of DMC or others; (vii) DMC 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) DMC 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
DMC between the date of deposit and the 91st day following the
deposit and that no Holder is an insider of DMC, 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; and (ix) certain other customary conditions precedent
are satisfied.
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 New Notes, as expressly provided for
in the Indenture) as to all outstanding New Notes when: (i)
either (a) all the New Notes theretofore authenticated and
delivered (except lost, stolen or destroyed New Notes which have
been replaced or paid and New Notes for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by DMC and thereafter repaid to DMC or discharged from such
trust) have been delivered to the Trustee for cancellation or (b)
all New Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and DMC has irrevocably
deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on
the New Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest on
the New Notes to the date of deposit together with irrevocable
instructions from DMC directing the Trustee to apply such funds
to the payment thereof at maturity or redemption, as the case may
be; (ii) DMC has paid all other sums payable under the Indenture
by DMC; and (iii) DMC 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.
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Modification of the Indenture
From time to time, DMC and the Trustee, without the consent
of the Holders, may amend the Indenture for certain specified
purposes, including curing ambiguities, omissions, defects or
inconsistencies, so long as such change does not, in the opinion
of the Trustee, materially adversely affect the rights of any of
the Holders. In formulating its opinion on such matters, the
Trustee will be entitled to rely on such evidence as it deems
appropriate, including, without limitation, solely on an opinion
of counsel. In addition, without the consent of the Holders, DMC
and the Trustee may amend the Indenture to provide for the
assumption by a successor corporation, partnership, trust or
limited liability company of the obligations of DMC under the
Indenture as permitted by this Indenture, to provide for
uncertificated New Notes in addition to or in place of
certificated New Notes, to add Restricted Subsidiaries, as
Guarantors as described under "Certain Covenants--Limitations on
Guarantees by Restricted Subsidiaries" or to add further
Guarantees, to secure the New Notes, to add to the covenants of
DMC for the benefit of the Holders or to surrender any right or
power conferred upon DMC or to comply with any requirement of the
Commission in connection with the qualification of the Indenture
under the Trust Indenture Act. Other modifications and amendments
of the Indenture may be made with the consent of the Holders of a
majority in principal amount of the then outstanding New Notes
issued under the Indenture, except that, without the consent of
each Holder affected thereby, no amendment may: (i) reduce the
amount of New Notes whose Holders must consent to an amendment;
(ii) reduce the rate of or change or have the effect of changing
the time for payment of interest, including defaulted interest,
on any New Notes; (iii) reduce the principal of or change or have
the effect of changing the fixed maturity of any New Notes, or
change the date on which any New Notes may be subject to
redemption, or reduce the redemption price therefor; (iv) make
any New Notes payable in money other than that stated in the New
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 New Note on or after the due
date thereof or to bring suit to enforce such payment, or
permitting Holders of a majority in principal amount of New Notes
to waive Defaults or Events of Default (other than Defaults or
Events of Default with respect to the payment of principal of, or
interest on, the New Notes); (vi) amend, change or modify in any
material respect the obligation of DMC to make and consummate a
Change of Control Offer in the event of a Change of Control; or
(vii) modify or change any provision of the Indenture or the
related definitions affecting the subordination or ranking of the
New Notes in a manner which adversely affects the Holders in any
material respect.
Governing Law
The Indenture will provide that it and the New Notes will
be governed by, and construed in accordance with, the laws of the
State of New York but without giving effect to applicable
principles of conflicts of law to the extent that the application
of the law of another jurisdiction would be required thereby.
The Trustee
The Indenture will provide 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 own affairs.
The Indenture and the provisions of the TIA contain certain
limitations on the rights of the Trustee, should it become a
creditor of DMC, 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 TIA, the Trustee
will be permitted to engage in other transactions; provided that
if the Trustee acquires any conflicting interest as described in
the TIA, it must eliminate such conflict or resign.
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Certain Definitions
Set forth below is a summary of certain of the defined
terms used in the Indenture. Reference is made to the Indenture
for the full definition of all such terms, as well as any other
terms used herein 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 DMC or at the time it merges or
consolidates with DMC or any of its Restricted Subsidiaries or
assumed by DMC 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 DMC or such acquisition, merger or
consolidation.
"Acquisition Financing Indebtedness" means Indebtedness of
DMC 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.
"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 DMC or any
Restricted Subsidiary of DMC in any other Person pursuant to
which such Person shall become a Restricted Subsidiary of DMC, or
shall be merged with or into DMC, or (b) the acquisition by DMC
or any Restricted Subsidiary of DMC of the assets of any Person
(other than a Restricted Subsidiary of DMC) 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 DMC or any of its Restricted Subsidiaries
(including any Sale and Leaseback Transaction) to any Person
other than DMC or a Wholly Owned Restricted Subsidiary of DMC of
(a) any Capital Stock of any Restricted Subsidiary of DMC; or (b)
any other property or assets of DMC or any Restricted Subsidiary
of DMC 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 DMC or its Restricted
Subsidiaries receive aggregate consideration of less than $1
million; (ii) the sale, lease, conveyance, disposition or other
transfer of all or substantially all of the assets of DMC as
permitted under "Merger, Consolidation and Sale of Assets of
DMC"; (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 DMC 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 DMC and its Restricted Subsidiaries in their business
as it exists on the date thereof, or in businesses the same as or
similar or reasonably related thereto) between DMC 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.
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"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.
"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 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 backed by the full faith and credit of the
United States, in each case maturing within one year from the
date of acquisition thereof; (ii) obligations issued or fully
guaranteed by any state of the United States of America or any
political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one
of the two highest ratings obtainable from either Standard &
Poor's Corporation ("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 DMC or DMFC 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 DMC
or DMFC, as the case may be, of any plan or proposal for the
liquidation or dissolution of DMC or DMFC, 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 DMC and DMFC and (B) TPG and its Related Parties shall
beneficially own, directly or indirectly, in the aggregate a
lesser percentage of the Voting Stock of DMC or DMFC, as the case
may be, than such other Person or Group: or (iv) the replacement
of a majority of the Board of Directors of DMC or DMFC over a
two-year period from the directors who constituted the Board of
Directors of DMC or DMFC, 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 DMC or
DMFC, 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 calculated
on a basis consistent with Regulation S-X under the Securities
Act) attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Four Quarter Period)
occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such Asset Sale or Asset
Acquisition (including the incurrence, assumption or liability
for any such Acquired Indebtedness) occurred on the first day of
the Four Quarter Period. If such Person or any of its Restricted
Subsidiaries directly or indirectly guarantees Indebtedness of a
third Person, the preceding sentence shall give effect to the
incurrence of such guaranteed Indebtedness as if such Person or
any Restricted Subsidiary of such Person had directly incurred or
otherwise assumed such guaranteed Indebtedness. Furthermore, in
calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of the
"Consolidated Fixed Charge Coverage Ratio," (1) interest on
outstanding Indebtedness determined on a fluctuating basis as of
the Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date, (2) notwithstanding clause (1)
above, interest on Indebtedness determined on a fluctuating
basis, to the extent such interest is covered by agreements
relating to Interest Swap Obligations, shall be deemed to accrue
at the rate per annum resulting after giving effect to the
operation of such agreements, (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 reasonably determined by the Board of Directors of
such Person (as evidenced by a Board Resolution) to be the rate
of interest 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.
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"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 and (f) net payments (whether positive or negative)
pursuant to Interest Swap Obligations; and (ii) the interest
component of Capitalized Lease Obligations 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 DMC 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 DMC.
"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, (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 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 restricted 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) the amortization
of any premiums, fees or expenses incurred in connection with the
Recapitalization and related financings and (ii) the amortization
or depreciation of any amounts required or permitted by
Accounting Principles Board Opinion Nos. 16 (including non-cash
write-ups and non-cash charges relating to inventory and fixed
assets, in each case arising in connection with the
Recapitalization) and 17 (including non-cash charges relating to
intangibles and goodwill arising in connection with the
Recapitalization).
"Consolidated Net Worth" means the total of the amounts
shown on the balance sheet of DMC and its Restricted
Subsidiaries, determined on a consolidated basis, as of the end
of the most recent fiscal quarter of DMC ending prior to the
taking of any action for the purpose of which the determination
is being made, as (i) the par or stated value of all outstanding
Capital Stock of DMC plus (ii) paid-in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any
amounts attributable to Disqualified Capital Stock.
"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 DMFC, DMC, the lenders party thereto in
their capacities as lenders thereunder and Bank of America
National Trust and Savings Association and Bankers Trust Company,
as agents, together with the related documents thereto
(including, without limitation, any guarantee agreements and
security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time,
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including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including, without
limitation, increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is
permitted by the covenant described under "Certain
Covenants--Limitation on Incurrence of Additional Indebtedness"
above) or adding Restricted Subsidiaries of DMC as additional
borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or
group of lenders.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement
designed to protect DMC or any Restricted Subsidiary of DMC
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 Senior Debt" means (i) Indebtedness under or in
respect of the Credit Agreement and (ii) any other Indebtedness
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 DMC 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 sole option of the holder
thereof, in each case on or prior to the final maturity date of
the New Notes.
"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.
"GAAP" means generally accepted accounting principles 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 be approved by a significant segment of the
accounting profession of the United States, which are in effect
as of the Issue Date.
"Guarantor" means each of DMFC and any other Person that
executes a Guarantee pursuant to the covenant described under
"Certain Covenants--Limitation on Guarantees by Restricted
Subsidiaries," each until a successor replaces it pursuant to the
Indenture and thereafter means such successor. A Person whose
Guarantee has terminated pursuant to the aforesaid covenant shall
cease to be a Guarantor effective as of such termination.
"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) 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
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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 DMC may be required to pay for the acquisition or
retirement of such Disqualified Capital Stock), but excluding
accrued dividends, if any. For purposes hereof, the "maximum
fixed repurchase price" of any Disqualified Capital Stock which
does not have a fixed repurchase price shall be calculated in
accordance with the terms of 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 DMC exceeding 10% and (ii) which, in the judgment of
the Board of Directors of DMC, 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 DMC,
"Investment" shall exclude extensions of trade credit (including
trade receivables) by DMC and its Restricted Subsidiaries on
commercially reasonable terms in accordance with normal trade
practices of DMC 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 DMC'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 DMC 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 DMC or any Restricted Subsidiary of
DMC sells or otherwise disposes of any Common Stock of any direct
or indirect Restricted Subsidiary of DMC such that, after giving
effect to any such sale or disposition, DMC no longer owns,
directly or indirectly, 100% of the outstanding Common Stock of
such Restricted Subsidiary, DMC 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.
"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
DMC or
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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 DMC 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 DMC 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 New Notes and the Indenture;
(ii) Indebtedness incurred pursuant to the Credit
Agreement in an aggregate principal amount at any time
outstanding not to exceed $730 million less (A) the sum of
(y) the 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 DMC on or before June 30, 2000 plus (z) the amount of
all mandatory principal payments in respect of such term
loans thereunder (other than such excluded payments) made
from (or attributable to) the proceeds received from Asset
Sales; (B) in the case of the Revolving Credit Facility,
any required permanent repayments (which are accompanied by
a corresponding permanent commitment reduction) thereunder
made on or before June 30, 2000 or made by reason of the
receipt of the proceeds of Asset Sales; and (C) the amount
of the Receivables Program Obligations then outstanding.
(iii) other Indebtedness of DMC and its Restricted
Subsidiaries outstanding on the Issue Date reduced by the
amount of any scheduled amortization payments or mandatory
prepayments when actually paid or permanent reductions
thereon;
(iv) Interest Swap Obligations of DMC covering
Indebtedness of DMC or any of its Restricted Subsidiaries
and Interest Swap Obligations of any Restricted Subsidiary
of DMC covering Indebtedness of such Restricted Subsidiary;
provided, however, that such Interest Swap Obligations are
entered into to protect DMC 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 DMC 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 DMC to DMC or to another Wholly Owned
Restricted Subsidiary of DMC, in either case for so long as
such Indebtedness is held by DMC or a Wholly Owned
Restricted Subsidiary of DMC, in each case subject to no
Lien held by a Person other than DMC or a Wholly Owned
Restricted Subsidiary of DMC; provided that if as of any
date any Person other than DMC or a Wholly Owned Restricted
Subsidiary of DMC 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;
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(vii) Indebtedness of DMC to a Wholly Owned Restricted
Subsidiary of DMC for so long as such Indebtedness is held
by a Wholly Owned Restricted Subsidiary of DMC, in each
case subject to no Lien; provided that (a) any Indebtedness
of DMC to any Wholly Owned Restricted Subsidiary of DMC is
unsecured and subordinated, pursuant to a written
agreement, to DMC's obligations under the Indenture and the
New Notes and (b) if as of any date any Person other than a
Wholly Owned Restricted Subsidiary of DMC 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 DMC;
(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 DMC 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 DMC and its Restricted Subsidiaries
incurred in the ordinary course of business not to exceed
$25 million at any one time outstanding;
(xi) guarantees by DMC 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 DMC, the covenant
described under "Certain Covenants--Limitation of
Guarantees by Restricted Subsidiaries";
(xii) Acquired Indebtedness and Acquisition Financing
Indebtedness; provided that (y) if such indebtedness is
incurred on or before June 30, 1999, the consolidated Fixed
Charge Coverage Ratio of DMC 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 or (z) if such indebtedness is incurred on or
after July 1, 1999, such pro forma Consolidated Fixed
Charge Coverage Ratio shall be greater than 2.0 to 1.0;
(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 DMC 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 DMC (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 DMC for the purpose of financing
such acquisition) in a principal amount not to exceed the
gross proceeds actually received by DMC 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 $20 million;
(xiv) guarantees furnished by DMC 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;
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(xvi) Receivables Program Obligations; and
(xvii) additional Indebtedness of DMC and its
Restricted Subsidiaries in an aggregate principal amount
not to exceed $50 million at any one time outstanding
(which amount may, but need not, be incurred in whole or in
part under the Credit Agreement).
"Permitted Investments" means: (i) Investments by DMC or
any Restricted Subsidiary of DMC in any Person that is or will
become immediately after such Investment a Restricted Subsidiary
of DMC or that will merge or consolidate into DMC or a Restricted
Subsidiary of DMC, provided that such Person is engaged, in all
material respects, solely in the business of food, food
distribution and related businesses; (ii) Investments in DMC by
any Restricted Subsidiary of DMC; provided that any Indebtedness
evidencing such Investment is unsecured and subordinated,
pursuant to a written agreement, to DMC's obligations under the
New Notes and the Indenture; (iii) Investments in cash and Cash
Equivalents; (iv) loans and advances to employees and officers of
DMC and its Restricted Subsidiaries in the ordinary course of
business for bona fide business purposes not in excess of $5
million at any one time outstanding; (v) Currency Agreements and
Interest Swap Obligations entered into in the ordinary course of
DMC's or its Restricted Subsidiaries' businesses and otherwise in
compliance with the Indenture; (vi) additional Investments not to
exceed $25 million at any one time outstanding; (vii) Investments
in securities of trade creditors or customers received in
settlement of obligations or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers; (viii)
Investments made by DMC 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 DMC or a Restricted Subsidiary of
DMC 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, (y) the proceeds of the sale of
certain assets identified in a schedule to the Indenture as being
held for disposition plus (z) $25 million; and (xii) Investments
made in connection with a Qualified Receivables Transaction.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental
charges or claims either (a) not delinquent or (b)
contested in good faith by appropriate proceedings and as
to which DMC 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;
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(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 DMC 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 DMC or any Restricted
Subsidiary of DMC other than the property and assets being
acquired or constructed and (B) the Lien securing such
Indebtedness shall be created within 90 days of such
acquisition or construction;
(viii) Liens upon specific items of inventory or other
goods and proceeds of any Person securing such Person's
obligations in respect of bankers' acceptances issued or
created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other
goods;
(ix) Liens securing reimbursement obligations with
respect to letters of credit which encumber documents and
other property relating to such letters of credit and
products and proceeds thereof;
(x) Liens encumbering deposits made to secure
obligations arising from statutory, regulatory,
contractual, or warranty requirements of DMC 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 DMC or a
Restricted Subsidiary of DMC and were not granted in
connection with, or in anticipation of, the incurrence of
such Acquired Indebtedness by DMC or a Restricted
Subsidiary of DMC and (B) such Liens do not extend to or
cover any property or assets of DMC 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 DMC or a
Restricted Subsidiary of DMC and are no more favorable to
the lienholders than those securing the Acquired
Indebtedness prior to the incurrence of such Acquired
Indebtedness by DMC or a Restricted Subsidiary of DMC;
(xiv) leases or subleases granted to others not
interfering in any material respect with the
business of DMC or its Restricted Subsidiaries;
(xv) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by DMC 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.
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"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.
"Purchase Money Indebtedness" means Indebtedness of DMC or
any of its Restricted Subsidiaries incurred in the normal course
of business for the purpose of financing all or any part of the
purchase price, or the cost of installation, construction or
improvement, of 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 DMC 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 DMC or any
such Subsidiary of DMC pursuant to which DMC or any such
Subsidiary may sell, convey or otherwise transfer to a
Receivables Subsidiary (in the case of a transfer by DMC 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 now existing or arising
in the future); 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
DMC or any other Seller (excluding guarantees of
obligations pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates DMC or any
other Seller in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property
or asset of DMC 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 DMC 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 DMC or such Seller than those that might be
obtained at the time from persons that are not affiliates
of DMC, other than fees payable in the ordinary course of
business in connection with servicing accounts receivable;
and
(c) DMC 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.
"Receivables" means all rights of DMC 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 DMC or such
Seller as accounts receivable.
"Receivables Documents" means (x) a receivables purchase
agreement, pooling and servicing agreement, credit agreement,
agreements to acquire undivided interests or other agreement to
transfer, or create a security interest in, Receivables Program
Assets, in each case as amended, modified, supplemented or
restated and in effect from time to time and entered into by DMC,
another Seller and/or a Receivables Subsidiary, and (y) each
other instrument, agreement and other document entered into by
DMC, 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.
107
<PAGE>
"Receivables Program Assets" means (a) all Receivables which
are described as being transferred by DMC, 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 DMC, a Subsidiary of DMC 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 DMC 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 DMC's Board of
Directors. Any such designation by the Board of Directors shall
be evidenced by filing with the Trustee a Board Resolution of DMC
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.
"Refinancing Indebtedness" means any Refinancing by DMC or
any Restricted Subsidiary of DMC 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) or (xiv) 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 DMC 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 DMC, then
such Refinancing Indebtedness shall be Indebtedness solely of DMC
and (y) if such Indebtedness being Refinanced is subordinate or
junior to the New Notes, then such Refinancing Indebtedness shall
be subordinate to the New Notes at least to the same extent and
in the same manner as the Indebtedness being Refinanced.
"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 DMC and its Restricted Subsidiaries.
"Related Party" means, any Affiliate of TPG.
108
<PAGE>
"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 in respect of any 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.
"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 DMC or a Restricted
Subsidiary of DMC of any property, whether owned by DMC or any
Restricted Subsidiary at the Issue Date or later acquired, which
has been or is to be sold or transferred by DMC 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.
"Seller" means DMC or any Subsidiary or other Affiliate of
DMC (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
DMC, 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
New 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 DMC 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 DMC to a Subsidiary of
DMC, (ii) Indebtedness to, or guaranteed by DMC for the benefit
of, any shareholder (other than a parent corporation), director,
officer or employee of DMC or any Subsidiary of DMC (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 DMC, (vi) any Indebtedness incurred in violation of the
Indenture and (vii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness
of DMC. "Senior Debt," when used with respect to a Guarantor,
shall have a meaning substantially identical to that applied to
the Indebtedness of such Guarantor (including any guarantees
issued by such Guarantor).
"Significant Subsidiary" shall have the meaning set forth
in Rule 1.02(w) of Regulation S-X under the Securities Act.
"Special Purpose Vehicle" means a trust, partnership or
other special purpose Person established by DMC and/or any of its
Subsidiaries to implement a Qualified Receivables Transaction.
"Standard Securitization Undertakings" means
representations, warranties, covenants and indemnities entered
into by DMC or any Subsidiary of DMC which are reasonably
customary in an accounts receivable transactions.
"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
109
<PAGE>
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 DMC and DMFC 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 DMC and DMFC on a
stand-alone basis if no consolidated tax return were filed by
such entities.
"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 DMC may designate any Subsidiary of DMC
(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,
DMC or any other Subsidiary of DMC that is not a Subsidiary of
the Subsidiary to be so designated; provided that (x) DMC
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 DMC or any of its Restricted
Subsidiaries. The Board of Directors of DMC may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary only if (x)
immediately after giving effect to such designation, DMC 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 DMC 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.
"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.
110
<PAGE>
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
Exchange of Old Notes for New Notes
The following summary describes the principal U.S. federal
income tax consequences of the exchange of the Old Notes for New
Notes (the "Exchange") that may be relevant to a beneficial owner
of Notes that will hold the New Notes as capital assets and that
is a citizen or resident of the United States, or that is a
corporation, partnership or other entity created or organized in
or under the laws of the United States or any political
subdivision thereof, an estate the income of which is subject to
U.S. federal income taxation regardless of its source or a trust
if (i) a U.S. court is able to exercise primary supervision over
the trust's administration and (ii) one or more U.S. fiduciaries
have the authority to control all of the trust's substantial
decisions.
The Exchange pursuant to the Exchange Offer will not be a
taxable event for U.S. federal income tax purposes. As a result,
a holder of an Old Note whose Old Note is accepted in an Exchange
Offer will not recognize gain on the Exchange. A tendering
holder's tax basis in the New Notes will be the same as such
holder's tax basis in its Old Notes. A tendering holder's holding
period for the New Notes received pursuant to the Exchange Offer
will include its holding period for the Old Notes surrendered
therefor.
ALL HOLDERS OF OLD NOTES ARE ADVISED TO CONSULT THEIR OWN
TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES OF THE EXCHANGE OF OLD NOTES FOR NEW NOTES AND OF
THE OWNERSHIP AND DISPOSITION OF NEW NOTES RECEIVED IN THE
EXCHANGE OFFER IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
111
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such
New Notes. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes
where such Old Notes were acquired as a result of market-making
activities or other trading activities. DMC and DMFC have agreed
that they will make this Prospectus available to any
Participating Broker-Dealer for a period of time not to exceed
180 days after the Registration Statement is declared effective
(subject to extension under certain circumstances) for use in
connection with any such resale. In addition, until such date,
all broker-dealers effecting transactions in the New Notes may be
required to deliver a prospectus.
Neither DMC nor DMFC will receive any proceeds from any
sale of New Notes by broker-dealers. New Notes received by
broker-dealers for their own account pursuant to the Exchange
Offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination
of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market
prices or negotiated prices. Any such resale may be made directly
to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such New Notes.
Any broker-dealer that resells New Notes that were received by it
for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such New Notes
may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and
any commissions or concessions received by any such persons may
be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
Starting on the Expiration Date, DMC or DMFC will promptly
send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. DMC and DMFC have
agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the Holders of the
Notes) other than commissions or concessions of any brokers or
dealers and will indemnify the Holders of the New Notes
(including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes and the Guarantee will be
passed upon for DMC and DMFC by Cleary, Gottlieb, Steen &
Hamilton, New York, New York.
EXPERTS
The consolidated financial statements of DMFC, as of June
30, 1996 and 1995, and for each of the three years in the period
ended June 30, 1996, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which
contains an explanatory paragraph with respect to the change in
the method of accounting for impairment of long-lived assets and
long-lived assets to be disposed of) appearing elsewhere herein,
and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
CHANGE IN ACCOUNTANTS
At a meeting held on April 18, 1997, the Board of Directors
of the Company approved the engagement of KPMG Peat Marwick LLP
as its independent auditors for the fiscal year ending June 30,
1997 to replace the firm of Ernst & Young LLP, who were dismissed
as auditors of the Company effective April 18, 1997.
112
<PAGE>
The reports of Ernst & Young LLP on the Company's financial
statements for the past two fiscal years did not contain an
adverse opinion or a disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope, or accounting
principles.
In connection with the audits of the Company's financial
statements for each of the two fiscal years ended June 30, 1996
and in the subsequent interim period, there were no disagreements
with Ernst & Young LLP on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope and
procedures which, if not resolved to the satisfaction of Ernst &
Young LLP would have caused Ernst & Young LLP to make reference
to the matter in their report.
The Company has requested Ernst & Young LLP to furnish it a
letter addressed to the Commission stating whether it agrees with
the above statements. A copy of that letter, dated June 11, 1997
is filed as Exhibit 16.1 to this Registration Statement.
113
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Del Monte Foods Company and subsidiaries
Page
----
Audited Financial Statements
- ----------------------------
Report of Independent Auditors ............................... F-2
Consolidated Balance Sheets--June 30, 1996 and 1995 .......... F-3
Consolidated Statements of Operations--Years
ended June 30, 1996, 1995 and 1994 .......................... F-4
Consolidated Statements of Stockholders' Equity--Years
ended June 30, 1996, 1995 and 1994 .......................... F-5
Consolidated Statements of Cash Flows--Years ended
June 30, 1996, 1995 and 1994 ................................ F-7
Notes to Consolidated Financial Statements ................... F-8
Unaudited Financial Statements
- ------------------------------
Consolidated Balance Sheets--March 31, 1997
and June 30, 1996 ........................................... F-24
Consolidated Statements of Operations--Nine-Month
Periods ended March 31, 1997 and 1996 ....................... F-25
Consolidated Statements of Cash Flows--Nine-Month
Periods ended March 31, 1997 and 1996 ....................... F-26
Notes to Consolidated Financial Statements ................... F-27
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Del Monte Foods Company
We have audited the accompanying consolidated balance
sheets of Del Monte Foods Company and subsidiaries as of June 30,
1996 and 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years
ended June 30, 1996, 1995 and 1994. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of Del Monte Foods Company and
subsidiaries at June 30, 1996 and 1995, and the consolidated
results of their operations and their cash flows for the years
ended June 30, 1996, 1995 and 1994 in conformity with generally
accepted accounting principles.
In the fiscal year ended June 30, 1996, Del Monte Foods
Company changed its method of accounting for impairment of
long-lived assets and for long-lived assets to be disposed of.
ERNST & YOUNG LLP
August 29, 1996
San Francisco, California
F-2
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions Except Per Share Amounts)
June 30,
---------------
1996 1995
---- ----
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 6 $ 8
Restricted cash ..................................... 30
Trade accounts receivable, net
of allowance ....................................... 98 157
Other receivables ................................... 8 12
Inventories ......................................... 304 360
Prepaid expenses and other
current assets ..................................... 13 14
----- -----
TOTAL CURRENT ASSETS ............................ 459 551
Property, plant and equipment, net ................... 247 317
Other assets ......................................... 30 92
----- -----
TOTAL ASSETS .................................... $ 736 $ 960
===== =====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses ........................................... $ 202 $ 267
Short-term borrowings ............................... 43 167
Current portion of long-term
debt ............................................... 7 18
----- -----
TOTAL CURRENT LIABILITIES ....................... 252 452
Long-term debt ....................................... 323 391
Other noncurrent liabilities ......................... 250 262
Minority Interest .................................... 31
Redeemable common stock ($.01 par
value per share, 1,650,000 shares
authorized; issued and outstanding:
159,386 in 1996 and 1995) ........................... 2 2
Redeemable preferred stock ($.01
par value per share, 32,493,000
shares authorized; issued and
outstanding: 17,300,041 in 1996
and 15,521,790 in 1995; aggregate
liquidation preference: $579 in
1996 and $500 in 1995) .............................. 213 215
Stockholders' equity:
Common stock ($.01 par value per
share, 1,700,000 shares authorized;
issued and outstanding: 223,468 in
1996 and 239,709 in 1995)
Paid-in capital ...................................... 3 3
Notes receivable from stockholders (1)
Retained earnings (deficit) .......................... (281) (369)
Cumulative translation adjustment .................... (26) (26)
----- -----
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) ............................... (304) (393)
----- -----
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ........................... $ 736 $ 960
===== =====
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions Except Per Share Amounts)
Year Ended June 30,
1996 1995 1994
Net sales ..................................... $1,304 $1,526 $1,499
Cost of products sold ......................... 1,084 1,289 1,275
----- ----- -----
Gross profit ................................ 220 237 224
Selling, advertising, administrative
and general expense .......................... 138 157 157
----- ----- -----
OPERATING INCOME ............................ 82 80 67
Interest expense .............................. 67 76 61
Gain on sale of divested assets (Note B) ...... (107) (13)
Other (income) expense (Note M) ............... 3 (11) 8
----- ----- -----
INCOME BEFORE INCOME TAXES, MINORITY
INTEREST, EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE ...... 119 15 11
Provision for income taxes ..................... 11 2 3
Minority interest in earnings of subsidiary .... 3 1 5
----- ----- -----
INCOME BEFORE EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE ...................................... 105 12 3
Extraordinary loss from refinancing of debt
and early debt retirement ..................... 10 7
Cumulative effect of accounting change ......... 7
----- ----- -----
NET INCOME ................................... $ 88 $ 5 $ 3
===== ===== =====
Net income (loss) attributable to common
shares ........................................ $ 23 $(66) $ (58)
===== ===== =====
Income (loss) per common shares:
Income (loss) before extraordinary item
and cumulative effect of accounting change . $59.40 $(145.35) $(143.08)
Extraordinary loss from refinancing of debt
and early debt retirement .................. (26.39) (18.34)
Cumulative effect of accounting change ...... (18.14) -- --
----- ----- -----
Net income (loss) per common share ....... $14.87 $(163.69) $(143.08)
===== ===== =====
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Millions)
Notes
Receivable Retained Cumulative
Common Paid-in from Earnings Translation Total
Stock Capital Stockholder (Deficit) Adjustment (Deficit)
------ ------- ----------- --------- ----------- ---------
Balance at
June 30, 1993 $ -- $ 3 $(1) $(377) $(10) $(385)
Repurchase
of shares
Net income
for year
ended June
30, 1994 3 3
Cumulative
translation
adjustment (2) (2)
----- ----- ----- ----- ----- -----
Balance at
June 30, 1994 -- 3 (1) (374) (12) (384)
Repurchase
of shares
Net income for
year ended
June 30, 1995 5 5
Cumulative
translation
adjustment (14) (14)
----- ----- ----- ----- ----- -----
Balance at
June 30, 1995 -- 3 (1) (369) (26) (393)
Repayment of
notes
receivable
from
stockholders 1 1
Repurchase
of shares
Net income
for year
ended
June 30, 1996 88 88
----- ----- ----- ----- ----- -----
Balance at
June 30, 1996 $ -- $ 3 $-- $(281) $(26) $(304)
===== ===== ===== ===== ===== =====
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)
Common Stock--Number of Shares
Total
Class A Class B Class E Common Shares
Shares issued and
outstanding at
June 30, 1993 ....... 232,214 25,000 257,214
Repurchase
of shares ............ (14,152) (14,152)
------- ------- ------- -------
Shares issued and
outstanding at
June 30, 1994 ........ 218,062 25,000 243,062
Repurchase
of shares............. (3,353) (3,353)
------- ------- ------- -------
Shares issued and
outstanding at
June 30, 1995 ........ 214,709 25,000 239,709
Repurchase
of shares............. (16,241) (16,241)
------- ------- ------- -------
Shares issued and
outstanding at
June 30, 1996 ........ 198,468 25,000 223,468
======= ======= ======= =======
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
Year ended June 30,
-------------------
1996 1995 1994
OPERATING ACTIVITIES:
Net income........................................... $88 $ 5 $ 3
Adjustments to reconcile net income to net cash flows:
Extraordinary loss from refinancing of debt
and early debt and retirement.................... 5 7
Cumulative effect of accounting change........... 7
Gain on sale of divested assets.................. (107) (13)
Loss on sales of assets.......................... 2 3 4
Depreciation and amortization.................... 31 40 40
Deferred income taxes............................ 2
Minority interest in earnings of subsidiary...... 1 5
Changes in operating assets and liabilities:
Accounts receivable.............................. 33 (37) 2
Inventories...................................... 11 (21) 27
Prepaid expenses and other current assets........ (2) 3 (2)
Other assets..................................... (1) (20) (5)
Accounts payable and accrued expenses............ (28) 25 (67)
Other non-current liabilities.................... 14 33 30
Other............................................ 2
----- ----- -----
Total adjustments................................ (35) 34 25
----- ----- -----
NET CASH PROVIDED BY OPERATING ACTIVITIES 53 39 28
INVESTING ACTIVITIES:
Capital expenditures.......................... (16) (24) (36)
Proceeds from sales of fixed assets........... 4 3
Proceeds from sales of divested assets........ 182 91
----- ----- -----
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES ........................... 170 (21) 55
FINANCING ACTIVITIES:
Short-term borrowings....................... 1,276 1,901 909
Payment on short-term borrowings............ (1,354) (1,867) (909)
Proceeds from long-term borrowing........... 188
Principal payments on long-term debt........ (108) (238) (78)
Specific Proceeds Collateral Account........ (30)
Dividends paid to minority shareholders..... (1) (2)
Other....................................... (1) (3) (3)
----- ----- -----
NET CASH USED IN FINANCING ACTIVITIES.. (217) (20) (83)
Effect of exchange rate changes on cash and cash
equivalent ................................... (8) 3 (2)
----- ----- -----
NET CHANGE IN CASH AND CASH EQUIVALENTS (2) 1 (2)
Cash and cash equivalents at beginning
of year ...................................... 8 7 9
----- ----- -----
CASH AND CASH EQUIVALENTS AT END OF YEAR $6 $8 $7
===== ===== =====
See Notes to Consolidated Financial Statements.
F-7
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions Except Per Share Amounts)
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: Del Monte Foods Company ("DMFC") and its wholly
owned subsidiary, Del Monte Corporation ("DMC"), (DMFC together
with DMC, "the Company") purchased the Del Monte processed foods
division of RJR Nabisco, Inc. effective January 9, 1990 ("the
Acquisition"). The Company operates in one business segment: the
manufacturing and marketing of processed foods, primarily canned
vegetables, fruits and tomato products. The Company primarily
sells its products under the Del Monte brand. The Company holds
the rights to the Del Monte brand in the United States, Mexico,
and Central America.
Principles of Consolidation: The consolidated financial
statements include the accounts of the Company and its majority
owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation. Certain
amounts reported in the consolidated financial statements are
based on management estimates. The ultimate resolution of these
items may differ from those estimates.
Cash Equivalents: The Company considers all highly liquid
investments with a maturity of three months or less when
purchased to be cash equivalents. The carrying amount reported in
the balance sheet for cash and cash equivalents approximates its
fair value.
Restricted Cash: Restricted cash represents a portion of
the proceeds from the Company's sale of its 50.1% interest in Del
Monte Pacific Resources Limited ("DMPR"), a joint venture
operating primarily in the Philippines, which were deposited into
the Specific Proceeds Collateral Account until agreement is
reached with the Term Loan lenders as to final application of the
funds (see Note B).
Inventories: Inventories are stated at the lower of cost or
market. The cost of substantially all inventories is determined
using the LIFO method. The Company has established various LIFO
pools that have measurement dates coinciding with the natural
business cycles of the Company's major inventory items.
Inflation has had a minimal impact on production costs
since the Company adopted the LIFO method as of July 1, 1991.
Accordingly, there is no significant difference between LIFO
inventory costs and current costs.
Property, Plant and Equipment and Depreciation: Property,
plant and equipment are stated at cost and depreciated over their
estimated useful lives, principally by the straight-line method.
Maintenance and repairs are expensed as incurred. Significant
expenditures that increase useful lives are capitalized.
The principal estimated useful lives are: land
improvements--10 to 30 years; building and leasehold
improvements--10 to 30 years; machinery and equipment--7 to 15
years. Depreciation of plant and equipment and leasehold
amortization was $26, $34 and $35 for the years ended June 30,
1996, 1995 and 1994, respectively.
Cost of Products Sold: Cost of products sold includes raw
material, labor, overhead, and direct trade promotion costs.
Research and Development: Research and development costs
are included as a component of "Selling, advertising,
administrative and general expense." Research and development
costs charged to operations were $6, $6 and $5 for fiscal years
ended June 30, 1996, 1995 and 1994, respectively.
Foreign Currency Translation: For the Company's operations
in countries where the functional currency is other than the U.S.
dollar, asset and liability accounts are translated at the rate
in effect at the balance sheet date, and revenue and expense
accounts are translated at the average rates during the period.
Translation adjustments are reflected as a separate component of
stockholders' equity.
F-8
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
Net Income (Loss) per Common Share: Net income (loss) per
common share is computed by dividing net income (loss)
attributable to common shares by the weighted average number of
common and redeemable common shares outstanding during the
period. Net income (loss) attributable to common shares is
computed as net income (loss) reduced by the cash and in-kind
dividends for the period on redeemable preferred stock.
Minority Interest: Minority interest represents the minority
shareholders' proportionate share of the equity of DMPR, a
consolidated subsidiary.
Change in Accounting Principle: Effective July 1, 1995, the
Company adopted the provisions of SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of". The statement requires that assets held and used be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. The Company has identified certain events as
possible indicators that an asset's carrying value may not be
recoverable including the elimination of or a significant
reduction in a product line. Future cash flows will be estimated
based on current levels of production, market sales price and
operating costs adjusted for expected trends. The statement also
requires that all long-lived assets, for which management has
committed to a plan to dispose, be reported at the lower of
carrying amount or fair value. A review of assets to be disposed
of resulted in identification of certain assets (farm lands and
plants no longer in use) whose carrying value exceeded their
present fair value, and a loss of $7 was recorded. The Company
does not depreciate long-lived assets held for sale.
NOTE B--DIVESTED ASSETS
Del Monte Pacific Resources Limited Operations
On March 29, 1996, the Company sold its 50.1% interest in
Del Monte Pacific Resources Limited, a joint venture operating
primarily in the Philippines, for $100 net of $2 of related
transaction expenses. This sale resulted in a gain of $52,
reduced by taxes of $6. Of the net gain of $46, $16 was deferred
and $30 was recognized in the current year. The purchase price
included a premium paid to the Company as consideration for
signing an eight year supply agreement whereby the Company must
source substantially all of its pineapple requirements from DMPR
over the agreement term. The gain associated with the value of
the premium has been deferred and will be amortized over the term
of the agreement.
The following results of the DMPR operations are included
in the Statements of Operations:
Year Ended June 30,
-----------------------
1996 1995 1994
---- ---- ----
Net sales.................................... $102 $142 $121
Costs and expenses........................... 97 141 115
--- --- ---
Income from operations before income taxes... 5 1 6
Provision for income taxes................... 2 2
--- --- ---
Income from operations....................... $3 $1 $4
=== === ===
All of the net proceeds from the sale of the Del Monte
Pacific Resources Limited operations were temporarily applied to
the revolving credit facility. In April 1996, $13 of Senior
Secured Notes were prepaid along with a $1 prepayment premium
recorded as an extraordinary loss. In addition, $30 was placed in
the Specific Proceeds Collateral Account until final agreement is
reached with the Term Loan lenders as to the application of
funds.
F-9
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
Pudding Business
On November 27, 1995, the Company sold its Pudding
Business, including the capital assets and inventory on hand, to
Kraft Foods, Inc. ("Kraft") for $89, net of $4 of related
transaction expenses. The sale resulted in the recognition of a
$71 gain, reduced by $2 of taxes. The purchase agreement, among
other things, allows Kraft to use the Del Monte name on
single-serve pudding products for up to a two-year period.
The following results of the Pudding Business are included in the
Statements of Operations:
Year Ended June 30,
-----------------------
1996 1995 1994
---- ---- ----
Net sales.................................... $15 $47 $41
Costs and expenses........................... 11 33 29
--- --- ---
Income from operations....................... $ 4 $14 $12
=== === ===
The net proceeds received from the Pudding Business sale
were used to prepay $54 of the term debt and $25 of the Senior
Secured Notes. In conjunction with the prepayment, the Company
recorded an extraordinary loss for the early retirement of debt.
The extraordinary loss consists of a $4 prepayment premium and a
$5 write-off of capitalized debt issue costs related to the early
retirement of debt.
Dried Fruit and Snack Operations
Effective August 13, 1993, the Company, sold its dried
fruit and snack operations to Yorkshire Dried Fruits and Nuts,
Inc., ("YDFNI") for $23. Proceeds from the sale were received in
cash ($16), preferred stock of YDFNI ($4) and common stock of
YDFNI ($3) representing a 20% equity interest in that company. No
significant gain or loss resulted from the sale. In connection
with this asset sale, DMC entered into certain agreements with
YDFNI which, among other things, grant YDFNI the right to use
certain Del Monte trademarks. Under these agreements, as a
service to, and for the benefit of YDFNI, DMC will purchase and
resell certain of the former DMC dried fruit and snack products.
Can Manufacturing Operations
Effective December 21, 1993, the Company sold substantially
all of the assets and certain related liabilities of its can
manufacturing operations in the United States to Silgan
Containers Corporation ("Silgan") for $70 in cash, net of $2 in
fees. The sale of these assets resulted in the recognition of a
$13 gain. In connection with the sale to Silgan, DMC entered into
a ten-year supply agreement under which Silgan, effective
immediately after the sale, began supplying substantially all of
DMC's metal container requirements for foods and beverages in the
United States and certain of DMC's metal container requirements
for foods and beverages in Mexico. Purchases under the agreement
for fiscal years 1996, 1995 and 1994 amounted to $130, $197 and
$77, respectively. The Company believes the supply agreement
provides it with a long term supply of cans at competitive prices
that adjust over time for normal manufacturing cost increases or
decreases.
F-10
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
NOTE C--SUPPLEMENTAL BALANCE SHEET INFORMATION
June 30,
---------------
1996 1995
---- ----
Trade Accounts Receivable:
Trade............................................. $99 $159
Allowance for doubtful accounts................... (1) (2)
----- -----
TOTAL TRADE ACCOUNTS RECEIVABLE................. $98 $157
===== =====
Inventories:
Finished product................................. $198 $208
Raw materials and supplies....................... 12 20
Other, principally packaging material............ 94 132
----- -----
TOTAL INVENTORIES........................... $304 $360
===== =====
Property, Plant and Equipment:
Land and land improvements....................... $44 $52
Buildings and leasehold improvements............. 98 117
Machinery and equipment.......................... 240 288
Construction in progress......................... 9 16
----- -----
391 473
Accumulated depreciation......................... (144) (156)
----- -----
TOTAL PROPERTY, PLANT AND EQUIPMENT......... $247 $317
===== =====
Other Assets:
Deferred debt issue costs..................... $26 $30
Other......................................... 10 65
----- -----
36 95
Accumulated amortization......................... (6) (3)
----- -----
TOTAL OTHER ASSETS.......................... $30 $92
===== =====
Accounts Payable and Accrued Expenses:
Accounts payable--trade....................... $76 $93
Marketing and advertising..................... 39 55
Payroll and employee benefits................. 18 30
Current portion of accrued pension liability.. 13 16
Current portion of other noncurrent
liabilities.................................. 22 11
Other............................................ 34 62
----- -----
TOTAL ACCOUNTS PAYABLE AND ACCRUED EXPENSES. $202 $267
===== =====
Other Noncurrent Liabilities:
Accrued postretirement benefits............... $140 $144
Accrued pension liability..................... 48 53
Self-insurance liabilities.................... 12 14
Other............................................ 50 51
----- -----
TOTAL OTHER NONCURRENT LIABILITIES.......... $250 $262
===== =====
F-11
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
NOTE D--SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings are summarized as follows:
June 30,
------------
1996 1995
---- ----
Revolving credit agreement................ $43 $121
Notes payable to banks outside
of the United States ................... 46
---- ----
$43 $167
==== ====
Unused lines of credit under the revolving credit agreement
at June 30, 1996 and 1995 totaled $328 and $245, respectively.
Long-term debt consists of the following:
June 30,
------------
1996 1995
---- ----
Term Loan................................. $ 68 $138
Subordinated Debt......................... 243 215
Senior Secured Notes...................... 13 50
Other..................................... 6 6
---- ----
330 409
Less Current Portion...................... 7 18
---- ----
$323 $391
==== ====
In June 1995, the Company refinanced its then existing $325
revolving credit agreement, Term Loan and Senior Secured Floating
Rate Notes through a new $400 revolving credit agreement, a $138
Term Loan and Senior Secured Notes in the amount of $50. In
conjunction with the refinancing, capitalized debt issue costs of
$7 were charged to fiscal 1995 income and have been accounted for
as an extraordinary item.
The revolving credit agreement bears an interest rate of
the London Interbank Offered Rate ("LIBOR") plus 2.75% or the
bank's reference rate plus 1.5% (9.75% at June 30, 1996), with
interest payable monthly. The credit facility also provides for
the issuance of letters of credit up to $50. Letters of credit
totaling $29 were outstanding at June 30, 1996. Letter of credit
fees are 2.75% per year. The Company pays a commitment fee to
maintain the lines of credit equal to .5% of the unused balance.
The agreement expires in June 2000.
At June 30, 1996, the Term Loan consists of three
components. A $31 amortizing component is due in quarterly
installments and bears an interest rate of LIBOR plus 3.25%. The
second component of this loan of $30 and the third component of
$7 are non-amortizing with interest fixed at 11.11% and LIBOR
plus 4.75%, respectively. The notes mature on December 1, 2000.
At June 30, 1996, the interest rate on the $31 component was
8.75% and on the $7 component was 10.25%.
The Senior Secured Notes bear interest at 18%, 14% payable
in cash and 4% payable in-kind in Secondary Notes, at the
Company's option. Interest payments are due quarterly. The notes
mature on December 1, 2001.
Subordinated Debt consists of Subordinated Guaranteed
Payment-in-Kind Notes. Interest accrues at 12.25% per year and is
generally payable through the issuance of additional PIK Notes.
The payment of such interest in additional PIK Notes since
issuance has resulted in an increase in the principal amount
outstanding of such indebtedness. The notes mature on September
1, 2002.
F-12
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
Scheduled maturities of long-term debt in each of the next five
years and thereafter will be as follows:
1997 ..................... $ 7
1998 ..................... 8
1999 ..................... 7
2000 ..................... 7
2001 ..................... 41
Thereafter ............... 260
----
$330
====
The Notes, Term Loan and Revolver (collectively "the Debt")
are collateralized by security interests in certain of the
Company's assets. Certain capital stock of the Company's wholly
owned subsidiaries is pledged as collateral on obligations of the
Company totaling $136. At June 30, 1996, total assets and net
equity of all subsidiaries, the stock or assets of which are not
pledged to secure the Debt, are less than 10% of the Company's
total consolidated amounts for these line items. At June 30,
1996, assets totaling $643 were pledged as collateral for
approximately $130 of short-term borrowings and long-term debt.
The Debt agreements contain restrictive covenants with
which the Company must comply. These restrictive covenants, in
some circumstances, limit the ability of the Company and its
subsidiaries to incur indebtedness, pay dividends, transfer
assets among subsidiaries, engage in transactions with
stockholders and affiliates, create liens, engage in mergers and
consolidations, engage in sales of assets and subsidiary stock
and make investments in unrestricted subsidiaries. Financial
covenants were set in June 1995 when the debt was issued based
upon the operations of the Company at that time. As a result of
the sale of the Pudding Business, such covenants have been
amended to reflect the absence of this business. The Company is
in compliance with all of the Debt covenants at June 30, 1996.
The Company made cash interest payments of $30, $44 and $37
for the years ended June 30, 1996, 1995 and 1994, respectively.
The Company has made an offer (the "Exchange Offer"), which
is scheduled to expire on September 6, 1996, to repurchase up to
$100 of the outstanding Subordinated Guaranteed Payment-in-Kind
Notes and exchange the remaining notes with new notes containing
similar terms except for a change of ownership premium. In order
to complete the Exchange Offer, the Company will apply the $30
Specific Proceeds Collateral Account and borrow an additional $55
and $35 under the existing Term Loan and the revolving credit
facility, respectively.
Due to the Company's ability to borrow additional funds in
conjunction with the Exchange Offer at terms consistent with its
current debt agreements, the borrowings presented on the June 30,
1996 balance sheet are deemed to approximate fair value.
NOTE E--STOCKHOLDERS' EQUITY AND REDEEMABLE STOCK
Stockholders' equity includes the following classes of
common stock, $.01 par value per share:
Shares Issued and Outstanding
Shares -------------------------------
Class Authorized June 30, 1996 June 30, 1995
- ----- ---------- ------------- -------------
A ................... 1,000,000 198,468 214,709
B ................... 150,000
E ................... 550,000 25,000 25,000
--------- ------- --------
1,700,000 223,468 239,709
========= ======= =======
F-13
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
Each class of common stock shares equally and ratably in
dividends declared by the Company on its common stock and in the
assets available to the holders of common stock in the event of
liquidation or dissolution of the Company. There are restrictions
on the payment of cash dividends on common stock under the
provisions of the Company's Debt agreements. Classes A and E
common stock have voting rights, Class A at one vote per share
and Class E at two votes per share. Class A common stock has
certain conversion features that permit, with various
restrictions, conversion to Classes C and D redeemable common
stock and Class E common stock. Classes B and E also have certain
conversion features that permit, with various restrictions,
conversion to Class A common.
Redeemable common and redeemable preferred stock consist of
the following:
Redeemable non-voting common stock ($.01 par value per
share):
Shares Issued and Outstanding
Shares -------------------------------
Class Authorized June 30, 1996 June 30, 1995
- ----- ---------- ------------- -------------
C ................... 550,000 6,903 6,903
D ................... 550,000 102,483 102,483
F ................... 550,000 50,000 50,000
--------- ------- --------
1,650,000 159,386 159,386
========= ======= =======
Classes C, D and F contain specified repurchase provisions
requiring the Company, at the twentieth anniversary of the
Acquisition closing date, to repurchase all outstanding shares
for cash at the then independently appraised value.
Each class of redeemable common stock shares equally and
ratably in dividends declared by the Company on its common stock
and in the assets available to the holders of common stock in the
event of liquidation or dissolution of the Company. There are
restrictions on the payment of cash dividends on redeemable
common stock under the provisions of the Company's Debt
agreements.
Redeemable preferred stock ($.01 par value per share):
Shares Issued and Outstanding
Shares -------------------------------
Series Authorized June 30, 1996 June 30, 1995
- ----- ---------- ------------- -------------
A Cumulative (issuable
in subseries A1
and A2 .............. 16,523,000 8,336,795 7,408,875
B Cumulative .......... 3,616,000 1,602,845 1,376,673
C Cumulative .......... 2,900,000 1,522,353 1,522,353
D Cumulative .......... 1,454,000 1,356,955 1,162,634
E Cumulative .......... 5,000,000 3,328,002 2,851,419
F Cumulative .......... 3,000,000 1,153,091 1,199,836
--------- --------- ----------
32,493,000 17,300,041 15,521,790
========== ========== ==========
In the event of a change in control, each holder of
redeemable preferred stock has the right, subject to certain
limitations, to require the Company to repurchase such holder's
shares in whole or in part at a purchase price equal to the
liquidation value plus accumulated and unpaid dividends per
share.
The various series of redeemable preferred stock pay
cumulative dividends, payable quarterly, at rates ranging from
15.0% to 15.5% per annum. Dividends on the Series A1 and B
redeemable preferred stock may be paid-in-kind in lieu of payment
in cash so long as the Company's debt agreements prohibit such
payment in cash. Dividends on the Series A2 redeemable preferred
stock may be paid in either cash or through a corresponding
periodic increase in the liquidation value of such stock.
Dividends on the Series C, D and E redeemable preferred
F-14
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
stock may be accumulated and unpaid or paid-in-kind in lieu of
payment of cash for a period of 28 quarters after issuance and
thereafter, if declared, must be paid in cash. Effective with the
quarter ended December 31, 1992, the holders of Series C
redeemable preferred stock elected to forego their periodic
receipt of paid-in-kind dividends in exchange for a corresponding
periodic increase in Series C liquidation value. Dividends on the
Series F redeemable preferred stock may be accumulated and unpaid
for a period of 28 quarters after issuance in lieu of payment in
cash and thereafter, if declared, must be paid in cash. Unpaid
dividends will be accumulated and compounded at the dividend
rate. There are restrictions on the payment of cash dividends on
redeemable preferred stock under the provisions of the Company's
Debt agreements.
Series A and Series B of the redeemable preferred stock
can, after the fifth anniversary of the issue date and at the
option of the holders thereof, be exchanged for subordinated debt
of DMFC in an amount equal to the liquidation value of stock
being exchanged. This debt would carry the same coupon as the
existing preferred stock. This debt would be subordinated to all
debt outstanding at June 30, 1996.
The various classes of redeemable preferred stock have no
voting rights except the right to elect two directors to the
Board in cases where dividends are in arrears for the specified
period or if the Charter is to be amended to adversely affect the
series of redeemable preferred stock in question.
The Company declared dividends for the following series of
redeemable preferred stock:
Dividend Rate Per Share
-----------------------
Year Ended June 30,
-----------------------
Series 1996 1995 1994
------ ---- ---- ----
A1 ................... $3.81 $3.81 $3.80
B .................... $3.87 $3.87 $3.87
D .................... $3.94 $3.93 $3.93
E .................... $3.94 $3.93 $3.93
Dividends are paid in like-kind redeemable preferred stock
at the rate of .04 shares for each $.001 dividend declared.
Resulting issuance of additional shares and related par values
are:
Year Ended June 30,
----------------------------------
1996 1995 1994
---- ---- ----
Additional shares 1,824,999 1,564,117 1,344,432
Total par value $ 0.018 $ 0.016 $ 0.012
NOTE F--RETIREMENT BENEFITS
The Company sponsors three non-contributory defined benefit
pension plans covering substantially all full-time employees.
Plans covering most hourly employees provide pension benefits
that are based on the employee's length of service and final
average compensation before retirement. Plans covering salaried
employees provide for individual accounts which offer lump sum or
annuity payment options, with benefits based on accumulated
compensation and interest credits made monthly throughout the
career of each participant. Assets of the plans consist primarily
of equity securities and corporate and government bonds.
It is the Company's policy to fund the plans in an amount
consistent with the funding requirements of federal law and
regulations and not to exceed an amount that would be deductible
for federal income tax purposes. Contributions are intended to
provide not only for benefits attributed to service to date but
also for those expected to be earned in the future.
F-15
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
The following table sets forth the pension plans' funding status
and amounts recognized on the Company's balance sheet:
June 30,
--------------
1996 1995
---- ----
Actuarial present value of benefit obligations:
Vested benefit obligation ........................ $(265) $(270)
Accumulated benefit obligation ................... (270) (276)
Projected benefit obligation for services
rendered to date ................................ (277) (287)
Plan assets at fair value ........................ 245 233
---- ----
Projected benefit obligation in excess
of plan assets .................................. (32) (54)
Unrecognized net actuarial gain .................. (27) (12)
Unrecognized prior service income ................ (2) (3)
---- ----
Accrued pension cost recognized in the
consolidated balance sheet ...................... $ (61) $ (69)
==== ====
The components of net periodic pension cost for the years
ended June 30, 1996, 1995 and 1994 for all defined benefit plans
are as follows:
June 30,
---------------------
1996 1995 1994
---- ---- ----
Service cost for benefits earned during
period .................................... $ 4 $ 4 $ 5
Interest cost on projected benefit
obligation ................................ 21 22 23
Actual return on plan assets ............... (32) (31) (22)
Net amortization and deferral .............. 11 11 (1)
Curtailment ................................ (2)
Settlement ................................. (1)
----- ----- -----
Net periodic pension cost .................. $ 4 $ 6 $ 2
===== ===== =====
The curtailment and settlement gains in fiscal 1994
resulted from the Company's sale of its container manufacturing
operations (see Note B) in December 1993. Significant rate
assumptions used in determining net periodic pension cost and
related pension obligations, are as follows:
As of June 30,
---------------------
1996 1995 1994
---- ---- ----
Weighted average discount rate used in
determining project benefit obligation ...... 8.0% 7.75% 8.5%
Rate of increase in compensation levels ...... 5.0 5.0 5.0
Weighted average long-term rate of return
on assets ................................... 9.0 9.0 9.0
In addition, the Company participates in several
multi-employer pension plans which provide defined benefits to
certain of its union employees. The contributions to
multi-employer plans for each of the years ended June 30, 1996,
1995 and 1994 were $4. The Company also sponsors defined
contribution plans covering substantially all employees. Company
contributions to the plans are based on employee contributions or
compensation. Contributions under such plans totaled $2, $3, and
$4 for the years ended June 30, 1996, 1995, and 1994,
respectively.
The Company provides retirement benefits under various
arrangements to substantially all employees in foreign locations
who are not covered under the above plans. Generally, benefits
under these arrangements are based on years of service and levels
of salary. The majority of the Company's foreign plans are
commonly referred to as termination indemnities. The plans
provide employees with retirement benefits in accordance with
programs mandated by the governments of the countries in which
such employees work. The expense and related liabilities
associated with these arrangements are recorded currently by the
Company based on established formulas, with funding generally
occurring when employees cease active service.
F-16
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
The Company sponsors several unfunded defined benefit
postretirement plans providing certain medical, dental and life
insurance benefits to eligible retired, salaried, non-union
hourly and union employees. Benefits, eligibility and cost-
sharing provisions vary by plan and employee group.
Net periodic postretirement benefit cost for the fiscal
years 1996, 1995 and 1994 included the following components:
June 30,
---------------------
1996 1995 1994
---- ---- ----
Service Cost .............................. $ 2 $ 2 $ 2
Interest Cost ............................. 9 9 11
Amortization of Actuarial Losses (Gains) .. (3)
Curtailment Gain .......................... (4) (6)
---- ---- ----
Net periodic postretirement benefit cost .. $ 4 $ 11 $ 7
==== ==== ====
In 1996, the Company began amortizing unrecognized gains
and losses at the end of the fiscal year over the expected
remaining service of active employees. The curtailment gain
results from the Company's sale of its container manufacturing
operations (See Note B) in December 1993 and from a reduction in
personnel in fiscal 1996. The following table sets forth the
plans' combined status reconciled with the amount included in the
consolidated balance sheet:
June 30,
--------------
1996 1995
---- ----
Accumulated postretirement benefit obligation:
Current Retirees ........................... $ 85 $94
Fully eligible active plan participants .... 16 15
Other active plan participants ............. 18 20
---- ----
119 129
Unrecognized Gain .......................... 30 23
---- ----
Accrued postretirement benefit cost ........ $ 149 $152
==== ====
For fiscal years 1996 and 1995, the weighted average annual
assumed rate of increase in the health care cost trend is 13.33%
and 14.25%, respectively, and is assumed to decrease gradually to
6.0% in the year 2004. The health care cost trend rate assumption
has a significant effect on the amounts reported. An increase in
the assumed health care cost trend by 1% in each year would
increase the accumulated postretirement benefit obligation as of
June 30, 1996 by $11 and the aggregate of the service and
interest cost components of net periodic postretirement benefit
cost for the year then ended by $1.
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation as of June 30, 1996
and 1995 was 8.32% and 8.18%, respectively.
NOTE G--MANAGEMENT STOCK OPTION PLAN
Effective as of July 1, 1991, the Del Monte Corporation
Management Stock Option Plan ("MSOP") was established pursuant to
which options to purchase up to 50,000 share of Class A Common
Stock of the Company may be awarded to certain officers and key
employees. Pursuant to this plan, options for approximately
37,500 shares were granted to approximately 440 key employees and
officers. Per share exercise price of the options granted is
$79.40. The options are non-qualified options for purposes of the
Internal Revenue Code and become exercisable only after the later
event of an initial public offering of the Company's stock or
three years after the Grant Date. All MSOP options expired on
July 31 1996.
F-17
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
NOTE H--PROVISION FOR INCOME TAXES
The provision for income taxes consists of the following:
Year Ended June 30,
---------------------
1996 1995 1994
---- ---- ----
Income (loss) before minority interest
and taxes:
Domestic .............................. $ 90 $ 2 $ (6)
Foreign ............................... 12 6 17
---- ---- ----
$102 $ 8 $ 11
==== ==== ====
Income tax provision (benefit) Current:
Federal .............................. $ 5 $ $
Foreign and state .................... 6 1 1
---- ---- ----
Total Current ........................ 11 1 1
---- ---- ----
Deferred:
Federal ............................... -- -- --
Foreign and state ..................... -- 1 2
---- ---- ----
Total Deferred ........................ -- 1 2
---- ---- ----
$ 11 $ 2 $ 3
==== ==== ====
Pre-tax income for foreign operations includes income of
all operations located outside the United States, some of which
are currently subject to U.S. taxing jurisdictions.
Significant components of the Company's deferred tax assets
and liabilities as of June 30, 1996 and 1995 are as follows:
Year Ended
June 30,
--------------
1996 1995
---- ----
Deferred Tax Assets:
Post employment benefits........................ $ 53 $ 54
Pension expense................................. 24 27
Deferred gain................................... 6 --
Workers' compensation........................... 7 8
Leases and patents.............................. 5 5
Other........................................... 20 16
Net operating loss carry forward................ 16 60
Deferred tax liabilities:
Depreciation.................................... 30 32
Other........................................... 3 13
---- -----
Net deferred tax assets.......................... 98 125
Valuation allowance............................. 98 125
---- -----
Total deferred taxes............................. $ -- $ --
==== =====
F-24
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
The differences between the provision for income taxes and income
taxes computed at the statutory U.S. federal income tax rates are
explained as follows:
Year Ended June 30,
---------------------
1996 1995 1994
---- ---- ----
Income taxes computed at the statutory
U.S. federal income tax rates ........... $ 36 $ 2 $ 6
Taxes on foreign income at rates different
than U.S. federal income tax rates ...... (1) (3)
State taxes, net of federal benefit ...... 3
Realization of prior years' operating loss
carryforwards and tax credits ........... (27)
---- ---- ----
Provision for income taxes ............... $ 11 $ 2 $ 3
==== ==== ====
At June 30, 1996, there was $20 of accumulated and
undistributed earnings of foreign subsidiaries included in
retained earnings for which no provision for U.S. federal income
taxes had been made.
As of June 30, 1996, the Company had operating loss
carryforwards for tax purposes available from domestic operations
totaling $45 which will expire between 2008 and 2010.
Extraordinary losses from refinancing of debt and early
debt retirement and the cumulative effect of change in accounting
principle have no tax effect.
The Company made income tax payments of $5, $3 and $4 for
the years ended June 30, 1996, 1995 and 1994, respectively.
NOTE I--COMMITMENTS AND CONTINGENCIES
The Company leases certain property and equipment,
agricultural lands, and office and plant facilities. At June 30,
1996, the aggregate minimum rental payments required under
operating leases that have initial or remaining terms in excess
of one year are as follows:
1997 ..................... $ 14
1998 ..................... 12
1999 ..................... 11
2000 ..................... 10
2001 ..................... 8
Thereafter ............... 46
-----
$ 101
=====
Minimum payments have not been reduced by minimum sublease
rentals of $9 due through 2016 under noncancelable subleases.
Rent expense was $28, $32, and $28 for fiscal years ended
June 30, 1996, 1995, and 1994, respectively. Rent expense
includes contingent rentals on certain equipment based on usage.
The Company has entered into noncancelable agreements with
growers, with terms ranging from 2 to 10 years, to purchase
certain quantities of raw products. The Company also has
commitments to purchase certain finished goods. Total purchases
under these agreements were $54, $68, and $86 for the years ended
June 30, 1996, 1995, and 1994, respectively. In addition, the
Company expects to purchase $51 in fiscal 1997 under the supply
agreement entered into in conjunction with the sale of the DMPR
operations (see Note B).
F-19
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
At June 30, 1996, aggregate future payments under such
purchase commitments (priced at the June 30, 1996 estimated cost)
are estimated as follows:
1997 .................. $ 55
1998 .................. 49
1999 .................. 43
2000 .................. 40
2001 .................. 36
Thereafter ............ 105
-----
$ 328
In May 1992, DMC entered into an exclusive supply agreement
(the "Agreement") with Pacific Coast Producers ("PCP"), a canned
fruit and tomato processor, to purchase substantially all of
PCP's tomato and fruit production commencing July 1, 1992. PCP
continued to own and operate its production facilities, as well
as purchase raw products via its established grower network. The
Agreement was to expire in June 1998 with optional successive
five year extensions. Total payments under the Agreement for the
twelve months ended June 30, 1995 and 1994 (including the
guaranteed payment) were $186 and $180, respectively.
The Federal Trade Commission ("FTC") conducted an
investigation to determine whether the supply arrangement was in
violation of certain U.S. antitrust laws. In January 1995, the
Company and PCP agreed to terminate their supply and purchase
option agreements in settlement of the FTC investigation. In
response to the Company's actions, the FTC issued a final consent
order on April 18, 1995. A consent agreement does not constitute
an admission of any violation of law. The option and supply
agreements were terminated in late fiscal 1995. As a condition of
the termination, the Company was required to make a termination
payment of $4 to PCP.
On November 1, 1992, DMC entered into an agreement with
Electronic Data Systems Corporation ("EDS") to provide services
and administration to the Company in support of its information
services functions for all domestic operations. Payments under
the terms of the agreement are based on scheduled monthly base
charges subject to various adjustments such as system usage and
inflation. Total payments for the twelve months ended June 30,
1996, 1995, and 1994 were $16, $16, and $15, respectively. The
agreement expires in November 2002 with optional successive one
year extensions.
At June 30, 1996, base charge payments under the agreement
are as follows:
1997 .................. $ 14
1998 .................. 14
1999 .................. 14
2000 .................. 13
2001 .................. 13
Thereafter ............ 19
----
$ 87
Del Monte has a concentration of labor supply in employees
working under union collective bargaining agreements, which
represent approximately 75% of its hourly and seasonal workforce.
Of these represented employees, 85% of employees are under
agreements that will expire in 1997.
The Company is defending various claims and legal actions
that arise from its normal course of business, including certain
environmental actions. While it is not feasible to predict or
determine the ultimate outcome of these matters, in the opinion
of management none of these actions, individually or in the
aggregate, will have a material effect on the Company's results
of operations, cash flow, liquidity and financial position.
F-20
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
NOTE J--FOREIGN OPERATIONS AND GEOGRAPHIC DATA
The Company's earnings are derived in part from foreign
operations. These operations, a significant factor in the
economies of the countries where the Company operates, are
subject to the risks that are inherent in operating in such
foreign countries, including government regulations, currency and
ownership restrictions, risks of expropriation and burdensome
taxes. Certain of these operations are also dependent on leases
and other agreements with these governments. Transfers between
geographic areas are accounted for as intercompany sales, and
transfer prices are based generally on negotiated contracts.
The following table shows certain financial information
relating to the Company's operations in various geographic areas:
Year Ended June 30,
---------------------
1996 1995 1994
---- ---- ----
Net sales
United States ........................ $1,146 $1,330 $1,320
Philippines .......................... 142 180 162
Latin America ........................ 55 65 69
Transfer between geographic areas .... (39) (49) (52)
------ ------ ------
Total Net Sales ..................... $1,304 $1,526 $1,499
====== ====== ======
Operating Income (Loss):
United States ........................ $ 65 $ 64 $ 43
Philippines .......................... 12 11 21
Latin America ........................ 5 5 3
------ ------ ------
Total Operating Income .............. $ 82 $ 80 $ 67
====== ====== ======
Assets:
United States ........................ $ 701 $ 754 $ 723
Philippines .......................... 164 156
Latin America ........................ 35 42 57
------ ------ ------
$ 736 $ 960 $ 936
====== ====== ======
Liabilities of the Company's Operations
Located in Foreign Countries ......... $ 7 $ 128 $ 130
====== ====== ======
NOTE K--DEL MONTE CORPORATION
DMC is directly- and wholly owned by DMFC. In the fiscal
years ended June 30, 1996 and 1994, DMC and DMC's subsidiaries
accounted for 100% of the consolidated revenues and net earnings
of the Company. In the fiscal year ended June 30, 1995, DMC and
DMC's subsidiaries accounted for all of the consolidated revenues
and net earnings of the Company except for proceeds recorded by
DMFC from a $30 letter of credit related to the termination of an
Agreement and Plan of Merger (see Note M). As of June 30, 1996
and 1995, the Company's sole asset, other than intercompany
receivables from DMC, was the stock of DMC. The Company had no
subsidiaries other than DMC and DMC's subsidiaries, and had no
direct liabilities other than intercompany payables to DMC. The
Company is separately liable under various guarantees of
indebtedness of DMC, which guarantees of indebtedness are in most
cases full and unconditional.
F-21
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
NOTE L--SALE OF LATIN AMERICA
In June, 1996, the Company adopted a plan to sell its Latin
American subsidiaries. On August 27, 1996, the Company signed a
Stock Purchase Agreement whereby it will sell its stock holdings
in the Latin American subsidiaries for approximately $59. The
sales transaction is expected to close on or about September 30,
1996, and the sales price, net of applicable fees and taxes, is
estimated to result in a minimal gain. The net assets at June 30,
1996, and 1995 of the Latin American operations included in the
Company's consolidated balance sheet are summarized as follows:
June 30,
--------------
1996 1995
---- ----
Assets
Current assets:
Cash........................................... $ 1 $ 1
Trade accounts receivable...................... 12 11
Other receivables.............................. 1
Inventories.................................... 13 17
Prepaids and other assets...................... 1 2
---- ----
Total current assets.......................... 27 32
Property, plant & equipment, net............... 8 10
---- ----
Total......................................... 35 42
Liabilities:
Current liabilities............................ 4 6
Noncurrent liabilities......................... 3 4
Cumulative translation adjustment................. 26 22
---- ----
Net assets.................................... $ 54 $ 54
==== ====
The following results of the Latin American operations are
included in the Statements of Operations:
Year Ended June 30,
---------------------
1996 1995 1994
---- ---- ----
Net sales $ 55 $ 65 $ 67
Costs and expenses 50 62 65
---- ---- ----
Income from operations before
income taxes 5 3 2
Provision for income taxes 1 1 1
---- ---- ----
Income from Latin American operations $ 4 $ 2 $ 1
==== ==== ====
NOTE M--TERMINATION OF AGREEMENT AND PLAN OF MERGER
On June 27, 1994 the Company entered into an Agreement and
Plan of Merger (the "Merger Agreement") with Grupo Empacador de
Mexico, S.A. de C.V., and CCP Acquisition Company of Maryland,
Inc. (the "Purchasers"). The Purchasers were formed by an
investor group led by Mr. Carlos Cabal Peniche for the purpose of
effecting an acquisition (the "Proposed Acquisition") of the
Company. The Merger Agreement provided that the Company was
entitled to terminate the Merger Agreement if the effective date
of the Proposed Acquisition failed to occur on or prior to
September 19, 1994. The effective date of the Proposed
Acquisition did not occur on or prior to such date and, on
September 21, 1994, the Company terminated the Merger Agreement
in accordance with its terms.
Pursuant to the Merger Agreement, the Purchasers caused a
$30 letter of credit (the "Letter of Credit") to be issued by
Banco Union, S.A., a Mexican bank affiliated with Mr. Cabal, and
confirmed by Midland Bank plc, New York Branch, in favor of the
Company. Under the terms of the Merger Agreement, the Company was
entitled
F-22
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
to draw under the Letter of Credit if the effective date of the
Proposed Acquisition failed to occur on or prior to September 19,
1994. Because the Proposed Acquisition did not close by September
19, 1994, on September 20, 1994 the Company drew $30 under the
Letter of Credit. This amount, net of $4 of related transaction
expenses, is included in "Other (income) expense". The cash was
applied to the repayment of indebtedness then outstanding under
the Company's revolving credit agreement.
F-23
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in Millions)
March 31, June 30,
1997 1996
----------- --------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents.................. $ 6 $ 6
Restricted cash............................ 2 30
Trade accounts receivable, net of allowance 84 98
Other receivables.......................... 3 8
Inventories................................ 381 304
Prepaid expenses and other current assets.. 4 13
---- ----
TOTAL CURRENT ASSETS....................... 480 459
Property, plant and equipment, net........... 229 247
Other assets................................. 30 30
---- ----
TOTAL ASSETS............................... $739 $736
==== ====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses...... $238 $202
Short-term borrowings...................... 42 43
Current portion of long-term debt.......... 16 7
---- ----
TOTAL CURRENT LIABILITIES................ 296 252
Long-term debt............................... 252 323
Other noncurrent liabilities................. 233 250
Redeemable common stock ($.01 par value per
share, 1,650,000 shares authorized; issued
and outstanding: 159,386 at March 31, 1997 and
June 30, 1996)............................. 2 2
Redeemable preferred stock ($.01 par value per
share, 32,493,000 shares authorized; issued and
outstanding: 18,327,449 at March 31, 1997,
$649 aggregate liquidation preference and
17,300,041 at June 30, 1996,
$579 aggregate liquidation preference)..... 213 213
Stockholders' equity:
Common stock ($.01 par value per share,
1,700,000 shares authorized;
issued and outstanding: 223,468 at March 31,
1997 and June 30, 1996)....................
Paid-in capital............................ 3 3
Retained earnings (deficit)................ (260) (281)
Cumulative translation adjustment.......... (26)
---- ----
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)....... (257) (304)
---- ----
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. $739 $736
==== ====
See Notes to Consolidated Financial Statements.
F-24
<PAGE>
Nine Months
March 31,
---------------
1997 1996
---- ----
Net sales .................................. $ 934 $ 1,018
Cost of products sold ...................... 733 858
---- ----
Gross profit ............................. 201 160
Selling, advertising, administrative and
general expenses .......................... 132 160
OPERATING INCOME ........................ 69 44
Interest expense ........................... 37 54
Loss (gain) on sale of divested assets ..... 5 (107)
Other (income) expense ..................... 1
---- ----
INCOME FROM OPERATIONS BEFORE INCOME
TAXES, MINORITY INTEREST, EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE .................................. 27 96
Provision for income taxes ................. 2 13
Minority interest in earnings of subsidiary 3
---- ----
INCOME FROM OPERATIONS BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE ..................................
25 80
Extraordinary loss from the Exchange Offer
and early debt retirement ................. 4 9
Cumulative effect of accounting change 3
---- ----
NET INCOME ............................... $ 21 $ 68
==== ====
Net income (loss) attributable to
common share .............................. $(49) $ 7
==== ====
Income (loss) per common share:
Income (loss) before extraordinary item
and cumulative effect of accounting
change ................................ $(117.36) $47.75
Extraordinary loss from the Exchange
Offer and early debt retirement ...... (9.77) (22.17)
Cumulative effect of accounting change (7.60)
-------- ------
Net income (loss) per common share ... $(127.13) $17.98
======== ======
F-25
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
MARCH 31, 1997
(Dollars in Millions)
Nine Months Ended
March 31,
-----------------
1997 1996
---- ----
OPERATING ACTIVITIES:
Net income..................................... $21 $68
Adjustments to reconcile net income to net
cash flows provided by (used in)
operating activities:
Depreciation and amortization................. 22 23
Extraordinary loss from the Exchange Offer
and early debt retirement .................... 4 5
Loss (gain) on sale of divested assets........ 5 (107)
Cumulative effect of accounting change........ 3
Changes in operating assets and liabilities:
Accounts receivable........................... 7 36
Inventories................................... (90) (52)
Prepaid expense and other current assets...... 7 2
Other assets.................................. (7) (2)
Accounts payable and accrued expenses......... 44 5
Other non-current liabilities................. 6 2
--- ---
Total adjustments............................. (2) (85)
--- ---
NET CASH USED IN OPERATING ACTIVITIES......... 19 (17)
INVESTING ACTIVITIES:
Capital expenditures........................... (12) (8)
Proceeds from sale of operations and assets.... 51 185
--- ---
NET CASH PROVIDED BY INVESTING ACTIVITIES..... 39 177
FINANCING ACTIVITIES:
Short-term borrowings.......................... 929 1,028
Payments on short-term borrowings.............. (930) (1,097)
Proceeds from long-term borrowings............. 55
Principal payments on long-term borrowings..... (140) (92)
Specific Proceeds Collateral Account 28
Other.......................................... (1)
--- ---
NET CASH USED IN FINANCING ACTIVITIES......... (58) (162)
--- ----
NET CHANGE IN CASH AND CASH EQUIVALENTS....... (2)
Cash and cash equivalents at beginning of period 6 8
--- ---
CASH AND CASH EQUIVALENTS AT END OF PERIOD.... $ 6 $ 6
=== ===
See Notes to Consolidated Financial Statements.
F-26
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(Dollars in Millions Except Per Share Amounts)
NOTE A--BASIS OF FINANCIAL STATEMENTS
Basis of Presentation: The accompanying consolidated
financial statements at March 31, 1997 and for the nine-month
periods ended March 31, 1997 and 1996, are unaudited, but are
prepared in accordance with generally accepted accounting
principles for interim financial information and include all
adjustments (consisting only of normal recurring entries) which,
in the opinion of management, are necessary for a fair
presentation of financial position, results of operations and
cash flows. These unaudited consolidated financial statements
should be read in conjunction with the audited consolidated
financial statements as of and for the year ended June 30, 1996,
and notes thereto.
NOTE B--INVENTORIES
The major classes of inventory are as follows:
March 31, June 30,
1997 1996
---- ----
Finished product....................... $317 $198
Raw materials and supplies............. 6 12
Other, principally packaging material.. 58 94
---- ----
$381 $304
During the twelve months ended June 30, 1996 and the nine
months ended March 31, 1997 and 1996, inflation had a minimal
impact on production costs. As a result, the effect of accounting
for these inventories by the LIFO method has had no material
effect on inventories at June 30, 1996 and March 31, 1997 or on
results of operations for the nine months ended March 31, 1997
and 1996.
NOTE C--SHORT TERM BORROWINGS AND LONG TERM DEBT
In August 1996, the Company offered (the "Exchange Offer")
to redeem a portion of its outstanding Subordinated Guaranteed
Pay-in-Kind Notes ("PIK Notes") for a cash payment and exchange
the remaining PIK Notes for new Senior Subordinated Guaranteed
Pay-in-Kind Notes ("1996 PIK Notes") due 2002. On September 11,
1996, following the required acceptances under the Exchange Offer
and approval of its senior lenders, the Company repurchased PIK
Notes in an aggregate amount of $102 for a cash payment of $100
and, concurrently, exchanged essentially all remaining PIK Notes
for 1996 PIK Notes in an aggregate amount of $156. In addition,
the $13 Senior Notes outstanding were repaid. Funding for the
Exchange Offer was accomplished through the application of $30
from a collateral account held by the Term Lenders, additional
borrowing in an aggregate amount of $55 under the existing Term
Loan ("1995 Term Loan"), and borrowing of approximately $36 from
the Revolving Credit Facility ("1995 Revolving Credit Facility").
The 1996 PIK Notes, which are senior to the PIK Notes, also
incorporate certain changes from the terms of the original PIK
Notes, principally the elimination of a make-whole premium upon a
change-in-control of the Company, or upon the redemption of the
PIK Notes by the Company. The 1996 PIK Notes also allow the
Company to call the notes beginning September 1, 1996, at a
premium which decreases annually. The 1996 PIK Notes required,
under certain conditions, an offer, at par, to further redeem
1996 PIK Notes from certain available Del Monte Latin America
sale proceeds. (See Note E below). Under this condition an offer
was tendered to the 1996 PIK Note holders on November 21, 1996.
One holder accepted the offer and $10 was redeemed at par on
December 23, 1996. The remaining proceeds from the sale were
applied to the 1995 Revolving Credit Facility.
F-27
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
MARCH 31, 1997
(Dollars in Millions Except Per Share Amounts)
Scheduled principal payments on the 1995 Term Loan, as
amended, are $15 for each of the fiscal years 1997 through 2000
and $63 in fiscal 2001. In conjunction with the Exchange Offer,
capitalized debt issue costs of approximately $4, net of a
discount on the PIK Notes, have been charged to net income and
accounted for as an extraordinary loss.
As of March 31, 1997, the Company's Short Term Borrowings
and Long Term Debt primarily consist of the 1995 Revolving Credit
Facility, 1995 Term Loan, and the 1996 PIK Notes. The 1995
Revolving Credit Facility bears interest at floating rates based
on LIBOR plus 2.75% or the bank's reference rate plus 1.5%. The
1995 Term Loan (maturing December 1, 2000) consists of three
components. One component is amortizing and bears interest at
LIBOR plus 3.25%. The other two components are non-amortizing.
One non-amortizing component bears interest at a fixed rate of
11.11% and the second component bears interest at LIBOR plus
4.75%. Under an amendment to the 1995 Term Loan in connection
with the closing of the Exchange Offer, the Company borrowed an
additional $55 (maturing June 1, 2001) consisting of three
components. One component is amortizing and bears interest at
LIBOR plus 3.25%. The other two components are non-amortizing.
One non-amortizing component bears interest at LIBOR plus 4.00%
and the other non-amortizing component bears interest at a fixed
rate of 11.729%.
Interest on the 1996 PIK Notes accrues at a fixed rate of
12.25% per annum, and is generally payable through the issuance
of additional 1996 PIK Notes. The payment of such interest in
additional 1996 PIK Notes since issuance will result in an
increase in the principal amount outstanding of such
indebtedness. Beginning March 11, 1997, additional interest
accrues at a rate of .50% per annum and is payable in additional
1996 PIK Notes until such time as a public registration statement
is effective with respect to the 1996 PIK Notes.
On April 18, 1997, the Company completed a recapitalization
transaction in which $301 of proceeds from the transaction were
used to repay the outstanding balances on the 1995 Revolving
Credit Facility, 1995 Term Loan and 1996 PIK Notes (see Note G).
NOTE D--NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share was computed by dividing
net income (loss) attributable to common shares by the weighted
average number of common and redeemable common shares outstanding
during the period. Net income (loss) attributable to common
shares is computed as net income or loss reduced by cash and
in-kind dividends for the period on redeemable preferred stock.
NOTE E--SALE OF LATIN AMERICA
On August 27, 1996, the Company signed a stock Purchase
Agreement to sell its Latin America subsidiaries to an affiliate
of Hicks, Muse, Tate & Furst Incorporated. This Agreement was
amended and restated on October 25, 1996. The sale of the
Company's Mexican subsidiary, Productos Del Monte, S.A. de C.V.
("PDM") to Hicks, Muse, Tate & Furst Incorporated for $38 was
completed on October 28, 1996 and the sale of the Central America
and Caribbean subsidiaries to an affiliate of Donald W.
Dickerson, Inc. for $12 was completed on November 13, 1996. The
sales price for PDM is subject to adjustment based on the final
balance sheet. The amount of any adjustment to the purchase price
is currently in dispute but is not expected to be material. The
combined sales prices of $50, reduced by $1 of related
transaction expenses, resulted in a loss of $5. In conjunction
with these sales, supply agreements were signed under which Del
Monte will sell limited quantities of fruit, vegetables, and
tomato products, at cost, to the Mexican business for a five-year
period and to the Central America/Caribbean business for an
eight-year period.
F-28
<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
MARCH 31, 1997
(Dollars in Millions Except Per Share Amounts)
NOTE F--REDEEMABLE STOCK
On January 28, 1997, the Board of Directors revised the
number of shares authorized for Series D Cumulative Preferred
Stock and Series F Cumulative Preferred Stock. Series D
authorized shares were increased by 100,000 shares from 1,454,000
to 1,554,000, and Series F authorized shares were decreased by
100,000 shares from 3,000,000 to 2,900,000.
Effective with the quarter ended March 31, 1997, the
holders of Series A1 and B redeemable preferred stock elected to
forego their periodic receipt of pay-in-kind dividends in
exchange for a corresponding periodic increase in Series A1 and B
liquidation value.
NOTE G--SUBSEQUENT EVENT - RECAPITALIZATION
On February 21, 1997, Del Monte Foods Company ("DMFC")
entered into a recapitalization agreement (the
"Recapitalization") and plan of merger which was amended and
restated as of April 14, 1997 with affiliates of Texas Pacific
Group ("TPG"). Under this agreement, a corporation affiliated
with TPG ("Merger Sub") was to be merged with and into DMFC (the
"Merger"), with DMFC being the surviving corporation. The Merger
became effective on April 18, 1997. By virtue of the Merger,
shares of DMFC's outstanding preferred stock having a value
implied by the Merger consideration of approximately $14, held by
certain of DMFC's pre-capitalization stockholders who remained
investors pursuant to the Recapitalization, were cancelled, and
were converted into the right to receive new DMFC common stock.
All other presently existing shares of DMFC stock were cancelled
and were converted into the right to receive cash consideration.
In the Merger, the common stock and preferred stock of Merger Sub
was converted into new shares of common stock and preferred
stock, respectively, of DMFC.
Immediately following the consummation of the
Recapitalization, the charter of DMFC authorized DMFC to issue
capital stock consisting of 1,000,000 shares of new common stock,
$.01 par value, and 1,000,000 shares of new preferred stock and
issued and has outstanding 140,000 shares of common stock, and
35,000 shares of Preferred Stock. TPG and certain of its
affiliates or partners hold 109,248 shares of DMFC's common
stock, continuing shareholders of DMFC hold 14,252 shares of such
stock, and other investors hold 16,500 shares (including Westar
Capital, which holds 5,000 shares, TCW Capital Investment
Corporation ("TCW"), which holds 1,500 shares, BT Investment
Partners, Inc., which holds 5,000 shares, BankAmerica Investment
Corporation, which holds 4,500 shares and MIG Partners III, an
affiliate of BankAmerica Investment Corporation, which holds 500
shares). TPG and certain of its affiliates hold 17,500
outstanding shares of preferred stock, and TCW holds 17,500
outstanding shares of preferred stock.
The preferred stock will accumulate dividends at the rate
of 14%. These dividends will be payable in cash or additional
shares of preferred stock, at the option of the Company, subject
to availability of funds and the terms of its loan agreements.
The preferred stock has a liquidation preference of $1,000 per
share and may be redeemed at the option of the Company at a
redemption price equal to the liquidation preference plus
accumulated and unpaid dividends (the "Redemption Price"). The
Company will be required to redeem all outstanding shares of
preferred stock on or prior to April 17, 2008 at the Redemption
Price or upon a change of control of the Company at 101% of the
Redemption Price. The initial purchases of preferred stock have
received warrants to purchase, at a nominal exercise price,
shares of DMFC common stock representing 2% of the outstanding
shares of DMFC common stock.
Cash funding requirements for the Recapitalization,
including repayment of substantially all previous indebtedness,
are $809 and have been satisfied through the following: (i) a
cash equity investment by TPG and other investors of $126 in the
common stock of Shield, (ii) a cash equity investment by TPG and
other investors of $35 in shares of redeemable preferred stock of
Shield, (iii) $380 of borrowings under a senior secured term loan
facility (the "Term Loan Facility"), (iv) $119 of borrowings
under a senior secured revolving credit facility (the "Revolving
Credit Facility" and, together with the Term Loan Facility, the
"Bank Financing"), (v) $147, net of $3
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<PAGE>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
MARCH 31, 1997
(Dollars in Millions Except Per Share Amounts)
of discount, from senior subordinated notes (the "Notes"), and
(vi) application of $2 of proceeds from an asset sale which had
been deposited in the Specific Proceeds Collateral Account
pending completion of the transaction.
Concurrent with the Recapitalization, the Company entered
into a credit agreement with respect to the Bank Financing. The
Term Loan Facility provides for term loans in the aggregate
amount of $380, consisting of Term Loan A of $200 and Term Loan B
of $180. The Revolving Credit Facility provides for revolving
loans in an aggregate amount of up to $350, including a $70
Letter of Credit subfacility. The Revolving Credit Facility will
expire in fiscal 2003, Term Loan A will mature in fiscal 2003,
and Term Loan B will mature in fiscal 2005.
In addition, on April 18, 1997, the Company issued senior
subordinated notes (the "Notes") with an aggregate principal
amount of $150 and received gross proceeds of $147. The notes
will accrue interest 12.25% per annum, payable semiannually in
cash on each April 15 and October 15. These Notes are guaranteed
by DMFC and mature on April 15, 2007. The Notes will be
redeemable in fiscal 2002. Prior to fiscal 2000, the Company, at
its option, may redeem up to 35% of the aggregate principal
amount of Notes originally issued with the net cash proceeds of
one or more public equity offerings at a redemption price equal
to 112.625% of the principal amount thereof, plus accrued and
unpaid interest to the date of redemption; provided that at least
65% of the aggregate principal amount of Notes originally issued
remains outstanding immediately after any such redemption.
There are no current maturities on the Bank Financing for
the remainder of fiscal 1997. Scheduled maturities on the long
term debt in each of the next five years and thereafter will be:
1998............. $ 1
1999............. 32
2000............. 37
2001............. 41
2002............. 47
Thereafter....... 372
----
$ 530
====
In conjunction with the Bank Financing, previously
capitalized debt issue costs of approximately $19 and a 1996 PIK
Note premium and a term loan make-whole aggregating $19 will be
charged to net income and accounted for as an extraordinary loss.
The interest rates applicable to amounts outstanding under
Term Loan A and the Revolving Credit Facility are, at the
Company's option, either (i) the base rate (the higher of .50%
above the Federal Funds Rate and the bank's reference rate) plus
1.25% or (ii) the reserve adjusted offshore rate plus 2.25%.
Interest rates on Term Loan B will be, at the Company's option,
either (i) the base rate plus 2.00% or (ii) the offshore rate
plus 3.00%. In addition, the Company will be required to pay the
lenders under the Revolving Credit Facility a commitment fee of
.50% on the unused portion of such Facility. The Company will
also be required to pay the lenders under the Revolving Credit
Facility letter of credit fees of 1.75% per annum for commercial
letters of credit and 2.25% per annum for all other letters of
credit, as well as an additional fee in the amount of 0.25% per
annum to the bank issuing such letters of credit. Upon attainment
of certain leverage ratios, the base rate margin, offshore rate
margin, as well as the commitment fees and letter of credit fees
will be adjusted.
The Bank Financing agreements contain restrictive covenants
with which the Company must comply. These covenants will require
the Company to meet certain financial tests, including minimum
levels of consolidated EBITDA (as defined in the Credit
Agreement), minimum fixed charge coverage, minimum adjusted net
worth and maximum leverage ratios. In addition, the Company will
agree 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.
F-30
<PAGE>
================================= =====================================
No person has been authorized
to give any information or to
make any representations other
than those contained or
incorporated by reference in
this Prospectus and the
accompanying Letter of
Transmittal and, if given or
made, such information or
representations must not be
relied upon as having been
authorized by the Company or
the Exchange Agent. Neither this Del Monte Corporation
Prospectus nor the accompanying Del Monte Foods Company
Letter of Transmittal, or both
together, constitute an offer to
sell or the solicitation of an
offer to buy any securities in Offer to Exchange
any jurisdiction to any person
to whom it is unlawful to make Series B 12 1/4% Senior
such offer or solicitation. Subordinated Notes due 2007,
Neither the delivery of this
Prospectus, nor the accompanying which have been registered under
Letter of Transmittal, or both Securities Act of 1933, as amended,
together, nor any sale made
hereunder shall, under any for any and all outstanding
circumstances, create an 12 1/4% Senior Subordinated
implication that there has been Notes due 2007
no change in the affairs of the
Company since the date hereof or
thereof or that the information
contained herein is correct at
any time subsequent to the date
hereof or thereof.
Until , 1997 (__ days after
the date of this Prospectus), all
dealers effecting transactions
in the New Notes, whether or not
participating in this distribution,
may be required to deliver a
Prospectus. This is in addition
to the obligation of the dealers
to deliver a Prospectus when
acting as underwriters and with
respect to their unsold allotments
or subscriptions.
TABLE OF CONTENTS
Page
Available Information........
Incorporation of Certain
Documents by Reference..... PROSPECTUS
Prospectus Summary...........
Risk Factors.................
The Recapitalization.........
Use of Proceeds..............
Texas Pacific Group.......... June __, 1997
Pro Forma Capitalization.....
Unaudited Pro Forma
Financial Data..............
Selected Consolidated
Financial Data..............
Management's Discussion
and Analysis of Financial
Condition and Results
of Operations...............
Corporate History............
Management...................
Capital Stock of DMC
and DMFC....................
Certain Relationships
and Related Transactions....
The Bank Financing...........
The Exchange Offer...........
Description of the New
Notes.......................
Certain U.S. Federal
Income Tax Considerations...
Plan of Distribution.........
Legal Matters................
Experts......................
Change in Accountants........
================================= =====================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
DMC's Articles of Incorporation and Bylaws provide that DMC
will indemnify each of its directors and officers to the full
extent permitted by the laws of the State of New York and may
indemnify certain other persons as authorized by the New York
General Corporation Law (the "GCL"). Section 722 of the GCL
provides as follows:
Authorization for indemnification of directors and officers
(a) A corporation may 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 the corporation to
procure a 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
the corporation served in any capacity at the request of
the corporation, by reason of the fact that he, his
testator or intestate, was a director or officer of the
corporation, 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 resonably believed to be in, or, in
the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the
corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his
conduct was unlawful.
(b) The termination of any such civil or criminal
action or proceedings by judgment, settlement, conviction
or upon a plea of nolo contendere, or its equivalent, shall
not in itself create a presumption that any such director
or officer did not act, in good faith, for a purpose which
he reasonably believed to be in, or, in the case of service
for any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation or
that he had reasonable cause to believe that his conduct
was unlawful.
(c) A corporation may indemnify any person made, or
threatened to be made, a party to an action by or in the
right of the corporation to procure a judgment in its favor
by reason of the fact that he, his testator or intestate,
is or was a director or officer of the corporation, or is
or was serving at the request of the corporation as a
director or officer of any other corporation of any type or
kind, domestic or foreign, of 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 actions, 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 for any other corporation or any
partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the
corporation, except that no indemnification under this
paragraph 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 the
corporation, 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 the circumstances of
the case, the person is fairly and reasonably entitled to
indemnify for such portion of the settlement amount and
expenses as the court deems proper.
II-1
<PAGE>
(d) For the purposes of this section, a corporation shall
be deemed to have requested a person to serve an employee
benefit plan where the performance by such person of his
duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan; excise taxes
assessed on a person with respect to an employee benefit
plan pursuant to applicable law shall be considered fines;
and action taken or omitted by a person with respect to an
employee benefit plan in the performance of such person's
duties for a purpose reasonably believed by such person to
be in the interest of the participants and beneficiaries of
the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the corporation.
DMFC's Charter provide that DMFC will indemnify each of its
directors and officers to the full extent permitted by the laws
of the State of Maryland and may indemnify certain other persons
as authorized by the Maryland General Corporation Law (the
"MGCL"). Section 2-418 of the MGCL provides as follows:
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS. -- (a) In this section the following words have the
meaning indicated.
(1) "Director" means any person who is or was a
director of a corporation and any person who, while a
director of a corporation, is or was serving at the
request of the corporation as a director, officer,
partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint
venture, trust, other enterprise, or employee benefit
plan.
(2) "Corporation" includes any domestic or
foreign predecessor entity of a corporation in a
merger, consolidation, or other transaction in which
the predecessor's existence ceased upon consummation
of the transaction.
(3) "Expenses" include attorney's fees.
(4) "Official capacity" means the following:
(i) When used with respect to a director, the
office of director in the corporation; and
(ii) When used with respect to a person
other than a director as contemplated in
subsection (j), the elective or appointive office
in the corporation held by the officer, or the
employment or agency relationship undertaken by
the employee or agent in behalf of the
corporation.
(iii) "Official capacity" does not include
service for any other foreign or domestic
corporation or any partnership, joint venture,
trust, other enterprise, or employee benefit
plan.
(5) "Party" includes a person who was, is, or is
threatened to be made a named defendant or respondent
in a proceeding.
(6) "Proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative.
(b) (1) A corporation may indemnify any director made
a party to any proceeding by reason of service in that
capacity unless it is established that:
(i) The act or omission of the director was
material to the matter giving rise to the proceeding; and
II-2
<PAGE>
1. Was committed in bad faith; or
2. Was the result of active and deliberate
dishonesty; or
(ii) The director actually received an improper
personal benefit in money, property, or services; or
(iii) In the case of any criminal proceeding, the
director had reasonable cause to believe that the act
or omission was unlawful.
(2) (i) Indemnification may be against judgments,
penalties, fines, settlements, and reasonable
expenses actually incurred by the director in
connection with the proceeding.
(ii) However, if the proceeding was one by
or in the right of the corporation,
indemnification may not be made in respect of any
proceeding in which the director shall have been
adjudged to be liable to the corporation.
(3) (i) The termination of any proceeding by
judgment, order, or settlement does not create a
presumption that the director did not meet the
requisite standard of conduct set forth in this
subsection.
(ii) The termination of any proceeding by
conviction, or a plea of nolo contendere or its
equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable
presumption that the director did not meet that
standard of conduct.
(c) A director may not be indemnified under subsection
(B) of this section in respect of any proceeding charging
improper personal benefit to the director, whether or not
involving action in the director's official capacity, in
which the director was adjudged to be liable on the basis
that personal benefit was improperly received.
(d) Unless limited by the charter:
(1) A director who has been successful, on the
merits or otherwise, in the defense of any proceeding
referred to in subsection (B) of this section shall be
indemnified against reasonable expenses incurred by
the director in connection with the proceeding.
(2) A court of appropriate jurisdiction upon
application of a director and such notice as the court
shall require, may order indemnification in the
following circumstances:
(i) If it determines a director is entitled
to reimbursement under paragraph (1) of this
subsection, the court shall order
indemnification, in which case the director shall
be entitled to recover the expenses of securing
such reimbursement; or
(ii) If it determines that the director is
fairly and reasonably entitled to indemnification
in view of all the relevant circumstances,
whether or not the director has met the standards
of conduct set forth in subsection (b) of this
section or has been adjudged liable under the
circumstances described in subsection (c) of this
section, the court may order such indemnification
as the court shall deem proper. However,
indemnification with respect to any proceeding by
or in the right of the corporation or in which
liability shall have been adjudged in the
circumstances described in subsection (c) shall
be limited to expenses.
II-3
<PAGE>
(3) A court of appropriate jurisdiction may be the
same court in which the proceeding involving the
director's liability took place.
(e) (1) Indemnification under subsection (b) of this
section may not be made by the corporation unless
authorized for a specific proceeding after a
determination has been made that indemnification of
the director is permissible in the circumstances
because the director has met the standard of conduct
set forth in subsection (b) of this section.
(2) Such determination shall be made:
(i) By the board of directors by a majority
vote of a quorum consisting of directors not, at
the time, parties to the proceeding, or, if such
a quorum cannot be obtained, then by a majority
vote of a committee of the board consisting
solely of two or more directors not, at the time,
parties to such proceeding and who were duly
designated to act in the matter by a majority
vote of the full board in which the designated
directors who are parties may participate:
(ii) By special legal counsel selected by
the board of directors or a committee of the
board by vote as set forth in subparagraph (i) of
this paragraph, or, if the requisite quorum of
the full board cannot be obtained and therefor
the committee cannot be established, by a
majority vote of the full board in which
directors who are parties may participate; or
(iii) By the stockholders.
(3) Authorization of indemnification and
determination as to reasonableness of expenses shall
be made in the same manner as the determination that
indemnification is permissible. However, if the
determination that indemnification is permissible is
made by special legal counsel, authorization or
indemnification and determination as to reasonableness
of expenses shall be made in the manner specified in
subparagraph (ii) of paragraph (2) of this subsection
for selection of such counsel.
(4) Shares held by directors who are parties to
the proceeding may not be voted on the subject matter
under this subsection.
(f) (1) Reasonable expenses incurred by a director who
is a party to a proceeding may be paid or reimbursed
by the corporation in advance of the final disposition
of the proceeding upon receipt by the corporation of:
(i) A written affirmation by the director of
the director's good faith belief that the
standard of conduct necessary for indemnification
by the corporation as authorized in this section
has been met; and
(ii) A written undertaking by or on behalf
of the director to repay the amount if it shall
ultimately be determined that the standard of
conduct has not been met.
(2) The undertaking required by subparagraph (ii)
of paragraph (1) of this subsection shall be an
unlimited general obligation of the director but need
not be secured and may be accepted without reference
to financial ability to make the repayment.
(3) Payments under this subsection shall be made
as provided by the charter, bylaws, or contract or as
specified in subsection (e) of this section.
II-4
<PAGE>
(g) The indemnification and advancement of expenses
provided or authorized by this section may not be deemed
exclusive of any other rights, by indemnification or
otherwise, to which a director may be entitled under the
charter, the bylaws, a resolution of stockholders or
directors, an agreement or otherwise, both as to action in
an official capacity and as to action in another capacity
while holding such office.
(h) This section does not limit the corporation's
power to pay or reimburse expenses incurred by a director
in connection with an appearance as a witness in a
proceeding at a time when the director has not been made a
named defendant or respondent in the proceeding.
(i) For purposes of this section:
(1) The corporation shall be deemed to have
requested a director to serve an employee benefit plan
where the performance of the director's duties to the
corporation also imposes duties on, or otherwise
involves services by, the director to the plan or
participants or beneficiaries of the plan:
(2) Excise taxes assessed on a director with
respect to an employee benefit plan pursuant to
applicable law shall be deemed fines; and
(3) Action taken or omitted by the director with
respect to an employee benefit plan in the performance
of the director's duties for a purpose reasonably
believed by the director to be in the interest of the
participants and beneficiaries of the plan shall be
deemed to be for a purpose which is not opposed to the
best interests of the corporation.
(j) Unless limited by the charter:
(1) An officer of the corporation shall be
indemnified as and to the extent provided in
subsection (d) of this section for a director and
shall be entitled, to the same extent as a director,
to seek indemnification pursuant to the provisions of
subsection (d);
(2) A corporation may indemnify and advance
expenses to an officer, employee, or agent of the
corporation to the same extent that it may indemnify
directors under this section; and
(3) A corporation, in addition, may indemnify and
advance expenses to an officer, employee, or agent who
is not a director to such further extent, consistent
with law, as may be provided by its charter, bylaws,
general or specific action of its board of directors
or contract.
(k) (1) A corporation may purchase and maintain
insurance on behalf of any person who is or was a
director, officer, employee, or agent of the
corporation, or who, while a director, officer,
employee, or agent of the corporation, is or was
serving at the request of the corporation as a
director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise,
or employee benefit plan against any liability
asserted against and incurred by such person in any
such capacity or arising out of such person's
position, whether or not the corporation would have
the power to indemnify against liability under the
provisions of this section.
(2) A corporation may provide similar protection,
including a trust fund, letter of credit, or surety
bond, not inconsistent with this section.
(3) The insurance or similar protection may be
provided by a subsidiary or an affiliate of the corporation.
II-5
<PAGE>
(1) Any indemnification of, or advance of expenses to, a
director in accordance with this section, if arising out of
a proceeding by or in the right of the corporation, shall be
reported in writing to the stockholders with the notice of
the next stockholders' meeting or prior to the meeting.
DMC and DMFC maintain directors' and officers' liability
insurance.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits. A list of exhibits included as part of
this Registration Statement is set forth in the Exhibit Index
which immediately precedes such exhibits and is hereby
incorporated by reference herein.
(b) Financial Statement Schedules. Schedules have been
omitted since the required information is not present, or not
present in amounts sufficient to require submission of the
schedule, or because the information is included in the financial
statements or notes thereto.
Item 22. Undertakings.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plans
annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant, pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by any such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether or not such indemnification is against public policy as
expressed in the Securities Act of 1933 and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes to
respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or
13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the
request.
The undersigned registrant hereby undertakes to supply
by means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, each registrant has duly caused this registration statement
to be signed on its behalf, thereunto duly authorized, in the
City of San Francisco, State of California, on June 11, 1997.
DEL MONTE CORPORATION
By: /s/ Richard G. Wolford
--------------------------
Title: Chief Executive Officer
DEL MONTE FOODS COMPANY
By: /s/ Richard G. Wolford
--------------------------
Title: Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below on this
Registration Statement hereby constitutes and appoints Jeffrey A.
Shaw, Richard G. Wolford and Wesley J. Smith, and each of them,
with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities (unless revoked in writing) to sign any and
all amendments (including post-effective amendments thereto) to
this Registration Statement to which this power of attorney is
attached, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, granting to such attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in connection therewith, as full to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this registration statement has been signed by the
following persons in the capacities indicated, on June 11, 1997.
Signature Title
--------- -----
/s/ Richard G. Wolford Chief Executive Officer (Principal
- -------------------------- Executive Officer) and Director
Richard G. Wolford
/s/ David L. Meyers Executive Vice President, Administration
- -------------------------- and Chief Financial Officer (Principal
David L. Meyers Financial Officer)
/s/ Richard L. French Vice President and Chief Accounting Officer
- -------------------------- (Principal Accounting Officer)
Richard L. French
/s/ James G. Coulter Director
- --------------------------
James G. Coulter
S-1
<PAGE>
Signature Title
--------- -----
/s/ Jeffrey A. Shaw Director
- --------------------------
Jeffrey A. Shaw
/s/ Wesley J. Smith Director
- --------------------------
Wesley J. Smith
S-2
<PAGE>
Signature Title
--------- -----
/s/ Brian E. Haycox Director
- --------------------------
Brian E. Haycox
S-3
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
--- -----------
2.1 Agreement and Plan of Merger, dated as of February 21,
1997, amended and restated as of April 14, 1997, among
TPG Partners, L.P., TPG Shield Acquisition Corporation
and Del Monte Foods Company (the "Agreement and Plan
of Merger")
NOTE: Pursuant to the provisions of paragraph (b)(2)
of Item 601 of Regulation S-K, the Registrant hereby
undertakes to furnish to the Commission upon request
copies of any schedule to the Agreement and Plan of
Merger.
3.1 Restated Certificate of Incorporation of Del Monte
Corporation, dated as of June 5, 1997
3.2 Amended and Restated By-laws of Del Monte Corporation,
as amended May 15, 1987 and as further amended May 11, 1994
3.3 Amendment to the Amended and Restated By-laws of Del
Monte Corporation dated March 6, 1996
3.4 Articles of Amendment and Restatement of TPG Shield
Acquisition Corporation, filed April 17, 1997
(included as Exhibit A of the Articles of Merger filed
as Exhibit 3.6)
3.5 Articles of Supplementary of TPG Shield Acquisition
Corporation, filed April 18, 1997 (included as Exhibit
A of the Articles of Merger filed as Exhibit 3.6)
3.6 Articles of Merger between TPG Shield Acquisition
Corporation and Del Monte Foods Company, filed
April 18, 1997
3.7 Bylaws of TPG Shield Acquisition Corporation, as of
February 20, 1997
4.1 Stockholders' Agreement, dated as of April 18, 1997,
among Del Monte Foods Company and its Stockholders
4.2 Indenture, dated as of April 18, 1997, among Del Monte
Corporation, as issuer, Del Monte Foods Company, as
guarantor, and Marine Midland Bank, as trustee,
relating to the Notes (the "Indenture")
4.3 Form of Series B 12-1/4% Senior Subordinated Note due
2007 of Del Monte Corporation (the "New Notes")
(included as Exhibit B of the Indenture filed as
Exhibit 4.2)
4.4 Credit Agreement, dated as of April 18, 1997, among
Del Monte Corporation, Bank of America N.T. & S.A., as
Administrative Agent, and the other financial
institutions parties thereto
4.5 Guaranty, dated April 18, 1997, executed by Del Monte
Foods Company, with respect to the obligations under
the Credit Agreement
X-1
<PAGE>
4.6 Security Agreement, dated April 18, 1997, between Del
Monte Corporation and Del Monte Foods Company and Bank
of America National Trust and Savings Association
4.7 Pledge Agreement, dated April 18, 1997, between Del
Monte Corporations and Bank of America National Trust
and Savings Association
4.8 Parent Pledge Agreement, dated April 18, 1997, between
Del Monte Foods Company and Bank of America National Trust
and Savings Association
4.9 Registration Rights Agreement, dated as of April 18, 1997,
by and among Del Monte Corporation and the Purchasers listed
therein, relating to the Notes
NOTE: Pursuant to the provisions of paragraph (b)(4)(iii) of
Item 601 of Regulation S-K, the Registrant hereby undertakes to
furnish to the Commission upon request copies of the instruments
pursuant to which various entities hold long-term debt of the
Company or its parent or subsidiaries, none of which instruments
govern indebtedness exceeding 10 percent of the total assets of
the Company and its parent or subsidiaries on a consolidated
basis.
5.1 Opinion of Cleary, Gottlieb, Steen & Hamilton
regarding legality of the New Notes and the guarantee
of the New Notes by Del Monte Foods Company
10.1 Transaction Advisory Agreement, dated as of April 18, 1997,
between Del Monte Corporation and TPG Partners, L.P
10.2 Management Advisory Agreement, dated as of April 18, 1997,
between Del Monte Corporation and TPG Partners, L.P
10.3 Retention Agreement between Del Monte Corporation and
David L. Meyers, dated November 1, 1991
10.4 Retention Agreement between Del Monte Corporation and
Glynn M. Phillips, dated October 5, 1994
10.5 Retention Agreement between Del Monte Corporation and
Thomas E. Gibbons, dated January 1, 1992
10.6 Retention Agreement between Del Monte Corporation and
Brian E. Haycox, dated December 11, 1995
10.7 Retention Agreement between Del Monte Corporation and
David M. Little, dated January 9, 1990
10.8 Del Monte Foods Annual Incentive Award Plan and 1997
Plan Year Amendments
10.9 Additional Benefits Plan of Del Monte Corporation, as
amended and restated effective
January 1, 1996
10.10 Supplemental Benefits Plan of Del Monte Corporation,
effective as of January 1, 1990, as amended as of
January 1, 1992 and May 30, 1996
X-2
<PAGE>
10.11 Agreement for Information Technology Services between
Del Monte Corporation and Electronic Data Systems
Corporation, dated November 1, 1992, as amended as of
September 1, 1993 and as of September 15, 1993
10.12 Supply Agreement between Del Monte Corporation and
Silgan Containers Corporation, dated as of September
3, 1993, as amended as of December 21, 1993
12.1 Computation of ratio of earnings to fixed charges
16.1 Letter re Change in Certifying Accountant
21.1 Subsidiaries of Del Monte Foods Company and Del Monte
Corporation
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cleary, Gottlieb, Steen & Hamilton (included
in its opinion filed as Exhibit 5.1)
25.1 Form T-1 with respect to the eligibility of Marine Midland
Bank with respect to the Indenture
27.1 Financial Data Schedule
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4 Form of Letter to Clients
99.5 Schedule Identifying Document Omitted pursuant to Instruction
2 to Item 601
X-3
<PAGE>
Exhibit 2.1
Conformed Copy
AGREEMENT
AND
PLAN OF MERGER
among
TPG PARTNERS, L.P.
TPG SHIELD ACQUISITION CORPORATION
and
DEL MONTE FOODS COMPANY
dated as of
February 21, 1997
amended and restated
as of
April 14, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS 2
ARTICLE II THE RECAPITALIZATION TRANSACTIONS 10
2.1 Amendment of DMFC's Articles of Incorporation
and the Stockholders Agreement 10
2.2 Subscription of Sub Stock 10
2.3 New Term Loan and New Revolving Credit 10
2.4 The Senior Subordinated Notes 10
2.5 The DMFC Dividend and Repayment of Existing
Indebtedness 11
2.6 The Merger 11
2.7 Effect of the Merger 11
2.8 Charter, By-laws, Directors and Officers of the
Surviving Corporation 11
2.9 Conversion or Cancellation of DMFC Common Stock
and DMFC Preferred Stock 12
2.10 Surrender of DMFC Share Certificates; Payment
for DMFC Common Stock and DMFC Preferred Stock 13
ARTICLE III CLOSING OF TRANSACTIONS 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF DMFC 15
4.1 Organization 15
4.2 Authority; Enforceability 16
4.3 Capitalization 16
4.4 No Breach 17
4.5 Financial Statements; Certain Actions 18
4.6 Consents 19
4.7 Actions and Proceedings 19
4.8 Brokers 19
4.9 Taxes and Tax Returns 20
4.10 Title to Property; Sufficiency 21
4.11 Real Property 21
4.12 Intellectual Property 23
4.13 Compliance with Legal Requirements 25
4.14 Environmental 26
4.15 Outstanding Commitments 27
4.16 Employee Benefits 27
4.17 Employee Relations 30
4.18 Insurance 30
4.19 Customers and Suppliers 30
<PAGE>
4.20 Certain Financial Information 31
4.21 Affiliate Transactions 31
4.22 Inventory and Accounts Receivable 31
4.23 Management Payments 32
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASERS 32
5.1 Organization 32
5.2 Authority; Enforceability 32
5.3 No Breach 33
5.4 Consents 33
5.5 Actions and Proceedings 33
5.6 Brokers 33
5.7 Availability of Funds 33
5.8 Surviving Corporation After the Merger 34
ARTICLE VI COVENANTS OF DMFC 34
6.1 Ordinary Course of Business 34
6.2 Access to Information 37
6.3 Stockholder Approvals; Stock Conversions 37
6.4 Cancellation of Certain Arrangements 38
6.5 No Shop Provision 38
6.6 Affiliate Transactions 38
6.7 Recapitalization Accounting Treatment 38
ARTICLE VII COVENANTS OF PURCHASERS 39
7.1 Employee Benefits 39
7.2 Executive Arrangements 39
7.3 Indemnification: Officers' and Directors' Insurance 40
7.4 Financing 41
ARTICLE VIII ADDITIONAL AGREEMENTS 42
8.1 Company Debt 42
8.2 Further Actions 42
8.3 Certain Notifications 43
8.4 Confidentiality 43
8.5 Fulfillment of Conditions and Certain Notifications 44
8.6 Expenses and Break-Up Fee 44
ARTICLE IX CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS 45
9.1 Conditions Precedent to Obligations of Purchasers 45
9.2 Conditions Precedent to Obligations of DMFC 46
ARTICLE X TERMINATION 48
<PAGE>
10.1 Grounds for Termination 48
10.2 Effect of Termination 49
ARTICLE XI MISCELLANEOUS 49
11.1 Non-Survival of Representations and Warranties 49
11.2 Publicity 49
11.3 Costs and Expenses 49
11.4 Notices 49
11.5 Counterparts 51
11.6 Entire Agreement 51
11.7 Headings 51
11.8 Governing Law 51
11.9 No Third Party Rights; Assignment 51
11.10 Waivers and Amendments 51
11.11 Consent to Jurisdiction 52
Exhibits
Exhibit A-1 Form of Irrevocable Proxy
Schedules
Schedule 2.9(a) Allocation of Consideration
Schedule 2.9(b) Calculation of Series F Share Consideration
Schedule 2.10(b) Persons payable by Purchasers
Schedule 4.1 List of Subsidiaries, etc.
Schedule 4.3(a) Outstanding Capital Stock, etc.
Schedule 4.3(b) Liens on Capital Stock
Schedule 4.4 Breaches, etc.
Schedule 4.5 Liabilities
Schedule 4.6 Consents (DMFC)
Schedule 4.7 Actions and Proceedings
Schedule 4.9 Taxes
Schedule 4.10 Permitted Liens
Schedule 4.11 Real Property
Schedule 4.12(a) Intellectual Property
Schedule 4.12(b) Infringement of Intellectual Property Rights
Schedule 4.13(a) Compliance with Legal Requirements
Schedule 4.13(b) Permits
Schedule 4.14 Environmental Matters
Schedule 4.15 Contracts
Schedule 4.16(a) Employees Benefit Plans
Schedule 4.16(b) Qualification of Plans
Schedule 4.16(f) Certain Employee Benefit Plan Liabilities
Schedule 4.16(g) Severance Payments, etc.
Schedule 4.16(h) Changes in Plans
Schedule 4.16(i) Violations relating to Employment Matters
Schedule 4.16(j) Certain Liabilities with respect to Employees
Schedule 4.16(k) Liabilities relating to Plan Insurance Contracts
Schedule 4.16(l) Indebtedness Owed to Employees
Schedule 4.16(m) Certain Benefit Arrangements
Schedule 4.17(a) Employee Relations
Schedule 4.17(b) Collective Bargaining
Schedule 4.19 Customers and Suppliers
Schedule 4.20(a) DMFC Combining Statement
Schedule 4.20(b) Evaluation of Adjusted Calendar Year 1996
Schedule 4.21 Affiliate Transactions
<PAGE>
Schedule 6.1 Actions Outside the Ordinary Course of Business
Schedule 6.1(b)(xiv) 1997 Capital Expenditure Plan
Schedule 6.4 Certain Arrangements
Schedule 7.2 Executive Arrangements
<PAGE>
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated
as of February 21, 1997, as amended and restated as of April 14,
1997, among TPG Partners, L.P., a Delaware limited partnership
("Parent"), and TPG Shield Acquisition Corporation, a Maryland
corporation ("Sub" and, together with Parent, "Purchasers") and
Del Monte Foods Company, a Maryland corporation ("DMFC").
WHEREAS, Parent owns all of the issued and outstanding
shares of capital stock of Sub;
WHEREAS, Sub is a transitory corporation established
solely to effect the Merger (as defined below), and each of the
new stockholders of Sub is subscribing for shares of Sub for the
purpose of acquiring through the Merger an equity interest in the
Surviving Corporation (as defined below).
WHEREAS, the Purchasers and DMFC have heretofore
entered into an Agreement and Plan of Merger dated as of February
21, 1997 (the "Original Agreement"), pursuant to which the
Purchasers and DMFC provided for the acquisition of DMFC by
Purchasers subject to the terms of the Original Agreement;
WHEREAS, the parties to the Original Agreement desire
to amend and restate the Original Agreement in order to provide
for the Recapitalization (as defined below);
WHEREAS, the Boards of Directors of DMFC and Sub, and
Parent, as sole stockholder of Sub, have approved a merger of Sub
with and into DMFC upon the terms and subject to the conditions
set forth in this Agreement (the "Merger");
WHEREAS, stockholders of DMFC have granted to
Purchasers irrevocable proxies with respect to at least 66-2/3%
of the shares outstanding of each class of DMFC Common Stock (as
defined below) and of each series of DMFC Preferred Stock (as
defined below) authorizing the approval of the Merger as set
forth in the Original Agreement, amended to the extent necessary
to permit the transactions contemplated thereby to be accounted
for pursuant to recapitalization accounting (the
"Recapitalization"); and
WHEREAS, in order to effect the Recapitalization, the
parties hereto and certain other parties named herein desire to
consummate, as of the Closing (as defined below), a series of
related transactions, including, without limitation, the
following transactions: (i) the amendment of the Articles of
Incorporation of DMFC and the Stockholders Agreement (as defined
below); (ii) the subscription by Parent and certain other equity
investors of newly issued shares of common stock, par value $0.01
per share, of Sub ("Sub Common Stock"); (iii) the making of new
secured and senior
<PAGE>
subordinated financing to the Company (as defined below); (iv)
the repayment of certain existing indebtedness of the Company;
and (v) the Merger.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants, agreements and
undertakings contained or referred to in this Agreement, and
subject to the satisfaction or waiver of the conditions to this
Agreement, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Capitalized terms used in this Agreement are used
as defined in this Article I or elsewhere in this Agreement (such
terms to be equally applicable to the singular and plural forms
thereof).
"Affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or
under common control with, such Person; for purposes of this
definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of an entity, whether through the
ownership of voting securities or otherwise.
"Assets" means all Properties of a member of the Del
Monte Group.
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
"Class A Common Stock" means the Class A Common Stock,
par value $.01 per share, of DMFC.
"Class B Common Stock" means the Class B Common Stock,
par value $.01 per share, of DMFC.
"Class C Common Stock" means the Class C Common Stock,
par value $.01 per share, of DMFC.
"Class D Common Stock" means the Class D Common Stock,
par value $.01 per share, of DMFC.
"Class E Common Stock" means the Class E Common Stock,
par value $.01 per share, of DMFC.
<PAGE>
"Class F Common Stock" means the Class F Common Stock,
par value $.01 per share, of DMFC.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" means Del Monte Corporation, a New York
corporation and a wholly-owned subsidiary of DMFC.
"Contracts" means any and all written and enforceable
oral contracts, agreements, guarantees, commitments,
arrangements, leases, licenses, mortgages, bonds, notes and other
instruments and obligations, excluding any Permits.
"Del Monte" means DMFC and the Company.
"Del Monte Group" means DMFC, the Company and the
Subsidiaries of the Company.
"Department" means the State Department of Assessments
and Taxation of Maryland.
"DMFC Common Stock" means the Class A Common Stock,
the Class B Common Stock, the Class C Common Stock, the Class D
Common Stock, the Class E Common Stock and the Class F Common
Stock.
"DMFC Preferred Stock" means the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock, the Series E Preferred Stock
and the Series F Preferred Stock.
"DMFC's Knowledge" means the actual knowledge of, without
any inquiry being required by, Brian E. Haycox, Paul H. Mullan,
David L. Meyers, Thomas E. Gibbons, Glynn Phillips, David M.
Little, William R. Sawyers, Richard L. French, Mark Buxton, Janet
Shestakov, Steven Ronzone and William Spain.
"Dollars" or "$" means the lawful currency of the United
States of America.
"Effective Time" means the time and date when the
Articles of Merger are accepted for record by the Department.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and, unless the
context otherwise requires, the rules and regulations promulgated
thereunder from time to time.
<PAGE>
"ERISA Affiliate" means any person (as defined in
Section 3(9) of ERISA), including each trade or business (whether
or not incorporated), which would be deemed to be a member of a
single "controlled group" within the meaning of Section 414(b),
(c), (m) or (o) of the Code with any member of the Del Monte
Group.
"Existing Debt" means the debt of the Company
outstanding at the Closing Date under the Term Loan Agreement,
the Revolving Credit Agreement, the PIK Notes and the 12-1/4%
Subordinated Guaranteed Pay-In-Kind Notes, if any, due 2002 of
the Company.
"Existing Senior Debt" means the debt of the Company
outstanding from time to time under the Term Loan Agreement and
the Revolving Credit Agreement.
"Financial Statements" means the audited consolidated
financial statements of DMFC as of, and for the three years
ended, June 30, 1996, and the unaudited financial statements of
DMFC as of, and for the six months ended, December 31, 1996.
"Financing Agreements" means the Senior Secured Credit
Agreement and the Senior Subordinated Financing Agreement.
"GAAP" shall mean generally accepted accounting
principles in the United States of America which are applicable
to the circumstances as of the date of determination.
"Governmental Authority" means any United States
federal, state or local or any foreign government, governmental,
regulatory or administrative authority, agency or commission or
any court, tribunal or judicial or arbitral body.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Intellectual Property Rights" means the Trademarks
and any and all patents, copyrights, formulas, inventions,
technical information, know-how, technology, proprietary designs,
processes, trade secrets, rights in plant varieties, and other
similar intellectual property rights and any registrations and
applications therefor owned or filed by any member of the Del
Monte Group or currently used in, or required for the Operations,
and all Contracts for the licensing or sub-licensing of the same
to or from third parties.
"January Balance Sheet" means the unaudited
consolidated balance sheet of DMFC as of January 26, 1997.
<PAGE>
"Judgments" means any and all judgments, orders,
directives, rulings, decisions, injunctions (temporary,
preliminary or permanent), decrees or awards of any Governmental
Authority.
"Laws" means all laws (whether statutory or
otherwise), rules, regulations and Judgments of all Governmental
Authorities.
"Legal Requirements" means any and all applicable (i)
Laws, (ii) Contracts with any Governmental Authority relating to
compliance with Laws and (iii) Permits.
"Liens" means any and all liens, mortgages, charges,
security interests, claims, leases, charges, options, rights of
first refusal, easements, or other real estate declarations,
covenants, conditions, restrictions or servitudes, transfer
restrictions, encumbrances or other similar restrictions or
limitations of any nature whatsoever.
"Loss" means any loss, liability, damage, cost or
expense whatsoever (including, without limitation, reasonable
attorneys' fees and expenses).
"Material Adverse Effect" means a material adverse
effect on the business operations, properties or financial
condition of the Del Monte Group taken as a whole or on the fruit
or vegetable business of the Del Monte Group, and shall include
any effect that would reasonably be expected to have such a
material adverse effect.
"Material Contract" means:
(i) any Contract which, in any case, involves
future payments (including reasonably anticipated potential
payments) thereunder of $10,000,000 or more in the aggregate or
$2,000,000 or more in any year (or its equivalent in any
currency); and
(ii) any Contract which:
(A) is with any labor union or association
representing employees;
(B) limits or affects the freedom of any
member of the Del Monte Group (other than a Subsidiary of the
Company) to engage in any line of business in any geographic area;
(C) relates to the borrowing of money, or the
guaranteeing of any such borrowing;
<PAGE>
(D) is a material partnership, joint venture,
shareholders' or other similar contract with any Person;
(E) other than this Agreement (A) limits or
contains restrictions on the ability of any member of the Del Monte
Group (other than a Subsidiary of the Company) to declare or pay
dividends on, to make any other distribution in respect of or to
issue or purchase, redeem or otherwise acquire its capital stock,
to incur indebtedness, to incur or suffer to exist any lien, to
purchase or sell any assets and properties, to change the lines
of business in which it participates or engages or to engage in
any merger or other business combination or (B) requires any
member of the Del Monte Group (other than Subsidiaries of the
Company) to maintain specified financial ratios or levels of net
worth or other indicia of financial condition;
(F) is with any of the stockholders of DMFC or
any Affiliate thereof;
(G) is to acquire or dispose of all or part of
the equity securities of any business and any buy/sell or other Contract
relating to the purchase or sale of capital stock of any member
of the Del Monte Group;
(H) is a guarantee of third party obligations;
(I) is a material license (whether as licensor
or licensee) or similar agreement permitting the use of any Intellectual
Property Rights; or
(J) is a broker or finder's agreement.
"MGCL" means the Maryland General Corporation Law.
"Morgan Stanley" means Morgan Stanley & Co. Incorporated.
"New Revolving Credit" means the revolving credit to
be made available to the Company by the Senior Secured Lenders
pursuant to the Senior Secured Credit Agreement for an aggregate
amount of up to $350.0 million.
"New Term Loan" means the loan to be made to the
Company by the Senior Secured Lenders pursuant to the Senior
Secured Credit Agreement for an aggregate amount of $380.0
million.
"Operations" means all businesses and activities
currently conducted by the Del Monte Group including, but not
limited to, the manufacturing, processing, assembling, packaging,
distribution and marketing of canned or packaged vegetables,
fruits, tomato products, pineapples and all other products
currently sold by the Del Monte Group.
<PAGE>
"Permits" means any and all written permits,
authorizations, approvals, registrations, waivers, variances and
licenses under any (x) Laws or (y) Contracts with any
Governmental Authority relating to compliance with Laws.
"Permitted Encumbrances" means any of the following:
(i) Liens listed on Schedule 4.10; (ii) Liens for Taxes accrued
but not yet due or for Taxes the validity of which is being
contested in good faith by appropriate proceedings and for which,
if required at such time by GAAP, adequate provision has been
made; (iii) Liens that, either individually or in the aggregate,
would not have a Material Adverse Effect; (iv) statutory liens of
carriers, warehousemen, mechanics, workmen and materialmen for
liabilities and obligations incurred in the ordinary course of
business that are not yet delinquent or are being contested in
good faith; (v) Liens disclosed in the Financial Statements; and
(vi) Liens which constitute (A) valid leases or subleases from
any member of the Del Monte Group to third parties, (B) security
agreements and licenses with respect to Intellectual Property
Rights entered into between any member of the Del Monte Group and
third parties or (C) security agreements entered into by any
member of the Del Monte Group pursuant to the Term Loan
Agreement, Revolving Credit Agreement or PIK Note Indenture.
"Person" means any individual, partnership, joint
venture, firm, corporation, association, trust or other entity or
any government or political subdivision or any agency, department
or instrumentality thereof.
"PIK Note Indenture" means the Indenture among the
Company, DMFC and Bankers Trust Company, dated as of September 1,
1996, relating to the Senior Subordinated Pay-in-Kind Notes due
2002 of the Company.
"PIK Notes" means the Senior Subordinated Guaranteed
PIK Notes due 2002 of the Company, guaranteed by DMFC, issued
under the PIK Note Indenture.
"Properties" means all properties and assets (real,
personal or mixed, tangible or intangible) owned or leased by any
Person.
"Purchase Price" means $436,000,000 reduced by the
amount of cash not paid upon conversion of shares of Series F
Preferred Stock as a result of holders of such shares electing
stock consideration rather than cash consideration in accordance
with Section 2.9(b) of this Agreement.
"Revolving Credit Agreement" means the Amended and
Restated Revolving Loan and Security Agreement, dated as of June
15, 1995, among the Company, certain lenders party thereto and
Bank America Business Credit, Inc., as Agent, as amended on
December 8, 1995, December 15, 1995 and September 11, 1996.
<PAGE>
"Securities Act" means the Securities Act of 1933, as
amended.
"Seller's Group" means (a) any "affiliated group", as
defined in Section 1504(a) of the Code, that includes or at any
time included DMFC or any predecessor of or successor to DMFC (or
another such predecessor or successor) and (b) any group of one
or more corporations that includes or at any time included DMFC
or any predecessor of or successor to DMFC (or another such
predecessor or successor) that is or was required to file or have
filed a return on a consolidated or combined basis for the
purposes of any Law relating to Taxes.
"Senior Secured Credit Agreement" means that certain
senior secured term and revolving loan agreement to be entered
into between the Company and the Senior Secured Lenders pursuant
to the Commitment Letters.
"Senior Secured Lenders" means Bank of America
National Trust and Savings Association and Bankers Trust Company
and the other lenders pursuant to the Senior Secured Credit
Agreement.
"Senior Subordinated Financing Agreement" means that
certain senior subordinated financing agreement to be entered
into between the Company and the Senior Subordinated Placement
Agents pursuant to the Commitment Letters.
"Senior Subordinated Notes" means the notes to be
issued by the Company and to be privately placed by the Senior
Subordinated Placement Agents pursuant to the Senior Subordinated
Financing Agreement in an aggregate amount of $150.0 million.
"Senior Subordinated Placement Agents" means BT Securities
Corporation, BankAmerica Securities, Inc. and Bear, Stearns & Co. Inc.
"Series A Preferred Stock" means the Series A
Cumulative Exchangeable Preferred Stock, par value $.01 per
share, of DMFC, which has been issued in two sub-series, Series
A-1 and Series A-2.
"Series B Preferred Stock" means the Series B
Cumulative Exchangeable Preferred Stock, par value $.01 per
share, of DMFC.
"Series C Preferred Stock" means the Series C
Cumulative Preferred Stock, par value $.01 per share, of DMFC.
"Series D Preferred Stock" means the Series D
Cumulative Preferred Stock, par value $.01 per share, of DMFC.
<PAGE>
"Series E Preferred Stock" means the Series E
Cumulative Preferred Stock, par value $.01 per share, of DMFC.
"Series F Preferred Stock" means the Series F
Cumulative Preferred Stock, par value $.01 per share, of DMFC.
"Specified Real Estate" means the tracts or parcels of
land listed on Schedule 4.11 and marked with an asterisk,
together with all buildings, structures, fixtures and
improvements located thereon or relating thereto, owned or leased
by any member of the Del Monte Group.
"Stockholders Agreement" means the Stockholders
Agreement, dated as of January 9, 1990, among DMFC (formerly DMPF
Holdings Corp.) and the signatories thereto, as amended by
Amendment No. 1 thereto dated as of February 9, 1990, Amendment
No. 2 thereto dated as of June 11, 1990 and the Amendment and
Waiver of Stockholders Agreement dated as of January 9, 1997.
"Subsidiary", as it relates to any Person, means a
corporation of which such Person owns, directly or indirectly,
more than 50% of the common stock.
"Tax" and "Taxes" means (i) all taxes, assessments,
levies, imposts, duties, license fees, registration fees,
withholdings, or other similar governmental charges, including,
without limitation, income taxes, gross receipts, windfall
profits, severance, property, production use, license,
employment, payroll, goods and services and franchise taxes,
transfer taxes or fees, sales taxes, excise taxes, ad valorem
taxes, withholding taxes, minimum taxes and social security taxes
and (ii) any interest, penalties or additions to tax imposed on a
Tax described in clause (i) hereof, imposed by the United States,
or any state, county, local or foreign government or subdivision
or agency of any of the foregoing.
"Tax Returns" means all reports, estimates,
information statements and returns relating to or required to be
filed in connection with any Taxes (including any attached
schedules), including, without limitation, any claims or refunds,
amended returns and declarations of estimated Taxes pursuant to
the statutes, rules and regulations of any federal, state, local
or foreign government taxing authority.
"Term Loan Agreement" means the Term Loan and Security
Agreement dated as of June 15, 1995 among the Company, certain
financial institutions party thereto, and General Electric
Capital Corporation, as Agent, as amended on December 8, 1995,
December 15, 1995 and September 11, 1996.
"Trademarks" means (i) any and all trademarks, service
marks, certification marks, trade dress, assumed names and trade
names (in each case whether
<PAGE>
registered or unregistered), and any applications and
registrations therefor, used or held by any member of the Del
Monte Group in connection with the Assets or Operations and (ii)
the goodwill of the Operations in connection with which such
marks, registrations or applications have been us
ARTICLE II
THE RECAPITALIZATION TRANSACTIONS
Upon the terms and subject to the conditions of this
Agreement, the parties hereto and other parties referred to
herein shall enter into the following transactions:
2.1 Amendment of DMFC's Articles of Incorporation and
the Stockholders Agreement. On or prior to the Closing Date, the
Articles of Incorporation of DMFC and the Stockholders Agreement
shall be amended in a manner consistent with, and to the extent
necessary to permit consummation of, the transactions
contemplated hereby.
2.2 Subscription of Sub Stock. At the Closing, Sub
shall issue (i) to Parent 98,347.62 shares of Sub Common Stock
for $99,347,618.13; (ii) to TPG Parallel, L.P. ("TPG Parallel")
9,900.74 shares of Sub Common Stock for $9,900,741.87; (iii) to
BankAmerica Investment Corporation ("BAIC") 4,500 shares of Sub
Common Stock for $4,500,000; (iv) to MIG Partners III ("MIG") 500
shares of Sub Common Stock for $500,000; (v) to BT Investment
Partners, Inc. ("BTIP") 5,000 shares of Sub Common Stock for
$5,000,000; (vi) to Westar Capital ("Westar") 5,000 shares of Sub
Common Stock for $5,000,000, all in accordance with the terms of
the Common Stock Subscription Agreement, dated as of April 18,
1997, among Sub, Parent, TPG Parallel, BAIC, MIG, BTIP and
Westar; and (vii) to TCW Capital Investment Corporation and/or
one or more of its Affiliates ("TCW") 1,500 shares of Sub Common
Stock for $1,500,000. At the Closing, Sub shall issue (x) to
Parent 15,914.045 shares and to TPG Parallel 1,585.955 shares of
Series A Redeemable Preferred Stock, $.01 par value per share, of
Sub ("Sub Series A Preferred Stock") for $15,914,045 and
$1,585,955, respectively, and (y) to TCW 17,500 shares of Series
B Redeemable Preferred Stock, $.01 par value per share, of Sub
("Sub Series B Preferred Stock"), all in accordance with the
terms of the Preferred Stock Subscription Agreement, dated as of
April 18, 1997, among Sub, Parent and TCW.
2.3 New Term Loan and New Revolving Credit. At the
Closing, the Company shall issue notes in the aggregate principal
amount of $380.0 million of New Term Loan Notes and advances of
$111 million under the New Revolving Credit Notes, pursuant to
the terms of the Senior Secured Credit Agreement, against payment
by the Senior Secured Lenders to the Company of the proceeds of
such New Term Loan and such New Revolving Credit.
<PAGE>
2.4 The Senior Subordinated Notes. At the Closing,
pursuant to the terms of the Senior Subordinated Financing
Agreement, the Company shall issue one or more Senior
Subordinated Notes in an aggregate principal amount of $150
million, with net proceeds to the Company of approximately $146.9
million, which shall be privately placed by the Senior
Subordinated Placement Agents pursuant to Rule 144A of the
Securities Act, against payment to the Company of the proceeds
from the sale of the Senior Subordinated Notes.
2.5 The DMFC Dividend and Repayment of Existing
Indebtedness. Subject to the receipt of the proceeds pursuant to
the financing transactions set forth in Sections 2.3 and 2.4, on
the Closing Date, the Company shall declare and pay a dividend of
approximately $265 million to DMFC and shall pay in full all of
the Existing Debt, including the outstanding principal of,
accrued and unpaid interest on, any prepayment penalties or
premiums on, and any other amounts payable with respect to, the
Existing Debt, but not any undrawn principal amounts under
outstanding letters of credit (the aggregate amount of such
obligations, the "Debt Retirement Payment").
2.6 The Merger. At the Effective Time, subject to the
terms and conditions of this Agreement, Sub shall be merged with
and into DMFC in accordance with the laws of the State of
Maryland, with DMFC being the surviving corporation (sometimes
referred to hereinafter as the "Surviving Corporation"). The
Merger shall be effective when properly executed and acknowledged
Articles of Merger (together with any other documents required by
law to effectuate the Merger) shall be filed with and accepted
for recording by the Department, which filing shall be made
promptly following the consummation of transactions contemplated
by Sections 2.1, 2.2, 2.3, 2.4 and 2.5 of this Agreement.
2.7 Effect of the Merger. By virtue of the Merger, at
the Effective Time, the Surviving Corporation shall possess all
the rights, privileges, immunities, powers and purposes of Sub
and DMFC and shall by operation of law assume and be liable for
all the liabilities, obligations and penalties of Sub and DMFC.
2.8 Charter, By-laws, Directors and Officers of the Surviving
Corporation.
(a) From and after the Effective Time, the Charter of
Sub in effect immediately prior to the Effective Time shall be
the Charter of the Surviving Corporation, until altered, amended
or repealed in accordance with applicable law, except that, at
the Effective Time, Article I of such Charter shall be amended to
read as follows: "The name of the Corporation is Del Monte Foods
Company."
<PAGE>
(b) From and after the Effective Time, the By-laws of
Sub in effect immediately prior to the Effective Time shall be
the By-laws of the Surviving Corporation until further altered,
amended or repealed in accordance with applicable law.
(c) From and after the Effective Time, the directors
of Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, and the officers of DMFC
immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, to serve until such time as their
successors have been elected and have qualified in accordance
with the Charter and By-laws of the Surviving Corporation and
applicable law unless sooner removed, retired, disqualified or
deceased.
2.9 Conversion or Cancellation of DMFC Common Stock
and DMFC Preferred Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
(a) Each share of DMFC Common Stock or DMFC Preferred
Stock (other than (i) shares of DMFC Common Stock or DMFC
Preferred Stock held by persons who have taken all steps
necessary to perfect their rights to an appraisal of the fair
value of such shares under Sections 3-202 et seq. of the MGCL
("Dissenting Shares") or (ii) Elected Shares (as defined below))
shall be cancelled and shall be converted into the right to
receive in cash the consideration applicable to such share in
accordance with Schedule 2.9(a) hereto, which schedule shall be
provided to Purchasers by DMFC within five business days after
the date of this Agreement. If, in accordance with Maryland law,
any holder of Dissenting Shares shall fail to perfect,
effectively withdraw or lose his right to payment of the fair
value for his shares of DMFC Common Stock or DMFC Preferred
Stock, each such share shall thereupon be deemed to have been
converted into and to have become exchangeable for, as of the
Effective Time, the right to receive in cash the consideration
applicable to such share in accordance with Schedule 2.9(a).
(b) At the election of the holder thereof in
accordance with this Section 2.9(b), each share of Series F
Preferred Stock held by such holder (an "Electing Shareholder")
shall be converted into a number of shares of common stock, par
value $0.01 per share, of the Surviving Corporation ("Surviving
Corporation Common Stock") determined in the manner set forth in
Schedule 2.9(b) hereto (the "Series F Share Consideration"), in
lieu of the cash consideration provided for in Section 2.9(a) of
this Agreement. In order to elect to receive the Series F Share
Consideration in lieu of cash consideration, an Electing
Shareholder must furnish to the Secretary of DMFC, on or before
the fifth business day immediately preceding the Closing Date,
written notice to DMFC and each of the Purchasers effectively (i)
waiving any right of such Electing Shareholder to receive the
cash consideration provided for in Section 2.9(a) of this
<PAGE>
Agreement with respect to, and (ii) electing to receive the
Series F Share Consideration in exchange for, in each case, all
or a portion of such Electing Shareholder's shares of Series F
Preferred Stock. For purposes of this Agreement, shares of Series
F Preferred Stock with respect to which an election to receive
the Series F Share Consideration is made shall be referred to as
"Elected Shares."
(c) The holders of shares of DMFC Common Stock and
DMFC Preferred Stock shall cease to have any rights as
stockholders of DMFC, including any right to receive dividends,
whether or not previously declared and unpaid, (except such
rights, if any, as they may have pursuant to Section 3-202 of the
MGCL) and their sole right shall be the right to receive, as the
case may be, (i) the cash into which their shares of DMFC Common
Stock or DMFC Preferred Stock have been converted by the Merger
as provided in Section 2.9(a) or (ii) in the case of Elected
Shares, the Surviving Corporation Common Stock into which such
Elected Shares shall have been converted in the Merger pursuant
to Section 2.9(b) of this Agreement.
(d) Each share of Sub Common Stock issued and
outstanding immediately prior to the Effective Time shall be
converted into one share of Surviving Corporation Common Stock.
(e) Each share of Sub Series A Preferred Stock issued
and outstanding immediately prior to the Effective Time shall be
converted into one share of Series A Redeemable Preferred Stock
of the Surviving Corporation ("Surviving Corporation Series A
Preferred Stock"). Each share of Sub Series B Preferred Stock
issued and outstanding immediately prior to the Effective Time
shall be converted into one share of Series B Redeemable
Preferred Stock of the Surviving Corporation ("Surviving
Corporation Series B Preferred Stock"). The terms of the
Surviving Corporation Series A Preferred Stock and the Surviving
Corporation Series B Preferred Stock shall be substantially the
same as the terms of the Sub Series A Preferred Stock and Sub
Series B Preferred Stock, respectively.
2.10 Surrender of DMFC Share Certificates; Payment for DMFC
Common Stock and DMFC Preferred Stock.
(a) Prior to the Closing, Sub shall select a bank or
other financial institution acceptable to DMFC to serve as the
Paying Agent (the "Paying Agent").
(b) At the Closing, immediately after the Effective
Time, Purchasers shall cause payments to be made to such Persons
who are identified on Schedule 2.10(b) to be provided by DMFC to
Purchasers no later than five days before the Closing and who
have surrendered to Sub one or more certificates which,
immediately prior to the Effective Time, represent shares of DMFC
Common Stock or DMFC Preferred Stock ("DMFC Share Certificates"),
together with a duly executed letter of transmittal in form
reasonably acceptable to Purchasers and the Company, of the
amount of cash into
<PAGE>
which the shares of DMFC Common Stock or DMFC Preferred Stock
theretofore represented by the DMFC Share Certificate so
surrendered by such Person shall have been converted pursuant to
the provisions of this Article II and the DMFC Share Certificate
so surrendered shall forthwith be canceled. No interest will be
paid or accrued on the cash payable on the surrender of the DMFC
Share Certificates. At the Closing, Purchasers shall deliver to
the Paying Agent, for the benefit of the holders of DMFC Common
Stock and DMFC Preferred Stock (other than Electing Shareholders)
not listed on Schedule 2.10(b) and Persons who are identified on
Schedule 2.10(b) who have not delivered DMFC Share Certificates
or the required letter of transmittal, funds in the aggregate
amount into which such shares of DMFC Common Stock or DMFC
Preferred Stock shall have been converted pursuant to the
provisions of this Article II. The total amount paid by
Purchasers under this Section 2.10(b) shall be, and shall not in
any event exceed, the Purchase Price.
(c) Within 10 business days after the Effective Time,
the Surviving Corporation shall mail to each holder of record
(other than Sub, any Affiliate of Sub, or any Subsidiary of DMFC
or the Company) of DMFC Share Certificates not surrendered
pursuant to subsection (b) above, (i) a letter of transmittal in
form reasonably acceptable to Purchasers and the Company, and
(ii) instructions for effecting the surrender of DMFC Share
Certificates for payment therefor. Within three days following
surrender of a DMFC Share Certificate for cancellation to the
Surviving Corporation, together with such letter of transmittal,
duly executed, the Paying Agent shall remit to the holder of such
DMFC Share Certificate the amount of cash into which the shares
of DMFC Common Stock or DMFC Preferred Stock theretofore
represented by the DMFC Share Certificate so surrendered shall
have been converted pursuant to the provisions of this Article II
and the DMFC Share Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on the cash payable
on the surrender of the DMFC Share Certificates.
(d) In the event that any DMFC Share Certificate shall
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such DMFC Share
Certificate to be lost, stolen or destroyed, the Surviving
Corporation will pay in exchange for such lost, stolen or
destroyed DMFC Share Certificate the cash payable in respect
thereof as determined in accordance with this Article II, except
that when authorizing such payment, the Board of Directors or a
duly authorized officer of the Surviving Corporation may, in its
discretion and as a condition to such payment, require the owner
of such DMFC Share Certificate to give the Surviving Corporation
an indemnity, in form and substance reasonably satisfactory to
the Surviving Corporation, against any loss or claim arising as a
result of the issuance of a new certificate.
(e) All unclaimed cash held by the Paying Agent on the
first anniversary of the Effective Time shall be returned by it
to the Surviving Corporation,
<PAGE>
and thereafter any DMFC Share Certificates not yet
surrendered shall be surrendered to, and payment therefor
delivered by, the Surviving Corporation.
(f) After the Effective Time, there shall be no
further registration of transfers on the stock ledger of the
Surviving Corporation of the shares of DMFC Common Stock or DMFC
Preferred Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, DMFC Share
Certificates representing such shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for
such consideration as provided in this Article II.
(g) The parties to this Agreement acknowledge that
Purchasers, Del Monte and certain stockholders of DMFC have
entered into an agreement dated April 14, 1997 (the "Escrow
Agreement"), pursuant to which $7,681,568.98 of the Purchase
Price (the "Escrow Amount") will be deposited by DMFC into escrow
and that the Escrow Amount will be distributed pursuant to the
terms of the Escrow Agreement.
ARTICLE III
CLOSING OF TRANSACTIONS
The closing of the transactions provided for in this
Agreement (the "Closing") shall be held at the offices of
Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York,
New York, (x) at 10:00 A.M. on the fifth business day after the
conditions specified in Sections 9.1(d) and (e) and 9.2(d) and
(e) have been satisfied or (y) at such other time and date after
each of the conditions set forth in Article IX of this Agreement
shall have been fulfilled or waived in accordance herewith as the
parties hereto may designate by mutual consent. The date on which
the Closing occurs is hereinafter referred to as the "Closing
Date." At the Closing: (i) the parties shall exchange the
documents referred to in Article IX; (ii) Sub shall make the
payments of cash to the holders of DMFC Common Stock and DMFC
Preferred Stock listed on Schedule 2.10(b) and to the Paying
Agent, on behalf of all other holders of DMFC Common Stock and
DMFC Preferred Stock (other than Electing Shareholders) required
by Section 2.10(b), by wire transfer of immediately available
funds; and (iii) Purchasers shall cause the Articles of Merger to
be filed for record with the Department.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DMFC
DMFC hereby represents and warrants to Purchasers
that:
<PAGE>
4.1 Organization. Each of DMFC and the Company is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. Each
Subsidiary of the Company is a corporation duly organized,
validly existing and in good standing, except as would not,
individually or in the aggregate, have a Material Adverse Effect.
Each of DMFC, the Company and each of the Company's Subsidiaries
has full corporate power and authority to own or lease and
operate its Properties and to conduct its business as currently
conducted, except as would not, individually or in the aggregate,
have a Material Adverse Effect. Each of DMFC, the Company and
each of the Company's Subsidiaries is duly licensed or qualified
and in good standing in all jurisdictions in which the character
of the Properties owned or leased by it or the nature of its
business requires it to be so licensed or qualified except where
the failure to be so licensed, qualified or in good standing
would not, individually or in the aggregate, have a Material
Adverse Effect. Attached hereto as Schedule 4.1 is a list, true
and complete in all material respects, of each Subsidiary of the
Company indicating its jurisdiction of incorporation and the
nature and level of ownership in such Subsidiary by the Company.
The Company is the sole direct subsidiary of DMFC. Copies, true
and complete in all material respects, of the Charter and By-laws
and other governing documents of DMFC and the Company have
previously been made available to Purchasers.
4.2 Authority; Enforceability. DMFC has the corporate
power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions provided for
hereby have been duly authorized by the Board of Directors of
DMFC, and no other corporate approval on the part of DMFC is
necessary to authorize the execution or delivery of this
Agreement or the consummation of any of the transactions
contemplated hereby, except for the approval of the Merger by the
stockholders of DMFC. This Agreement has been duly executed and
delivered by DMFC and, subject only to the approval of the Merger
by the stockholders of DMFC (and assuming due authorization,
execution and delivery by the Purchasers), constitutes a legal,
valid and binding obligation of DMFC, enforceable against DMFC in
accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting creditors' rights generally
and except as enforcement thereof is subject to general
principles of equity (regardless of whether considered in a
proceeding in equity or at law).
4.3 Capitalization.
(a) As of the date hereof, the entire authorized
capital stock of DMFC consists of (i) 16,523,000 shares of Series
A Preferred Stock, of which 8,858,349 shares are outstanding,
(ii) 3,616,000 shares of Series B Preferred Stock, of which
1,730,206 shares are outstanding, (iii) 2,900,000 shares of
Series C Preferred Stock, of which 1,522,353
<PAGE>
shares are outstanding, (iv) 1,554,000 shares of Series D
Preferred Stock, of which 1,466,582 shares are outstanding, (v)
5,000,000 shares of Series E Preferred Stock, of which 3,596,867
shares are outstanding, (vi) 2,900,000 shares of Series F
Preferred Stock, of which 1,153,091 are outstanding, (vii)
1,000,000 shares of Class A Common Stock, of which 198,468 shares
are outstanding, (viii) 150,000 shares of Class B Common Stock,
none of which is outstanding, (ix) 550,000 shares of Class C
Common Stock, of which 6,903 shares are outstanding, (x) 550,000
shares of Class D Common Stock, of which 102,483 shares are
outstanding, (xi) 550,000 shares of Class E Common Stock of which
25,000 shares are outstanding and (xii) 550,000 shares of Class F
Common Stock of which 50,000 shares are outstanding. All of such
outstanding shares have been duly authorized and validly issued
and are fully paid and nonassessable. Schedule 4.3(a) sets forth
the issued and outstanding shares of the capital stock of DMFC,
the names of the holders of record of such shares, the
liquidation value as of January 31, 1997 of each class of DMFC
Preferred Stock and the dividends in arrears as of such date in
respect of each class of DMFC Preferred Stock.
(b) The entire authorized capital stock of the Company
consists of 2,000 shares of common stock, par value $1.00 per
share, of which 100 shares are outstanding and no shares are held
in treasury. All of such outstanding shares have been duly
authorized and validly issued and are fully paid and
nonassessable and are owned by DMFC, free and clear of all Liens
other than as set forth in Schedule 4.3(b).
(c) Other than as set forth in the Charter of DMFC or
the Stockholders Agreement, there are not authorized or
outstanding any subscriptions, options, conversion rights,
warrants or other agreements, securities or commitments of any
nature whatsoever obligating any member of the Del Monte Group to
issue, deliver, sell or acquire or cause to be issued, delivered,
sold or acquired, any shares of the capital stock, or any
securities convertible into or exchangeable for shares of capital
stock, of any of them or obligating any of them to grant, extend
or enter into any such agreement or commitment, and there are no
other obligations of any kind which would require any Person to
sell, pledge, transfer or register any shares of capital stock of
DMFC.
(d) All of the outstanding shares of capital stock of
each Subsidiary of the Company have been validly issued and are
fully paid and nonassessable, and all of such outstanding shares
will, at the Closing, be owned by the Company, free and clear of
all Liens. Except as set forth in Schedules 4.1 and 4.3(b),
neither DMFC, the Company nor any of its Subsidiaries, directly
or indirectly, owns any interest in any other Person other than a
Subsidiary.
(e) As of the fiscal January close (January 26, 1997),
there was an aggregate of $210.5 million of Existing Senior Debt,
comprised of $115.9 million under the Term Loan Agreement and
$94.6 million under the Revolving Credit Agreement, and an
aggregate accreted face amount (including accrued interest) of
$153.6 million of
<PAGE>
PIK Notes and the Accounts Payable-Trade as of that date
were $62.4 million, all as reflected on the January Balance
Sheet.
4.4 No Breach. Except as set forth on Schedule 4.4 or
as would not impair the ability of DMFC to consummate the Merger,
and would not have a Material Adverse Effect, each of the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby does not and
will not (i) conflict with or violate any provision of the
Charter, By-laws or any other governing document of any member of
the Del Monte Group, (ii) violate, conflict with or result in the
breach or termination of, or otherwise give any other Person the
right to accelerate, terminate or receive any payment, or
constitute a default, event of default or an event which with
notice, lapse of time, or both, would constitute a default or
event of default, under the terms of, any Permit or Contract to
which any member of the Del Monte Group (other than a Subsidiary
of the Company) is a party or by which any of them or their
respective Assets are bound, (iii) result in the creation of any
Liens upon any of their respective Assets or (iv) constitute a
violation by any member of the Del Monte Group of any Legal
Requirement.
4.5 Financial Statements; Certain Actions.
(a) DMFC has provided to Purchasers copies of the
Financial Statements. The Financial Statements have been prepared
in accordance with GAAP, consistently applied and followed
throughout the periods indicated (except as noted thereon), and
present fairly, in all material respects, the consolidated
financial position of DMFC as of December 31, 1996, and as of
June 30, 1996, June 30, 1995 and June 30, 1994, and the
consolidated results of operations of DMFC for the six-month
period or the fiscal years then ended.
(b) As of June 30, 1996 and December 31, 1996, no member
of the Del Monte Group had any material liabilities or obligations
of any nature, whether accrued, absolute, contingent or
otherwise, whether due or to become due, which were required by
GAAP to be reflected in the audited consolidated balance sheet of
DMFC as of June 30, 1996 (the "June 30, 1996 Balance Sheet") or
the unaudited consolidated balance sheet of DMFC as of December
31, 1996 (the "December 31, 1996 Balance Sheet"), respectively,
of DMFC (collectively, "Liabilities" and individually, a
"Liability"), that were not so reflected or reserved against in
the June 30, 1996 Balance Sheet or the December 31, 1996 Balance
Sheet, respectively, or specifically disclosed or provided for in
the respective notes thereto. Except as set forth in Schedule
4.5, no member of the Del Monte Group has incurred any
Liabilities since December 31, 1996 except Liabilities incurred
in the usual and ordinary course of business consistent with past
practice or in connection with the performance of this Agreement
or that would not have a Material Adverse Effect.
<PAGE>
(c) Except as set forth on Schedule 4.5, since
December 31, 1996, DMFC, the Company and its Subsidiaries have
not:
(i) through the date hereof, suffered any event
or condition which had a Material Adverse Effect;
(ii) split, combined or reclassified its
outstanding capital stock or declared, set aside, made
or paid any dividend or other distribution in respect
of the capital stock of any member of the Del Monte
Group (in cash or otherwise), except dividends in kind
in respect of the Preferred Stock;
(iii) other than in the ordinary course of
business, (A) incurred any indebtedness for borrowed
money or varied the material terms of any existing
debt securities, or (B) issued, sold or transferred,
or agreed to issue, sell or transfer, any stock, bond,
debenture or other security of any member of the Del
Monte Group or any debt securities;
(iv) sold, mortgaged, pledged, subjected to any
Lien or otherwise disposed of any material Assets or
properties, except for the sale of inventory and
disposition of obsolete equipment in the ordinary
course of business;
(v) taken any other action that, if it occurred
after the date of this Agreement and prior to the
Closing Date, would be prohibited by Section 6.1; or
(vi) authorized or proposed, or agreed to take,
any of the actions set forth in the foregoing
subparagraphs (i) through (v).
4.6 Consents. No consent, waiver, approval,
authorization, exemption, registration, license or declaration
("Consent") of or by, or filing with, any Governmental Authority
is required to be made or obtained by DMFC or any other member of
the Del Monte Group in connection with (i) the execution,
delivery and performance of this Agreement or (ii) the
consummation of the Merger, other than (a) those the failure of
which to be made or obtained, individually or in the aggregate,
would not have a Material Adverse Effect, (b) those set forth in
Schedule 4.6 and (c) Consents and filings under the HSR Act and
the MGCL.
4.7 Actions and Proceedings. Except as set forth in
Schedule 4.7, there is no action, suit or legal, administrative,
arbitration or other alternative dispute resolution proceeding or
investigation (each, a "Proceeding" and collectively,
"Proceedings") (in each case, whether or not the defense thereof
or Liability in respect
<PAGE>
thereof is covered by policies of insurance) pending (to
DMFC's Knowledge in the case of any such investigation) or, to
DMFC's Knowledge, threatened, nor any Judgment (which has not
been discharged), against any member of the Del Monte Group nor
any mandatory or voluntary recall of products or stock rotation
by any member of the Del Monte Group pending or, to DMFC's
Knowledge, threatened, that, if adversely determined, would
result in a Liability for any member of the Del Monte Group in
excess of $1,000,000 or otherwise, either individually or in the
aggregate, would have a Material Adverse Effect. Schedule 4.7
also sets forth a description of each and every currently
outstanding material written claim known to any member of the Del
Monte Group, including the amount thereof, against any member of
the Del Monte Group for indemnification pursuant to any agreement
relating to the purchase or sale of stock or assets by such
member of the Del Monte Group. As of the date of this Agreement,
no Proceeding is pending (to DMFC's Knowledge in the case of any
such investigation) or, to DMFC's Knowledge, threatened in
writing against DMFC or any other member of the Del Monte Group
before any Governmental Authority to restrain or prohibit, or to
obtain damages, a discovery order or other relief in connection
with this Agreement or any of the transactions contemplated
hereby.
4.8 Brokers. No member of the Del Monte Group nor
anyone acting on behalf of any member of the Del Monte Group has
employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees or other similar
compensation in connection with the Merger and the transactions
contemplated by this Agreement, other than DMFC's engagement of
Morgan Stanley as exclusive agent for DMFC to attempt to arrange
the disposition of all or a portion of the Operations. DMFC has
provided to Purchasers a true and complete copy of the agreement
between DMFC and Morgan Stanley with respect to such engagement.
4.9 Taxes and Tax Returns.
(a) Except as set forth on Schedule 4.9, all material
Tax Returns of all income and franchise Taxes, including, without
limitation, consolidated federal income Tax Returns, of the
Seller's Group and all other material Tax Returns required to be
filed on or before the date hereof with respect to DMFC and its
Subsidiaries or any of their income, properties or operations,
have been duly filed in a timely manner (taking into account all
extensions of due dates). For purposes of the preceding sentence,
the materiality of a Tax Return shall be judged with respect to
the Del Monte Group. All material Taxes attributable to DMFC and
its Subsidiaries that are or were due and payable as of the date
hereof (without regard to whether such Taxes have been assessed),
have been paid.
(b) Except as set forth on Schedule 4.9, the
consolidated federal income tax returns of the Seller's Group
(exclusive of any Seller's Group that included Merrill, Lynch & Co.
or an affiliate (other than DMFC or its subsidiaries)) are closed to
<PAGE>
assessment, for all years through September 30, 1992. Except
as set forth on Schedule 4.9, there is no claim or assessment
pending, or, to DMFC's Knowledge, threatened against any member
of the Del Monte Group for any alleged deficiency in Taxes, and
neither DMFC, the Company nor any Subsidiary of the Company knows
of any audit or investigation with respect to any Liability of
any member of the Del Monte Group for Taxes. Except as set forth
on Schedule 4.9, no deficiencies for any material Taxes have been
proposed, asserted or assessed against DMFC or any of its
Subsidiaries. Except as set forth on Schedule 4.9, there are no
agreements in effect to extend the period of limitations for the
assessment or collection of any material Tax of DMFC or any of
its Subsidiaries.
(c) To DMFC's knowledge, no consent has been filed
relating to the Company or any of its Subsidiaries pursuant to
Section 341(f) of the Code.
(d) Except as provided on Schedule 4.9, DMFC and each
of its Subsidiaries has in all material respects satisfied
(including through timely payment to the appropriate taxing
authority) all applicable material federal, state, foreign and
local withholding Tax and information reporting requirements
(including, without limitation, income, social security and
employment Tax withholding for all types of compensation) and has
furnished or made available to the Purchasers complete and
accurate copies of all federal income Tax Returns, and all
material state and local income and franchise Tax Returns, and
any amendments thereto, filed by such member for tax years ending
September 30, 1993, 1994 and 1995.
(e) DMFC is not a United States real property holding
corporation within the meaning of section 897(c)(2) of the Code.
(f) The reported net operating losses and foreign tax
credits for federal income tax purposes of DMFC and its
Subsidiaries are not subject to limitation on their use under
Sections 382 or 383 of the Code, or the rules relating to
"separate return limitation years" (excluding any effect of the
transactions contemplated by this Agreement).
(g) Except as set forth on Schedule 4.9, there is no
contract, agreement or intercompany account system in existence
under which DMFC, the Company or any Subsidiary of the Company
has, or may at any time in the future have, an obligation to
contribute to the payment of any portion of a Tax (or pay any
amount calculated with reference to any portion of a Tax)
determined on a consolidated, combined or unitary basis with
respect to an affiliated group (as defined in Section 1504 of the
Code) or with respect to any other group of corporations of which
DMFC, the Company or any Subsidiary of the Company is or was a
part.
<PAGE>
(h) The representations made in subsections (a), (b),
(c), (e) and (g), insofar as they relate to Taxes attributable to
periods including January 10, 1990, or any earlier dates are made
to DMFC's Knowledge.
4.10 Title to Property; Sufficiency.
(a) Each member of the Del Monte Group has (i) with
respect to the Specified Real Estate which is owned by it, good
and marketable fee simple title and, with respect to the
Specified Real Estate which is leased by it, valid and subsisting
leasehold estates, in each instance free and clear of all Liens
other than Permitted Encumbrances and (ii) with respect to the
owned or leased Assets (other than the Specified Real Estate and
Intellectual Property Rights), good title or valid leasehold
interests, free and clear of all Liens other than Permitted
Encumbrances. The Permitted Encumbrances (other than those on
Schedule 4.10) do not and will not materially adversely affect or
interfere with the occupancy, value or current use or operations
of the Specified Real Estate nor could such Permitted
Encumbrances have a material adverse effect thereon.
(b) The Assets (other than Intellectual Property
Rights) include all Properties (other than Intellectual Property
Rights) necessary for the conduct of the Operations, as they are
currently being conducted, except where the failure to include
any such Properties would not have a Material Adverse Effect.
4.11 Real Property.
(a) Schedule 4.11 sets forth a list of all fee and
leasehold interests in real property of DMFC, the Company and the
Subsidiaries of the Company.
(b) No member of the Del Monte Group has given or
received notice of any material default under any lease of
Specified Real Estate under which any member of the Del Monte
Group is the lessee of real property (each a "Lease" and
collectively the "Leases") and, to DMFC's Knowledge, no member of
the Del Monte Group or any other party thereto is in default in
any material respect under any of the Leases. Schedule 4.11
contains a complete list of all Leases relating to the Specified
Real Estate (including all amendments, modifications, waivers,
supplements and other agreements relating thereto). Except as set
forth on Schedule 4.11, none of the Leases has been modified in
any material respect and such Leases are in full force and
effect. Except as set forth in Schedule 4.11, no member of the
Del Monte Group has leased, subleased, licensed or assigned, as
the case may be, all or any portion of its fee or leasehold
interest in any Specified Real Estate to any Person and a member
of the Del Monte Group is in sole and exclusive possession of and
has the right to use all of the Specified Real Estate. Except as
set forth on Schedule 4.5, no Person other than the Del Monte
Group has any option or right to purchase, lease or use any
portion of the
<PAGE>
Specified Real Estate. Schedule 4.11 sets forth
all rights of the Del Monte Group to purchase the Specified Real
Estate leased by the Del Monte Group under any Lease.
(c) Except as disclosed in Schedule 4.13, the
buildings and improvements on the Specified Real Estate
(including all fixtures, roofs, plumbing systems, HVAC systems,
fire protection systems, electrical systems, equipment, elevators
and all structural components) are in all material respects in
good operating condition and in a state of good and working
maintenance and repair, ordinary wear and tear excepted, are
adequate and suitable for the purposes for which they are
presently being used and, to DMFC's Knowledge, there are no
condemnation or appropriation proceedings pending or threatened
against any of such Specified Real Estate or the improvements
thereon, and no buildings or improvements on such real property
encroach on real property not leased to or owned by a member of
the Del Monte Group, to the extent that removal of such
encroachment would have a material adverse effect on the current
use, value, occupancy or operation of such improvements. No
improvements or buildings not located on Specified Real Estate
encroach upon any of the Specified Real Estate to the extent that
the same would have a material adverse effect on the current use,
value, occupancy or operation of such Specified Real Estate.
(d) To DMFC's Knowledge, no part of any Specified Real
Estate is subject to any building or use restriction that would
materially restrict or prevent the present use and operation of
such property. To DMFC's Knowledge, none of the Specified Real
Estate nor the use thereof by the Del Monte Group constitutes a
nonconforming use or legal non-conforming use.
(e) The Del Monte Group is in possession of and has
good title to, or has valid leasehold interests in or valid
rights under contract to use, all tangible personal property used
in the business of the Del Monte Group or reflected in the
December 31, 1996 Balance Sheet. All such tangible personal
property is owned by a member of the Del Monte Group free and
clear of all Liens other than Permitted Encumbrances, or is
leased under a valid and subsisting lease, and is in all material
respects in good working order and condition, ordinary wear and
tear excepted.
(f) No labor has been performed or material furnished
for any portion of any property owned by any member of the Del
Monte Group for which a Lien in excess of $500,000 in value can
be claimed against any such property. All of the Specified Real
Estate has rights of access to dedicated public ways (and makes
no material use of any means of access or egress that is not
pursuant to such dedicated public ways or recorded, irrevocable
rights-of-way) and is served by water, sewer, sanitary sewer,
telephone, electric, gas and other public utilities necessary or
desirable for the current use thereof which utilities are
available to such Specified Real Estate through a public
right-of-way. There are no pending or proposed special or other
assessments for public improvements on the Specified Real Estate.
(g) To DMFC's Knowledge, there is no pending or threatened
Proceeding or governmental action to modify the zoning classification of, or to
<PAGE>
(g) To DMFC's Knowledge, there is no pending or
threatened Proceeding or governmental action to modify the zoning
classification of, or to condemn or take by power of eminent
domain (or any purchase in lieu thereof), or to classify as a
landmark, all or any material part of the Specified Real Estate
except, in each case, for any Proceeding or action that would not
have a Material Adverse Effect.
4.12 Intellectual Property.
(a) Schedule 4.12(a) sets forth an accurate and
complete list of all material United States Intellectual Property
Rights, indicating for each material Trademark and material
patent (i) whether such Trademark or patent is owned by DMFC, the
Company or a Subsidiary thereof, and including the jurisdictions
in which each such Trademark or patent has been issued or
registered or in which any application for issuance or
registration has been made (including the official number or
other identifier of such issuance, registration or application
therefor), (ii) whether such Trademark or patent is owned by or
licensed or sub-licensed from a third party and (iii) whether
such Trademark or patent is licensed by DMFC, the Company or any
Subsidiary thereof or, to DMFC's Knowledge, sub-licensed to any
third party. Except as set forth in Schedule 4.12(a), all
Trademarks which are listed in Schedule 4.12(a) have been duly
registered with, filed in or issued by or an application is
pending in the United States Patent and Trademark Office or
proper non-U.S. Government office for such registrations, and
such registrations have been properly maintained and renewed in
accordance with all Legal Requirements and are currently valid
and in full force and effect except, in each case, where failure
to so register, apply, maintain, renew or be valid would not have
a Material Adverse Effect. Each member of the Del Monte Group has
taken all reasonable and appropriate steps to protect the
material United States Intellectual Property Rights and to
preserve in all material respects the confidentiality of all
trade secrets, proprietary know-how and proprietary information
included in such material United States Intellectual Property
Rights. To DMFC's Knowledge, all use by and disclosure of trade
secrets and other proprietary and confidential information that
comprises any material part of the material United States
Intellectual Property Rights to any other person has been
pursuant to the terms of a written agreement with such person,
and all use by the Del Monte Group of trade secrets and other
proprietary and confidential information that is owned by another
person has been pursuant to the terms of a written agreement with
such person or is otherwise lawful. Except as set forth in
Schedule 4.12(a) or as would not have a Material Adverse Effect,
no member of the Del Monte Group has been notified in writing of
any adverse claims or demands of any Person pertaining to, or
challenges to the scope or viability of, any of the material
United States Intellectual Property Rights listed in Schedule 4.12(a).
There does not exist (i) any unexpired patent which covers (x) any
part of the Operations, (y) any product of the Operations or
(z) any apparatus, method or process or design used or held in
the Operations, unless such patent is owned by or licensed to
<PAGE>
a member of the Del Monte Group, (ii) any Trademark or
copyright used in the Operations, unless it is owned by or
licensed to a member of the Del Monte Group or (iii) any
technology, proprietary design, know-how, process or trade secret
used or held in the Operations, unless it is owned by or licensed
to the Company or any of its Subsidiaries, except in each case
where the existence thereof would not have a Material Adverse
Effect. Except as set forth in Schedule 4.12(a), the Company or a
Subsidiary has the sole and exclusive right to use the
Intellectual Property Rights required for the conduct of the
Operations, in the jurisdictions in which it conducts its
business or where the products of its business are distributed,
and the consummation of the transactions contemplated hereby will
not materially alter or impair any such rights, except in each
case where failure to have such right would not have a Material
Adverse Effect. Except as would not have a Material Adverse
Effect, (i) there has been no registration for any Intellectual
Property Rights lost due to inactivity or abandoned since January
1, 1993 and no (ii) such registration is subject to lapsing due
to inactivity within six months following the date of this
Agreement, except as set forth in Schedule 4.12(a). Schedule
4.12(a) also sets forth all other material Intellectual Property
Rights licensed or sub-licensed from or to any third party.
(b) Except as set forth on Schedule 4.12(b), to DMFC's
Knowledge, the use or other exploitation of the Intellectual
Property Rights by the Del Monte Group does not infringe on the
rights of any other Person, except where any loss or liability
resulting from such infringement would not have a Material
Adverse Effect. Except as set forth on Schedule 4.12(b), to the
DMFC's Knowledge, no other Person is infringing on the rights of
the Company or any of its Subsidiaries in the United States with
respect to the Intellectual Property Rights, except where any
loss or liability resulting from such infringement would not have
a Material Adverse Effect.
(c) The validity of the United States Intellectual
Property Rights owned or licensed by the Del Monte Group is not
being challenged in any actual, or to DMFC's Knowledge,
threatened Proceeding in which an adverse outcome would have a
Material Adverse Effect.
(d) Except as set forth on Schedule 4.7, no member of
the Del Monte Group is a party to, subject to or bound by any
Judgment or Legal Requirement that would prevent the transfer by
such member of the Del Monte Group of any Intellectual Property
Rights.
(e) In the case of Trademarks and patents owned by a
member of the Del Monte Group, except as disclosed on Schedules
4.12(b) and 4.15, such member has good title to such Trademark
and patent, free and clear of all Liens other than Permitted
Encumbrances, and has the right to sell, transfer, assign and
license all right, title and interest in and to such patent and
Trademark rights.
<PAGE>
(f) In the case of Trademarks or patents held pursuant
to a license or licensed to third parties, each such license is in
full force and effect and constitutes a legal, valid and binding
agreement, enforceable in accordance with its terms, of the
Company or a Subsidiary thereof and, to DMFC's Knowledge, each
other party thereto.
4.13 Compliance with Legal Requirements.
(a) Except as set forth on Schedule 4.13(a) or as
would not have a Material Adverse Effect, each member of the Del
Monte Group and all of the Specified Real Estate (including the
use thereof) is, and since January 1, 1993 has been, in
compliance in all respects with all Legal Requirements, including
under the Federal Food, Drug and Cosmetic Act, as amended, and
other statutes, rules and regulations administered by the United
States Federal Food and Drug Administration. To DMFC's Knowledge,
except as set forth in Schedule 4.13(a) or as would not have a
Material Adverse Effect, no member of the Del Monte Group has any
continuing Liability resulting from (A) any citations, notices of
violations, written complaints, consent orders (or amendments to
or modifications of such orders), compliance schedules or other
similar enforcement orders received from any Governmental
Authority since January 1, 1993 with respect to Legal
Requirements, or (B) any notice, including inspection reports,
received from any Governmental Authority since January 1, 1993
which in any case would indicate that there was not then or is
not currently compliance with all such Legal Requirements.
(b) Except as set forth in Schedule 4.13(b) or for
Permits the lack of which, individually or in the aggregate,
would not have a Material Adverse Effect, each member of the Del
Monte Group and all of the Specified Real Estate (including the
use thereof) has, and upon consummation of the Merger, will
continue to have all Permits necessary to own, use and maintain
the Assets as they are currently being used, and to conduct the
Operations as they are currently being conducted. Except as set
forth on Schedule 4.13(b) or as would not have a Material Adverse
Effect, (i) all Permits of the Del Monte Group are in full force
and effect, (ii) any applications for renewal of any
Permit due prior to Closing have been, or will be, timely filed
prior to Closing, (iii) no Proceeding (to DMFC's Knowledge in the
case of any investigation) to modify, suspend, revoke, withdraw,
terminate or otherwise limit any such Permit is pending or, to
DMFC's Knowledge, threatened and (iv) neither DMFC nor the
Company has received notification that any administrative or
governmental actions have been taken nor, to DMFC's Knowledge,
are any such actions threatened in connection with the
expiration, continuance or renewal of such Permits which could
affect the ability of the Company or any of its Subsidiaries to
own any Assets, to operate, use or maintain any Assets or to
conduct any of the Operations in substantially the same manner in
which such Operations are conducted currently.
4.14 Environmental.
<PAGE>
(a) Except as set forth on Schedule 4.14, to DMFC's
Knowledge, all of the operations of DMFC, the Company and its
Subsidiaries at or from any real property owned or leased by them
(the "Real Property") comply with applicable Environmental Laws
except as would not have a Material Adverse Effect. Except as set
forth on Schedule 4.14, to DMFC's Knowledge, neither DMFC, the
Company or any of its Subsidiaries, nor any other person acting
on behalf of any of them, has engaged in or permitted any
operations or activities upon any of the Real Property for the
purpose of or involving the treatment, storage, use, generation,
release, discharge, emission, or disposal of any Hazardous
Substances at the Real Property, except as would not have a
Material Adverse Effect. As used in this Agreement, (i)
"Environment" means any surface or subsurface physical medium or
natural resource, including, air, land, soil (surface or
subsurface), surface waters, ground waters, wetlands, stream and
river sediments, rock and biota, (ii) "Environmental Laws" means
any federal, state or local law, legislation, rule, regulation,
ordinance or code relating to the injury to, or the pollution or
protection of, human health and safety or the Environment, and
(iii) "Hazardous Substances" means petroleum, petroleum products,
petroleum-derived substances, radioactive materials, hazardous
wastes, polychlorinated biphenyls, lead based paint, urea
formaldehyde, asbestos or any materials containing asbestos, and
any materials or substances regulated or defined as or included
in the definition of "hazardous substances," "hazardous
materials," "toxic substances," "pollutants," "contaminants" or
any similar denomination intended to classify substances by
reason of toxicity, carcinogenicity, ignitability, corrosivity or
reactivity under any Environmental Laws.
(b) Except as set forth on Schedule 4.14 or as would
not have a Material Adverse Effect, (i) none of the properties
included in the Specified Real Estate is on a National Priority
List or the Comprehensive Environmental Response Compensation and
Liability Information System, or is the subject of any
remediation or cleanup of (whether being performed voluntarily or
under the direction of or by a Governmental Authority), or, to
DMFC's Knowledge, any investigation with respect to, any
contamination or pollution, and, to DMFC's Knowledge, no such
investigation, remediation or cleanup is threatened; and (ii) to
DMFC's Knowledge, no notices under Section 103 of CERCLA relating
to such Properties have been filed, or are required to have been
filed.
(c) Except as set forth on Schedule 4.14 or as would
not have a Material Adverse Effect, to DMFC's Knowledge, there
are no events, circumstances, or conditions relating to the
Environment, including but not limited to on-site or off-site
use, management or disposal of Hazardous Substances in connection
with (i) the properties included in the Specified Real Estate or
(ii) properties previously owned, operated or used by a member of
the Del Monte Group, which could give rise to any liability for
the Del Monte Group under any Environmental Law or which could be
<PAGE>
reasonably expected to interfere with, or require material
changes to, the conduct of the operations of the Del Monte Group.
4.15 Outstanding Commitments.
(a) Schedule 4.15 contains a list, accurate and
complete in all material respects, as of the date hereof of all
Material Contracts, true and complete copies of which have been
furnished (or made available) to the Purchasers (excluding
purchase orders), to which a member of the Del Monte Group is a
party or by which any of the Assets or Operations are bound. Each
Material Contract is a valid and binding obligation of at least
one member of the Del Monte Group and, to DMFC's Knowledge, each
other party thereto, and is enforceable against a member of the
Del Monte Group and, to DMFC's Knowledge, each other party
thereto, in accordance with its terms, except to the extent that
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
creditors' rights generally and is subject to general principles
of equity, and no member of the Del Monte Group, nor to DMFC's
Knowledge, any other party, is in default under any Material
Contract, except in each case for such failures to be valid,
binding and enforceable and for such defaults which, individually
or in the aggregate, would not have a Material Adverse Effect.
(b) Except as would not have a Material Adverse
Effect, neither DMFC, the Company nor any of the Company's
Subsidiaries is in default under any of the Material Contracts.
No Proceeding (to DMFC's Knowledge in the case of any
investigation) or event or condition has occurred or exists, or
to DMFC's Knowledge, is alleged by any party to have occurred or
exist which, with notice or lapse of time or both, would
constitute a default by any of the parties thereto of their
respective obligations under a Material Contract (or would give
rise to any right of termination or cancellation), except as
would not have a Material Adverse Effect. No supplier of fruits
or vegetables or any insurance company has given written notice
of its intention to, or threatened to, terminate any Contract
with a member of the Del Monte Group which termination would have
a Material Adverse Effect.
4.16 Employee Benefits.
(a) Schedule 4.16(a) and Schedule 7.2 contain a list
of each plan, program, arrangement, agreement or commitment which
is an employment, consulting, termination or deferred
compensation agreement, or an executive compensation, incentive
bonus or other bonus, employee pension, profit-sharing, savings,
retirement, stock option, stock purchase, severance pay, life,
health, disability or accident insurance plan, or vacation, or
other employee benefit plan, program, arrangement, agreement or
commitment, including, without limitation, any "employee benefit
plan," within the meaning of Section 3(3) of ERISA, currently
maintained, sponsored, or contributed to
<PAGE>
by each member of the Del Monte Group or to which any such member
has any obligation to contribute to, or with respect to which any
such member has any Liability (whether actual or contingent,
including, without limitation, a Liability arising out of an
indemnification, guarantee, hold harmless or similar agreement)
(each a "Plan" and, collectively, the "Plans"), including,
without limitation, any multiemployer plan within the meaning of
Section 3(37) of ERISA ("Multiemployer Plan"). With respect to
each Plan, a copy of the document embodying the Plan has been
delivered or made available to the Purchaser.
(b) Except as set forth on Schedule 4.16(b), each Plan
(other than a Multiemployer Plan) intended to be qualified under
Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service (the "IRS") that the
Plan is qualified and that its related trust has been determined
to be exempt from taxation under Section 501(a) of the Code and,
to DMFC's Knowledge, nothing has occurred since the date of such
letter that could reasonably be expected to cause any such Plan
or trust to cease to be so qualified or exempt. To DMFC's
Knowledge, each Multiemployer Plan has received a favorable
determination letter from the IRS that the Plan is qualified
under Section 401(a) of the Code and that its related trust has
been determined to be exempt from taxation under Section 501(a)
of the Code.
(c) Each member of the Del Monte Group has performed
all material obligations required to be performed under each
Plan. No event has occurred in connection with which any member
of the Del Monte Group or any Plan, directly or indirectly, could
be subject to any material Liability under ERISA, the Code or any
other Law, regulation or governmental order applicable to any
Plan, including, without limitation, Section 406, 409, 502(i),
502(l), 4069 or 4212(c) of ERISA, or Section 4971, 4975 or 4976
of the Code, or under any agreement, instrument, statute, rule of
law or regulation pursuant to or under which any member of the
Del Monte Group has agreed to indemnify or is required to
indemnify any person against Liability incurred under, or for a
violation or failure to satisfy the requirements of, any such
statute, regulation or order. Except as described in the
following sentence, all contributions required or payments due
and owing under each Plan, trust, collective bargaining agreement
or otherwise required by law with respect to all periods through
the Closing Date will be timely made and will be made no later
than the Closing Date, or accrued on the Financial Statements to
the extent required by United States generally accepted
accounting principles. The amount required to be paid with
respect to the deemed partial termination of the Retirement Plan
for Salaried Employees during 1992 does not exceed $1,200,000.
(d) No lawsuit or claim (other than routine claims for
benefits, and appeals of such claims) has been asserted or
instituted or, to DMFC's Knowledge, is threatened against any
Plan or its assets or fiduciaries or with respect to any Plan.
<PAGE>
(e) To DMFC's Knowledge, no Plan is under audit by
the IRS or the Department of Labor.
(f) Except as set forth on Schedule 4.16(f), with
respect to each employee benefit plan that is subject to the
provisions of Title IV or Section 302 of ERISA or Section 412 of
the Code and with respect to which the Company or any ERISA
Affiliate may, directly or indirectly, incur any liability, no
event or circumstance exists or is expected to occur which has
given, or could reasonably be expected to give, rise to any
material liability or any lien under Title IV or Section 302 of
ERISA or Section 412 of the Code.
(g) Except as set forth in Schedule 4.16(g) and in
Schedule 7.2, the consummation of the transactions contemplated
by this Agreement will not (i) entitle any employee or former
employee of any member of the Del Monte Group to severance pay,
unemployment compensation or any other payment or (ii) accelerate
the time of payment, funding or vesting of, or increase the
amount of, compensation due to any such employee or former
employee.
(h) Except as set forth in Schedule 4.16(h), no member
of the Del Monte Group has any announced plan or commitment
(whether or not legally binding) to create any additional Plans
or to amend or modify any existing Plan.
(i) Except as set forth in Schedule 4.16(i), no member
of the Del Monte Group has violated any Legal Requirement
regarding the terms and conditions of employment of employees,
former employees or prospective employees of the Del Monte Group
or other labor related matters regarding the employees of the Del
Monte Group, including, without limitation, any Legal Requirement
relating to discrimination, fair labor standards and occupational
health and safety, wrongful discharge or violation of the
personal rights of employees, former employees or prospective
employees which, taken alone or together with any such violation
or violations, would have a Material Adverse Effect.
(j) Except as set forth on Schedule 4.16(j), no member
of the Del Monte Group could incur, directly or indirectly, any
material Liability (whether actual or contingent, including,
without limitation, a Liability arising out of an
indemnification, guarantee, hold harmless or similar agreement)
with respect to any employees or former employees arising out of
any divestiture by any member of the Del Monte Group of any
business or assets.
(k) Except as set forth on Schedule 4.16(k), no member
of the Del Monte Group has any material Liability (whether actual
or contingent, including, without limitation, a Liability arising
out of an indemnification, guarantee, hold harmless or similar
agreement) relating to any insurance contract held under or
<PAGE>
purchased to fund a Plan the issuer of which is or was insolvent
or in reorganization or the payments under which were suspended.
(l) Schedule 4.16(l) sets forth any and all
indebtedness owed by any employee or former employee to any
member of the Del Monte Group.
(m) Except as set forth on Schedule 4.16(m) and
Schedule 7.2, no member of the Del Monte Group maintains any
plan, program or arrangement or is a party to any Contract that
provides any benefits or provides for payments to any Person
based on or measured by the value of any equity security of or
interest in a member of the Del Monte Group.
4.17 Employee Relations.
(a) Except as set forth on Schedule 4.17(a), since
January 1, 1994 there has not occurred or, to DMFC's Knowledge,
been threatened any strikes, slow downs, picketing, work
stoppages, concerted refusals to work overtime or other similar
labor activities with respect to employees employed in the
Operations. Except as set forth on Schedule 4.17(a), no grievance
or arbitration proceeding arising out of or under any collective
bargaining agreement relating to the Operations is pending, and,
to DMFC's Knowledge, no such grievance or proceeding is
threatened, except for grievances and proceedings which,
individually and in the aggregate, would not have a Material
Adverse Effect.
(b) Except as set forth on Schedule 4.17(b), the
employees employed in the Operations are not represented by any
labor union or other labor representative and, except as set
forth on Schedule 4.17(b), there are no collective bargaining
agreements or other arrangements in effect with respect to such
employees and, to DMFC's Knowledge, there are no other Persons
attempting to represent or organize or purporting to represent
any employees employed in the Operations.
4.18 Insurance. The insurance carried by DMFC, the
Company and its Subsidiaries is in such types and amounts and
covering such risks as are consistent with customary practices
and standards of companies engaged in businesses and operations
similar to those of DMFC, the Company and its Subsidiaries.
Except as would not have a Material Adverse Effect, all such
insurance is in full force and effect and none of DMFC, the
Company or any of its Subsidiaries is in default thereunder.
Except as would not have a Material Adverse Effect, all claims
thereunder have been filed in a due and timely fashion. Except as
would not have a Material Adverse Effect, neither DMFC, the
Company nor any of its Subsidiaries has been notified in writing
of a refusal of any material insurance coverage relating to
products liability (including renewals of any such products
liability coverage) by any insurance carrier to which it has
applied for insurance during the past three years.
<PAGE>
4.19 Customers and Suppliers. Schedule 4.19
identifies, and provides an accurate and complete breakdown of
the revenues received from, the twenty largest customers or other
Persons (in terms of gross revenues from such customers or
Persons) of the Del Monte Group in the fiscal year ended June 30,
1996 and identifies, and provides an accurate and complete
breakdown of the dollar amount of purchases from the ten largest
suppliers of the Del Monte Group in the fiscal year ended June
30, 1996 (in terms of gross purchases from such suppliers).
Schedule 4.19 lists all exclusive arrangements between any member
of the Del Monte Group on the one hand and its customers or
suppliers on the other hand. There are no disputes, claims or
other actions or Proceedings (to DMFC's Knowledge in the case of
any investigation) between any member of the Del Monte Group, on
the one hand, and any such customer or other Person or any
supplier of the Del Monte Group, on the other hand, other than
those occurring in the ordinary course of business in amounts
consistent with past practices or that, individually or in the
aggregate, would not have a Material Adverse Effect. As of the
date of this Agreement, no member of the Del Monte Group has
received any notice or other communication (in writing or
otherwise), or any other information, indicating that there is a
material possibility that (i) any customer or other Person or
supplier identified in Schedule 4.19 will cease dealing with the
Del Monte Group or may otherwise materially reduce the volume of
business transacted by such customer or other Person or supplier
with the Del Monte Group below historical levels other than
reductions comparable to those experienced to date as a result of
the Company's Go-to-Market strategy, or (ii) the consummation of
the transactions contemplated hereby will adversely affect the
relationships of any member of the Del Monte Group with any of
its customers or suppliers.
4.20 Certain Financial Information.
(a) The adjustments included in the DMFC Combining
Statement of Operations as of June 30, 1996 set forth in Schedule
4.20(a) (the "DMFC Combining Statement") provided by DMFC and the
Company to Parent appropriately reflect the transactions
represented by such adjustments, and such adjustments have been
properly applied to the historical financial information for the
Del Monte Group in the compilation of the historical financial
information.
(b) The Evaluation of Adjusted Calendar Year 1996 set
forth in Schedule 4.20(b) has been prepared in good faith on a
reasonable basis and in a manner consistent with the DMFC
Combining Statement.
4.21 Affiliate Transactions. Except as set forth on
Schedule 4.21, (a) there is no indebtedness between any member of
the Del Monte Group, on the one hand, and any officer, director,
stockholder or Affiliate (other than the Company and its
Subsidiaries) of DMFC, on the other, (b) no such officer,
director or Affiliate provides or
<PAGE>
causes to be provided any assets, services or facilities to the
Del Monte Group which are individually or in the aggregate
material to the business or condition of the Del Monte Group, (c)
no member of the Del Monte Group provides or causes to be
provided any assets, services or facilities to any such officer,
director or Affiliate which are individually or in the aggregate
material to the business or condition of the Del Monte Group, and
(d) no member of the Del Monte Group owns any capital stock,
indebtedness or other securities issued by any such officer,
director or Affiliate.
4.22 Inventory and Accounts Receivable. All inventory
of the Del Monte Group reflected on the January Balance Sheet
(the "Inventories") consists of a quality and quantity usable or
salable in the ordinary course of business, except for
slow-moving items and items of below-standard quality, all of
which have been written off or written down to net realizable
value in the January Balance Sheet. All Inventories not written
off have been priced at the lower of cost or market on a last in,
first out basis. All accounts receivable of the Del Monte Group
that are reflected on the January Balance Sheet (the "Accounts
Receivable") represent valid obligations arising from sales
actually made or services performed in the ordinary course of
business. The Accounts Receivable are current and collectible net
of the applicable reserves reflected in the January Balance Sheet
(which reserves are adequate and calculated consistent with past
practice). The Inventories and Accounts Receivable (net of the
applicable reserves) are $453.6 million and $63.0 million,
respectively.
4.23 Management Payments. Other than payments under
the Del Monte Corporation New Management Equity Plan, payment of
salary for July through December 1997 to each of the Co-Chief
Executive Officers of the Company, payments set forth on Schedule
4.16(g) and payments properly budgeted in the Company's 1997
Annual Operating Plan, there are no payments to management of the
Del Monte Group that (i) arise out of or are related to the
consummation of the Merger and the transactions contemplated
thereby or (ii) otherwise are payable during, or in respect of,
the Company's fiscal year ending June 30, 1997, in each case
whether or not set forth in Schedule 7.2.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Purchasers represent and warrant to DMFC:
5.1 Organization. Each Purchaser is an entity duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or formation and has full
power and authority to own, lease and operate its Properties and
to carry on its businesses as now being conducted.
<PAGE>
5.2 Authority; Enforceability. Each Purchaser has the
power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions provided for
hereby have been duly authorized by the general partner of Parent
and the Board of Directors of Sub, and no other approval on the
part of either Purchaser is necessary to authorize the execution
or delivery of this Agreement or the consummation of any of the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by each Purchaser and (assuming due
authorization, execution and delivery by DMFC) constitutes a
legal, valid and binding obligation of each Purchaser,
enforceable against it in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
5.3 No Breach. Except as would not impair the ability
of Purchasers to consummate the Merger, each of the execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby does not and will not (i)
conflict with or violate any provision of the Articles of
Incorporation, By-laws or other governing documents of either
Purchaser, (ii) violate, conflict with or result in the breach or
termination of, or otherwise give any other Person the right to
accelerate, renegotiate, terminate or receive any payment, or
constitute a default, event of default or an event which with
notice, lapse of time, or both, would constitute a default or
event of default under the terms of, any Contract or Permit to
which either Purchaser is a party or by which such Purchaser or
its Properties or businesses are bound, (iii) result in the
creation of any Liens upon any of their respective Properties or
businesses or (iv) constitute a violation by either Purchaser of
any Legal Requirement.
5.4 Consents. No Consent of or by, or filing with, any
Governmental Authority is required to be made or obtained by
either Purchaser in connection with (i) the execution or delivery
of this Agreement or (ii) the consummation of any of the
transactions provided for in this Agreement, other than (a) those
the failure of which to be made or obtained, individually or in
the aggregate, would not have a material adverse effect on the
ability of Purchasers to consummate the transactions contemplated
by this Agreement and (b) Consents and filings under the HSR Act
and the MGCL.
5.5 Actions and Proceedings. There is no Proceeding
(to Purchasers' Knowledge in the case of any investigation)
pending or, to the best knowledge of Purchasers, threatened, nor
any Judgment (which has not been discharged), (a) against either
Purchaser before any Governmental Authority to restrain or
prohibit, or to obtain
<PAGE>
damages, a discovery order or other relief in connection with
this Agreement or any of the transactions contemplated by this
Agreement or (b) as of the date hereof, and except as previously
disclosed to DMFC, against either Purchaser or any of their
Affiliates, by or before any Governmental Authority, that, if
adversely determined, would (i) adversely affect Purchasers'
ability to perform their obligations hereunder or to consummate
the transactions contemplated hereby, or (ii) require any of the
holders of DMFC Common Stock or DMFC Preferred Stock to pay over
any portion of the Purchase Price to any Person, including,
without limitation, any Governmental Authority.
5.6 Brokers. Except as disclosed by Parent to DMFC,
neither Parent, Sub nor anyone acting on any of their behalf has
employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with
the Merger and the transactions contemplated by this Agreement.
5.7 Availability of Funds. Purchasers have available
or have binding commitments for, and will have available on the
Closing Date, sufficient funds to enable them to consummate the
transactions contemplated by this Agreement, including the
payment of the Purchase Price.
5.8 Surviving Corporation After the Merger.
Immediately after the Effective Time and after giving effect to
the Merger, the Surviving Corporation will not (i) be insolvent
(either because its financial condition is such that the sum of
its debts is greater than the fair value of its assets or because
the fair saleable value of its assets is less than the amount
required to pay its probable liability on its existing debts as
they mature), (ii) have unreasonably small capital with which to
engage in its business, or (iii) have incurred debts beyond its
ability to pay as they become due.
ARTICLE VI
COVENANTS OF DMFC
6.1 Ordinary Course of Business. During the period
from the date of this Agreement to the Effective Time, except as
contemplated by this Agreement or as set forth on Schedule 6.1 or
as otherwise consented to in writing by Purchasers (which consent
shall not unreasonably be withheld):
(a) DMFC will use all reasonable efforts, and will
cause its Subsidiaries to use all reasonable efforts, to (i)
carry on its business in the ordinary course in substantially the
same manner as heretofore conducted consistent with such business
and with its "go-to-market" strategy, (ii) preserve intact its
present business organization, (iii) keep available the services
of its present officers and employees, (iv)
<PAGE>
preserve its relationships with clients, suppliers, customers,
distributors and others having business dealings with it, (v)
maintain all Assets other than those disposed of in the ordinary
course of business in all material respects in good repair and
condition and (vi) maintain all insurance; and
(b) Except as expressly provided for in Article II
hereof, DMFC will, and will cause its Subsidiaries to:
(i) not amend its Articles of
Incorporation or By-laws or other governing document
or agreement;
(ii) not acquire by merging or
consolidating with, or purchasing all or substantially
all of the assets of, or otherwise acquiring any
business of any corporation, partnership, association
or other business organization or division thereof, in
each case for consideration having a value in excess
of $1,000,000;
(iii) not split, combine or reclassify
its outstanding capital stock or declare, set aside,
make or pay any dividend or other distribution in
respect of the capital stock of any member of the Del
Monte Group (in cash or otherwise), except dividends
in kind in respect of the Preferred Stock;
(iv) not issue or sell (or agree to
issue or sell) any shares of its capital stock of any
class or series, or any options, warrants, conversion
or other rights to purchase any such shares or any
securities convertible into or exchangeable for such
shares, or grant, or agree to grant, any such options
or modify or alter the terms of any of the above;
(v) not, other than in the ordinary
course of business consistent with past practice, (A)
incur any indebtedness for borrowed money or vary the
material terms of any existing debt securities, (B)
issue or sell any debt securities, (C) acquire any
substantial assets outside of the ordinary course of
business, (D) except to the extent required by
applicable Law, make any change in any investment,
accounting, financial reporting, inventory, credit,
allowance or tax practice or policy or (E) enter into,
modify in any material respect or terminate any
Material Contract;
(vi) not sell, mortgage, pledge or
otherwise dispose of any Assets or Properties, except
for the sale of inventory and disposition of obsolete
equipment, other than in the ordinary course of
<PAGE>
business consistent with prior practice and following
prior notice to and consultation with Purchasers;
(vii) not grant to any director, or,
except in the ordinary course of business consistent
with prior practice, consultant, officer, employee or
agent of any member of the Del Monte Group, any
increase in compensation in any form, or any severance
or termination pay, or make any loan to any such
person, except in each case as may be legally required
pursuant to any existing employment or termination
agreements, Plan or applicable Laws;
(viii) not adopt, enter into, amend in
any material respect, terminate or announce any
intention to adopt, amend or terminate, any Plan,
except as required by applicable Law or as disclosed
on any disclosure schedule pursuant to Section 4.15;
(ix) not discharge or satisfy any
material Lien or pay or satisfy any material
obligation or Liability or compromise, settle or
otherwise adjust any material claim or litigation,
except in the ordinary course of business consistent
with past practice or commence any voluntary petition,
proceeding or action under any bankruptcy, insolvency
or other similar laws;
(x) not make or institute any material
change in its accounting procedures or practices unless
mandated by GAAP;
(xi) not perform any act, or attempt to
do any act, or knowingly permit any act or omission to
act, which will cause a breach of any Material
Contract;
(xii) not make any Tax election or
settle or compromise any material federal, state,
local or foreign income Tax Liability, other than in
the ordinary course of business consistent with prior
practice and following prior notice to and
consultation with Purchasers;
(xiii) not (in a manner that deviates
from their historical practice) (a) delay payment of
any material account payable or other material
liability, (b) offset any material account payable or
material Liability to a person against any account
receivable or payment due from such person, (c)
accelerate the collection of accounts receivable, (d)
accelerate the sale or liquidation of any inventory,
or (e) delay the making of scheduled capital
expenditures (including, without limitation, the
<PAGE>
capital expenditures identified in Schedule 4.13(a)
to the extent legally required);
(xiv) not make capital expenditures or
commitments for additions to property, plant or
equipment constituting capital assets in an amount
which exceeds $100,000 individually or $1,000,000 in
the aggregate during the period from the date of this
Agreement to the Closing Date, except for capital
expenditures included in DMFC's 1997 capital
expenditure plan (a copy of which is attached hereto
as Schedule 6.1(b)(xiv)), which capital expenditures
the Del Monte Group shall make in accordance with such
plan;
(xv) not decrease any reserve
(including any valuation allowance) for Taxes or other
Liabilities on the books of any member of the Del
Monte Group or otherwise provided therefor, except for
Taxes or other Liabilities relating to the operations
of the Del Monte Group since the date of this
Agreement and except in the ordinary course of
business consistent with past practices;
(xvi) not sell, assign, transfer,
license or permit to lapse any right with respect to
material United States Intellectual Property Rights;
(xvii) not make any loan, or redeem or
purchase any of its capital stock, transfer any asset
or pay any commission, salary or bonus, or pay any
rent, commission or fee, or enter into or agree to
enter into any transaction, to, with or for the
benefit of any shareholder or any relative or
Affiliate of any shareholder other than the
transactions contemplated by this Agreement or
pursuant to the agreements listed on Schedule 4.21;
(xviii) not write off any account
receivable or other indebtedness as uncollectible in
an amount in excess of existing reserves, or establish
any extraordinary reserve or decrease any existing
reserve, except in the ordinary course of business
consistent with past practices; or
(xix) not authorize or propose, or agree
to take, any of the actions set forth in the foregoing
subparagraphs (i) through (xviii).
6.2 Access to Information. Except as prohibited or
limited by Law, DMFC shall, from and after the date of this
Agreement and until the Closing Date, give and cause the other
members of the Del Monte Group to give to Purchasers and their
prospective lenders and financing institutions, officers, agents,
representatives,
<PAGE>
advisers, accountants, employees and counsel full and complete
access, upon reasonable prior notice and during normal business
hours, to all officers, employees, agents, representatives,
counsel, consultants, contractors, advisers, offices, properties,
Contracts, Permits, Judgments, papers, books, documents, plans,
agreements, records and affairs of the Del Monte Group or
otherwise relating to the Operations, and will, at Purchasers'
sole expense, provide copies of such information concerning the
Del Monte Group and the Assets and Operations as such persons may
reasonably request; provided, however, that the foregoing shall
not permit Purchasers or any agent of either of them to disrupt
the Operations or to perform any testing on any real property
owned or leased by any member of the Del Monte Group.
Notwithstanding the preceding sentence, if, after the date of
this Agreement, Purchasers become aware of any fact relating to
the existence of Hazardous Substances at any site owned or leased
(subject to receipt of any required consents) by the Company that
in the judgment of Purchaser and a nationally recognized
environmental consultant retained by Purchaser is reasonably
likely to result in liability to the Del Monte Group in excess of
$1,000,000, Purchasers may perform testing (subject to DMFC's
prior review and reasonable approval of the scope of testing).
From and after the date of this Agreement and until the Closing
Date, DMFC shall, and shall cause each member of the Del Monte
Group to, regularly consult with Purchasers regarding the
management of the business and Operations of the Del Monte Group,
including without limitation the ongoing implementation of the
"go-to-market" strategy.
6.3 Stockholder Approvals; Stock Conversions.
(a) DMFC shall call a special meeting (the "Special
Meeting") of its stockholders to be held not later than March 31,
1997 for the purpose of submitting the Merger and the Executive
Arrangements referred to in the Proxy attached as Exhibit A- 1
for the approval of the stockholders of DMFC. DMFC shall, through
its Board of Directors, recommend that its stockholders approve
the Merger and such Executive Arrangements and shall use all
reasonable efforts (without requiring DMFC to incur material
costs or expenses or to commence Proceedings) to solicit the
requisite vote necessary for such approval in accordance with the
applicable provisions of the MGCL and this Agreement.
(b) DMFC shall promptly (and within five business days
of the receipt of notice by DMFC) give notice to Purchasers of
the conversion of any shares of DMFC Common Stock or DMFC
Preferred Stock by any stockholder of DMFC, such notice to
specify the number of shares and class of DMFC Common Stock or
DMFC Preferred Stock converted by such stockholder and the number
of shares and class of DMFC Common Stock or DMFC Preferred Stock
received by such stockholder upon such conversion.
<PAGE>
6.4 Cancellation of Certain Arrangements. Except as
set forth on Schedule 6.4, all accounts payable or Contracts
obligating DMFC, the Company or any of the Company's Subsidiaries
to make payments to the stockholders of DMFC or their Affiliates
(other than the Company and its Subsidiaries), or to provide the
stockholders of DMFC or their Affiliates (other than the Company
and its Subsidiaries) any rights to use any of the Assets shall
be canceled at or prior to the Closing without any consideration
being paid in respect therefor.
6.5 No Shop Provision. During the period from the date
of this Agreement to the earlier of the termination of this
Agreement and the Closing, DMFC shall not, and shall cause the
Company and its Subsidiaries and their respective directors,
officers, employees, agents and representatives not to (a)
solicit, initiate or encourage, directly or indirectly, any
inquiries, discussions, proposals or offers for, (b) continue,
propose or enter into any discussions or negotiations looking
toward, (c) consider any proposal for, or (d) enter into any
agreement or understanding providing for, any acquisition by a
third party of the capital stock, assets or businesses of DMFC,
the Company or any of its Subsidiaries; nor shall any of such
persons or entities provide any information to any Person (other
than Purchasers and their representatives, accountants, advisors,
consultants and counsel) for the purpose of evaluating or
determining whether to make or pursue any inquiries or proposals
with respect to any such transactions. DMFC will promptly advise
Purchasers of, and communicate to Purchasers the terms of, any
such inquiry or proposal that the officers or directors of any
member of the Del Monte Group may receive or of which such
persons may become aware during the period referred to in the
first sentence of this subsection and which any of the foregoing
persons believes to be a bona fide offer or a serious indication
of interest.
6.6 Affiliate Transactions. Except as set forth in
Schedule 4.21 or as requested by Purchasers prior to or
concurrently with the Closing, any indebtedness and other amounts
owing under contracts between any officer, director or Affiliate
(other than the Company or any Subsidiary of the Company) of
DMFC, on the one part, and any member of the Del Monte Group, on
the other, will be paid in full and DMFC will cause to be
terminated each such contract. During the period from the date of
this Agreement to the Closing Date, no member of the Del Monte
Group will engage in any transaction (other than pursuant to
contracts disclosed in Schedule 4.21), including borrowing any
money or receiving any capital contribution, from or with any
such officer, director or Affiliate.
6.7 Recapitalization Accounting Treatment. DMFC agrees
to cooperate in all reasonable respects with Purchaser in
Purchasers' efforts to persuade existing stockholders of DMFC to
become stockholders of the Surviving Corporation, including
without limitation by providing access to existing stockholders
of DMFC, and, if Purchasers are successful, DMFC shall make any
appropriate amendments to
<PAGE>
this Agreement and the structure of the financing of the
transactions contemplated by this Agreement so that the
transactions contemplated hereby could be accounted for pursuant
to recapitalization accounting, provided that any amendment to
this Agreement or to the structure of the financing of the
transactions contemplated by this Agreement does not and will not
reduce the Purchase Price payable by Purchasers hereunder (except
to the extent that any existing DMFC stockholders receive or
retain capital stock of DMFC pursuant to this Agreement or the
transactions contemplated hereby, in which case the Purchase
Price shall be reduced to reflect such fact).
ARTICLE VII
COVENANTS OF PURCHASERS
7.1 Employee Benefits. For a period of 12 months
following the Closing, Purchasers shall cause the Surviving
Corporation and its Subsidiaries to maintain for employees of the
Surviving Corporation and its Subsidiaries (other than any
employees covered by a collective bargaining agreement),
considered collectively, compensation, benefits and perquisites
which are no less favorable in the aggregate than the
compensation, benefits and perquisites enjoyed by such employees
prior to the Closing; provided, however, that except as otherwise
provided in the Executive Arrangements, nothing herein shall be
construed as requiring the continued employment of any employee
nor the continuation of any particular employee benefit or
perquisite. This Agreement is not intended to constitute an
actual or de facto amendment of any employee benefit plan,
program, agreement or arrangement and nothing herein shall be so
construed.
7.2 Executive Arrangements. Schedule 7.2 sets forth
the arrangements (the "Executive Arrangements") between the Del
Monte Group and certain executives and employees of the Del Monte
Group with respect to a sale of DMFC, true and complete copies of
which have been made available to Purchasers.
(a) Purchasers shall cause each member of the Del
Monte Group to satisfy all of its obligations under each
agreement set forth on Schedule 7.2(a). If there is any conflict
between the summary of any such agreement set forth on such
schedule and the terms of the agreement, the terms of the
agreement shall in all cases govern.
(b) Purchasers shall cause the Company to pay, on the
Closing Date, the amounts described in Schedule 7.2(b) to the
persons indicated thereon, subject to applicable withholding
taxes. Such payment shall also be subject to (i) the approval of
such payments by the shareholders of DMFC for purposes of Section
280G of the Code and (ii) receipt by the Company of a receipt
from each such person acknowledging that
<PAGE>
the indicated payment is in full satisfaction of the Company's
obligations with respect to the New Management Equity Plan.
(c) Purchasers shall cause the Company to pay, on the
Closing Date, the amounts described in Schedule 7.2(c) to the
persons indicated thereon, subject to applicable withholding
taxes and to receipt by the Company of a receipt from each such
person acknowledging that the indicated payment is in full
satisfaction of the Company's obligations with respect to the
1995 Management Equity Plan.
(d) Purchasers shall cause the bonus pool under the
Annual Incentive Award Plan ("AIPA") with respect to the
performance period ending on June 30, 1997 to equal at least
$2,525,100. Bonuses shall be paid pursuant to and in accordance
with the terms of such Plan not later than July 31, 1997. Any
participant who is involuntarily terminated without cause on or
before July 31, 1997 shall be paid a pro-rata share of the
participant's AIAP target with consideration given for
performance factors.
(e) Purchasers shall cause the Company to pay, on the
Closing Date, the amounts described in Schedule 7.2(e) to the
persons indicated thereon, subject to applicable withholding
taxes and to receipt by the Company of a receipt from each such
person acknowledging that the indicated payment is in full
satisfaction of the Company's obligations with respect to the
Long Term Incentive Plan.
7.3 Indemnification: Officers' and Directors' Insurance.
(a) The Purchasers agree that all rights to
indemnification existing as of the date hereof in favor of the
present or former directors, officers, employees, fiduciaries and
agents of DMFC, the Company or any of its Subsidiaries as
provided in DMFC's certificate of incorporation or by-laws or
pursuant to other agreements, arrangements or the certificate of
incorporation, by-laws or similar documents of any of the
Company's Subsidiaries as in effect on the date hereof with
respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect
pursuant to the terms thereof. Purchasers shall cause to be
maintained in effect for not less than six years from the
Effective Time the current policies of directors' and officers'
liability insurance maintained by the Company and its
Subsidiaries (provided that Purchasers may substitute therefor
policies of at least the same coverage containing terms and
conditions which are no less advantageous) with respect to
matters occurring prior to the Effective Time. True and complete
copies of all such agreements, arrangements and insurance
policies have been made available to Purchasers.
(b) It is understood and agreed that the Company
shall, to the fullest extent permitted under applicable law and
regardless of whether the Merger becomes effective, indemnify and
hold harmless, and after the Effective Time, the Surviving
<PAGE>
Corporation shall, to the fullest extent permitted under
applicable law, indemnify and hold harmless, each present and
former director, officer and fiduciary of the Company or any of
its Subsidiaries (collectively, the "Indemnified Parties")
against any fees, costs or expenses (including reasonable
attorneys' fees) and judgments, fines, losses, damages,
liabilities and amounts paid in settlement, in connection with
any pending, threatened or completed claim, action, suit,
proceeding or investigation arising out of any actions or
omissions occurring at or prior to the Effective Time that are in
whole or in part based on or arising out of the fact that such
person is or was a director, officer or fiduciary of DMFC or
pertaining to any of the transactions contemplated hereby, and in
the event of any such claim (whether commenced before or after
the Effective Time), (i) the Company or the Surviving Corporation
shall pay the reasonable fees and expenses of counsel selected by
the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, as the
case may be, promptly after statements therefor are received and
shall advance other expenses to the fullest extent permitted
under applicable law and (ii) the Company and the Surviving
Corporation shall cooperate in the defense of any such matter;
provided, however, that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably
withheld). Notwithstanding the foregoing, neither the Company nor
the Surviving Corporation shall have any obligation to indemnify
and hold harmless any Indemnified Party against any judgments
rendered by a court of competent jurisdiction if such court finds
that such party engaged in conduct constituting gross negligence,
willful misconduct or willful violation of law.
(c) If any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated hereby is
commenced, whether before or after the Effective Time, the
Company and, after the Effective Time, the Surviving Corporation,
shall agree to use their best efforts to defend against and
respond thereto.
(d) This Section 7.3 shall survive for a period of six
years following the Effective Time and is intended to benefit the
Company, the Surviving Corporation and the Indemnified Parties.
In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or
surviving corporation of such consolidation or merger, or (ii)
transfers all or substantially all of its properties to any
person, then, and in each case, proper provision shall be made so
that the successors and assigns of the Company and the Surviving
Corporation, as the case may be, shall assume the obligations set
forth in this Section 7.3.
7.4 Financing. Purchasers have delivered to DMFC true
and complete copies of commitment letters (the "Commitment
Letters") from Bank of America National Trust and Savings
Association and Bankers Trust Company (but not signed by Purchasers)
to provide the debt financing required to effect the transactions
<PAGE>
contemplated by this Agreement (the "Required Financing"). If
DMFC delivers the 66- 2/3% Proxies (as defined in Section
10.1(c)), on the following business day, Purchasers shall execute
and deliver to DMFC the Commitment Letters. Purchasers shall use
their best efforts to enter into, within four weeks after the
date of delivery of the 66-2/3% Proxies, fully executed and
binding definitive financing agreements with Bank of America
National Trust and Savings Association and/or Bankers Trust
Company, subject only to normal conditions, to provide the
Required Financing on substantially the terms set forth in the
commitment letters. Purchasers shall deliver to DMFC true and
complete copies of such financing agreements as soon as they are
available. If for any reason the Required Financing is not
available from Bank of America National Trust and Savings
Association and/or Bankers Trust Company, Purchasers shall use
their best efforts to obtain alternative sources of the Required
Financing on substantially the same terms and conditions.
Purchasers shall use their best efforts to satisfy all conditions
to the closing of the Required Financing prior to or at the
Closing. Prior to or at the Closing, Parent and its Affiliates
shall make (or cause to be made) a cash equity investment in Sub
equal to $140 million or such other amount as would satisfy the
equity funding requirements of the Required Financing.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 Company Debt. The Purchasers acknowledge that the
Merger will constitute an Event of Default under the Term Loan
Agreement and the Revolving Credit Agreement and that the holders
of the PIK Notes will have a right, as a result of the Merger, to
put the PIK Notes to the Company. If the Purchasers so request,
the Company and the Purchasers shall together seek to obtain from
the lenders under the Term Loan Agreement, the lenders under the
Revolving Credit Agreement and the holders of the PIK Notes a
waiver of the Event of Default under the Term Loan Agreement, a
waiver of the Event of Default under the Revolving Credit
Agreement, or a waiver of the right to put the PIK Notes from the
Company, as the case may be, as a result of the Merger. If the
Purchaser does not so request, or if the lenders under the Term
Loan Agreement or the Revolving Credit Agreement or the holders
of the PIK Notes refuse to grant such waiver, the Purchasers
shall provide to the Company at the Closing all funds required to
repay in full the indebtedness under the Term Loan Agreement, the
indebtedness under the Revolving Credit Agreement or the PIK
Notes, as the case may be, including any prepayment premiums or
penalties thereunder.
8.2 Further Actions. Subject to the terms and
conditions herein provided, each of the parties hereto shall use
its reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things reasonably required
under applicable Legal Requirements, to consummate and make
effective the transactions
<PAGE>
contemplated by this Agreement. Subject to the terms and
conditions herein provided, DMFC and Purchasers will, and will
cause each of their respective Affiliates to, use their
reasonable efforts to obtain all Consents necessary or advisable
to consummate and make effective the transactions contemplated by
this Agreement. In case at any time after the date hereof any
further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers or directors of
DMFC, Purchasers or the Company, as the case may be, shall take
all such necessary action. In the event that any injunction shall
at any time be in effect that prohibits or declares illegal the
Merger or any of the other transactions contemplated by this
Agreement, Purchasers shall use their best efforts to have such
injunction lifted as soon as practicable. In addition, Purchasers
shall, and shall cause their Affiliates to, take promptly any or
all actions to the extent necessary to eliminate each and every
impediment under any antitrust law that may be asserted by any
Governmental Authority with respect to the consummation of the
Merger or any of the other transactions contemplated hereby,
including, without limitation, entering into negotiations,
providing information, making proposals, entering into and
performing agreements or submitting to judicial or administrative
orders, or selling or otherwise disposing of, or holding
separate, particular assets or categories of assets, or
businesses, of Purchasers or their Affiliates. Without limiting
the foregoing provisions of this Section 8.2, DMFC and Purchasers
each shall file with the Department of Justice and the Federal
Trade Commission a Pre-Merger Notification and Report Form
pursuant to the HSR Act in respect of the transactions
contemplated hereby within five business days of the date of this
Agreement and shall cooperate with one another in connection with
their respective filings under the HSR Act and in connection with
resolving any investigation or other inquiry concerning the
transactions contemplated hereby commenced by either the
Department of Justice or the Federal Trade Commission.
8.3 Certain Notifications. At all times prior to the
Closing Date, each party shall promptly notify the other in
writing of the occurrence of any event which will or may result
in the failure of any of the conditions contained in Article IX
hereof to be satisfied.
8.4 Confidentiality.
(a) Each Purchaser shall, and shall use its best
efforts to cause its officers, employees, agents and
representatives to, hold in strict confidence all data and
information obtained by it from any member of the Del Monte Group
or any agent of any such member (unless such information is or
becomes readily ascertainable from public or published
information other than as a result of disclosure prohibited
hereby) ("Confidential Information") and shall not, and shall use
its best efforts to ensure that such officers, employees, agents
and representatives do not, disclose any of such data and
information to others without the prior written consent of DMFC
or use any of such data and information for any purpose other
than considering or furthering the
<PAGE>
transactions contemplated by this Agreement (except as required
by any applicable Law).
(b) In the event that this Agreement is terminated,
Purchasers shall return promptly to DMFC or destroy every
document furnished to either of them by or on behalf of any
member of the Del Monte Group in connection with the transactions
contemplated hereby and any copies thereof which may have been
made, and shall cause their representatives to whom such
documents were furnished promptly to return to DMFC such
documents and any copies thereof any of them may have made.
(c) In the event that either Purchaser is requested
pursuant to, or required by, applicable law or regulation or by
legal process to disclose any Confidential Information, it shall
provide DMFC with prompt written notice of such request or
requirement in order to enable DMFC to seek an appropriate
protective order or other remedy, to consult with such other
party with respect to taking steps to resist or narrow the scope
of such request or legal process, or to waive compliance, in
whole or in part, with the terms of this Section 8.4. In any such
event, such Purchaser will use its reasonable best efforts to
ensure that all such Confidential Information and data that is so
disclosed will be accorded confidential treatment.
8.5 Fulfillment of Conditions and Certain
Notifications. DMFC and Purchasers shall each take all steps
necessary or desirable and proceed diligently and in good faith
to satisfy each condition to the obligations of the other(s).
Without limiting the generality of the foregoing, DMFC shall take
all actions reasonably requested by Purchasers in connection with
the Required Financing and the refinancing of the Existing Senior
Debt and the PIK Notes (including making appropriate officers of
DMFC available on a reasonable basis for road show
presentations), giving due regard to the time schedule for
Closing, and shall provide reasonable access to the Lenders, any
other prospective Lenders and their respective counsel,
accountants and representatives in connection with the Required
Financing. DMFC shall not, and shall not permit any member of the
Del Monte Group to, take or knowingly fail to take any action
that could reasonably be expected to result in the nonfulfillment
of any such condition, and Purchasers shall not take or knowingly
fail to take any action that could reasonably be expected to
result in the nonfulfillment of any such condition.
8.6 Expenses and Break-Up Fee. If Purchasers terminate
the Agreement pursuant to Section 10.1(c) or (d), DMFC shall (or
shall cause the Company to) pay to Purchasers on the second
business day following termination the sum of $2,000,000 to
reimburse Purchasers for their expenses in connection with the
transactions contemplated by this Agreement. If the Agreement is
terminated for any reason other than a material breach by
Purchasers, and if within 12 months from the date of such
termination an Acquisition Event (as hereinafter defined) occurs
at a price higher than the Purchase Price, DMFC shall (or shall
cause the Company to) pay to
<PAGE>
Parent a fee of $15,000,000. As used herein, "Acquisition Event"
shall mean the consummation of any transaction (or series of
transactions) that results in any person, entity or "group"
(other than Parent or any of its Affiliates) acquiring all or
substantially all of the outstanding shares of DMFC Common Stock
and DMFC Preferred Stock or all or substantially all of the
assets of DMFC or the Company (including through any merger or
business combination). Purchasers acknowledge that payment of the
$15,000,000 fee requires approval by the Board of Directors of
DMFC; DMFC shall hold a meeting of the Board of Directors by
February 24, 1997 to consider the fee, and shall notify
Purchasers of the Board's determination. If the Board does not
approve the payment of the fee, Purchasers may terminate the
Agreement, in which event DMFC shall (or shall cause the Company
to) pay to Purchasers on the second business day following
termination the sum of $2,000,000 as provided above.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
9.1 Conditions Precedent to Obligations of Purchasers. The
obligations of Purchasers to consummate the Merger at the Closing
are subject to the satisfaction or waiver at or prior to the
Closing of each of the following conditions:
(a) All representations and warranties of DMFC
contained in this Agreement shall be true and correct
in all material respects as of the Closing Date as
though made on and as of such date, except to the
extent that any such representation or warranty is
made as of a specified date, in which case such
representation or warranty shall have been true and
correct in all material respects as of such date, and
except that any representation or warranty that is
qualified by materiality or Material Adverse Effect
shall be true and correct in all respects (giving
effect to such qualification);
(b) DMFC shall have performed and complied with
the covenants in sub-sections 6.1(b)(i), 6.1(b)(iii),
6.1(b)(iv), 6.1(b)(xvii) and, with respect only to
directors of any member of the Del Monte Group who are
not officers or employees, 6.1(b)(vii), and DMFC shall
have performed and complied with, in all material
respects, all other agreements and covenants required
by this Agreement to be performed or complied with by
DMFC prior to or at the Closing, except that any
agreement or covenant that is qualified by materiality
or Material Adverse Effect shall have been performed
and complied with in all respects (giving effect to
such qualification);
<PAGE>
(c) No Law or Judgment shall be in effect which
prohibits or declares illegal the Merger or the other
transactions contemplated by this Agreement;
(d) The approval of the Merger by the stockholders
of DMFC shall have been obtained;
(e) All waiting periods specified under the HSR
Act, and all extensions thereof, the passing of which
are necessary for consummation of the Merger, shall
have passed;
(f) The Purchasers shall have received from DMFC
a certificate, signed by an appropriate officer, as to
compliance with the conditions set forth in paragraphs
(a) and (b) of this Section 9.1;
(g) The Purchasers shall have received from
William R. Sawyers, Proskauer Rose Goetz & Mendelsohn
LLP and Ballard Spahr Andrews & Ingersoll legal
opinions in form and substance reasonably satisfactory
to Purchasers and their counsel with respect to the
matters set forth in the first and the third and
fourth (except with respect to the Company's
Subsidiaries) sentences of Section 4.1, Section 4.2,
the first and second sentences of Section 4.3(a),
Section 4.3(b) and (c), clauses (i), (ii) and (iv) of
Section 4.4 (except with respect to the Company's
Subsidiaries), Section 4.6 and the first sentence of
Section 4.7 with respect to Proceedings and Judgments;
(h) Since the date of this Agreement, no change
or circumstance resulting in a Material Adverse Effect shall
have occurred;
(i) All of the conditions to the funding
contemplated by the written commitments from the
lenders (the "Lenders") with respect to the financings
(the "Financings") to be entered into by Sub in
connection with the transactions contemplated by this
Agreement, copies of which written commitments have
been furnished to DMFC, shall have been satisfied in
full or waived and such Lenders shall have provided or
made available to Sub the cash contemplated by such
Financings;
(j) DMFC shall have provided to the Purchasers the
statement described in Treasury Regulation Section
1.1445-2(c)(3) certifying that none of the interests in
DMFC or the Company are U.S. real property interests for
purposes of Section 1445 of the Code. Such statement will
be complete, accurate and valid on the Closing Date.
If such statement is not
<PAGE>
received by or on the Closing Date, DMFC shall withhold
all amounts required to be withheld by Section 1445 of
the Code; and
(k) No Person shall have commenced or threatened
to commence any actions or proceedings against a
member of the Del Monte Group that challenges or seeks
(or would challenge or seek) the recovery of a
material amount of damages in connection with the
transactions contemplated hereby and that in
Purchasers' reasonable judgment presents a material
risk of a material adverse judgment or ruling against
such member of the Del Monte Group.
9.2 Conditions Precedent to Obligations of DMFC. The
obligation of DMFC to consummate the Merger at the Closing is
subject to the satisfaction or waiver at or prior to the Closing
of each of the following conditions:
(a) All representations and warranties of
Purchasers contained in this Agreement shall be true
and correct in all material respects on and as of the
Closing Date as though made on and as of such date,
except to the extent that any such representation or
warranty is made as of a specified date, in which case
such representation or warranty shall have been true
and correct in all respects as of such date;
(b) Purchasers shall have performed and complied
with, in all material respects, all agreements and
covenants required by this Agreement to be performed
or complied with by them prior to or at the Closing,
except that any agreement or covenant that is
qualified by materiality or Material Adverse Effect
shall have been performed and complied with in all
respects (giving effect to such qualification);
(c) No Law or Judgment shall be in effect which
prohibits or declares illegal the Merger or the other
transactions contemplated by this Agreement;
(d) The approval of the Merger by the
stockholders of DMFC shall have been obtained;
(e) All waiting periods under the HSR Act,
and all extensions thereof, the passing of which are
required for consummation of the Merger, shall have
passed;
(f) Purchasers shall have made the payments
required by Section 2.5(b);
<PAGE>
(g) DMFC shall have received from Purchasers a
certificate, signed by an appropriate officer of each
Purchaser, as to compliance with the conditions set
forth in paragraphs (a) and (b) of this Section 9.2;
(h) DMFC shall have received from Cleary,
Gottlieb, Steen & Hamilton, counsel to Purchasers, a
legal opinion in form and substance reasonably
satisfactory to DMFC and its counsel with respect to
the matters set forth in Sections 5.1, 5.2, clauses
(i), (ii) and (iv) of 5.3, 5.4 and 5.5(a); and
(i) No Person shall have commenced or threatened
to commence any actions or proceedings against a
member of the Del Monte Group that challenges or seeks
(or would challenge or seek) the recovery of a
material amount of damages in connection with the
transactions contemplated hereby and that in DMFC's
reasonable judgment presents a material risk of a
material adverse judgment or ruling against such
member of the Del Monte Group.
ARTICLE X
TERMINATION
10.1 Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing Date:
(a) By the written agreement of each of Purchasers
and DMFC; or
(b) By either Purchasers or DMFC if the Closing shall
not have occurred on or prior to June 30, 1997; or
(c) By Purchasers if, by February 27, 1997, Purchasers
shall not have received, and retain, irrevocable proxies
substantially in the form of Exhibit A-1 hereto from
holders of DMFC Common Stock and DMFC Preferred Stock
holding of record at least 66_% of the shares outstanding
of each Class of DMFC Common Stock and of each Series of
DMFC Preferred Stock (the "66-2/3% Proxies"); provided,
however, if by February 27, 1997 W.R. Huff Asset Management
Company indicates its consent to the Merger with respect to
the shares for which it has voting authority and agrees to
use its best efforts to obtain such proxies from the
holders of the shares for which it is the investment
advisor, including recommending that such holders execute
the proxies, W.R. Huff Asset Management Company shall have
until March 3, 1997 to deliver such proxies; or
<PAGE>
(d) By Purchasers if, by March 21, 1997, Purchasers
shall not have received, and retain, irrevocable proxies
substantially in the form of Exhibit A-1 hereto from
holders of DMFC Common Stock and DMFC Preferred Stock
holding of record at least 90% of the shares outstanding of
DMFC Common Stock and shares of DMFC Preferred Stock
representing at least 90% of the aggregate liquidation
value of all of the DMFC Preferred Stock ; or
(e) By Purchasers, if more than 5% of the shares
outstanding of DMFC Common Stock or shares of DMFC
Preferred Stock representing more than 5% of the aggregate
liquidation value of all of the DMFC Preferred Stock are
Dissenting Shares;
(f) By either DMFC or the Purchasers in the event that
any Judgment or Legal Requirement becomes effective
restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions
contemplated by this Agreement, upon notification of the
non-terminating party by the terminating party; or
(g) By any party, at any time, if litigation is
brought or threatened to be brought by any Governmental
Authority for the purpose of restraining, enjoining or
otherwise prohibiting or making illegal the consummation of
any of the transactions contemplated by this Agreement.
10.2 Effect of Termination. If this Agreement is
terminated as permitted under Section 10.1, such termination
shall be without liability of or to any party to this Agreement,
or any Affiliate, stockholder, partner, director, officer,
employee, agent, servant, consultant or representative of such
party, except that termination of this Agreement under this
provision shall not relieve any party from any liability for
breach of this Agreement prior to the date of termination.
Notwithstanding the foregoing, if this Agreement is terminated
pursuant to the provisions set forth herein, the provisions set
forth in Section 8.4 and Article XI shall survive any such
termination.
ARTICLE XI
MISCELLANEOUS
11.1 Non-Survival of Representations and Warranties.
No representation or warranty in this Agreement or in the
schedules or certificates delivered pursuant to this Agreement
shall survive the Closing.
11.2 Publicity. At all times prior to the Closing,
Purchasers, DMFC and the Company shall consult with each other and
cooperate in the preparation of any
<PAGE>
press release or other public disclosure about this Agreement or
the proposed transactions contemplated hereby; provided, however,
that if this Agreement is terminated in accordance with its terms
or the Closing otherwise shall not occur, no party shall issue
any press release or make any other public disclosure with
respect to such termination or the transactions contemplated by
this Agreement without the prior written consent of the other
parties hereto; provided further, that any party may make all
disclosures required by any applicable Legal Requirement.
11.3 Costs and Expenses. Except as provided in Section
8.6, whether or not the transactions contemplated by this
Agreement are consummated, each of the parties to this Agreement
shall bear their own expenses incurred in connection with the
negotiation, preparation, execution and closing of this Agreement
and the transactions provided for hereby. Purchasers hereby agree
and acknowledge that, at the Closing, DMFC shall pay (or shall
cause the Company to pay) to Morgan Stanley all fees and expenses
to which it is entitled in connection with the transactions
contemplated hereby, and shall also pay (or shall cause the
Company to pay) the fees and estimated expenses of DMFC's other
advisors including, without limitation, legal counsel and
accountants. Purchasers agree that the reimbursement of all
additional expenses of the foregoing parties will be made no
later than 25 days following the Closing Date.
11.4 Notices. All notices, requests, consents,
payments, demands, and other communications required or
contemplated under this Agreement shall be in writing and (a)
personally delivered or sent via telecopy (receipt confirmed),
(b) sent by telegram (other than where original payment or other
documents must be delivered) for delivery within 24 hours, or (c)
sent by Federal Express, DHL Worldwide Express, or Airborne
Courier (for next business day delivery), shipping prepaid, as
follows:
If to Parent and/or Sub, to:
Texas Pacific Group
600 California Street, Suite 1850
San Francisco, CA 94108
Attention: Jeffrey A. Shaw, Vice President
Telecopy: (415) 616-0420
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: Paul J. Shim, Esq.
Telecopy: (212) 225-3999
<PAGE>
If to DMFC, to:
Del Monte Foods Company
One Market
San Francisco, California 94105
Attention: David L. Meyers, Chief Financial Officer
Telecopy: (415) 247-3103
with a copy to:
Attention: William R. Sawyers, General Counsel
Telecopy: (415) 247-3263
with a copy to:
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036
Attention: Peter G. Samuels, Esq.
Telecopy: (212) 969-2900
or to such other Persons or addresses as any party hereto may
request by notice given as aforesaid. Notices shall be deemed
given and received at the time of personal delivery or completed
telecopying, or, if sent by telegram, 24 hours after the time
sent, or, if sent by Federal Express, DHL Worldwide Express, or
Airborne Courier, one business day after such sending.
11.5 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute a single
instrument.
11.6 Entire Agreement. This Agreement (including the
exhibits and schedules annexed hereto or referred to herein) and
the Confidentiality Agreement dated October 28, 1996 between the
parties set forth the entire understanding and agreement between
the parties as to the matters covered herein and therein and
supersede and replace any prior understanding, agreement or
statement of intent, in each case, written or oral, of any and
every nature with respect thereto.
11.7 Headings. The headings, section titles and
captions contained in this Agreement or in any schedule or
exhibit annexed hereto or referred to herein, and the table of
contents to this Agreement, are for convenience of reference
only, shall not be deemed a part of this Agreement and do not
qualify or affect in any way the
<PAGE>
meaning or interpretation of this Agreement. All references
herein to sections shall be deemed references to such parts of
this Agreement, unless the context otherwise requires.
11.8 Governing Law. This Agreement shall be governed
in all respects, by the laws of the State of New York, including
validity, interpretation and effect, without regard to principles
of conflicts of law, except to the extent that the laws of the
State of Maryland shall specifically and mandatorily apply to the
Merger and the rights of stockholders incident thereto.
11.9 No Third Party Rights; Assignment. This
Agreement, including without limitation Section 7.1 hereof, is
intended to be solely for the benefit of the parties hereto and
is not intended to confer any benefits upon, or create any rights
in favor of, any Person other than the parties hereto, except
that the provisions of Section 7.2 shall be for the benefit of,
and shall be enforceable by each counterparty to the employment
agreements referred to in such Section, and the provisions of
Section 7.3 shall be for the benefit of, and shall be enforceable
by each Indemnified Party. No party hereto may assign this
Agreement or its rights or duties hereunder without the prior
written consent of the other party hereto, which consent shall
not be unreasonably withheld, except that either Purchaser may
assign its rights and duties to an Affiliate of Purchasers
(provided that such assignment shall not release either Purchaser
from its obligations hereunder).
11.10 Waivers and Amendments. This Agreement shall not
be amended or modified except by an instrument in writing signed
by the party against whom enforcement is sought. No waiver shall
be deemed to have been made by any party of any of its rights
under this Agreement unless the same shall be in a writing that
expressly refers to this Section and is signed on its behalf by
its authorized officer. Any such waiver shall constitute a waiver
only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time.
No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof. The
rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise
have at law or in equity.
11.11 Consent to Jurisdiction. DMFC, Parent and Sub
hereby submit themselves and their respective property in any
action or proceeding relating to this Agreement, or for
recognition and enforcement of any judgment in respect thereof,
to the non-exclusive general jurisdiction of the courts of the
State of New York, the County and City of New York, and the
United States of America in the Southern District of New York,
and the appellate courts thereof. DMFC, Parent and Sub each
consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such
<PAGE>
court or that such action or proceeding is brought in an
inconvenient court and agrees not to plead or claim the same.
DMFC, Parent and Sub each agrees that service of process in any
such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to it at the address set
forth in Section 11.4. DMFC, Parent and Sub agree that nothing in
this Section 11.11 shall affect the parties' right to effect
service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction.
[END OF TEXT]
<PAGE>
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
IN WITNESS WHEREOF, this Agreement has been executed
and delivered as of the date first written above.
DEL MONTE FOODS COMPANY TPG PARTNERS, L.P.
By: /s/ Thomas E. Gibbons By: /s/ Carrie Wheeler
-------------------------- ---------------------------
Name: Name:
Title: Title:
TPG SHIELD ACQUISITION
CORPORATION
By: /s/ Carrie Wheeler
---------------------------
Name:
Title:
<PAGE>
Exhibit 3.1
Conformed Copy
Restated Certificate of Incorporation
of
Del Monte Corporation
Under Section 807 of the Business Corporation Law
The undersigned, David L. Meyers, being the Executive
Vice President of Del Monte Corporation, and William R. Sawyers, being
the Secretary of Del Monte Corporation, hereby certify that as of
June 5, 1997:
ARTICLE FIRST: The name of the corporation is Del Monte
Corporation, hereinafter sometimes called the "Corporation."
ARTICLE SECOND: The Certificate of Incorporation of
the Corporation was filed by the Department of State of the State
of New York on the 5th day of October 1978 under the name
Reynolds Merger Corp.
ARTICLE THIRD: The text of the Certificate of Incorporation
is hereby restated without amendment or change to read in full as
follows:
FIRST: The name of the corporation is Del Monte
Corporation, hereinafter sometimes called the "Corporation."
SECOND: The purposes for which the Corporation is
formed are to engage primarily in the specific business of:
(1) Acquiring, producing, processing, marketing
and dealing in food, beverages and edible products of every
kind.
(2) Manufacturing, marketing and dealing in containers,
packaging materials, machinery and refrigerants.
(3) Acquiring, developing and dealing in and with
real and personal property, patents, inventions and
processes.
(4) Transporting, handling and storing goods of all
kinds.
(5) Performing property maintenance and other services
related thereto.
(6) Carrying on any related business or activity
which the Corporation may deem proper or convenient in
connection with any of the foregoing purposes, or
<PAGE>
which may be calculated directly or indirectly to promote
the interest of the Corporation or to enhance the value of
its property or business.
THIRD: The office of the Corporation in the State
of New York is to be located in The City of New York, New York
County.
FOURTH: The aggregate number of shares which the
Corporation shall have the authority to issue is 2,000
shares of common stock of the par value of $1.00 per share.
FIFTH: The Secretary of State is designated as
the agent of the Corporation upon whom process against the
Corporation may be served, and the address to which the
Secretary of State shall mail a copy of any process against
the Corporation served upon him is:
CT Corporation System
1633 Broadway
New York, New York 10019
SIXTH: The accounting period which the
Corporation intends to establish as its first calendar or
fiscal year for reporting the franchise tax on business
corporations imposed by Article Nine (a) of the Tax Law is
the period ending December 31, 1978.
SEVENTH: The registered agent of the Corporation
is CT Corporation System, whose address is 1633 Broadway,
New York, New York 10019. The registered agent is the agent
of the Corporation upon whom process against it may be
served.
EIGHTH: The Corporation 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 the Corporation to
procure a 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
the Corporation served in any capacity at the request of
the Corporation, by reason of the fact that he, his
testator or intestate, was a director or officer of the
Corporation, 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 for any other corporation or any
partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the
Corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his
conduct was unlawful; provided, however, that the
termination of any such civil or criminal action or
proceeding by judgment, settlement, conviction or upon a
plea of nolo contendere, or its equivalent, shall not in
itself create a presumption that any such director or
officer did not act, in good faith, for a
2
<PAGE>
purpose which he reasonably believed to be in or, in the
case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the
Corporation or that he had reasonable cause to believe that
his conduct was unlawful.
The Corporation shall indemnify any person made,
or threatened to be made, a party to an action by or in the
right of the Corporation to procure a judgment in its favor
by reason of the fact that he, his testator or intestate,
is or was a director or officer of the Corporation, or is
or was serving at the request of the Corporation 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 for any other corporation or any
partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the
Corporation, except that no indemnification under this
paragraph 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 the
Corporation, 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 the 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.
For the purpose of this Section EIGHTH, the
Corporation shall be deemed to have requested a person to
serve an employee benefit plan where the performance by
such person of his duties to the Corporation also imposes
duties on, or otherwise involves services by, such person
to the plan or participants or beneficiaries of the plan;
excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be
considered fines; and action taken or omitted by a person
with respect to an employee benefit plan in the performance
of such person's duties for a purpose reasonably believed
by such person to be in the interest of the participants
and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the
corporation.
A person who has been successful, on the merits
or otherwise, in the defense of a civil or criminal action
or proceeding of the character described in this Section
EIGHTH shall be entitled to indemnification as authorized
in this Section EIGHTH.
Except as provided in the immediately preceding
paragraph, any indemnification under this Section EIGHTH
unless ordered by a court, shall be made by the
Corporation, only if authorized in the specific case: (i)
by the Board acting by a
3
<PAGE>
quorum consisting of directors who are not parties to such
action or proceeding upon a finding that the director or
officer has met the standard of conduct set forth in
paragraphs 1 or 2, of this Section EIGHTH or, (ii) if such
quorum is not obtainable or, even if obtainable, a quorum
of disinterested directors so directs, (A) By the board
upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because
the applicable standard of conduct set forth in such
paragraphs has been met by such director or officer, or (B)
By the shareholders upon a finding that the director or
officer has met the applicable standard of conduct set
forth in such paragraphs.
Expenses incurred in defending a civil or
criminal action or proceeding may be paid by the
corporation in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by or
on behalf of such director or officer to repay such amount
as, and to the extent, required by paragraph (a) of Section
725 of the Business Corporation Law.
All expenses incurred in defending a civil or
criminal action or proceeding which are advanced by the
Corporation under the provisions of Section 723 of the
Business Corporation Law or allowed by a court under the
provisions of Section 724 of the Business Corporation Law
shall be repaid in case the person receiving such
advancement or allowance is ultimately found, under the
procedure set forth in this Section NINTH, not to be
entitled to indemnification or, where indemnification is
granted, to the extent the expenses so advanced by the
Corporation or allowed by the court exceed the
indemnification to which he is entitled.
No indemnification, advancement or allowance
shall be made under this Section EIGHTH in any circumstance
where it appears: (i) that the indemnification would be
inconsistent with the law of the jurisdiction of
incorporation of a foreign corporation which prohibits or
otherwise limits such indemnification; (ii) that the
indemnification would be inconsistent with a provision of
the certificate of incorporation, a by-law, a resolution of
the board or of the shareholders, an agreement or other
proper corporate action, in effect at the time of the
accrual of the alleged cause of action asserted in the
threatened or pending action or proceeding in which the
expenses were incurred or other amounts were paid, which
prohibits or otherwise limits indemnification; or (iii) if
there has been a settlement approved by the court, that the
indemnification would be inconsistent with any condition
with respect to indemnification expressly imposed by the
court in approving the settlement.
If any expenses or other amounts are paid by way
of indemnification, otherwise than by court order or action
by the shareholders, the Corporation shall, not later than
the next annual meeting of the shareholders unless such
meeting is held within three months from the date of such
payment, and in any event, within fifteen months from the
date of such payment, mail to its shareholders of record at
the time entitled to vote for the election of directors a
statement specifying the persons paid, the amounts paid and
the nature and status at the time of such payment of the
litigation or threatened litigation.
4
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If any action with respect to indemnification of
directors and officers is taken by way of amendment of the
by-laws, resolution of directors, or by agreement, then the
Corporation shall, not later than the next annual meeting
of shareholders, unless such meeting is held within three
months from the date of such action, and, in any event,
within fifteen months from the date of such action, mail to
its shareholders of record at the time entitled to vote for
the election of directors a statement specifying the action
taken.
The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by
him in any such capacity, or arising out of
his status as such, whether or not the Corporation would
have the power to indemnify him against such liability
under the provisions of Section 726 of the Business
Corporation Law.
The indemnification and advancement of expenses
granted pursuant to, or provided by, this Section EIGHTH
shall not be deemed exclusive of any other rights to which
a director or officer seeking indemnification or
advancement of expenses may be entitled, whether contained
in the certificate of incorporation or by-laws or, when
authorized by the certificate of incorporation or by-laws,
(i) a resolution of shareholders, (ii) a resolution of
directors, or (iii) an agreement providing for such
indemnification, provided that no indemnification may be
made to or on behalf of any director or officer if a
judgment or other final adjudication adverse to the
director or officer establishes that his acts were
committed in bad faith or were the result of active and
deliberate dishonesty and were material to the cause of
action so adjudicated, or that he personally gained in fact
a financial profit or other advantage to which he was not
legally entitled. Nothing contained in this Section EIGHTH
shall affect any rights to indemnification to which
corporate personnel other than directors and officers may
be entitled by contract or otherwise under law.
The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section EIGHTH
shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such
a person.
NINTH: A director of the Corporation shall not be
personally liable to the Corporation or its stockholders
for monetary damages for any breach of fiduciary duty as a
director, except for liability for actions under the
following provisions of the Business Corporations Law: (i)
the liability of any director if a judgment or other final
adjudication adverse to him establishes that his acts or
omissions were in bad faith or involved intentional
misconduct or a knowing violation of law or that he
personally gained in fact a financial profit or other
advantage to which he was not legally entitled or
5
<PAGE>
that his acts violated Section 719 of the Business
Corporation Law, or (ii) the liability of any director for
any act or omission prior to the adoption of a provision
authorized by this paragraph.
If the Business Corporation Law of the State of
New York shall be amended, after this Certificate of
Amendment is filed to include this Section NINTH to
authorize corporate action further eliminating or limiting
the liability of directors, then a director of the
Corporation, in addition to the circumstances in which he
is liable immediately prior to such amendment, shall be
free of liability to the fullest extent permitted by the
Business Corporation Law of the State of New York, as so
amended.
ARTICLE FOURTH: This Restated Certificate of Incorporation
was authorized by a unanimous vote of the Board of Directors
followed by a written consent of the sole stockholder.
6
<PAGE>
IN WITNESS WHEREOF, we have signed this certificate on
the 5th day of June 1997, and we affirm that the statements contained
herein are true under penalty of perjury.
/s/ David L. Meyers
-----------------------------
David L. Meyers
Executive Vice President
/s/ William R. Sawyers
-----------------------------
William R. Sawyers
Secretary
7
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED
BY-LAWS
OF
DEL MONTE CORPORATION
As Amended May 15, 1987
and as Further Amended May 11, 1994
ARTICLE I
Meetings of Stockholders
SECTION 1.01. Annual. The annual meeting of the
stockholders of Del Monte Corporation (the "Company") shall be
held in October, November or December each year at such place and
such time as the Board of Directors may fix.
SECTION 1.02. Special. Special meetings of the
stockholders may be called by the Chairman of the Board, by the
Chief Executive Officer or by the Board of Directors and shall be
held at such place, date and time as any of them shall fix.
SECTION 1.03. Notice. Written notice of the time and
place and, in the case of special meetings, the purpose or
purposes of each meeting of stockholders shall be given not less
than 10 days nor more than 50 days before each meeting to each
stockholder entitled to vote at the meeting.
SECTION 1.04. Quorum. At all meetings of stockholders
the holders of a majority of the stock entitled to vote at said
meeting, present in person or represented by proxy, shall
constitute a quorum for the transaction of business except as
otherwise provided by statute or the Certificate of
Incorporation. If a quorum is not present at any meeting of
stockholders, the presiding officer may adjourn the meeting
without notice other than by announcement at the meeting to
another place, date and time. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally
noticed.
SECTION 1.05. Voting. At all meetings of the
stockholders, each stockholder entitled to vote may vote
personally or by proxy. The instrument authorizing a proxy to act
at any meeting shall be filed with the Secretary. All elections
and other matters shall be decided by a majority of the shares
entitled to vote at the meeting except as otherwise provided by
statute, the Certificate of Incorporation or these By-Laws.
<PAGE>
SECTION 1.06. Written Consent. Any action required or
permitted to be taken at any meeting of stockholders, including
annual meetings, may be taken without a meeting and without
notice, if a written consent thereto is signed by the holder(s)
of all of the stock entitled to vote on such actions. Such
written consent(s) shall be filed with the minutes of the
Company.
ARTICLE II
Board of Directors
SECTION 2.01. Number and Term. The business and
affairs of the Company shall be managed by or under the direction
of a Board of Directors. The number of Directors shall be such
number as may from time to time be fixed by resolution of the
Board of Directors, but in no event shall such number be less
than three. Directors shall be elected at each annual meeting of
the stockholders and shall serve until the next annual meeting of
the stockholders or until their successors are elected and shall
qualify.
SECTION 2.02. Resignation. Any director may resign at
any time by giving written notice to the Chairman of the Board,
to the Chief Executive Officer or to the Secretary. Unless
otherwise stated in such notice of resignation, acceptance by the
Board shall not be necessary to make it effective. Any
resignation shall take effect at the time specified therein or,
in the absence of such specification, it shall take effect upon
receipt.
SECTION 2.03. Vacancies. Any vacancy on the Board of
Directors and any newly created directorship resulting from any
increase in the authorized number of Directors may be filled by a
majority of the Directors then in office, although less than a
quorum, or by the sole remaining Director, and any Director so
chosen shall hold office until the next annual meeting of the
stockholders and until his successor shall be elected and shall
qualify.
SECTION 2.04. Meetings. As soon as practicable after
the annual meeting of the stockholders, an annual meeting of the
Board of Directors shall be held without notice at such place as
may be designated by the Chairman of the Board or by the Chief
Executive Officer for the purpose of electing officers and
transacting such other business as may properly come before the
meeting. Regular meetings of the Board of Directors may be held
without notice at such dates, times and place as shall from time
to time be determined by the Board of Directors. Special meetings
of the Board of Directors may be called by the Chief Executive
Officer or the President or the Secretary. Special meetings of
the Board of Directors pursuant to Section 2.07 of these By-Laws
may be called upon not less than one hour's oral or written
notice transmitted by any means of communication.
SECTION 2.05. Quorum. One third, but not less than two
(2) of the Directors in office shall constitute a quorum for the
transaction of business. All matters coming before the Directors
shall be determined by a majority vote of the Directors present,
except as otherwise provided herein or required by law.
<PAGE>
SECTION 2.06. Action Without Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors or
any committee appointed by the Board of Directors may be taken
without a meeting if all members thereof consent to such action
in writing and such writing or writings are filed with the
minutes of proceedings of the Board or committee.
SECTION 2.07. Meeting via Conference Telephone.
Members of the Board of Directors may participate in a meeting of
the Board by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 2.07 shall
constitute presence in person at such meeting.
ARTICLE III
Officers
SECTION 3.01. Description. The Board of Directors
shall annually elect a Chairman of the Board, a President and a
Chief Executive Officer, who may be the same person and who may
hold any other office, and a Secretary, Treasurer, and such other
officers with such titles as the Board of Directors may
designate, who need not be Directors. The Board of Directors from
time to time may fill such vacancies as may occur among the
officers elected by the Board and may elect such additional
officers with such titles as they may deem appropriate. Each
officer shall have such powers and perform such duties as may be
specified in the By-Laws as may be determined from time to time
by the Board or by the Chief Executive Officer.
SECTION 3.02. Terms. The officers elected by the Board
of Directors shall hold their offices until the next annual
meeting of the Board of Directors and until their successors
shall be elected and shall qualify. Any such officer may resign
at any time by giving written notice to the Chairman of the
Board, the President, the Chief Executive Officer or to the
Secretary. Unless otherwise stated in such notice of resignation,
acceptance by the Board of Directors shall not be necessary to
make it effective. Any resignation shall take effect at the time
specified therein or in the absence of such specification, it
shall take effect upon receipt. Any of said officers may be
removed at any time by the Board of Directors.
SECTION 3.03. Appointed Officers and Agents. The Chief
Executive Officer may from time to time appoint one or more
officers and agents with such titles, powers and duties as the
Chief Executive Officer may specify. Any of said appointed
officers or agents may be removed at any time by the Chief
Executive Officer and may resign at any time by giving written
notice to the Chief Executive Officer or to the Secretary.
SECTION 3.04. Chief Executive Officer. The Chief
Executive Officer, pursuant to authority delegated to him by the
Board of Directors, shall have all of the power and authority of
the Board of Directors in managing the business and affairs of
the Company except as reserved or restricted by law, the
Company's Certificate of Incorporation or the By-Laws or as
specifically reserved by the Board of Directors. He shall have
general and active control of the
<PAGE>
business and affairs of the Company and the general supervision
of its officers, employees and agents.
SECTION 3.05. Delegation of Powers and Authority by
Officers. All officers of the Company shall have such authority
and perform such duties in the management of the Company as may
be provided in these By-Laws, or as may be determined by the
Chief Executive Officer. Each officer may further delegate to any
other officer or to any employee or agent of the Company, such
portions of their authority as the officer shall deem
appropriate, subject to such limitations as the officer shall
specify, and may revoke such authority at any time.
SECTION 3.06. Stockholder Consents and Proxies. The
Chief Executive Officer, President, Treasurer, Secretary, an
Assistant Secretary, or any one of them, shall have the power and
authority on behalf of the Company to execute any stockholders'
consents and to attend and act and vote in person or by proxy at
any meetings of the stockholders of any corporation in which the
Company may own stock, and at any such meetings shall possess and
may exercise any and all the rights and powers incident to the
ownership of such stock which as the owner thereof the Company
might have possessed and executed if present. The Board of
Directors by resolutions from time to time may confer like power
upon any other officer.
ARTICLE IV
Shares of Stock and Certificates
SECTION 4.01. Form. Any classes or series of the
Company's stock, by resolution of the Board of Directors, may be
in the form of uncertificated shares but every stockholder, upon
request in the case of uncertificated shares and without request
in the case of certificated shares, shall be entitled to have a
certificate or certificates signed by the appropriate officers of
the Company certifying the number of shares owned by him. Any of
or all the signatures on the certificate may be facsimile. In
case any officer, transfer agent or registrar whose facsimile
signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before the
certificate is issued, such certificate may be issued as if such
person were such officer, transfer agent or registrar at the date
of issue.
SECTION 4.02. Transfer of Ownership. Transfers of
certificated shares shall be made upon surrender of the
certificate therefor, and a written assignment of the shares
evidenced thereby. Except when a certificate is issued under
Section 4.03, an outstanding certificate shall be canceled before
the new certificate is issued. Transfers of uncertificated shares
shall be made upon written assignment.
SECTION 4.03. Lost Certificates. Any person requesting
a stock certificate in lieu of one lost, stolen or destroyed,
shall provide the Company an affidavit as to ownership of the
certificate and of the facts which go to prove its loss, theft or
destruction. The Secretary may also require a bond sufficient to
indemnify the Company against any claim that may be made on
account of the alleged loss, theft or destruction of the
certificate or the issuance of a new certificate.
<PAGE>
SECTION 4.04. Fixing Record Date. The Board of Directors
may fix in advance a record date not more than 50 days nor less than
10 days before the date of any meeting of the stockholders, nor
more than 50 days prior to any other action described below in
this section, for the determination of the stockholders entitled
to notice of or to vote at any meeting of stockholders and any
adjournment thereof, or entitled to receive payment of any
dividend or other distribution of any rights, or entitled to
exercise the rights in respect of any change, conversion or
exchange of stock for the purpose of any other lawful action.
ARTICLE V
Amendments
These By-Laws may be altered, amended or repealed by a
majority of the Board of Directors or by the stockholders.
<PAGE>
Exhibit 3.3
AMENDMENT TO THE
AMENDED AND RESTATED
BY-LAWS
OF
DEL MONTE CORPORATION
March 6, 1996
Article III, Section 3.01 of the Amended and Restated
By-laws of the Corporation is hereby replaced by the following
new Section 3.01, which reads in its entirety as follows:
"SECTION 3.01. Description. The Board of Directors
shall annually elect a Chairman of the Board, a
President and a Chief Executive Officer, who may be
the same person and who may hold any other office, or
two Co-Chairmen of the Board, two Co-Presidents and
two Co-Chief Executive Officers, and a Secretary, a
Treasurer and such other officers with such titles as
the Board of Directors may designate, who need not be
Directors. The Board of Directors from time to time
may fill such vacancies as may occur among the
officers elected by the Board and may elect such
additional officers with such titles as they may deem
appropriate. Each officer shall have such powers and
perform such duties as may be specified in the By-Laws
as may be determined from time to time by the Board or
by the Chief Executive Officer or Co-Chief Executive
Officers."
Article III of the Amended and Restated By-laws of the
Corporation is hereby amended by adding, immediately following
Section 3.04, Section 3.04.1 thereto which reads in its entirety
as follows:
"SECTION 3.04.1. Co-Chief Executive Officers. In the
absence of a Chief Executive Officer, the Board of
Directors may elect two Co-Chief Executive Officers, who
shall have such powers and perform such duties as may be
assigned to them by the Board of Directors."
<PAGE>
Exhibit 3.6
Conformed Copy
ARTICLES OF MERGER
BETWEEN
TPG SHIELD ACQUISITION CORPORATION
AND
DEL MONTE FOODS COMPANY
THIS IS TO CERTIFY THAT:
FIRST: TPG Shield Acquisition Corporation and Del Monte
Foods Company agree to merge (the "Merger") in the manner hereinafter
set forth.
SECOND: Del Monte Foods Company is the corporation to
survive the Merger.
THIRD: Both Del Monte Foods Company (the "Surviving
Corporation") and TPG Shield Acquisition Corporation (the
"Merging Corporation") are incorporated under the laws of the
State of Maryland.
FOURTH: The principal office of the Surviving
Corporation in the State of Maryland is located in Baltimore City
and the principal office of the Merging Corporation in the State
of Maryland is located in Baltimore City.
FIFTH: The Merging Corporation owns no interest in land
in the State of Maryland.
SIXTH: The charter of the Merging Corporation, as set
forth in Exhibit A attached hereto (the "Surviving Charter"),
will be the charter of the Surviving Corporation, except that
Article I of the Surviving Charter shall be amended by deleting
the Article in its entirety and substituting the following in
lieu thereof:
"The name of the Corporation is Del Monte Foods Company."
SEVENTH: The current address of the principal office of
the Surviving Corporation is as set forth in Article Third of the
Surviving Charter.
EIGHTH: The name and address of the Surviving Corporation's
current resident agent is as set forth in Article Third of the
Surviving Charter.
NINTH: The number of directors of the Surviving Corporation
and the names of those currently in office are as set forth in
Article Fifth of the Surviving Charter.
<PAGE>
TENTH: The total number of shares of all classes of stock
which each corporation party to these Articles has the authority
to issue and the number of shares of each class are as follows:
Surviving Corporation
(a) The total number of shares of stock which the
Surviving Corporation has authority to issue immediately before
the Merger described herein is 35,843,000 shares, consisting of
(i) 16,523,000 shares of Series A Cumulative Exchangeable
Preferred Stock, $.01 par value per share, (ii) 3,616,000 shares
of Series B Cumulative Exchangeable Preferred Stock, $.01 par
value per share, (iii) 2,900,000 shares of Series C Cumulative
Preferred Stock, $.01 par value per share, (iv) 1,554,000 shares
of Series D Cumulative Preferred, $.01 par value per share, (v)
5,000,000 of Series E Cumulative Preferred Stock, $.01 par value
per share, (vi) 2,900,000 shares of Series F Cumulative Preferred
Stock, $.01 par value per share, (vii) 1,000,000 shares of Class
A Common Stock, $.01 par value per share, (viii) 150,000 shares
of Class B Common Stock, $.01 par value per share, (ix) 550,000
shares of Class C Common Stock, $.01 par value per share, (x)
550,000 Shares of Class D Common Stock, $.01 par value per share,
(xi) 550,000 shares of Class E Common Stock, $.01 par value per
share, and (xii) 550,000 shares of Class F Common Stock, $.01 par
value per share, having an aggregate par value of $358,430.00.
(b) The total number of shares of all classes of
stock which the Surviving Corporation has authority to issue as
changed by the Merger described herein is 2,000,000 shares,
consisting of 1,000,000 shares of Common Stock, $.01 par value
per share, and 1,000,000 shares of Preferred Stock, $.01 par
value per share, of which 75,000 shares have been designated and
classified as Series A Redeemable Preferred Stock and 75,000
shares have been designated and classified as Series B Redeemable
Preferred Stock. The aggregate par value of all shares of all
classes having a par value is $20,000.
Merging Corporation
(c) The total number of shares of all classes of
stock which the Merging Corporation has authority to issue is
2,000,000 shares, consisting of 1,000,000 shares of Common Stock,
$.01 par value per share, and 1,000,000 shares of Preferred
Stock, $.01 par value per share, of which 75,000 shares have been
designated and classified as Series A Redeemable Preferred Stock
and 75,000 shares have been designated and classified as Series B
Redeemable Preferred Stock. The aggregate par value of all shares
of all classes having a par value is $20,000.
ELEVENTH: Upon the Effective Time, the Merging
Corporation shall be merged into the Surviving Corporation; and,
thereupon, the Surviving Corporation shall possess any and all
purposes and powers of the Merging Corporation; and all leases,
licenses, property, rights, privileges, and powers of whatever
nature and description of the Merging Corporation shall be
transferred to, vested in, and devolved upon the Surviving
Corporation, without further act or deed, subject to all of the
debts and obligations of the Merging Corporation.
2
<PAGE>
At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof:
(a) Each share of Class A Common Stock, Class B Common
Stock, Class C Common Stock, Class D Common Stock, Class E Common
Stock and Class F Common Stock of the Surviving Corporation (the
"DMFC Common Stock") and of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and Series F Preferred Stock (the
"DMFC Preferred Stock") (other than (i) shares of DMFC Common
Stock of DMFC Preferred Stock held by persons who have taken all
steps necessary to perfect their right to an appraisal of the
fair market value of such shares under Sections 3-202 et seq. of
the Maryland General Corporation Law ("Dissenting Shares") or
(ii) Elected Shares (as defined below)) shall be converted into
the right to receive in cash the consideration applicable to such
share in accordance with Schedule 2.9(a) of the Agreement and
Plan of Merger (the "Agreement"), dated as of February 21, 1997,
as amended and restated as of April 14, 1997, among TPG Partners,
L.P., a Delaware limited partnership, the Merging Corporation
(collectively, the "Purchasers") and the Surviving Corporation.
If, in accordance with the Maryland General Corporation Law, any
holder of Dissenting Shares shall fail to (i) file a written
objection to the Merger at or before the meeting of stockholders
of the Surviving Corporation at which the Merger is considered or
(ii) effectively withdraw or lose his right to payment of the
fair value for his shares of DMFC Common Stock or DMFC Preferred
Stock, then each such share shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive in cash the
consideration applicable to such share in accordance with
Schedule 2.9(a) of the Agreement.
(b) At the election of the holder thereof in
accordance with this Article, each share of Series F Preferred
Stock of the Surviving Corporation held by such holder (an
"Electing Shareholder") shall be converted into a number of
shares of common stock, par value $0.01 per share, of the
Surviving Corporation ("Surviving Corporation Common Stock")
determined in the manner set forth in Schedule 2.9(b) of the
Agreement (the "Series F Share Consideration"), in lieu of the
cash consideration provided for in Section 2.9(a) of the
Agreement. In order to elect to receive the Series F Share
Consideration in lieu of cash consideration, an Electing
Shareholder must furnish to the Secretary of the Surviving
Corporation, on or before the fifth business day immediately
preceding the Closing Date (as defined in the Agreement), written
notice to the Surviving Corporation and each of the Purchasers
effectively (i) waiving any right of such Electing Shareholder to
receive the cash consideration provided for in Section 2.9(a) of
the Agreement and (ii) electing to convert all or a portion of
such Electing Shareholder's shares of Series F Preferred Stock of
the Surviving Corporation into the Series F Share Consideration.
For purposes of these Articles of Merger, shares of Series F
Preferred Stock with respect to which an election to receive the
Series F Share Consideration is made shall be referred to as
"Elected Shares."
(c) The holders of shares of DMFC Common Stock and
DMFC Preferred Stock shall cease to have any rights as
stockholders of the Surviving Corporation, including any right to
receive dividends, whether or not previously declared and unpaid
(except such rights, if any, as they may have pursuant to Section
3-202 of the Maryland General Corporation Law) and their
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sole right shall be the right to receive, as the case may be, (i)
the cash into which their shares of DMFC Common Stock or DMFC
Preferred Stock have been converted by the Merger as provided in
Section 2.9(a) of the Agreement or (ii) in the case of Elected
Shares, the Surviving Corporation Common Stock into which such
Elected Shares shall have been converted in the Merger pursuant
to Section 2.9(b) of the Agreement.
(d) Each share of common stock, $.01 par value per
share, of the Merging Corporation issued and outstanding
immediately prior to the Effective Time shall be converted into
one share of Surviving Corporation Common Stock.
(e) Each share of Series A Redeemable Preferred Stock,
$.01 par value per share, of the Merging Corporation ("Merging
Corporation Series A Preferred Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into
one share of Series A Redeemable Preferred Stock of the Surviving
Corporation ("Surviving Corporation Series A Preferred Stock").
Each share of Series B Redeemable Preferred Stock, $.01 par value
per share, of the Merging Corporation ("Merging Corporation
Series B Preferred Stock") issued and outstanding immediately
prior to the Effective Time shall be converted into one share of
Series B Redeemable Preferred Stock of the Surviving Corporation
("Surviving Corporation Series B Preferred Stock"). The terms of
the Surviving Corporation Series A Preferred Stock and the
Surviving Corporation Series B Preferred Stock shall, by virtue
of the Merger, in which the charter of the Merging Corporation
shall become the charter of the Surviving Corporation (except as
otherwise provided in Article Sixth hereof), be the same as the
terms of the Merging Corporation Series A Preferred Stock and
Merging Corporation Series B Preferred Stock, respectively.
TWELFTH: The terms and conditions of the Merger were
duly advised, authorized and approved by the Merging Corporation
in the manner and by the vote required by the laws of the State
of Maryland and the charter of the Merging Corporation, as
follows:
(a) The Board of Directors of the Merging Corporation,
by written consent to such action signed by all the members
thereof and filed with the minutes of proceedings of the Board,
adopted resolutions declaring that the terms and conditions of
the Merger were advisable and directing that the proposed
transaction be submitted for consideration by the stockholders of
the Merging Corporation.
(b) A consent in writing, setting forth approval of
the terms and conditions of the Merger as so proposed was signed
by all stockholders of the Merging Corporation entitled to vote
thereon, and such consent is filed with the records of
stockholder meetings of the Merging Corporation.
THIRTEENTH: The terms and conditions of the Merger
were duly advised, authorized and approved by the Surviving
Corporation in the manner and by the vote required by the laws of
the State of Maryland and the charter of the Surviving
Corporation, as follows:
(a) The Board of Directors of the Surviving Corporation,
at meetings duly called and held, adopted resolutions declaring
that the terms and conditions of the Merger were
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advisable and directing that the proposed transaction be
submitted for consideration by the stockholders of the Surviving
Corporation.
(b) At a meeting duly called and held, resolutions
setting forth approval of the terms and conditions of the Merger
as so proposed were adopted by the requisite vote of the
stockholders of the Surviving Corporation entitled to vote
thereon.
FOURTEENTH: These Articles of Merger shall become
effective upon acceptance for record by the State Department of
Assessments and Taxation of the Maryland (the "Effective Time").
FIFTEENTH: Each of the undersigned President and
Senior Vice President acknowledges these Articles of Merger to be
the corporate act of the respective corporate party on whose
behalf he has signed, and further, as to all matters or facts
required to be verified under oath, each of the undersigned
President and Senior Vice President acknowledges that to the best
of his knowledge, information and belief, these matters and facts
relating to the corporation on whose behalf he has signed are
true in all material respects and that this statement is made
under the penalties for perjury.
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IN WITNESS WHEREOF, these Articles of Merger have been duly
executed by the parties hereto this 17th day of April, 1997.
ATTEST: TPG SHIELD ACQUISITION
CORPORATION
/s/ Carrie Wheeler By: /s/ Jeffrey A. Shaw (SEAL)
- -------------------------- ------------------------
Carrie Wheeler Jeffrey A. Shaw
Assistant Secretary President
ATTEST: DEL MONTE FOODS COMPANY
/s/ William R. Sawyers By: /s/ Thomas E. Gibbons (SEAL)
- -------------------------- ------------------------
William R. Sawyers Thomas E. Gibbons
Secretary Senior Vice President
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Exhibit A
TPG SHIELD ACQUISITION CORPORATION
ARTICLES SUPPLEMENTARY
TPG Shield Acquisition Corporation, a Maryland
corporation (the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: Under a power contained in Article Sixth of the
Restated and Amended Articles of Incorporation of the Corporation
(the "Restated Articles of Incorporation"), the Board of
Directors of the Corporation (the "Board of Directors"), by
unanimous written consent dated April 17, 1997, classified and
designated seventy-five thousand (75,000) shares (the "Series A
Shares") of Preferred Stock (as defined in the Restated Articles
of Incorporation) as shares of Series A Redeemable Preferred
Stock, with preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of
redemption of shares as set forth below:
Section 1. Designation and Amount.
The shares of such series shall be designated as
the "Series A Redeemable Preferred Stock" ("Series A
Preferred Stock") and the number of shares constituting
such series shall be seventy-five thousand (75,000), which
number may be decreased and, only for purposes of Section
2(b) below, increased by the Board of Directors without a
vote of stockholders; provided, however, that such number
may not be decreased below the number of then currently
outstanding shares of Series A Preferred Stock.
Section 2. Dividends and Distributions.
(a) The holders of shares of Series A Preferred
Stock, in preference to the holders of shares of the
Corporation's Common Stock, par value $.01 per share (the
"Common Stock"), and to any other capital stock of the
Corporation ranking junior to Series A Preferred Stock as
to payment of dividends, shall be entitled to receive,
when, as and if declared by the Board of Directors out of
funds of the Corporation legally available for the payment
of dividends, cumulative dividends at the annual rate of
14% of the Liquidation Value per share, and, subject to the
provisions of Section 4(d)(ii), no more. Dividends payable
in respect of the outstanding shares of Series A Preferred
Stock shall begin to accrue and be cumulative from the
respective dates of original issue of such shares (which
dates shall be reflected on the certificates evidencing the
same), and shall be payable in quarterly payments on April
15, July 15, October 15 and January 15 (or, if any such day
is not a Business Day, as defined in Section 7, the
Business Day next preceding such day) in each year (each
such date being referred to herein as a "Quarterly Dividend
Payment Date") for each of the fiscal quarters ended June
30, September 30, December 31 and March 31, respectively,
commencing in respect of each share of
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Series A Preferred Stock on the first Quarterly Dividend
Payment Date which is at least seven days after the date of
original issue thereof.
(b) Any dividend payable in respect of shares of
Series A Preferred Stock may, at the election of the Board
of Directors, be declared and paid in additional shares of
Series A Preferred Stock, to the extent legally
permissible, in lieu of declaration and payment therefor in
cash. The number of shares of Series A Preferred Stock to
be issued in lieu of cash dividends shall be calculated
based on the Liquidation Value of each share of Series A
Preferred Stock. The shares of Series A Preferred Stock so
issued shall be duly authorized, validly issued, fully paid
and nonassessable. To the extent not declared and paid in
cash or in additional shares of Series A Preferred Stock,
or declared and funds necessary therefor shall have been
Set Aside for Payment, on each Quarterly Dividend Payment
Date, an amount equal to all dividends which have
accumulated on each share of Series A Preferred Stock then
outstanding during the period from the immediately
preceding Quarterly Dividend Payment Date (or from the date
of issuance in the case of the initial Quarterly Dividend
Payment Date) to such Quarterly Dividend Payment Date will
be added to the Liquidation Value of such shares of Series
A Preferred Stock and will remain a part thereof until such
dividends are paid in cash or additional shares of Series A
Preferred Stock, at which time such Liquidation Value will
be reduced by the amount of dividends so paid.
(c) The amount of dividends payable shall be
determined on the basis of twelve 30-day months and a
360-day year. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of
such dividends at the time accumulated and payable on such
shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The
Board of Directors may fix a record date (a "Regular Record
Date") for the determination of holders of shares of Series
A Preferred Stock entitled to receive payment of a dividend
declared thereon, which record date shall be no more than
60 days nor less than ten days prior to the date fixed for
the payment thereof. Any dividend declared by the Board of
Directors as payable and punctually paid or Set Apart for
Payment on a Quarterly Dividend Payment Date will be paid
to the Persons, as defined in Section 8, in whose names
Series A Preferred Stock is registered at the close of
business on the Regular Record Date set with respect to
that Quarterly Dividend Payment Date (the "Registered
Holders"). Any dividend not so paid or Set Apart for
Payment shall forthwith cease to be payable to such
Registered Holders and may be paid to the Registered Holder
at the close of business on the record date for the payment
of such defaulted dividends and interest to be fixed by the
Board of Directors (a "Special Record Date"). The Board of
Directors shall provide Registered Holders of Series A
Preferred Stock not less than 10 days' prior notice of a
Special Record Date. All cash payments shall be made in
such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public
and private debts.
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(d) The Registered Holder of any shares of Series A
Preferred Stock, upon the Corporation's written request
therefor containing a reasonably complete description of
the basis for such request, shall indemnify the Corporation
for any and all withholding tax liabilities incurred by the
Corporation in connection with any dividends paid or
distributions made (including, without limitation, in
connection with any redemption of Series A Preferred Stock,
but excluding any penalties other than penalties resulting
from the failure of the Registered Holder to provide any
required information) to such holder in respect of Series A
Preferred Stock. Each Registered Holder, by acceptance of
the certificate evidencing such holder's shares of Series A
Preferred Stock, shall be deemed to have agreed to the
terms of this Section 2(d).
(e) The holders of shares of Series A Preferred
Stock shall not be entitled to receive any dividends or
other distributions in respect of such shares of Series A
Preferred Stock except as provided for in these Articles
Supplementary.
Section 3. Restrictive Covenants; Voting Rights.
(a) So long as any shares of Series A Preferred
Stock shall be outstanding and unless the consent or
approval of a greater number of shares shall then be
required by law, without first obtaining the consent or
approval of the holders of at least a majority of the
number of then-outstanding shares of Series A Preferred
Stock, voting as a single class, given in person or by
proxy at a meeting at which the holders of such shares
shall be entitled to vote separately as a class, or by
written consent, the Corporation shall not:
(i) authorize or create any class or series,
or any shares of any class or series, of stock having
any preference or priority as to dividends or upon
redemption, liquidation, dissolution, or winding up
over Series A Preferred Stock ("Senior Stock");
provided, however, that no such vote shall be required
with respect to the authorization or creation by the
Corporation of one or more series of Senior Stock if
the proceeds of the Corporation's issuance of such
Senior Stock are sufficient, and are used, to redeem
all outstanding shares of Series A Preferred Stock
concurrently with the issuance of such Senior Stock;
(ii) authorize or create any class or
series, or any shares of any class or series, of
stock, other than Series B Redeemable Preferred Stock
of the Corporation, ranking on a parity (either as to
dividends or upon redemption, liquidation, dissolution
or winding up) with Series A Preferred Stock ("Parity
Stock"); provided, however, that no such vote shall be
required with respect to the authorization or creation
by the Corporation of one or more new series of Parity
Stock if the proceeds of the Corporation's issuance of
such Parity Stock are sufficient, and are used, to
redeem all outstanding shares
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of Series A Preferred Stock concurrently with the issuance
of such Parity Stock;
(iii) reclassify, convert or exchange any shares
of stock of the Corporation into shares of Senior Stock or
Parity Stock;
(iv) authorize any security exchangeable for,
convertible into, or evidencing the right to purchase any
shares of Senior Stock or Parity Stock;
(v) amend, alter or repeal the Corporation's
Restated and Amended Articles of Incorporation, as it
may be amended from time to time (the "Restated
Articles of Incorporation") or the Corporation's
By-Laws, as they may be amended from time to time (the
"By-Laws"), to alter or change the preferences, rights
or powers of Series A Preferred Stock so as to affect
Series A Preferred Stock adversely or, except for
purposes of Section 2(b) above, to increase the
authorized number of shares of Series A Preferred
Stock;
(vi) declare or pay dividends or make any
other distributions on, or redeem or repurchase any,
shares of Common Stock or other capital stock of the
Corporation ranking junior (either as to dividends or
upon redemption, liquidation, dissolution or winding
up) to the Series A Preferred Stock ("Junior Stock"),
other than (A) dividends, redemptions, repurchases or
distributions made in the form of, or exchangeable
for, shares of Junior Stock, or warrants, rights or
options to acquire shares of Junior Stock, (B)
provided that dividends on shares of Series A
Preferred Stock payable pursuant to the terms of
Section 2(a) on the four most recent Quarterly
Dividend Payment Dates shall have been paid in full in
cash (or shares of Series A Preferred Stock issued in
respect of such dividends pursuant to Section 2(b)
shall have been redeemed or repurchased for cash)
dividends, redemptions, repurchases and distributions
in an amount which, when taken together with the
amount of cash dividends and redemption or repurchase
proceeds previously paid in respect of the
Corporation's stock (other than in accordance with the
proviso to clause (ix) of this Section 3(a)), does not
exceed the amount of dividends, redemptions,
repurchases or distributions permitted to be made by
Del Monte Corporation, a wholly owned subsidiary of
the Corporation ("DMC"), under the Indenture with
respect to the Senior Subordinated Notes dated April
18, 1997, among the Corporation, as guarantor, DMC, as
issuer, and Marine Midland Bank, as trustee, as in
effect on the date hereof; (C) from time to time
during the period in which shares of Series A
Preferred Stock are outstanding, up to an aggregate of
$10,000,000 in redemptions or repurchases of Junior
Stock held by management of the Corporation in
connection with termination of employment, retirement
and similar circumstances; and (D) dividends,
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<PAGE>
redemptions, repurchases and distributions permitted by
the proviso to clause (ix) of this Section 3(a);
(vii) declare or pay dividends or make any
other distributions on, or redeem or repurchase any,
shares of Parity Stock, other than (A) dividends or
distributions made in the form of, or exchangeable
for, shares of Junior Stock, or warrants, rights or
options to acquire shares of Junior Stock, (B) other
dividends or distributions paid ratably on Series A
Preferred Stock and all Parity Stock on which
dividends are payable or in arrears, in proportion to
the total amounts to which the holders of all such
shares are then entitled, (C) redemptions or
repurchases in exchange for shares of Junior Stock, or
warrants, rights or options to acquire shares of
Junior Stock, and (D) other redemptions or repurchases
effected ratably on Series A Preferred Stock and all
Parity Stock, in proportion to the total amounts to
which the holders of all such shares are then
entitled;
(viii) merge or consolidate with, or sell
all or substantially all of the Corporation's assets
to, another entity unless shares of Series A Preferred
Stock outstanding immediately prior to such
transaction (A) remain outstanding after such
transaction without change to the preferences, rights
or powers thereof, (B) are exchanged for securities
containing substantially the same preferences, rights
and powers or (C) are redeemed concurrently with the
effectiveness of such transaction;
(ix) use cash proceeds of any
recapitalization or refinancing transaction to redeem
or repurchase any shares of Junior Stock without also
redeeming or repurchasing each outstanding share of
Series A Preferred Stock at the Redemption Price
therefor; provided, however, that the Corporation
shall be permitted to use the proceeds of the issuance
of Junior Stock (other than pursuant to an
underwritten public offering) to redeem or repurchase
shares of Junior Stock to the extent that, after
giving effect to such transaction, TPG Partners, L.P.
("TPG") and its Affiliates would hold at least 55% of
the common equity interest in the Corporation that TPG
and its Affiliates held immediately following the
consummation of the merger effected pursuant to the
Agreement and Plan of Merger, dated as of February 21,
1997, as amended, among the Corporation, TPG and Del
Monte Foods Company; or
(x) permit DMC to issue shares of preferred
stock other than to the Corporation or another wholly
owned subsidiary of the Corporation.
(b) Whenever (i) there shall have occurred six
consecutive Quarterly Dividend Payment Dates on which
dividends payable on shares of Series A Preferred Stock
pursuant to the terms of Section 2(a) shall not have been
paid, in cash or in additional shares of Series A Preferred
Stock or by increasing the Liquidation
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Value of the shares of Series A Preferred Stock pursuant to
Section 2(b), at the annual rate of 14% of Liquidation
Value per share (a "Dividend Default"), (ii) the
Corporation shall not have redeemed shares of Series A
Preferred Stock within ten days of the date (a "Redemption
Date") of any redemption of which it has given, or is
required to give, notice pursuant to Section 5(c),
regardless of whether there shall be funds legally
available to effect such redemption (a "Redemption
Default"), thereafter and until such time as all dividends
on Series A Preferred Stock shall have been paid, in cash
or in additional shares of Series A Preferred Stock or by
increasing the Liquidation Value of the shares of Series A
Preferred Stock pursuant to Section 2(b), in full (and no
dividend arrearages shall exist on the Series A Preferred
Stock) (hereafter a cure of such Dividend Default), or such
redemption shall have been performed or all funds necessary
therefor Set Apart for Payment, as the case may be, the
holders of shares of Series A Preferred Stock shall have
the right, notwithstanding anything to the contrary
contained in the Restated Articles of Incorporation or
ByLaws of the Corporation, voting together as a single
class, to elect one director. This right to elect one
director may be exercised at any annual meeting or at any
special meeting called for such purpose as hereinafter
provided or at any adjournments thereof, or by the written
consent delivered to the Secretary of the Corporation, of
the holders of a majority of all outstanding shares of
Series A Preferred Stock as of the record date of such
written consent, until any Dividend Default or Redemption
Default shall have been cured, at which time the term of
office of the director so elected shall terminate
automatically. So long as such right to vote continues (and
unless such right has been exercised by written consent of
the holders of a majority of the outstanding shares of
Series A Preferred Stock as hereinbefore authorized), the
Secretary of the Corporation may call, and upon the written
request of the holders of record of a majority of the
outstanding shares of Series A Preferred Stock addressed to
him or her at the principal office of the Corporation shall
call, a special meeting of the holders of Series A
Preferred Stock for the election of one director as
provided herein. Such meeting shall be held within 10 days
after delivery of such notice to the Secretary, at the
place and upon the notice provided by law and in the
By-Laws or in the notice of meeting. No such special
meeting or adjournment thereof shall be held on a date less
than 10 days before any annual meeting of stockholders or
any special meeting in lieu thereof. If at any such annual
or special meeting or any adjournment thereof the holders
of a majority of the then outstanding shares of Series A
Preferred Stock entitled to vote in such election shall be
present or represented by proxy, or if the holders of the
majority of the outstanding shares of Series A Preferred
Stock shall have acted by written consent in lieu of a
meeting with respect thereto, then the authorized number of
directors shall be increased by one and the holders of
Series A Preferred Stock, voting as a class, shall be
entitled to elect the additional one director. The absence
of a quorum of the holders of any class or series of
capital stock of the Corporation at any such annual or
special meeting shall not affect the exercise by the
holders of Series A Preferred Stock of its voting rights.
Any director so elected shall serve until the next annual
meeting or until his or her successor shall be elected and
shall qualify, unless the director's term of office shall
have terminated under the circumstances set forth in the
second sentence of this Section 3(b). If any director
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elected by the holders of Series A Preferred Stock as a
class dies or becomes incapacitated, the holders of Series
A Preferred Stock then outstanding are entitled to vote for
such director by written consent as hereinabove provided,
or at a special meeting of such holders called as provided
above, may elect his or her successor to hold office for
the unexpired term. Holders of Series A Preferred Stock
shall have the right to remove, with or without cause, any
director originally elected by such holders, upon the
affirmative vote of a majority of such holders by written
consent as hereinabove provided or at a special meeting of
such holders called as provided above. The rights of the
holders of Series A Preferred Stock to elect a director
pursuant to the terms of this Section 3(b) shall not be
affected adversely by the voting or other rights applicable
to any other security of the Corporation.
(c) Except as otherwise provided in these
Articles Supplementary or in the Restated Articles of
Incorporation, or as required by law, the holders of shares
of Series A Preferred Stock shall have no voting rights and
their consent shall not be required for the taking of any
corporate action.
Section 4. Redemption.
(a) The Corporation may redeem, in whole or in
part, any outstanding shares of Series A Preferred Stock at
any time, but only out of funds legally available therefor,
by paying therefor in cash the Liquidation Value of such
shares plus an amount equal to all Accrued Dividends, as
defined in Section 7, thereon to the date of redemption
(the "Redemption Price"). If less than all outstanding
shares of Series A Preferred Stock are to be redeemed, the
Corporation shall redeem shares pro rata among the holders
thereof in accordance with the respective numbers of shares
of Series A Preferred Stock held by each of them.
(b) On or before April 17, 2008, the Corporation
shall redeem all outstanding shares of Series A Preferred
Stock, if any, but only out of funds legally available
therefor, by paying the Redemption Price therefor.
(c) The Corporation shall redeem all outstanding
shares of Series A Preferred Stock, if any, but only out of
funds legally available therefor, by paying 101% of the
Redemption Price therefor in the event of (i) a Change of
Control, as defined in Section 7, or (ii) a merger or
consolidation of the Corporation with another entity in
which holders of the common equity of the Corporation
immediately prior to the consummation of the transaction
hold, directly or indirectly, immediately following the
consummation of the transaction, 50% or less of the common
equity interest in the surviving corporation in such
transaction.
(d) (i) Notice of any redemption of shares of
Series A Preferred Stock pursuant to this Section 4 shall
be mailed not less than 10, but not more than 60, days
prior to the date fixed for redemption to each holder of
shares of Series A Preferred Stock to be redeemed, at such
holder's address as it appears on the transfer books of the
Corporation. In order to facilitate the redemption of
shares of Series A
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Preferred Stock, the Board of Directors may fix a record
date for the determination of the holders of shares of
Series A Preferred Stock to be redeemed, not more than 60
days or less than 10 days prior to the date fixed for such
redemption.
(ii) Notice having been given pursuant to
Section 4(d)(i), from and after the date specified therein
as the date of redemption, unless default shall be made by
the Corporation in providing for the payment of the
applicable Redemption Price, all dividends on Series A
Preferred Stock thereby called for redemption shall cease
to accrue, and from and after the earlier of (x) the date
of redemption so specified, unless default shall be made by
the Corporation as aforesaid, and (y) the date (prior to
the date of redemption so specified) on which funds of the
Corporation sufficient for the payment of the Redemption
Price shall have been Set Apart for Payment thereof if the
notice of redemption shall state the intention of the
Corporation so to deposit such funds on a date specified in
such notice, all rights of the holders thereof as
stockholders of the Corporation, except the right to
receive the applicable Redemption Price (but without
interest), shall cease and terminate. Any interest allowed
on moneys so deposited shall be paid to the Corporation.
Any moneys so deposited which shall remain unclaimed by the
holders of such Series A Preferred Stock at the end of six
years after the redemption date shall to the fullest extent
permitted by law become the property of, and be paid by
such bank or trust company to, the Corporation. If the
Corporation shall default in providing for the payment of
the Redemption Price as required pursuant to this Section
4, dividends on such Series A Preferred Stock shall accrue
at the rate of 16% per annum and be added to the required
redemption payments as provided in Section 2(a).
Section 5. Reacquired Shares.
Any shares of Series A Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation or any
Subsidiary of the Corporation in any manner whatsoever
shall become authorized but unissued shares of Preferred
Stock, $.01 par value per share, of the Corporation and may
be reissued as part of another series of Preferred Stock,
$.01 par value per share, of the Corporation, subject to
the conditions or restrictions on authorizing or creating
any class or series, or any shares of any class or series,
set forth in Section 3(a).
Section 6. Liquidation, Dissolution or Winding Up.
(a) If the Corporation shall liquidate, dissolve
or wind up, whether pursuant to federal bankruptcy laws,
state laws or otherwise, no distribution shall be made (i)
to the holders of shares of Junior Stock, unless prior
thereto the holders of shares of Series A Preferred Stock
shall have received the Liquidation Value for each share
plus an amount equal to all Accrued Dividends thereon to
the date of such payment or (ii) to the holders of shares
of Parity Stock, except distributions made ratably on
Series A Preferred Stock and all such Parity Stock in
proportion to the total
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amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up
of the Corporation.
(b) Neither the consolidation, merger or other
business combination of the Corporation with or into any
other Person or Persons, nor the sale, lease, exchange or
conveyance of all or any part of the property, assets or
business of the Corporation to a Person or Persons other
than the holders of Junior Stock shall be deemed to be a
liquidation, dissolution or winding up of the Corporation
for purposes of this Section 6.
Section 7. Definitions.
As used herein, the following terms shall have
the meanings indicated.
"Accrued Dividends" to a particular date (the
"Applicable Date") means all unpaid dividends payable
pursuant to Section 2(a), whether or not declared,
accumulated to the Applicable Date.
"Affiliate" means any Person that directly, or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person
specified.
"Business Day" means any day other than a
Saturday, Sunday, or a day on which banking institutions in
the State of New York are authorized or obligated by law or
executive order to close.
"Change in Control" means the occurrence of one
or more of the following events: (i) any sale, lease,
exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the
assets of the Corporation or DMC to any Person or group of
related persons for purposes of Section 13(d) of the
Securities Exchange Act of 1934 (a "Group"), together with
any Affiliates thereof (whether or not otherwise in
compliance with the provisions of this Series A Preferred
Stock) other than to TPG or any of its Affiliates; (ii) the
approval by the holders of capital stock of the Corporation
or DMC of any plan or proposal for the liquidation or
dissolution of the Corporation or DMC, as the case may be
(whether or not otherwise in compliance with the provisions
of this Series A Preferred Stock); (iii) (A) any Person or
Group (other than TPG or any of its Affiliates) shall
become the owner, directly or indirectly, beneficially or
of record, of shares representing more than 40% of the
aggregate voting power of the issued and outstanding stock
entitled to vote in the election of directors, managers or
trustees (the "Voting Stock") of the Corporation or DMC and
(B) TPG and any of its Affiliates beneficially own,
directly or indirectly, in the aggregate a lesser
percentage of the Voting Stock of the Corporation than such
other Person or Group; or (iv) the replacement of a
majority of the Board of Directors of the Corporation or
DMC over a two-year period from the directors who
constituted the Board of Directors of the Corporation or
DMC, as the case may be, at the beginning of such period,
and such replacement shall not have
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been approved by a vote of at least a majority of the Board
of Directors of the Corporation or DMC, 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, either of TPG or any of its Affiliates.
"Liquidation Value" with respect to any share of
Series A Preferred Stock as of any particular date means an
amount equal to the sum of $1,000 plus (A) an amount equal
to any accumulated and unpaid dividends on such share of
Series A Preferred Stock added to the Liquidation Value of
such share pursuant to Section 2, as such amount may be
reduced in accordance with the provisions of Section 2, and
(B) in any liquidation, dissolution or winding up of the
Corporation or any redemption, as the case may be, an
amount equal to dividends accumulating from and including
the next preceding Quarterly Dividend Payment Date to but
excluding the Quarterly Dividend Payment Date.
"Person" means any person or entity of any nature
whatsoever, specifically including an individual, a firm, a
company, a corporation, a partnership, a trust or other
entity.
"Set Apart for Payment" means, when used with
respect to funds of the Corporation to be used to pay
dividends or effect redemptions of shares of Series A
Preferred Stock, that the funds of the Corporation to be
used to pay dividends on or effect redemptions of any
shares of Series A Preferred Stock to the Corporation shall
have irrevocably deposited with a bank or trust company
doing business in the Borough of Manhattan in the City of
New York, and having a capital and surplus of at least $50
million, in trust for the exclusive benefit of the holders
of shares of Series A Preferred Stock, funds sufficient to
satisfy such payment of redemption obligation.
"Subsidiary" of any Person means any corporation
or other entity of which all the voting power of the voting
equity securities or equity interest is owned, directly or
indirectly, by such Person.
Section 9. Rank.
Series A Preferred Stock will rank, with respect
to dividends and upon distribution of assets in
liquidation, dissolution or winding up, prior to the Common
Stock and pari passu with the Series B Redeemable Preferred
Stock of the Corporation.
SECOND: Under a power contained in Article Sixth of the
Restated Articles of Incorporation, the Board of Directors , by
unanimous written consent dated April 17, 1997, classified and
designated seventy-five thousand (75,000) shares (together with
the Series A Shares, the "Shares") of Preferred Stock as shares
of Series B Redeemable Preferred Stock, with preferences,
conversion and other rights, voting
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powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of
redemption of shares as set forth below:
Section 1. Designation and Amount.
The shares of such series shall be designated as
the "Series B Redeemable Preferred Stock" ("Series B
Preferred Stock") and the number of shares constituting
such series shall be seventy-five thousand (75,000), which
number may be decreased and, only for purposes of Section
2(b) below, increased by the Board of Directors without a
vote of stockholders; provided, however, that such number
may not be decreased below the number of then currently
outstanding shares of Series B Preferred Stock.
Section 2. Dividends and Distributions.
(a) The holders of shares of Series B Preferred
Stock, in preference to the holders of shares of the
Corporation's Common Stock, par value $.01 per share (the
"Common Stock"), and to any other capital stock of the
Corporation ranking junior to Series B Preferred Stock as
to payment of dividends, shall be entitled to receive,
when, as and if declared by the Board of Directors out of
funds of the Corporation legally available for the payment
of dividends, cumulative dividends at the annual rate of
14% of the Liquidation Value per share, and, subject to the
provisions of this Section 4(d)(ii), no more. Dividends
payable in respect of the outstanding shares of Series B
Preferred Stock shall begin to accrue and be cumulative
from the respective dates of original issue of such shares
(which dates shall be reflected on the certificates
evidencing the same), and shall be payable in quarterly
payments on April 15, July 15, October 15 and January 15
(or, if any such day is not a Business Day, as defined in
Section 7, the Business Day next preceding such day) in
each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date" for each of the fiscal
quarters ended June 30, September 30, December 31 and March
31, respectively, commencing in respect of each share of
Series B Preferred Stock on the first Quarterly Dividend
Payment Date which is at least seven days after the date of
original issue thereof.
(b) Any dividend payable in respect of shares of
Series B Preferred Stock may, at the election of the Board
of Directors, be declared and paid in additional shares of
Series B Preferred Stock, to the extent legally
permissible, in lieu of declaration and payment therefor in
cash. The number of shares of Series B Preferred Stock to
be issued in lieu of cash dividends shall be calculated
based on the Liquidation Value of each share of Series B
Preferred Stock. The shares of Series B Preferred Stock so
issued shall be duly authorized, validly issued, fully paid
and nonassessable. To the extent not declared and paid in
cash or in additional shares of Series B Preferred Stock,
or declared and funds necessary therefor shall have been
Set Aside for Payment, on each Quarterly Dividend Payment
Date, an amount equal to all dividends which have
accumulated on each share of Series B Preferred Stock then
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outstanding during the period from the immediately
preceding Quarterly Dividend Payment Date (or from the date
of issuance in the case of the initial Quarterly Dividend
Payment Date) to such Quarterly Dividend Payment Date will
be added to the Liquidation Value of such shares of Series
B Preferred Stock and will remain a part thereof until such
dividends are paid in cash or additional shares of Series B
Preferred Stock, at which time such Liquidation Value will
be reduced by the amount of dividends so paid.
(c) The amount of dividends payable shall be
determined on the basis of twelve 30-day months and a
360-day year. Dividends paid on the shares of Series B
Preferred Stock in an amount less than the total amount of
such dividends at the time accumulated and payable on such
shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The
Board of Directors may fix a record date (a "Regular Record
Date") for the determination of holders of shares of Series
B Preferred Stock entitled to receive payment of a dividend
declared thereon, which record date shall be no more than
60 days nor less than ten days prior to the date fixed for
the payment thereof. Any dividend declared by the Board of
Directors as payable and punctually paid or Set Apart for
Payment on a Quarterly Dividend Payment Date will be paid
to the Persons, as defined in Section 8, in whose names
Series B Preferred Stock is registered at the close of
business on the Regular Record Date set with respect to
that Quarterly Dividend Payment Date (the "Registered
Holders"). Any dividend not so paid or Set Apart for
Payment shall forthwith cease to be payable to such
Registered Holders and may be paid to the Registered Holder
at the close of business on the record date for the payment
of such defaulted dividends and interest to be fixed by the
Board of Directors (a "Special Record Date"). The Board of
Directors shall provide Registered Holders of Series B
Preferred Stock not less than 10 days' prior notice of a
Special Record Date. All cash payments shall be made in
such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public
and private debts.
(d) The Registered Holder of any shares of Series
B Preferred Stock, upon the Corporation's written request
therefor containing a reasonably complete description of
the basis for such request, shall indemnify the Corporation
for any and all withholding tax liabilities incurred by the
Corporation in connection with any dividends paid or
distributions made (including, without limitation, in
connection with any redemption of Series B Preferred Stock,
but excluding any penalties other than penalties resulting
from the failure of the Registered Holder to provide any
required information) to such holder in respect of Series B
Preferred Stock. Each Registered Holder, by acceptance of
the certificate evidencing such holder's shares of Series B
Preferred Stock, shall be deemed to have agreed to the
terms of this Section 2(d).
(e) The holders of shares of Series B Preferred
Stock shall not be entitled to receive any dividends or
other distributions in respect of such shares of Series B
Preferred Stock except as provided for in these Articles
Supplementary.
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<PAGE>
Section 3. Restrictive Covenants; Voting Rights.
(a) So long as any shares of Series B Preferred
Stock shall be outstanding and unless the consent or
approval of a greater number of shares shall then be
required by law, without first obtaining the consent or
approval of the holders of at least a majority of the
number of then-outstanding shares of Series B Preferred
Stock, voting as a single class, given in person or by
proxy at a meeting at which the holders of such shares
shall be entitled to vote separately as a class, or by
written consent, the Corporation shall not:
(i) authorize or create any class or series,
or any shares of any class or series, of stock having
any preference or priority as to dividends or upon
redemption, liquidation, dissolution, or winding up
over Series B Preferred Stock ("Senior Stock");
provided, however, that no such vote shall be required
with respect to the authorization or creation by the
Corporation of one or more series of Senior Stock if
the proceeds of the Corporation's issuance of such
Senior Stock are sufficient, and are used, to redeem
all outstanding shares of Series B Preferred Stock
concurrently with the issuance of such Senior Stock;
(ii) authorize or create any class or
series, or any shares of any class or series, of
stock, other than Series A Redeemable Preferred Stock
of the Corporation, ranking on a parity (either as to
dividends or upon redemption, liquidation, dissolution
or winding up) with Series B Preferred Stock ("Parity
Stock"); provided, however, that no such vote shall be
required with respect to the authorization or creation
by the Corporation of one or more new series of Parity
Stock if the proceeds of the Corporation's issuance of
such Parity Stock are sufficient, and are used, to
redeem all outstanding shares of Series B Preferred
Stock concurrently with the issuance of such Parity
Stock;
(iii) reclassify, convert or exchange any
shares of stock of the Corporation into shares of Senior
Stock or Parity Stock;
(iv) authorize any security exchangeable for,
convertible into, or evidencing the right to purchase any
shares of Senior Stock or Parity Stock;
(v) amend, alter or repeal the Corporation's
Restated and Amended Articles of Incorporation, as it
may be amended from time to time (the "Restated
Articles of Incorporation") or the Corporation's
By-Laws, as they may be amended from time to time (the
"By-Laws"), to alter or change the preferences, rights
or powers of Series B Preferred Stock so as to affect
Series B Preferred Stock adversely or, except for
purposes of Section 2(b) above, to increase the
authorized number of shares of Series B Preferred
Stock;
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<PAGE>
(vi) declare or pay dividends or make any other
distributions on, or redeem or repurchase any, shares
of Common Stock or other capital stock of the
Corporation ranking junior (either as to dividends or
upon redemption, liquidation, dissolution or winding
up) to the Series B Preferred Stock ("Junior Stock"),
other than (A) dividends, redemptions, repurchases or
distributions made in the form of, or exchangeable
for, shares of Junior Stock, or warrants, rights or
options to acquire shares of Junior Stock, (B)
provided that dividends on shares of Series B
Preferred Stock payable pursuant to the terms of
Section 2(a) on the four most recent Quarterly
Dividend Payment Dates shall have been paid in full in
cash (or shares of Series A Preferred Stock issued in
respect of such dividends pursuant to Section 2(b)
shall have been redeemed or repurchased for cash)
dividends, redemptions, repurchases and distributions
in an amount which, when taken together with the
amount of cash dividends and redemption or repurchase
proceeds previously paid in respect of the
Corporation's stock (other than in accordance with the
proviso to clause (ix) of this Section 3(a)), does not
exceed the amount of dividends, redemptions,
repurchases or distributions permitted to be made by
Del Monte Corporation, a wholly owned subsidiary of
the Corporation ("DMC"), under the Indenture with
respect to the Senior Subordinated Notes dated April
18, 1997, among the Corporation, as guarantor, DMC, as
issuer, and Marine Midland Bank, as trustee, as in
effect on the date hereof; (C) from time to time
during the period in which shares of Series B
Preferred Stock are outstanding, up to an aggregate of
$10,000,000 in redemptions or repurchases of Junior
Stock held by management of the Corporation in
connection with termination of employment, retirement
and similar circumstances; and (D) dividends,
redemptions, repurchases and distributions permitted
by the proviso to clause (ix) of this Section 3(a);
(vii) declare or pay dividends or make any
other distributions on, or redeem or repurchase any,
shares of Parity Stock, other than (A) dividends or
distributions made in the form of, or exchangeable
for, shares of Junior Stock, or warrants, rights or
options to acquire shares of Junior Stock, (B) other
dividends or distributions paid ratably on Series B
Preferred Stock and all Parity Stock on which
dividends are payable or in arrears, in proportion to
the total amounts to which the holders of all such
shares are then entitled, (C) redemptions or
repurchases in exchange for shares of Junior Stock, or
warrants, rights or options to acquire shares of
Junior Stock, and (D) other redemptions or repurchases
effected ratably on Series B Preferred Stock and all
Parity Stock, in proportion to the total amounts to
which the holders of all such shares are then
entitled;
(viii) merge or consolidate with, or sell
all or substantially all of the Corporation's assets
to, another entity unless shares of Series B Preferred
Stock outstanding immediately prior to such
transaction (A) remain
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outstanding after such transaction without change to
the preferences, rights or powers thereof, (B) are
exchanged for securities containing substantially the
same preferences, rights and powers or (C) are
redeemed concurrently with the effectiveness of such
transaction;
(ix) use cash proceeds of any
recapitalization or refinancing transaction to redeem
or repurchase any shares of Junior Stock without also
redeeming or repurchasing each outstanding share of
Series B Preferred Stock at the Redemption Price
therefor; provided, however, that the Corporation
shall be permitted to use the proceeds of the issuance
of Junior Stock (other than pursuant to an
underwritten public offering) to redeem or repurchase
shares of Junior Stock to the extent that, after
giving effect to such transaction, TPG Partners, L.P.
("TPG") and its Affiliates would hold at least 55% of
the common equity interest in the Corporation that TPG
and its Affiliates held immediately following the
consummation of the merger effected pursuant to the
Agreement and Plan of Merger, dated as of February 21,
1997, as amended, among the Corporation, TPG and Del
Monte Foods Company; or
(x) permit DMC to issue shares of preferred
stock other than to the Corporation or another wholly
owned subsidiary of the Corporation.
(xi) redeem or repurchase, or pay any
dividends or distributions in cash in respect of,
shares of Series A Preferred Stock without also
redeeming, repurchasing or paying dividends or
distributions in cash in respect of shares of Series B
Preferred Stock on equivalent terms.
(b) Whenever (i) there shall have occurred six
consecutive Quarterly Dividend Payment Dates on which
dividends payable on shares of Series B Preferred Stock
pursuant to the terms of Section 2(a) shall not have been
paid, in cash or in additional shares of Series B Preferred
Stock or by increasing the Liquidation Value of the shares
of Series B Preferred Stock pursuant to Section 2(b), at
the annual rate of 14% of Liquidation Value per share (a
"Dividend Default"), (ii) the Corporation shall not have
redeemed shares of Series B Preferred Stock within ten days
of the date (a "Redemption Date") of any redemption of
which it has given, or is required to give, notice pursuant
to Section 5(c), regardless of whether there shall be funds
legally available to effect such redemption (a "Redemption
Default"), thereafter and until such time as all dividends
on Series B Preferred Stock shall have been paid, in cash
or in additional shares of Series B Preferred Stock or by
increasing the Liquidation Value of the shares of Series B
Preferred Stock pursuant to Section 2(b), in full (and no
dividend arrearages shall exist on the Series B Preferred
Stock) (hereafter a cure of such Dividend Default), or such
redemption shall have been performed or all funds necessary
therefor Set Apart for Payment, as the case may be, the
holders of shares of Series B Preferred Stock shall have
the right, notwithstanding anything to the contrary
contained in the Restated Articles of Incorporation or By-
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Laws of the Corporation, voting together as a single class,
to elect one director. This right to elect one director may
be exercised at any annual meeting or at any special
meeting called for such purpose as hereinafter provided or
at any adjournments thereof, or by the written consent
delivered to the Secretary of the Corporation, of the
holders of a majority of all outstanding shares of Series B
Preferred Stock as of the record date of such written
consent, until any Dividend Default or Redemption Default
shall have been cured, at which time the term of office of
the director so elected shall terminate automatically. So
long as such right to vote continues (and unless such right
has been exercised by written consent of the holders of a
majority of the outstanding shares of Series B Preferred
Stock as hereinbefore authorized), the Secretary of the
Corporation may call, and upon the written request of the
holders of record of a majority of the outstanding shares
of Series B Preferred Stock addressed to him or her at the
principal office of the Corporation shall call, a special
meeting of the holders of Series B Preferred Stock for the
election of one director as provided herein. Such meeting
shall be held within 10 days after delivery of such notice
to the Secretary, at the place and upon the notice provided
by law and in the By-Laws or in the notice of meeting. No
such special meeting or adjournment thereof shall be held
on a date less than 10 days before any annual meeting of
stockholders or any special meeting in lieu thereof. If at
any such annual or special meeting or any adjournment
thereof the holders of a majority of the then outstanding
shares of Series B Preferred Stock entitled to vote in such
election shall be present or represented by proxy, or if
the holders of the majority of the outstanding shares of
Series B Preferred Stock shall have acted by written
consent in lieu of a meeting with respect thereto, then the
authorized number of directors shall be increased by one
and the holders of Series B Preferred Stock, voting as a
class, shall be entitled to elect the additional one
director. The absence of a quorum of the holders of any
class or series of capital stock of the Corporation at any
such annual or special meeting shall not affect the
exercise by the holders of Series B Preferred Stock of its
voting rights. Any director so elected shall serve until
the next annual meeting or until his or her successor shall
be elected and shall qualify, unless the director's term of
office shall have terminated under the circumstances set
forth in the second sentence of this Section 3(b). If any
director elected by the holders of Series B Preferred Stock
as a class dies or becomes incapacitated, the holders of
Series B Preferred Stock then outstanding are entitled to
vote for such director by written consent as hereinabove
provided, or at a special meeting of such holders called as
provided above, may elect his or her successor to hold
office for the unexpired term. Holders of Series B
Preferred Stock shall have the right to remove, with or
without cause, any director originally elected by such
holders, upon the affirmative vote of a majority of such
holders by written consent as hereinabove provided or at a
special meeting of such holders called as provided above.
The rights of the holders of Series B Preferred Stock to
elect a director pursuant to the terms of this Section 3(b)
shall not be affected adversely by the voting or other
rights applicable to any other security of the Corporation.
(c) Except as otherwise provided in these Articles
Supplementary or in the Restated Articles of Incorporation, or
as required by law, the holders of
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shares of Series B Preferred Stock shall have no voting
rights and their consent shall not be required for the
taking of any corporate action.
Section 4. Redemption.
(a) The Corporation may redeem, in whole or in
part, any outstanding shares of Series B Preferred Stock at
any time, but only out of funds legally available therefor,
by paying therefor in cash the Liquidation Value of such
shares plus an amount equal to all Accrued Dividends, as
defined in Section 7, thereon to the date of redemption
(the "Redemption Price"). If less than all outstanding
shares of Series B Preferred Stock are to be redeemed, the
Corporation shall redeem shares pro rata among the holders
thereof in accordance with the respective numbers of shares
of Series B Preferred Stock held by each of them.
(b) On or before April 17, 2008, the Corporation
shall redeem all outstanding shares of Series B Preferred
Stock, if any, but only out of funds legally available
therefor, by paying the Redemption Price therefor.
(c) The Corporation shall redeem all outstanding
shares of Series B Preferred Stock, if any, but only out of
funds legally available therefor, by paying 101% of the
Redemption Price therefor in the event of (i) a Change of
Control, as defined in Section 7, or (ii) a merger or
consolidation of the Corporation with another entity in
which holders of the common equity of the Corporation
immediately prior to the consummation of the transaction
hold, directly or indirectly, immediately following the
consummation of the transaction, 50% or less of the common
equity interest in the surviving corporation in such
transaction.
(d) (i) Notice of any redemption of shares of
Series B Preferred Stock pursuant to this Section 4 shall
be mailed not less than 10, but not more than 60, days
prior to the date fixed for redemption to each holder of
shares of Series B Preferred Stock to be redeemed, at such
holder's address as it appears on the transfer books of the
Corporation. In order to facilitate the redemption of
shares of Series B Preferred Stock, the Board of Directors
may fix a record date for the determination of the holders
of shares of Series B Preferred Stock to be redeemed, not
more than 60 days or less than 10 days prior to the date
fixed for such redemption.
(ii) Notice having been given pursuant to
Section 4(d)(i), from and after the date specified therein
as the date of redemption, unless default shall be made by
the Corporation in providing for the payment of the
applicable Redemption Price, all dividends on Series B
Preferred Stock thereby called for redemption shall cease
to accrue, and from and after the earlier of (x) the date
of redemption so specified, unless default shall be made by
the Corporation as aforesaid, and (y) the date (prior to
the date of redemption so specified) on which funds of the
Corporation sufficient for the payment of the Redemption
Price shall have been Set Apart for Payment thereof if the
notice of redemption shall state the intention of the
Corporation so to deposit such funds on a date specified in
such notice, all rights of
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the holders thereof as stockholders of the Corporation,
except the right to receive the applicable Redemption Price
(but without interest), shall cease and terminate. Any
interest allowed on moneys so deposited shall be paid to
the Corporation. Any moneys so deposited which shall remain
unclaimed by the holders of such Series B Preferred Stock
at the end of six years after the redemption date shall to
the fullest extent permitted by law become the property of,
and be paid by such bank or trust company to, the
Corporation. If the Corporation shall default in providing
for the payment of the Redemption Price as required
pursuant to this Section 4, dividends on such Series B
Preferred Stock shall accrue at the rate of 16% per annum
and be added to the required redemption payments as
provided in Section 2(a).
Section 5. Reacquired Shares.
Any shares of Series B Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation or any
Subsidiary of the Corporation in any manner whatsoever
shall become authorized but unissued shares of Preferred
Stock, $.01 par value per share, of the Corporation and may
be reissued as part of another series of Preferred Stock,
$.01 par value per share, of the Corporation, subject to
the conditions or restrictions on authorizing or creating
any class or series, or any shares of any class or series,
set forth in Section 3(a).
Section 6. Liquidation, Dissolution or Winding Up.
(a) If the Corporation shall liquidate, dissolve
or wind up, whether pursuant to federal bankruptcy laws,
state laws or otherwise, no distribution shall be made (i)
to the holders of shares of Junior Stock, unless prior
thereto the holders of shares of Series B Preferred Stock
shall have received the Liquidation Value for each share
plus an amount equal to all Accrued Dividends thereon to
the date of such payment or (ii) to the holders of shares
of Parity Stock, except distributions made ratably on
Series B Preferred Stock and all such Parity Stock in
proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution
or winding up of the Corporation.
(b) Neither the consolidation, merger or other
business combination of the Corporation with or into any
other Person or Persons, nor the sale, lease, exchange or
conveyance of all or any part of the property, assets or
business of the Corporation to a Person or Persons other
than the holders of Junior Stock shall be deemed to be a
liquidation, dissolution or winding up of the Corporation
for purposes of this Section 6.
Section 7. Definitions.
As used herein, the following terms shall have
the meanings indicated.
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"Accrued Dividends" to a particular date (the
"Applicable Date") means all unpaid dividends payable pursuant
to Section 2(a), whether or not declared, accumulated to the
Applicable Date.
"Affiliate" means any Person that directly, or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person
specified.
"Business Day" means any day other than a
Saturday, Sunday, or a day on which banking institutions in
the State of New York are authorized or obligated by law or
executive order to close.
"Change in Control" means the occurrence of one
or more of the following events: (i) any sale, lease,
exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the
assets of the Corporation or DMC to any Person or group of
related persons for purposes of Section 13(d) of the
Securities Exchange Act of 1934 (a "Group"), together with
any Affiliates thereof (whether or not otherwise in
compliance with the provisions of this Series B Preferred
Stock) other than to TPG or any of its Affiliates; (ii) the
approval by the holders of capital stock of the Corporation
or DMC of any plan or proposal for the liquidation or
dissolution of the Corporation or DMC, as the case may be
(whether or not otherwise in compliance with the provisions
of this Series B Preferred Stock); (iii) (A) any Person or
Group (other than TPG or any of its Affiliates) shall
become the owner, directly or indirectly, beneficially or
of record, of shares representing more than 40% of the
aggregate voting power of the issued and outstanding stock
entitled to vote in the election of directors, managers or
trustees (the "Voting Stock") of the Corporation or DMC and
(B) TPG and any of its Affiliates beneficially own,
directly or indirectly, in the aggregate a lesser
percentage of the Voting Stock of the Corporation than such
other Person or Group; or (iv) the replacement of a
majority of the Board of Directors of the Corporation or
DMC over a two-year period from the directors who
constituted the Board of Directors of the Corporation or
DMC, as the case may be, at the beginning of such period,
and such replacement shall not have been approved by a vote
of at least a majority of the Board of Directors of the
Corporation or DMC, 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, either
of TPG or any of its Affiliates.
"Liquidation Value" with respect to any share of
Series B Preferred Stock as of any particular date means an
amount equal to the sum of $1,000 plus (A) an amount equal
to any accumulated and unpaid dividends on such share of
Series B Preferred Stock added to the Liquidation Value of
such share pursuant to Section 2, as such amount may be
reduced in accordance with the provisions of Section 2, and
(B) in any liquidation, dissolution or winding up of the
Corporation or any redemption, as the case may be, an
amount equal to dividends accumulating from and including the
19
<PAGE>
next preceding Quarterly Dividend Payment Date to but excluding
the Quarterly Dividend Payment Date.
"Person" means any person or entity of any nature
whatsoever, specifically including an individual, a firm, a
company, a corporation, a partnership, a trust or other
entity.
"Set Apart for Payment" means, when used with
respect to funds of the Corporation to be used to pay
dividends or effect redemptions of shares of Series B
Preferred Stock, that the funds of the Corporation to be
used to pay dividends on or effect redemptions of any
shares of Series B Preferred Stock to the Corporation shall
have irrevocably deposited with a bank or trust company
doing business in the Borough of Manhattan in the City of
New York, and having a capital and surplus of at least $50
million, in trust for the exclusive benefit of the holders
of shares of Series B Preferred Stock, funds sufficient to
satisfy such payment of redemption obligation.
"Subsidiary" of any Person means any corporation
or other entity of which all the voting power of the voting
equity securities or equity interest is owned, directly or
indirectly, by such Person.
Section 9. Rank.
Series B Preferred Stock will rank, with respect
to dividends and upon distribution of assets in
liquidation, dissolution or winding up, prior to the Common
Stock and pari passu with the Series A Redeemable Preferred
Stock of the Corporation.
THIRD: The Shares have been classified and designated by
the Board of Directors under the authority contained in the Restated
Articles of Incorporation.
FOURTH: These Articles Supplementary have been approved
by the Board of Directors in the manner and by the vote required by
law.
FIFTH: The undersigned President of the Corporation
acknowledges these Articles Supplementary to be the corporate act
of the Corporation and as to all matters or facts required to be
verified under oath, the undersigned President acknowledges that
to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.
20
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these
Articles Supplementary to be executed under seal in its name and
on its behalf by its President and attested to by its Assistant
Secretary on this 17th day of April, 1997.
ATTEST: TPG SHIELD ACQUISITION
CORPORATION
/s/ Carrie Wheeler By: /s/ Jeffrey A. Shaw (SEAL)
- ---------------------------- ------------------------
Carrie Wheeler Jeffrey A. Shaw
Assistant Secretary President
21
<PAGE>
TPG SHIELD ACQUISITION CORPORATION
ARTICLES OF AMENDMENT AND RESTATEMENT
THIS IS TO CERTIFY THAT:
FIRST: TPG Shield Acquisition Corporation, a Maryland
corporation (the "Corporation"), desires to amend and restate its
charter as currently in effect and as hereinafter amended.
SECOND: The following provisions are all the provisions of
the charter currently in effect and as hereinafter amended:
FIRST: The name of the corporation is TPG Shield
Acquisition Corporation (hereinafter referred to as the
"Corporation").
SECOND: The purpose for which the Corporation is
formed is:
To engage in any or all lawful business for
which corporations may be organized under the
Maryland General Corporation Law.
THIRD: The address of the principal office of the
Corporation in this State is c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland
21202. The name of the resident agent of the
Corporation in this State is The Corporation Trust
Incorporated, a corporation of this State, and the
address of the resident agent is 32 South Street,
Baltimore, Maryland 21202.
FOURTH: The total number of shares of stock which
the Corporation shall have authority to issue is one
million (1,000,000) shares of Common Stock, $0.01 par
value per share ("Common Stock"), and one million
(1,000,000) shares of Preferred Stock, $0.01 par value
per share ("Preferred Stock"). The aggregate par value
of all authorized shares of stock having par value is
twenty thousand dollars ($20,000).
The Board of Directors may authorize the issuance
from time to time of shares of stock of the
Corporation of any class or series, whether now or
hereafter authorized, or securities or rights
convertible into shares of stock of any class or
series, whether now or hereafter authorized, for such
consideration as the Board of Directors may deem
advisable (or without consideration in the case of a
stock split or stock dividend), subject to such
restrictions or limitations, if any, as may be set
forth in the charter or the Bylaws.
<PAGE>
The Board of Directors may classify any unissued
shares of stock and reclassify any previously
classified but unissued shares of stock of any class
or series from time to time, in one or more classes or
series of stock.
Prior to issuance of classified or reclassified
shares of any class or series, the Board of Directors
by resolution shall: (a) designate that class or
series to distinguish it from all other classes and
series of stock of the Corporation; (b) specify the
number of shares to be included in the class or
series; (c) set or change, subject to the express
terms of any class or series of stock of the
Corporation outstanding at the time, the preferences,
conversion or other rights, voting powers,
restrictions, limitations as to dividends or other
distributions, qualifications and terms and conditions
of redemption for each class or series; and (d) cause
the Corporation to file articles supplementary with
the State Department of Assessments and Taxation of
Maryland ("SDAT"). Any of the terms of any class or
series of stock set or changed pursuant to clause (c)
of this paragraph may be made dependent upon facts or
events ascertainable outside the charter (including
determinations by the Board of Directors or other
facts or events within the control of the Corporation)
and may vary among holders thereof, provided that the
manner in which such facts, events or variations shall
operate upon the terms of such class or series of
stock is clearly and expressly set forth in articles
supplementary filed with the SDAT.
All persons who shall acquire stock in the
Corporation shall acquire the same subject to the
provisions of the charter and the Bylaws.
FIFTH: The number of directors of the Corporation
shall be three (3),which may be changed in accordance
with the Bylaws of the Corporation. The names of the
directors who shall act until the first annual meeting
and until their successors are duly chosen and qualify
are:
Jeffrey A. Shaw
Wesley J. Smith
Richard G. Wolford
SIXTH: To the maximum extent that Maryland law in
effect from time to time permits limitation of the
liability of the directors and officers of a
corporation, no director or officer of the Corporation
shall be liable to the Corporation or its stockholders
for money damages.
No amendment to or repeal of the foregoing
paragraph shall apply to or have any effect on the
liability or alleged liability of any director of the
Corporation or with respect to any acts or omissions
of such directors occurring prior to such amendment.
SEVENTH: The existence of the Corporation shall
be perpetual.
2
<PAGE>
EIGHTH: The Corporation reserves the right from time
to time to make any amendment to its charter, now or
hereafter authorized by law, including any amendment
altering the terms or contract rights, as expressly
set forth in the charter, of any shares of outstanding
stock. All rights and powers conferred by the charter
on stockholders, directors and officers are granted
subject to this reservation.
NINTH: Notwithstanding any provision of law
permitting or requiring any action to be taken or
approved by the affirmative vote of holders of shares
entitled to cast a greater number of votes, any such
action shall be effective and valid if taken or
approved by the affirmative vote of holders of shares
entitled to cast a majority of all the votes entitled
to be cast on the matter.
TENTH: The Corporation shall have the power, to
the maximum extent permitted by Maryland law in effect
from time to time, to obligate itself to indemnify,
and to pay or reimburse reasonable expenses in advance
of final disposition of a proceeding to, (a) any
individual who is a present or former director or
officer of the Corporation or (b) any individual who,
while a director of the Corporation, serves or has
served as a director, officer, partner or trustee of
such corporation, real estate investment trust,
partnership, joint venture, trust, employee benefit
plan or any other enterprise from and against any
claim or liability to which such person may become
subject or which such person may incur by reason of
his status as a present or former director or officer
of the Corporation. The Corporation shall have the
power, with the approval of its Board of Directors, to
provide such indemnification and advancement of
expenses to a person who served a predecessor of the
Corporation in any of the capacities described in (a)
or (b) above and to any employee or agent of the
Corporation or a predecessor of the Corporation.
THIRD: The current address of the principal office of the
Corporation is as set forth in Article Three of the foregoing
amendment and restatement of the charter.
FOURTH: The name and address of the Corporation's current
resident agent is as set forth in Article Three of the foregoing
amendment and restatement of the charter.
FIFTH: The number of directors of the Corporation and the
names of those currently in office are as set forth in Article
Five of the foregoing amendment and restatement of the charter.
SIXTH: The total number of shares of stock which the
Corporation had authority to issue immediately prior to this
amendment was one thousand (1,000), consisting of one thousand
(1,000) shares of Common Stock, $0.01 par value per share. The
aggregate par value of all shares of stock having par value was
ten dollars ($10).
3
<PAGE>
SEVENTH: The total number of shares of stock which the
Corporation has authority to issue pursuant to the foregoing
amendment and restatement of the charter of the Corporation is
two million (2,000,000), consisting of one million (1,000,000)
shares of Common Stock, $0.01 par value per share and one million
(1,000,000) shares of Preferred Stock, $0.01 par value per share.
The aggregate par value of all authorized shares of stock having
par value is twenty thousand dollars ($20,000).
EIGHTH: The amendment to and restatement of the charter of
the Corporation as hereinabove set forth has been duly advised by
the Board of Directors and approved by the stockholders of the
Corporation as required by law.
The undersigned President acknowledges these Articles
of Amendment and Restatement to be the corporate act of the
Corporation and as to all matters or facts required to be
verified under oath, the undersigned President acknowledges that
to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.
4
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these
Articles of Amendment and Restatement to be signed in its name
and on its behalf by its President and attested to by its
Assistant Secretary on this 15th day of April, 1997.
ATTEST: TPG SHIELD ACQUISITION CORPORATION
/s/ Carrie Wheeler By: /s/ Jeffrey A. Shaw (SEAL)
- -------------------------- ------------------------------
Carrie Wheeler Jeffrey A. Shaw
Assistant Secretary President
5
<PAGE>
Exhibit 3.7
BYLAWS
OF
TPG SHIELD ACQUISITION CORPORATION
February 20, 1997
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. - The principal
office of the corporation shall be c/o the office of the The
Corporation Trust Incorporated at 32 South Street in Maryland,
in the City of Baltimore.
SECTION 2. OTHER OFFICES. - The corporation may
have such other offices and places of business, within or
without the State of Maryland, as shall be determined by the
directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS. - Meetings of the
shareholders may be held at such place or places, within or
without the State of Maryland, as shall be fixed by the
directors and stated in the notice of the meeting.
SECTION 2. ANNUAL MEETING. - The annual meeting of
shareholders for the election of directors and the transaction of
such other business as may properly come before the meeting shall
be held on such date as may be fixed by the directors and stated
in the notice of the meeting.
<PAGE>
SECTION 3. NOTICE OF ANNUAL MEETING. - Notice of
the annual meeting shall be given to each shareholder entitled
to vote, at least ten days prior to the meeting.
SECTION 4. SPECIAL MEETINGS. - Special meetings of
the shareholders for any purpose or purposes may be called by the
President or Secretary and must be called upon receipt by either
of them of the written request of the holders of [twenty-five]
percent of the stock then outstanding and entitled to vote.
SECTION 5. NOTICE OF SPECIAL MEETING. - Notice of a
special meeting, stating the time, place and purpose or purposes
thereof, shall be given to each shareholder entitled to vote, at
least ten days prior to the meeting. The notice shall also set
forth at whose direction it is being issued.
SECTION 6. QUORUM. - At any meeting of the
shareholders, the holders of a majority of the shares of stock
then entitled to vote, shall constitute a quorum for all
purposes, except as otherwise provided by law or the Articles
of Incorporation.
SECTION 7. VOTING. - At each meeting of the
shareholders, every holder of stock then entitled to vote may
vote in person or by proxy, and, except as may be otherwise
provided by the Articles of Incorporation, shall have one vote
for each share of stock registered in his name.
SECTION 8. ADJOURNED MEETING. - Any meeting of
shareholders may be adjourned to a designated time and place by a
vote of a majority in interest of the shareholders present in
person or by proxy and entitled to vote, even though less than a
quorum is so present. No notice of such an adjourned meeting need
be given, other than by announcement at the meeting, and any
business may be transacted which might have been transacted at
the meeting as originally called.
SECTION 9. ACTION BY WRITTEN CONSENT OF
SHAREHOLDERS. - Whenever by any provision of statute or of the
Articles of Incorporation or of these Bylaws, the vote of
shareholders at a meeting thereof is required or permitted to
be taken in connection with any corporate action, the meeting
<PAGE>
and vote of shareholders may be dispensed with, if all the
shareholders who would have been entitled to vote upon the action
if such meeting were held, shall consent in writing to such
corporate action being taken.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER. - The number of directors of the
corporation shall be three (3) who shall hold office for the term
of one year and until the successor or successors is or are
elected and shall qualify. The number of directors may be
increased or decreased from time to time by amendment to these
Bylaws made by a majority of the Board of Directors or by the
shareholders. The number of directors may be less than three when
all of the shares are owned by less than three shareholders, but
in such event the number of directors may not be less than the
number of shareholders. Directors need not be shareholders.
SECTION 2. POWERS. - The Board of Directors may adopt
such rules and regulations for the conduct of its meetings, the
exercise of its powers and the management of the affairs of the
corporation as it may deem proper, not inconsistent with the laws
of the State of Maryland, the Articles of Incorporation or these
Bylaws.
In addition to the powers and authorities by these
Bylaws expressly conferred upon them, the directors may exercise
all such powers of the corporation and do such lawful acts and
things as are not by statute or by the Articles of Incorporation
or by these Bylaws directed or required to be exercised or done
by the shareholders.
SECTION 3. MEETING, QUORUM, ACTION WITHOUT
MEETING. - Meetings of the Board may be held at any place,
either within or outside the State of Maryland, provided a
quorum be in attendance. Except as may be otherwise provided
by the Articles of Incorporation or by the General Corporation
Law of Maryland, a majority of the directors in office shall
<PAGE>
constitute a quorum at any meeting of the Board and the vote of a
majority of a quorum of directors shall constitute the act of the
Board.
The Board of Directors may hold an annual meeting,
without notice, immediately after the annual meeting of
shareholders. Regular meetings of the Board of Directors may be
established by a resolution adopted by the Board. The Chairman of
the Board (if any) or the President or Secretary may call, and at
the request of any two directors, must call a special meeting of
the Board of Directors, five days' notice of which shall be given
by mail, or two days' notice personally or by telegraph or cable
to each director.
Any one or more members of the Board or any Committee
thereof may participate in a meeting of such Board or Committee
by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
Any action required or permitted to be taken by the
Board or any Committee thereof may be taken without a meeting if
all members of the Board or the Committee consent in writing to
the adoption of a resolution authorizing the action.
The resolution and the written consents thereto by
the members of the Board or Committee shall be filed with the
minutes of the proceedings of the Board or Committee.
SECTION 4. VACANCIES, REMOVAL. - Except as otherwise
provided in the Articles of Incorporation or in the following
paragraph, vacancies occurring in the membership of the Board of
Directors, from whatever cause arising (including vacancies
occurring by reason of the removal of directors without cause and
newly created directorships resulting from any increase in the
authorized number of directors), may be filled by a majority vote
of the remaining directors, though less than a quorum, or such
vacancies may be filled by the shareholders.
Except where the Articles of Incorporation contains
provisions authorizing cumulative voting or the election of one
<PAGE>
or more directors by class or their election by holders of bonds,
or requires all action by shareholders to be by a greater vote,
any one or more of the directors may be removed, (a) either for
or without cause, at any time, by vote of the shareholders
holding a majority of the outstanding stock of the corporation
entitled to vote, present in person or by proxy, at any special
meeting of the shareholders or, (b) for cause, by action of the
Board of Directors at any regular or special meeting of the
Board. A vacancy or vacancies occurring from such removal may be
filled at the special meeting of shareholders or at a regular or
special meeting of the Board of Directors.
SECTION 5. COMMITTEES. - The Board of Directors, by
resolution adopted by a majority of the entire Board, may
designate from its members an Executive Committee or other
committee or committees, each consisting of three or more
members, with such powers and authority (to the extent permitted
by law) as may be provided in said resolution.
ARTICLE IV
OFFICERS
SECTION 1. EXECUTIVE OFFICERS. - The executive
officers of the corporation shall be a President, a Treasurer and
a Secretary, all of whom shall be elected annually by the
directors, who shall hold office during the pleasure of the
directors. Except for the offices of President and Secretary, any
two offices or more may be held by one person. Provided, however,
when all of the issued and outstanding stock of the corporation
is owned by one person, such person may hold all or any
combination of offices. All vacancies occurring among any of the
officers shall be filled by the directors. Any officer may be
removed at any time by the affirmative vote of a majority (unless
the Articles of Incorporation required a larger vote) of the
directors present at a special meeting of directors called for
the purpose.
<PAGE>
SECTION 2. OTHER OFFICERS. - The Board of
Directors may appoint such other officers and agents with such
powers and duties as it shall deem necessary.
SECTION 3. CHAIRMAN. The Chairman of the Board of
Directors, if one be elected, shall preside at all meetings of
the Board of Directors and he shall have and perform such other
duties as from time to time may be assigned to him by the Board
of Directors.
SECTION 4. PRESIDENT. The President shall be the
chief executive officer of the corporation and shall have the
general powers and duties of supervision and management usually
vested in the office of President of a corporation. He shall
preside at all meetings of the stockholders if present thereat,
and in the absence or nonelection of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall
have general supervision, direction and control of the business
of the corporation. Except as the Board of Directors shall
authorize the execution thereof in some other manner, he shall
execute bonds, mortgages and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any
instrument requiring it and when so affixed the seal shall be
attested by the signature of the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. Each Vice-President shall
have such powers and shall perform such duties as shall be
assigned to him by the directors.
SECTION 6. TREASURER. The Treasurer shall have the
custody of the corporate funds and securities and shall keep full
and accurate account of receipts and disbursements in books
belonging to the corporation. He shall deposit all moneys and
other valuables in the name and to the credit of the corporation
in such depositaries as may be designated by the Board of
Directors.
The Treasurer shall disburse the funds of the
corporation as may be ordered by the Board of Directors, or the
President, taking proper vouchers for such disbursements. He
shall render to the President and Board of Directors at the
regular meetings of the Board of Directors, or whenever they
<PAGE>
may request it, an account of all his transactions as Treasurer
and of the financial condition of the corporation. If required by
the Board of Directors, he shall give the corporation a bond for
the faithful discharge of his duties in such amount and with such
surety as the board shall prescribe.
SECTION 7. SECRETARY. The Secretary shall give, or
cause to be given, notice of all meetings of stockholders and
directors, and all other notices required by law or by these
Bylaws, and in case of his absence or refusal or neglect so to
do, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders, upon
whose requisition the meeting is called as provided in these
Bylaws. He shall record all the proceedings of the meetings of
the corporation and of the directors in a book to be kept for
that purpose, and shall perform such other duties as may be
assigned to him by the directors or the President. He shall have
the custody of the seal of the corporation and shall affix the
same to all instruments requiring it, when authorized by the
directors or the President, and attest the same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT
SECRETARIES. Assistant Treasurers and Assistant Secretaries, if
any, shall be elected and shall have such powers and shall
perform such duties as shall be assigned to them, respectively,
by the directors.
SECTION 9. SALARIES. - The salaries of all
officers shall be fixed by the Board of Directors, and the fact
that any officer is a director shall not preclude him from
receiving a salary as an officer, or from voting upon the
resolution providing the same.
<PAGE>
ARTICLE V
CAPITAL STOCK
SECTION 1. FORM AND EXECUTION OF CERTIFICATES.
Certificates of stock shall be in such form as required by the
General Corporation Law of Maryland and as shall be adopted by
the Board of Directors. They shall be numbered and registered in
the order issued; shall be signed by the President, the Vice
President or Chairman of the Board (if any) and countersigned by
the Secretary, an Assistant Secretary, the Treasurer or an
Assistant Treasurer and may be sealed with the corporate seal or
a facsimile thereof. When such a certificate is countersigned by
a transfer agent or registered by a registrar, the signatures of
any such officers may be facsimile.
SECTION 2. TRANSFER. - Transfer of shares shall be
made only upon the books of the corporation by the registered
holder in person or by attorney, duly authorized, and upon
surrender of the certificates for such shares properly assigned
for transfer.
SECTION 3. LOST OR DESTROYED CERTIFICATES. - The
holder of any certificate representing shares of stock of the
corporation may notify the corporation of any loss, theft or
destruction thereof, and the Board of Directors may thereupon, in
its discretion, cause a new certificate for the same number of
shares to be issued to such holder upon satisfactory proof of
such loss, theft or destruction, and the deposit of indemnity by
way of bond or otherwise, in such form and amount and with such
surety or sureties as the Board of Directors may require, to
indemnify the corporation against loss or liability by reason of
the issuance of such new certificates.
SECTION 4. RECORD DATE. - In lieu of closing the
books of the corporation, the Board of Directors may fix, in
advance, a date, not exceeding fifty days, nor less than ten
days, as the record date for the determination of shareholders
entitled to receive notice of, or to vote, at any meeting of
shareholders, or to consent to any proposal without a meeting, or
for the purpose of determining shareholders entitled to
<PAGE>
receive payment of any dividends, or allotment of any rights,
or for the purpose of any other action.
ARTICLE VI
MISCELLANEOUS
SECTION 1. DIVIDENDS. - The directors may declare
dividends from time to time upon the capital stock of the
corporation from the surplus or net profits available therefor.
SECTION 2. SEAL - The directors shall provide a
suitable corporate seal which shall be in charge of the Secretary
and shall be used as authorized by the Bylaws.
SECTION 3. FISCAL YEAR. - The fiscal year of the
corporation shall be fixed by the directors.
SECTION 4. CHECKS, NOTES, ETC. - Checks, notes,
drafts, bills of exchange and orders for the payment of money
shall be signed or endorsed in such manner as shall be
determined by the directors.
The funds of the corporation shall be deposited in
such bank or trust company, and checks drawn against such funds
shall be signed in such manner as may be determined from time to
time by the directors.
SECTION 5. NOTICE AND WAIVER OF NOTICE. - Any notice
required to be given under these Bylaws may be waived by the
person entitled thereto, in writing, by telegram, cable or
radiogram, and the presence of any person at a meeting shall
constitute waiver of notice thereof as to such person.
Whenever any notice is required by these Bylaws to be
given, personal notice is not meant unless expressly so stated;
and any notice so required shall be deemed to be sufficient if
given by depositing it in a post office or post box in a sealed
postpaid wrapper, addressed to such shareholder, officer or
director, at such address as appears on
<PAGE>
the books of the corporation and such notice shall be deemed to
have been given on the day of such deposit.
ARTICLE VII
AMENDMENTS
SECTION 1. BY SHAREHOLDERS. - These Bylaws may be
amended at any shareholders' meeting by vote of the shareholders
holding a majority (unless the Articles of Incorporation requires
a larger vote) of the outstanding stock having voting power,
present either in person or by proxy, provided notice of the
amendment is included in the notice or waiver of notice of such
meeting.
SECTION 2. BY DIRECTORS. - The Board of Directors may
also amend these Bylaws at any regular or special meeting of the
Board by a majority (unless the Articles of Incorporation
requires a larger vote) vote of the entire Board, but any Bylaws
so made by the Board of Directors may be altered or repealed by
the shareholders.
<PAGE>
Exhibit 4.1
Conformed Copy
STOCKHOLDERS' AGREEMENT
This AGREEMENT is made as of this 18th day of April,
1997, by and among Del Monte Foods Company, a Maryland
corporation (hereinafter referred to as the "Company"), and each
of the following (hereinafter severally referred to as a
"Stockholder" and collectively referred to as the
"Stockholders"): TPG Partners, L.P. ("TPG"), TPG Parallel I,
L.P., BankAmerica Investment Corporation ("BAIC"), MIG Partners
III ("MIG"), BT Investment Partners, Inc., Westar Capital, 399
Venture Partners, Inc. ("399 Venture"), TCW Capital Investment
Corporation ("TCW"), each of the individuals that are signatories
hereto and each of the parties who become parties to this
Agreement pursuant to Article V hereof as stockholders.
WHEREAS, DMFC has entered into an Agreement and Plan
of Merger among TPG, TPG Shield Acquisition Corporation, a wholly
owned subsidiary of TPG ("Shield"), and DMFC, dated as of
February 21, 1997 (the "Merger Agreement");
WHEREAS, the Merger Agreement provides for, among
other things, the merger of Shield with and into DMFC, with DMFC
being the surviving corporation, on the terms and subject to the
conditions set forth in the Merger Agreement (the "Merger");
WHEREAS, the Merger Agreement has been amended as of
April 14, 1997 pursuant to Section 6.7 thereof (the "Amended
Merger Agreement") to provide for the restructuring of the Merger
so that it will be accounted for as a recapitalization for
accounting purposes;
<PAGE>
WHEREAS, following the consummation of the transactions
contemplated by the Amended Merger Agreement, the Stockholders
will own all of the issued and outstanding common stock of the
Company (all of the issued and outstanding shares of common stock
of the Company, together with any additional shares issued by the
Company, being hereinafter severally referred to as a "Share" and
collectively referred to as the "Shares"); and
WHEREAS, in consideration of the Amended Merger Agreement
and the transactions contemplated thereby, the parties hereto
desire to enter into an agreement regarding certain matters
described herein, including the imposition of certain
restrictions on the transferability at any time of any Shares
held by any Stockholder.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, the parties mutually
agree as follows:
ARTICLE I
Representations and Warranties
Each of the parties hereby severally represents and
warrants to each of the other parties as follows:
1.1 Authority; Enforceability. Such party has the
legal capacity or corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. Such
party is duly organized and validly existing under the laws of
its jurisdiction of organization, and the execution of this
Agreement and the consummation of the transactions contemplated
herein have been duly authorized by all necessary action, and no
other act or proceeding, corporate or otherwise, on its part is
necessary to authorize the execution of this Agreement or the
consummation of any of the transactions contemplated hereby. This
Agreement has been duly executed by such party and constitutes
its legal, valid and binding obligation, enforceable against
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it in accordance with the terms of this Agreement, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the rights of creditors generally and to the
exercise of judicial discretion in accordance with general
principles of equity (whether applied by a court of law or of
equity).
1.2 No Breach. Neither the execution of this Agreement
nor the performance by such party of its obligations hereunder nor
the consummation of the transactions contemplated hereby does or
will:
(a) conflict with or violate its articles of
incorporation, bylaws or other organizational documents;
(b) violate, conflict with or result in the
breach or termination of, or otherwise give any other person the
right to accelerate, renegotiate or terminate or receive any
payment, or constitute a default or an event of default (or an
event which with notice, lapse of time, or both, would constitute
a default or event of default) under the terms of, any contract
or agreement to which it is a party or by which it or any of its
assets or operations are bound or affected; or
(c) constitute a violation by such party of any
laws, rules or regulations of any governmental, administrative or
regulatory authority or any judgments, orders, rulings or awards
of any court, arbitrator or other judicial authority or any
governmental, administrative or regulatory authority.
1.3 Consents. No consent, waiver, approval,
authorization, exemption, registration, license or declaration is
required to be made or obtained by such party, other than those
which have been made or obtained, in connection with (i) the
execution or enforceability of this Agreement or (ii) the
consummation of any of the transactions contemplated hereby.
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1.4 Share Ownership. Such party will own, immediately
following the consummation of the transactions contemplated by
the Amended Merger Agreement, the number of Shares set forth
opposite such party's name in Schedule 1.4 attached hereto, free
and clear of any and all liens, claims and encumbrances, other
than those created by this Agreement.
ARTICLE II
Transfer of Shares
2.1 Restrictions on Transfers.
(a) No Stockholder may transfer by way of sale,
exchange, assignment, pledge, gift or other disposition (all of
which acts shall be deemed included in the term "transfer" as
used in this Agreement) any or all of the Shares (whether held in
its, his or her own right or by a representative of the
Stockholder, such Stockholder hereinafter being referred to as a
"Transferor") unless (i) such transfer of Shares is made on the
books of the Company and in accordance with the provisions of
Article II of this Agreement and (ii) the transferee of such
Shares (if other than the Company or another Stockholder, or a
transferee in a sale of Shares made under Rule 144 (or any
successor provision) under the Securities Act of 1933, as amended
(the "Securities Act"), that is otherwise permitted by this
Agreement) agrees to become a party to this Agreement pursuant to
Article V hereof and executes such further documents as may be
necessary, in the opinion of the Company, to make him, her or it
a party hereto.
(b) Any purported transfer of Shares other than
in accordance with this Agreement by any Transferor shall be null
and void, and the Company shall refuse to recognize any such
transfer for any purpose and shall not reflect in its records any
change in record ownership of Shares pursuant to any such
transfer.
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(c) The Company shall not, without the written
consent of the holders of a majority, by voting power, of the
outstanding Shares, issue any Shares upon original issue or reissue
or otherwise dispose of any Shares unless the recipient or
transferee of such Shares (if other than a Stockholder) shall
agree to be added to this Agreement pursuant to Article V hereof
and executes such further documents as may be necessary, in the
opinion of the Company, to make him, her or it a party hereto.
2.2 Right of First Refusal.
(a) In the event that a Transferor desires to
sell all or part of its Shares (the "Offered Shares") to a good
faith independent purchaser (a "Purchaser"), other than pursuant
to Section 2.3, 2.4 or 2.5 of this Agreement or in reliance and
in accordance with Rule 144 (or any successor provision) under
the Securities Act, the Transferor shall give written notice (the
"Transferor's Notice") of its intention to sell the Offered
Shares to the Company and the other Stockholders at least 60 days
prior to the date of the proposed transfer setting forth (i) the
number of Offered Shares, (ii) the consideration to be received
by the Transferor, (iii) the identity of the Purchaser, (iv) any
other material items and conditions of the proposed transfer and
(v) the date of the proposed transfer.
(b) If the Transferor shall obtain the written
consent of the holders of a majority, by voting power, of the
outstanding Shares (including such Transferor and its Offered
Shares) entitled to vote at a meeting of Stockholders within 15
days after giving the Transferor's Notice, the Transferor may
freely transfer the Offered Shares to the Purchaser on the terms
and conditions set forth in such notice for a period of 90 days
after obtaining such consent without complying with the other
provisions of this Section 2.2. Thereafter, such Offered Shares
may be
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transferred only by again complying with all of the terms and
procedures set forth in this Article II.
(c) If the Transferor does not obtain consent to
the proposed transfer as provided in Subsection 2.2(b) above,
each Stockholder (other than the Transferor) may, by written
notice given to the Transferor, the other Stockholders and the
Company within 30 days after the date of the Transferor's Notice,
elect to acquire all of the Offered Shares on the same terms and
conditions set forth in the Transferor's Notice.
If the Stockholders electing to acquire all of
the Offered Shares (for purposes of this Section 2.2, the
"Electing Stockholders") collectively elect to acquire an
aggregate number of shares greater than the total number of
Offered Shares, each Electing Stockholder will be allocated a
number of the Offered Shares, up to the number of shares
specified in such Electing Stockholder's notice to the
Transferor, equal to such Electing Stockholder's Aggregate Pro
Rata Portion (as hereinafter defined) of the Offered Shares. If
one or more Electing Stockholders does not purchase all of its or
their Aggregate Pro Rata Portion of the Offered Shares, then the
remaining Electing Stockholders (for purposes of this Subsection
2.2(c), the "Remaining Electing Stockholders"), who based on
their notice to the Transferor still desire to purchase the
remaining Offered Shares (the "Remaining Offered Shares"), shall
have the right to purchase an Aggregate Pro Rata Portion of such
Remaining Offered Shares until all the Offered Shares are
purchased.
For purposes of this Subsection 2.2(c),
"Aggregate Pro Rata Portion" shall mean the number equal to the
product of (i) (A) the number of Offered Shares or (B) the number
of Remaining Offered Shares, as the case may be, multiplied by
(ii) a fraction, the numerator of which shall be the total number
of Shares held by the Electing Stockholder, and the denominator
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of which shall be the total number of Shares held by (A) all
Electing Stockholders or (B) all Remaining Electing Stockholders,
as the case may be.
(d) If the Electing Stockholders collectively
elect to acquire fewer than all of the Offered Shares within 30
days after the date of the Transferor's Notice, the Company shall
thereupon have the option, exercisable by written notice given to
the Transferor and the other Stockholders within 45 days after
the date of the Transferor's Notice, to repurchase all or part of
the remaining Offered Shares on the same terms and conditions set
forth in the Transferor's Notice.
(e) Subject to Subsection 2.2(f) below, upon the
giving of the notices provided in Subsections 2.2(c) and (d)
above, the Electing Stockholders and/or the Company, as the case
may be, shall be obligated severally, but not jointly, to
acquire, and the Transferor shall be obligated to transfer to
each of them, the respective numbers of Offered Shares specified
in such notices (or determined in accordance with Subsection
2.2(c) above, as the case may be) on the terms and conditions set
forth in the Transferor's Notice; provided that, if the proposed
transfer to the Purchaser provides for the payment of non-cash
consideration for the Offered Shares, any Electing Stockholder
and/or the Company may in their discretion, in lieu thereof, pay
the Transferor in cash the fair market value of such non-cash
consideration.
(f) Notwithstanding the foregoing provisions of
Subsection 2.2(e), if the Electing Stockholders and the Company
collectively elect to acquire fewer than all of the Offered
Shares, neither the Electing Shareholders nor the Company shall
have the right to purchase any of the Offered Shares, and the
Transferor may freely transfer all (but not less than all) of the
Offered Shares to the Purchaser on the terms and conditions set
forth in the Transferor's Notice at any time after 60 days, but
within 120 days, following the date of such
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Transferor's Notice, provided, however, if the holders of a
majority, by voting power, of the outstanding Shares notify the
Transferor in writing, within 50 days after the date of the
Transferor's Notice, of an objection to the Purchaser because the
Purchaser or one or more of its affiliates competes with one or
more of the businesses of the Company and its subsidiaries, the
Transferor shall not have the right to transfer any of the
Offered Shares to such Purchaser.
In the event that the Offered Shares are not so
transferred to the Purchaser or if the Transferor shall desire to
transfer the Offered Shares to the Purchaser upon terms and
conditions different from those set forth in the Transferor's
Notice, then such Offered Shares may be transferred only by again
complying with all of the terms and procedures set forth in this
Article II.
2.3 Transfers to Permitted Transferees. A Stockholder
may transfer any or all of the Shares held by such Stockholder to
a Permitted Transferee (as hereinafter defined) of such
Stockholder without complying with any other provision of this
Article II other than Section 2.1. For purposes of this Section
2.3, a "Permitted Transferee" means (a) in the case of TPG, any
other investment partnership, limited liability company or other
entity established for investment purposes and controlled by the
principals of TPG, (b) in the case of any other Stockholder that
is a corporation, any other entity that owns, directly or
indirectly, at least 51% of the equity securities of such
Stockholder ("majority ownership") or that is under common
majority ownership with such Stockholder, (c) in the case of any
other Stockholder that is an investment partnership, limited
liability company or other entity established for investment
purposes, the partners, members, stockholders or other owners
thereof or another investment partnership, limited liability
company or other entity established for investment purposes
and controlled by such partners, members, stockholders or
other owners, (d) in the case of any other Stockholder
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that is an individual, any successor by death or divorce, (e) in
the case of BAIC, MIG, (f) in the case of MIG, BAIC, (g) in the
case of 399 Venture, CCT Partners IV, L.P., and (h) in the case
of TCW, any of TCW/Crescent Mezzanine Partners, L.P.,
TCW/Crescent Mezzanine Trust or TCW/Crescent Mezzanine Investment
Partners, L.P.
2.4 Bankruptcy of a Stockholder.
(a) Upon the bankruptcy (as hereinafter defined
in Subsection 2.4(d) below) of a Stockholder (the "Bankrupt
Stockholder"), each Stockholder (other than the Bankrupt
Stockholder) may, by written notice given to the Bankrupt
Stockholder, the other Stockholders and the Company within 30
days following the occurrence of the event specified in
Subsection 2.4(d) which gives rise to such bankruptcy, elect to
purchase for cash part or all of such Bankrupt Stockholder's
shares (the "Bankrupt Shares") at a price equal to the fair
market value of such shares at the time of purchase, as
determined either by agreement among the Stockholders or by an
independent appraiser to be selected by the Company. Fees and
expenses of any independent appraiser selected pursuant to this
subsection shall be shared equally by (i) the Bankrupt
Stockholder and (ii) the Stockholders electing to acquire any or
all of the Bankrupt Shares (for purposes of this Section 2.4, the
"Electing Stockholders"). The share of the fees and expenses to
be shared by the Electing Stockholders shall be in proportion to
the shares to be purchased by them.
If the Electing Stockholders collectively elect
to acquire an aggregate number of shares greater than the total
number of the Bankrupt Shares, each Electing Stockholder will be
allocated a number of the Bankrupt Shares, up to the number of
shares specified in such Electing Stockholder's notice to the
Company, equal to such Electing Stockholder's Aggregate Pro Rata
Portion (as hereinafter defined) of the Bankrupt Shares. If one
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or more Electing Stockholder does not purchase all of its or
their Aggregate Pro Rata Portion of the Offered Shares, then the
remaining Electing Stockholders (for purposes of this Subsection
2.4(a), the "Remaining Electing Stockholders"), who based on
their notice to the Company still desire to purchase the
remaining Bankrupt Shares (the "Remaining Bankrupt Shares"),
shall have the right to purchase an Aggregate Pro Rata Portion of
such Remaining Bankrupt Shares until all the Bankrupt Shares are
purchased.
For purposes of this Subsection 2.4(a),
"Aggregate Pro Rata Portion" shall mean the number equal to the
product of (i) (A) the number of Bankrupt Shares or (B) the
number of Remaining Bankrupt Shares, as the case may be,
multiplied by (ii) a fraction, the numerator of which shall be
the total number of Shares held by the Electing Stockholder, and
the denominator of which shall be the total number of Shares held
by (A) all Electing Stockholders or (B) all Remaining Electing
Stockholders, as the case may be.
(b) If the Electing Stockholders collectively
elect to acquire fewer than all of the Bankrupt Shares within 30
days after the event giving rise to such bankruptcy, the Company
shall thereupon have the option, exercisable by written notice
given to the Bankrupt Stockholder and the other Stockholders
within 45 days after the event giving rise to such bankruptcy, to
purchase for cash all or part of the remaining Bankrupt Shares at
the price determined in accordance with Subsection 2.4(a) above.
(c) Upon the giving of the notices provided in
Subsections 2.4(a) and (b) above, the Electing Stockholders
and/or the Company, as the case may be, shall be obligated
severally, but not jointly, to purchase, and the Bankrupt Stockholder
shall be obligated to sell to each of them, the respective numbers
of such Bankrupt Shares specified in such notices (or
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determined in accordance with Subsection 2.4(a) above, as the
case may be) for cash at the price determined in accordance with
Subsection 2.4(a) above.
(d) The bankruptcy of a Stockholder shall be
deemed to occur upon the occurrence of any of the following
events:
(i) The filing of a voluntary petition in
bankruptcy by such Stockholder;
(ii) The filing of an involuntary petition
in bankruptcy with respect to such Stockholder which remains
undismissed for a period of 90 days;
(iii) The appointment of a receiver with
respect to such Stockholder or with respect to all or substantially
all of his, her or its assets or affairs which remains undismissed
for a period of 60 days; or
(iv) The admission in writing by the Stockholder
of his, her or its inability to pay his, her or its debts generally
as they become due.
2.5 Certain Rights.
(a) Drag Along Rights. If a Stockholder or
Stockholders holding in the aggregate a majority, by voting
power, of the outstanding Shares (a "Controlling Stockholder")
desires to sell its Shares to a Purchaser (other than pursuant to
Section 2.3) and said Purchaser desires to acquire all of the
issued and outstanding Shares of the Company upon such terms and
conditions as agreed to with the Controlling Stockholder, each
other Stockholder agrees to sell all of its Shares to said
Purchaser (or to vote in favor of any merger or other transaction
which would effect such a sale) at the same price per Share and
pursuant to the same terms and conditions with respect to payment
for the Shares as agreed to by the Controlling Stockholder. In
such case, the Controlling Stockholder shall give written notice
of such sale to
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the other Stockholders at least 30 days prior to the consummation
of such sale, setting forth (i) the consideration to be received
by the Stockholders, (ii) the identity of the Purchaser, (iii)
any other material items and conditions of the proposed transfer
and (iv) the date of the proposed transfer.
(b) Tag Along Rights. If TPG or its affililates
proposes to transfer any Shares to a Purchaser other than an
affiliate or employee of TPG or its affiliates, then such
Stockholder (hereinafter referred to as a "Selling Stockholder")
shall give written notice of such proposed transfer to the other
Stockholders (for purposes of this Subsection 2.5(b), the "Other
Stockholders") at least 30 days prior to the consummation of such
proposed transfer, setting forth (A) the number of Shares
offered, (B) the consideration to be received by such Selling
Stockholder, (C) the identity of the Purchaser, (D) any other
material items and conditions of the proposed transfer and (E)
the date of the proposed transfer.
Each Other Stockholder may elect to sell a Pro
Rata Portion (as hereinafter defined) of its Shares, at the same
price per Share and pursuant to the same terms and conditions
with respect to payment for the Shares as agreed to by the
Selling Stockholder, by sending written notice to the Selling
Stockholder within 15 days of the date of the Selling
Stockholder's notice, indicating a desire to sell such Pro Rata
Portion of its Shares in the same transaction. Following such 15
day period, the Selling Stockholder shall be permitted to sell to
the Purchaser additional Shares representing Shares not sold by
Other Stockholders.
"Pro Rata Portion" shall mean a number equal to
the product of (x) the total number of Shares owned by such Other
Stockholder and (y) a fraction, the numerator of which shall be
the total number of Shares offered (for sale or registration) by
the Selling Stockholder, and the denominator of which shall be
the total number of Shares owned by the
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Selling Stockholder (including the Shares proposed to be sold or
registered by the Selling Stockholder).
(c) Piggyback Registration Rights.
(i) Notice to Stockholders. If the Company
determines that it will file a registration statement under the
Securities Act, other than a Form S-8 under the Securities Act or
any similar form under the Securities Act, for an offering which
includes Shares held by TPG or its affiliates (a "Registering
Stockholder"), then the Company shall give prompt written notice
to each of the other Stockholders (for purposes of this
Subsection 2.5(c), the "Other Stockholders") that such filing is
expected to be made (but in no event less than 30 days nor more
than 60 days in advance of filing such registration statement),
the jurisdiction or jurisdictions in which such offering is
expected to be made, and the underwriter or underwriters (if any)
that the Company (or the person requesting such registration)
intends to designate for such offering. If the Company, within 15
days after giving such notice, receives a written request for
registration of any Shares from any of the Other Stockholders,
then the Company shall include in the same registration statement
the number of additional Shares to be sold by each Other
Stockholder as shall have been specified in its request, except
that each Other Stockholder shall not be permitted to register
more than a Pro Rata Portion of its Shares. The Company shall
bear all costs of preparing and filing the registration
statement, and shall indemnify and hold harmless, to the extent
customary and reasonable, pursuant to indemnification and
contribution provisions to be entered into by the Company at the
time of filing of the registration statement, the seller of any
Shares covered by such registration statement.
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Notwithstanding anything herein to the contrary, the Company, on
prior notice to the participating Stockholder, may abandon its
intention to file a registration statement under this Subsection
2.5(c) at any time prior to such filing.
(ii) Allocation. If the managing underwriter shall
inform the Company (or the person requesting such registration) in
writing that the number of shares requested to be included in such
registration exceeds the number which can be sold in (or during
the time of) such offering within a price range acceptable to the
Company (or, if the offering is not for the Company's account,
such person), then the Company shall include in such registration
such number of Shares which the Company (or such person) is so
advised can be sold in (or during the time of) such offering. All
Stockholders proposing to sell Shares shall share pro rata in the
number of Shares to be excluded from such offering, such sharing
to be based on the respective numbers of Shares as to which
registration has been requested by such Stockholders.
(iii) Permitted Transfer. Notwithstanding
anything to the contrary contained herein, sales of Shares pursuant
to a registration statement filed by the Company may be made without
compliance with any other provision of this Article II.
ARTICLE III
Legends on Share Certificates
3.1 The certificates representing the Shares shall
include an endorsement typed conspicuously thereon of the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE
ON THE BOOKS OF THE ISSUER UNLESS SUCH TRANSFER IS MADE IN
CONNECTION WITH AN EFFECTIVE REGISTRATION STATEMENT
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UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES NOT
APPLY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN A
STOCKHOLDERS' AGREEMENT DATED AS OF APRIL 18, 1997 AS THE
SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH IS
ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER.
NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE
ON THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH
RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH."
In the event that any Shares shall cease to be
Restricted Shares (as hereinafter defined), the Company shall,
upon the written request of the holder thereof, issue to such
holder a new certificate representing such Shares without the
first paragraph of the legend required by this Section 3.1. In
the event that any Shares shall cease to be subject to the
restrictions on transfer set forth in this Agreement, the Company
shall, upon the request of the holder thereof, issue to such
holder a new certificate representing such Shares without the
second paragraph of the legend required by Section 3.1.
"Restricted Shares" shall mean all Shares other than
(a) Shares that have been registered under a registration
statement pursuant to the Securities Act and sold thereunder, (b)
Shares with respect to which a sale or other disposition has been
made in reliance on and in accordance with Rule 144 (or any
successor provision) under the Securities Act, or (c) Shares with
respect to which the holder thereof shall have delivered to the
Company either (i) an opinion, in form and substance satisfactory
to the Company, of counsel, who shall be satisfactory to the
Company, or (ii) a "no action" letter from the Securities and
Exchange Commission, to the effect that subsequent transfers of
such Shares may be effected without registration under the
Securities Act.
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3.2 All certificates for Shares hereafter issued, whether
upon transfer or original issue, shall be endorsed with a like
legend.
3.3 Upon the exercise of any option to purchase
described herein, the certificates representing the Shares
purchased shall be delivered to the Secretary of the Company and
properly endorsed for transfer on the stock book of the Company.
ARTICLE IV
Covenants
4.1 Financial Information. The Company shall, at its
expense, provide to each Stockholder signatory hereto at the date
hereof, promptly following the final preparation thereof, copies
of consolidated annual, quarterly and monthly financial
statements of the Company and its subsidiaries, such statements
to include such type of information as is required to be provided
to the senior secured lenders of Del Monte Corporation at the
date hereof. The rights provided by this Section 4.1 may not be
transferred or assigned to any other person without the consent
of holders of a majority, by voting power, of the outstanding
Shares, and shall be subject as to each Stockholder to the
provision by such Stockholder of customary confidentiality
undertakings.
4.2 Affiliate Transactions. The Company shall not, and
shall not permit any of its subsidiaries to, enter into any
transaction with any affiliate of the Company (other than a
material subsidiary of the Company), except upon fair and
reasonable terms no less favorable to the Company or such
subsidiaries than would be obtainable in a comparable arm's
length transaction, unless the Company shall obtain the written
consent of a majority of the independent directors of the Company
or of the holders of a majority, by voting power, of the
outstanding Shares (excluding such affiliate and its Shares)
entitled to vote at a meeting of Stockholders; provided,
agreements in effect on the date hereof shall be deemed not to
violate this provision.
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4.3 Exchange of Shares. The Stockholders will use all
reasonable efforts to cause the Board of Directors of the Company to
authorize the exchange of Shares held by any Stockholder subject
to the Bank Holding Company Act of 1956, as amended (the "BHCA"),
to the extent necessary, for substantially equivalent shares with
diminished voting rights, to permit the ownership of such Shares
by such Stockholder to comply with the requirements of Section
4(c)(6) or 4(c)(7) of the BHCA.
ARTICLE V
Additional Parties
Notwithstanding the provisions of Section 6.3,
additional Stockholders may be added to and be bound by this
Agreement upon the signing and delivery of a counterpart of this
Agreement by the Company and the acceptance thereof by such
additional Stockholders. Promptly thereafter, the Company will
deliver a conformed copy thereof to the Stockholders.
ARTICLE VI
Miscellaneous Provisions
6.1 Specific Performance. The parties hereby declare
and acknowledge that it is impossible to measure in money the
damages which will accrue to any party hereto or to a
representative of a Stockholder by reason of a failure to perform
any of the obligations under this Agreement. Therefore, if any
party hereto or the representative of a Stockholder shall
institute any action or proceeding to enforce the provisions
hereof, the person against whom such action or proceeding is
brought hereby waives the claim or defense that such party or
such representative has an adequate remedy at law, and such
person shall not urge in any such action or proceeding the claim
or defense that such party or such representative has an adequate
remedy at law. The parties hereto agree that this Agreement shall
be specifically enforceable.
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6.2 Notices. Any and all notices, designations, offers,
acceptances or other communications provided for herein shall be
given in writing by registered or certified mail, which shall be
addressed, in the case of the Company, to its principal office,
and, in the case of any Stockholder, to such Stockholder's
address appearing on the stock book of the Company or to such
other address as may be designated by such Stockholder in writing
to the Company.
6.3 Entire Agreement. This Agreement constitutes the
only agreement between the parties hereto respecting restrictions
on the transferability of the Shares and supersedes all prior
agreements, expressed or implied, between the parties.
6.4 Governing Law. The validity, construction and
performance of this Agreement shall be governed by the laws of the
State of Maryland, without giving effect to principles of conflicts
of laws.
6.5 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, and their successors
and assigns.
6.6 Severability. If any portion of this Agreement
shall be declared void or unenforceable by any court or
administrative body of competent jurisdiction, such portion shall
be deemed severable from the remainder of this Agreement, which
shall continue in all respects valid and enforceable.
6.7 Amendment and Waiver. Any amendment of this Agreement
or any waiver of any provision hereof shall be in writing and signed
by all of the parties hereto. The addition of a Transferee of Shares or
a recipient of any Shares as a party hereto pursuant to Article IV
hereof shall not constitute an amendment hereto and need be signed
only by the Company and such Transferee or recipient. Any failure
by any party at any time to enforce any
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of the provisions of this Agreement shall not be construed a
waiver of such provision or any other provisions hereof.
6.8 Termination. This Agreement shall terminate on the
earlier of (a) the date on which more than 50% of the issued and
outstanding Shares at such date shall have been registered and
sold pursuant to one or more registration statements filed under
the Securities Act and (b) the tenth anniversary of the date
hereof. Notwithstanding the foregoing, in connection with the
underwritten initial public offering by the Company of any
Shares, the holders of a majority, by voting power, of the
outstanding Shares may, by written notice to each of the parties
to this Agreement and to each party who becomes a party to this
Agreement, terminate this Agreement within 30 days after giving
such notice, provided, however, termination pursuant to this
second sentence of Section 6.8. shall not terminate the rights,
if any, of Stockholders set forth in Subsection 2.5(c) of this
Agreement.
6.9 Counterparts. This Agreement may be signed by each
party hereto upon a separate copy of this Agreement in which
event all of said copies shall constitute a single counterpart of
this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
Each Stockholder in agreement with the foregoing
should sign the form of acceptance in the space provided for such
Stockholder's signature on this copy of this Agreement delivered
to such Stockholder. This Agreement will become a binding
agreement among such Stockholders and the Company when signed by
the Company and so accepted by such Stockholders.
19
<PAGE>
The foregoing Agreement is hereby accepted as of the
day and year first above written.
DEL MONTE FOODS COMPANY
By: /s/ Thomas E. Gibbons
-----------------------------
Name:
Title:
Stockholders:
TPG PARTNERS, L.P.
By: TPG Genpar, L.P.
By: TPG Advisors, Inc.
By: /s/ Carrie Wheeler
--------------------------
Name:
Title:
TPG PARALLEL I, L.P.
By: TPG Genpar, L.P.
By: TPG Advisors, Inc.
By: /s/ Carrie Wheeler
--------------------------
Name:
Title:
S-1
<PAGE>
399 VENTURE PARTNERS, INC.
By: /s/ David Howe
--------------------------
Name:
Title:
S-2
<PAGE>
BANKAMERICA INVESTMENT CORPORATION
By: /s/ Dennis P. McCrary
--------------------------
Name: Dennis P. McCrary
Title: Managing Director
MIG PARTNERS III
By: /s/ Dennis P. McCrary
--------------------------
Name: Dennis P. McCrary
Title: Managing Director
S-3
<PAGE>
BT INVESTMENT PARTNERS, INC.
By: /s/ Joseph T. Wood
--------------------------
Name: Joseph T. Wood
Title: Managing Director
S-4
<PAGE>
WESTAR CAPITAL
By: /s/ Steven B. Sebastian
--------------------------
Name: Steven B. Sebastian
Title: General Partner
S-5
<PAGE>
TCW CAPITAL INVESTMENT CORPORATION
By: TCW Asset Management Company
its general partner
By: /s/ Alvin R. Albe, Jr. By: /s/ Marie M. Bender
Name: Alvin R. Albe, Jr. Name: Marie M. Bender
Title: Executive Vice President, Title: Assistant Secretary
Finance & Administration Address: 865 South Figueroa Street
Address: 865 South Figueroa Street Suite 1800
Suite 1800 Los Angeles, California
Los Angeles, California 90017
90017
S-6
<PAGE>
/s/ Robert J. Carbonell
------------------------------
ROBERT J. CARBONELL
/s/ Richard Cashin
------------------------------
RICHARD CASHIN
/s/ Stephen Sherrill
------------------------------
STEPHEN SHERRILL
/s/ David Thomas
------------------------------
DAVID THOMAS
S-7
<PAGE>
Exhibit 4.2
Conformed Copy
DEL MONTE CORPORATION,
as Issuer
DEL MONTE FOODS COMPANY,
as Guarantor
and
MARINE MIDLAND BANK
as Trustee
INDENTURE
Dated as of April 18, 1997
$150,000,000
12-1/4% Senior Subordinated Notes due 2007
and
Series B 12-1/4% Senior Subordinated Notes due 2007
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1) ................................ 7.10
(a)(2) ................................ 7.10
(a)(3) ................................ N.A.
(a)(4) ................................ N.A.
(a)(5) ................................ 7.08; 7.10
(b) ................................ 7.08; 7.10; 13.02
(c) ................................ N.A.
311(a) ................................ 7.11
(b) ................................ 7.11
(c) ................................ N.A.
312(a) ................................ 2.05
(b) ................................ 13.03
(c) ................................ 13.03
313(a) ................................ 7.06
(b)(1) ................................ N.A.
(b)(2) ................................ 7.06
(c) ................................ 7.06; 13.02
(d) ................................ 7.06
314(a) ................................ 4.07; 4.08; 13.02
(b) ................................ N.A.
(c)(1) ................................ 13.04
(c)(2) ................................ 13.04
(c)(3) ................................ N.A.
(d) ................................ N.A.
(e) ................................ 13.05
(f) ................................ N.A.
315(a) ................................ 7.01(b)
(b) ................................ 7.05; 13.02
(c) ................................ 7.01(a)
(d) ................................ 7.01(c)
(e) ................................ 6.11
316(a)(last sentence)........................ 2.09
(a)(1)(A)................................ 6.05
(a)(1)(B)................................ 6.04
(a)(2) ................................ N.A.
(b) ................................ 6.07
(c) ................................ 9.05
317(a)(1) ................................ 6.08
(a)(2) ................................ 6.09
(b) ................................ 2.04
318(a) ................................ 13.01
(c) ................................ 13.01
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions 1
-----------
SECTION 1.02. Incorporation by Reference of TIA 28
---------------------------------
SECTION 1.03. Rules of Construction 28
---------------------
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating 29
SECTION 2.02. Execution and Authentication; Aggregate
Principal Amount 30
SECTION 2.03. Registrar and Paying Agent 31
--------------------------
SECTION 2.04. Paying Agent To Hold Assets in Trust 32
------------------------------------
SECTION 2.05. Noteholder Lists 32
----------------
SECTION 2.06. Transfer and Exchange 33
---------------------
SECTION 2.07. Replacement Notes 34
-----------------
SECTION 2.08. Outstanding Notes 34
-----------------
SECTION 2.09. Treasury Notes 34
--------------
SECTION 2.10. Temporary Notes 35
---------------
SECTION 2.11. Cancellation 35
------------
SECTION 2.12. Defaulted Interest 35
------------------
SECTION 2.13. CUSIP Number 35
------------
SECTION 2.14. Deposit of Moneys 36
-----------------
SECTION 2.15. Restrictive Legends 36
-------------------
SECTION 2.16. Book-Entry Provisions for Global Note 38
-------------------------------------
SECTION 2.17. Special Transfer Provisions 39
---------------------------
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee 41
------------------
SECTION 3.02. Selection of Notes To Be Redeemed 41
---------------------------------
SECTION 3.03. Notice of Redemption 42
--------------------
SECTION 3.04. Effect of Notice of Redemption 43
------------------------------
SECTION 3.05. Deposit of Redemption Price 43
---------------------------
SECTION 3.06. Notes Redeemed in Part 43
----------------------
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes 44
----------------
SECTION 4.02. Maintenance of Office or Agency 44
-------------------------------
SECTION 4.03. Corporate Existence 45
-------------------
SECTION 4.04. Payment of Taxes and Other Claims 45
---------------------------------
SECTION 4.05. Maintenance of Properties and Insurance 45
---------------------------------------
SECTION 4.06. Compliance Certificate; Notice of Default 46
-----------------------------------------
SECTION 4.07. Compliance with Laws 46
--------------------
SECTION 4.08. SEC Reports 47
-----------
SECTION 4.09. Waiver of Stay, Extension or Usury Laws 47
---------------------------------------
SECTION 4.10. Limitation on Restricted Payments 48
---------------------------------
SECTION 4.11. Limitation on Transactions with Affiliates 50
------------------------------------------
SECTION 4.12. Limitation on Incurrence of Additional
--------------------------------------
Indebtedness 51
SECTION 4.13. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries 51
------------------------------------
SECTION 4.14. Prohibition on Incurrence of Senior Subordinated
Debt 52
----
SECTION 4.15. Change of Control 52
-----------------
SECTION 4.16. Limitation on Asset Sales 54
-------------------------
SECTION 4.17. Limitation on Preferred Stock of Restricted
-------------------------------------------
Subsidiaries 58
------------
SECTION 4.18. Limitation on Liens 58
-------------------
SECTION 4.19. Limitation on Guarantees by Restricted
Subsidiaries 59
--------------
SECTION 4.20. Restriction of Lines of Business to Food, Food
Distribution and Related Businesses 60
-----------------------------------
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets of the
Company 60
-------
SECTION 5.02. Successor Corporation Substituted for the
Company 61
-------
SECTION 5.03. Merger, Consolidation and Sale of Assets of
Holdings 62
--------
SECTION 5.04. Successor Corporation Substituted for Holdings 63
----------------------------------------------
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default 63
-----------------
SECTION 6.02. Acceleration 64
------------
SECTION 6.03. Other Remedies 65
--------------
SECTION 6.04. Waiver of Past Defaults 66
-----------------------
SECTION 6.05. Control by Majority 66
-------------------
SECTION 6.06. Limitation on Suits 66
-------------------
SECTION 6.07. Rights of Holders To Receive Payment 67
------------------------------------
SECTION 6.08. Collection Suit by Trustee 67
--------------------------
SECTION 6.09. Trustee May File Proofs of Claim 67
--------------------------------
SECTION 6.10. Priorities 68
----------
SECTION 6.11. Undertaking for Costs 68
---------------------
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee 68
-----------------
SECTION 7.02. Rights of Trustee 70
-----------------
SECTION 7.03. Individual Rights of Trustee 71
----------------------------
SECTION 7.04. Trustee's Disclaimer 71
--------------------
SECTION 7.05. Notice of Default 71
-----------------
SECTION 7.06. Reports by Trustee to Holders 71
-----------------------------
SECTION 7.07. Compensation and Indemnity 72
--------------------------
SECTION 7.08. Replacement of Trustee 73
----------------------
SECTION 7.09. Successor Trustee by Merger, Etc 74
--------------------------------
SECTION 7.10. Eligibility; Disqualification 74
-----------------------------
SECTION 7.11. Preferential Collection of Claims Against
-----------------------------------------
Company 74
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations. 74
----------------------------------------
SECTION 8.02. Legal Defeasance and Covenant Defeasance 76
----------------------------------------
SECTION 8.03. Conditions to Legal Defeasance or Covenant
------------------------------------------
Defeasance 77
----------
SECTION 8.04. Application of Trust Money 79
--------------------------
SECTION 8.05. Repayment to the Company 79
------------------------
SECTION 8.06. Reinstatement 80
-------------
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders 80
--------------------------
SECTION 9.02. With Consent of Holders 81
-----------------------
SECTION 9.03. Effect on Senior Debt 82
---------------------
SECTION 9.04. Compliance with TIA 82
-------------------
SECTION 9.05. Revocation and Effect of Consents 83
---------------------------------
SECTION 9.06. Notation on or Exchange of Notes 83
--------------------------------
SECTION 9.07. Trustee To Sign Amendments, Etc 84
-------------------------------
SECTION 9.08. Effect of Supplemental Indentures 84
---------------------------------
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Debt 84
---------------------------------
SECTION 10.02. No Payment on Notes in Certain Circumstances. 84
--------------------------------------------
SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc 86
----------------------------------------------
SECTION 10.04. Payments May Be Paid Prior to Dissolution 87
-----------------------------------------
SECTION 10.05. Subrogation 87
-----------
SECTION 10.06. Obligations of the Company Unconditional 88
----------------------------------------
SECTION 10.07. Notice to Trustee and Paying Agents 88
-----------------------------------
SECTION 10.08. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent 89
-----------------
SECTION 10.09. Trustee's Relation to Senior Debt 89
---------------------------------
SECTION 10.10. Subordination Rights Not Impaired by Acts or
--------------------------------------------
Omissions of the Company or Holders of Senior
--------------------------------------------
Debt 90
--------
SECTION 10.11. Noteholders Authorize Trustee and Paying Agent
To Effectuate Subordination of Notes 90
--------------------------------------------
SECTION 10.12. This Article Ten Not To Prevent Events of
Default 91
--------
SECTION 10.13. Trustee's Compensation Not Prejudiced 91
--------------------------------------------
ARTICLE ELEVEN
GUARANTEE OF HOLDINGS
SECTION 11.01. Unconditional Guarantee 91
-----------------------
SECTION 11.02. Subordination of Guarantee 92
--------------------------
SECTION 11.03. Severability 92
------------
SECTION 11.04. Release of Guarantee 92
--------------------
SECTION 11.05. Waiver of Subrogation 93
---------------------
SECTION 11.06. Execution of Guarantee 93
----------------------
SECTION 11.07. Waiver of Stay, Extension or Usury Laws 94
---------------------------------------
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE OBLIGATIONS
SECTION 12.01. Guarantee Obligations Subordinated to Guarantor
Senior Debt of Holdings 94
--------------------------------------------
SECTION 12.02. No Payment on Notes in Certain Circumstances 94
--------------------------------------------
SECTION 12.03. Payment Over of Proceeds upon Dissolution, Etc 96
----------------------------------------------
SECTION 12.04. Payments May Be Paid Prior to Dissolution 97
-----------------------------------------
SECTION 12.05. Subrogation 98
-----------
SECTION 12.06. Obligations of Holdings Unconditional 98
-------------------------------------
SECTION 12.07. Notice to Trustee and Paying Agents 98
-----------------------------------
SECTION 12.08. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent 99
----------------
SECTION 12.09. Trustee's Relation to Guarantor Senior Debt of
Holdings 99
--------
SECTION 12.10. Subordination Rights Not Impaired by Acts or
Omissions of Holdings or Holders of Guarantor
Senior Debt of Holdings 100
-----------------------
SECTION 12.11. Noteholders Authorize Trustee and Paying Agent
To Effectuate Subordination of Notes 100
-----------------------------------------
SECTION 12.12. This Article Twelve Not To Prevent Events of
Default 101
--------
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls 101
------------
SECTION 13.02. Notices 101
-------
SECTION 13.03. Communications by Holders with Other Holders 104
--------------------------------------------
SECTION 13.04. Certificate and Opinion as to Conditions
-----------------------------------------
Precedent 104
---------
SECTION 13.05. Statements Required in Certificate or Opinion 104
---------------------------------------------
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar 105
-----------------------------------------
SECTION 13.07. Legal Holidays 105
--------------
SECTION 13.08. Governing Law 105
-------------
SECTION 13.09. No Adverse Interpretation of Other Agreements 105
---------------------------------------------
SECTION 13.10. No Recourse Against Others 105
--------------------------
SECTION 13.11. Successors 106
----------
SECTION 13.12. Duplicate Originals 106
-------------------
SECTION 13.13. Severability 106
------------
Signatures 104
Exhibit A - Form of Initial Note and Guarantee............... A-1
Exhibit B - Form of Exchange Note and Guarantee.............. B-1
Exhibit C - Form of Certificate To Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors.......................... C-1
Exhibit D - Form of Certificate To Be Delivered in
Connection with Transfers Pursuant to
Regulation S.................................. D-1
Schedule 1 - Assets Being Held For Disposition
Note: This Table of Contents shall not, for any purpose,
be deemed to be part of the Indenture.
<PAGE>
INDENTURE, dated as of April 18, 1997, among DEL MONTE
CORPORATION, a New York corporation (the "Company"), DEL MONTE
FOODS COMPANY, a Maryland corporation ("Holdings") and MARINE
MIDLAND BANK, a New York banking and trust company, as Trustee
(the "Trustee").
The Company has duly authorized the creation of an
issue of 12-1/4% Senior Subordinated Notes due 2007 (the "Initial
Notes") and Series B 12-1/4% Senior Subordinated Notes due 2007
(the "Exchange Notes," and together with the Initial Notes, the
"Notes") and, to provide therefor, the Company has duly
authorized the execution and delivery of this Indenture. All
things necessary to make the Notes, when duly issued and executed
by the Company, and authenticated and delivered hereunder, the
valid obligations of the Company, and to make this Indenture a
valid and binding agreement of the Company, have been done.
Holdings has agreed to guarantee the Notes on a senior
subordinated basis.
Each party hereto agrees as follows for the benefit of
the other parties and for the equal and ratable benefit of the
Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceleration Notice" has the meaning provided in
Section 6.02(a).
"Acquired Indebtedness" means Indebtedness of a Person
or any of its Subsidiaries existing at the time such Person
becomes a Restricted Subsidiary of the Company or at the time it
merges or consolidates with the Company or any of its Restricted
Subsidiaries or assumed by the Company or any of its Restricted
Subsidiaries in connection with the acquisition of assets from
such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such
Person becoming a Restricted Subsidiary of the Company or such
acquisition, merger or consolidation.
"Acquisition Financing Indebtedness" means
Indebtedness of the Company incurred in connection with the
acquisition of assets or capital stock (by stock purchase, merger
or otherwise) of a Person engaged in all material respects solely
in the business of food, food distribution and related
businesses.
<PAGE>
"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.
"Affiliate Transaction" has the meaning provided in
Section 4.11 .
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section
2.16.
"Applicable Premium" means, with respect to a Note at
any Change of Control Redemption Date, the greater of (i) 1.0% of
the principal amount of such Note and (ii) the excess of (A) the
present value at such time of (1) the redemption price of such
Note at April 15, 2002 determined in accordance with paragraph
6(a) of the Notes plus (2) all required interest payments due on
such Note through April 15, 2002, computed using a discount rate
equal to the Treasury Rate plus 1.00% per annum, over (B) the
principal amount of such Note.
"Asset Acquisition" means (a) an Investment by the
Company or any Restricted Subsidiary of the Company in any other
Person pursuant to which such Person shall become a Restricted
Subsidiary of the Company or shall be merged with or into the
Company or any Restricted Subsidiary of the Company, or (b) the
acquisition by the Company or any Restricted Subsidiary of the
Company of the assets of any Person (other than a Restricted
Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprises any division or
line of business of such Person or any other properties or assets
of such Person other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale,
issuance, conveyance, transfer, lease (other than operating
leases entered into in the ordinary course of business),
assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than the Company or a Wholly
Owned Restricted Subsidiary of the Company of (a) any Capital
Stock of any Restricted Subsidiary of the Company or (b) any
other property or assets of the Company or any Restricted
Subsidiary of the Company other than in the ordinary course of
business; provided, however, that Asset Sales shall not include
(i) a transaction or series of related transactions for which the
Company or its Restricted Subsidiaries receive aggregate
consideration of less than $1,000,000; (ii) the sale, lease,
conveyance, disposition or other transfer of all or substantially
all of the assets of the Company as permitted under Section 5.01;
(iii) the grant of Liens
<PAGE>
permitted by Section 4.18; (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 Schedule 1 to this Indenture as being held
for disposition.
"Asset Swap" means the execution of a definitive
agreement, subject only to customary closing conditions that the
Company in good faith believes will be satisfied, for a
substantially concurrent purchase and sale, or exchange, of
assets (of a kind used or usable by the Company and its
Restricted Subsidiaries in their business as it exists on the
date thereof, or in businesses the same as, or similar or
reasonably related thereto) between the Company or any of its
Restricted Subsidiaries and another Person or group of affiliated
Persons; provided, however, that any amendment to or waiver of
any closing condition that individually or in the aggregate is
material to the Asset Swap shall be deemed to be a new Asset
Swap.
"Authenticating Agent" has the meaning provided in
Section 2.02.
"Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal, state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section
10.02.
"Board of Directors" means, as to any Person, the
board of directors of such Person or any duly authorized
committee thereof.
"Board Resolution" means, with respect to any Person,
a copy of a resolution certified by the Secretary or an Assistant
Secretary of such Person to have been duly adopted by the Board
of Directors of such Person and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"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
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.
<PAGE>
"Cash Equivalents" means (i) obligations issued by, or
unconditionally guaranteed by, the U.S. Government or issued by
any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the
date of acquisition thereof; (ii) obligations issued or fully
guaranteed by any state of the United States or any political
subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Ratings
Service ("S&P") or Moody's Investors Service, Inc. ("Moody's");
(iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having
the highest rating obtainable from either S&P or Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States or any state
thereof or the District of Columbia or any U.S. branch of a
foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $250,000,000; (v) repurchase
obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified
in clause (iv) above; and (vi) investments in money market funds
which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of one or
more of the following events: (i) any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the
Company or Holdings to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act (a "Group"),
together with any Affiliates thereof (whether or not otherwise in
compliance with the provisions of this Indenture) other than to
TPG or its Related Parties; (ii) the approval by the holders of
Capital Stock of the Company or Holdings, as the case may be, of
any plan or proposal for the liquidation or dissolution of the
Company or Holdings, as the case may be (whether or not otherwise
in compliance with the provisions of this Indenture); (iii) (A)
any Person or Group (other than TPG or its Related Parties) shall
become the owner, directly or indirectly, beneficially or of
record, of shares representing more than 40% of the aggregate
ordinary voting power represented by the issued and outstanding
Capital Stock (the "Voting Stock") of the Company or Holdings and
(B) TPG and its Related Parties shall beneficially own, directly
or indirectly, in the aggregate a lesser percentage of the Voting
Stock of the Company or Holdings, as the case may be, than such
other Person or Group; or (iv) the replacement of a majority of
the Board of Directors of the Company or Holdings over a two-year
period from the directors who constituted the Board of Directors
of the Company or Holdings, as the case may be, at the beginning
of such period, and such replacement shall not have been approved
by a vote of at least a majority of the Board of Directors of the
Company or Holdings, as the case may be, then still in office who
either were members of such Board of Directors at the beginning
of such period or whose election as a member of such Board of
Directors
<PAGE>
was previously so approved or who were nominated by, or designees
of TPG or its Related Parties.
"Change of Control Date" has the meaning provided in
Section 4.15.
"Change of Control Offer" has the meaning provided in
Section 4.15.
"Change of Control Payment Date" has the meaning
provided in Section 4.15.
"Change of Control Redemption Date" has the meaning
provided in Section 4.15.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents
(however designated and whether voting or non-voting) of such
Person's common stock, whether outstanding on the Issue Date or
issued after the Issue Date, and includes, without limitation,
all series and classes of such common stock.
"Company" means the party named as such in this
Indenture until a successor replaces it pursuant to this
Indenture and thereafter means such successor.
"Consolidated EBITDA" means, with respect to any
Person, for any period, the sum (without duplication) of (i)
Consolidated Net Income and (ii) to the extent Consolidated Net
Income has been reduced thereby, (A) all income taxes of such
Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period, (B) Consolidated Interest
Expense and (C) Consolidated Non-cash Charges less any non-cash
items increasing Consolidated Net Income for such period, all as
determined on a consolidated basis for such Person and its
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with
respect to any Person, the ratio of Consolidated EBITDA of such
Person during the four full fiscal quarters (the "Four Quarter
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 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
<PAGE>
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 calculated
on a basis consistent with Regulation S-X under the Securities
Act) 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 Indebtedness or Acquired Indebtedness) occurred on
the first day of the Four Quarter Period. If such Person or any
of its Restricted Subsidiaries directly or indirectly guarantees
Indebtedness of a third Person, the preceding sentence shall give
effect to the incurrence of such guaranteed Indebtedness as if
such Person or any Restricted Subsidiary of such Person had
directly incurred or otherwise assumed such guaranteed
Indebtedness. Furthermore, in calculating "Consolidated Fixed
Charges" for purposes of determining the denominator (but not the
numerator) of the "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating
basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed
rate per annum equal to the rate of interest on such Indebtedness
in effect on the Transaction Date, (2) notwithstanding clause (1)
above, interest on Indebtedness determined on a fluctuating
basis, to the extent such interest is covered by agreements
relating to Interest Swap Obligations, shall be deemed to accrue
at the rate per annum resulting after giving effect to the
operation of such agreements, (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 reasonably determined by the Board of Directors of
such Person (as evidenced by a Board Resolution) to be the rate
of interest 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
<PAGE>
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 conformity 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 and (f) net payments (whether positive or negative)
pursuant to Interest Swap Obligations; and (ii) the interest
component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by such Person and its Restricted
Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP. Notwithstanding the foregoing,
Consolidated Interest Expense of the Company shall include the
interest expense of a Person only to the extent that the net
income of such Person is included in the Consolidated Net Income
of the Company.
"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 and
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, (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 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 restricted by 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 a
Wholly Owned 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) the amortization
of any premiums, fees or expenses incurred in connection with the
Recapitalization and related financings and (ii) the amortization
or depreciation of any amounts required or permitted by
Accounting Principles Board
<PAGE>
Opinion Nos. 16 (including non-cash write-ups and non-cash
charges relating to inventory and fixed assets, in each case
arising in connection with the Recapitalization) and 17
(including non-cash charges relating to intangibles and goodwill
arising in connection with the Recapitalization).
"Consolidated Net Worth" means the total of the
amounts shown on the balance sheet of the Company and its
Restricted Subsidiaries, determined on a consolidated basis, as
of the end of the most recent fiscal quarter of the Company
ending prior to the taking of any action for the purpose of which
the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in
capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any
accumulated deficit and (B) any amounts attributable to
Disqualified Capital Stock.
"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 non-cash charge which requires an accrual of
or a reserve for cash charges for any future period).
"Covenant Defeasance" has the meaning provided in
Section 8.02.
"Credit Agreement" means the Credit Agreement dated as
of April 18, 1997, among Holdings, the Company, the lenders party
thereto in their capacities as lenders thereunder and Bank of
America National Trust and Savings Association and Bankers Trust
Company, as agents, together with the related documents thereto
(including, without limitation, any guarantee agreements and
security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including
any agreement extending the maturity of, refinancing, replacing
or otherwise restructuring (including, without limitation,
increasing the amount of available borrowings thereunder
(provided that such increase in borrowings is permitted by
Section 4.12) or adding Restricted Subsidiaries of the Company as
additional borrowers or guarantors thereunder) all or any portion
of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Currency Agreement" means any foreign exchange
contract, currency swap agreement or other similar agreement or
arrangement designed to protect the Company or any Restricted
Subsidiary of the Company against fluctuations in currency
values.
<PAGE>
"Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any applicable
Bankruptcy Law.
"Default" means an event or condition the occurrence
of which is, or with the lapse of time or the giving of notice or
both would be, an Event of Default.
"Default Notice" has the meaning provided in Section
10.02.
"Depository" means The Depository Trust Company, its
nominees and successors.
"Designated Senior Debt" means (i) Indebtedness under
or in respect of the Credit Agreement and (ii) any other
Indebtedness constituting Senior Debt which, at the time of
determination, has an aggregate principal amount of at least $75
million and is specifically designated by the Company in the
instrument evidencing such Senior Debt as "Designated Senior
Debt".
"Disqualified Capital Stock" means that portion of any
Capital Stock which, by its terms (or by the terms of any
security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder
thereof, in each case on or prior to the final maturity date of
the Notes.
"Event of Default" has the meaning provided in Section
6.01.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, or any successor statute or statutes thereto.
"Exchange Notes" has the meaning provided in the
preamble to this Indenture.
"Exchange Offer" means the registration by the Company
under the Securities Act pursuant to a registration statement of
the offer by the Company to each Holder of the Initial Notes to
exchange all the Initial Notes held by such Holder for Exchange
Notes in an aggregate principal amount equal to the aggregate
principal amount of the Initial Notes held by such Holder, all in
accordance with the terms and conditions of the Registration
Rights Agreement.
"fair market value" means, with respect to any asset
or property, the price which could be negotiated in an
arm's-length, free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction.
<PAGE>
"GAAP" means generally accepted accounting principles
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 approved by a significant segment of the
accounting profession of the United States, which are in effect
as of the Issue Date.
"Global Note" has the meaning provided in Section 2.01.
"Guarantee" means, as the context requires, the
Guarantee of Holdings set forth in Article Eleven or a Guarantee
of a Restricted Subsidiary described in Section 4.19.
"Guarantee Obligations" has the meaning provided in
Section 12.01.
"Guarantor" means each of Holdings and any Restricted
Subsidiary that executes a Guarantee pursuant to Section 4.19,
each until a successor replaces it pursuant to this Indenture and
thereafter means such successor. A Restricted Subsidiary whose
Guarantee has terminated pursuant to Section 4.19 shall cease to
be a Guarantor effective as of such termination.
"Guarantor Blockage Period" has the meaning provided in
Section 12.02.
"Guarantor Default Notice" has the meaning provided in
Section 12.02.
"Guarantor Senior Debt" means, with respect to a
Guarantor, the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a
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 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) 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
<PAGE>
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) any liability for federal, state, local or other
taxes owed or owing by such Guarantor and (v) any guaranty of
Indebtedness which is, by its express terms, subordinated in
right of payment to any other guaranty of Indebtedness of such
Guarantor.
"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 Maryland
corporation and the parent corporation of the Company, and its
successors in interest.
"incur" has the meaning provided in Section 4.12.
"Indebtedness" means with respect to any Person,
without duplication, (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all
Capitalized Lease Obligations of such Person (but excluding any
operating lease obligations), (iv) all obligations of such Person
issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations under any title
retention agreement (but excluding trade accounts payable and
other accrued liabilities arising in the ordinary course of
business that are not overdue by 90 days or more or that are
being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (v) all obligations for the
reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction, (vi) guarantees and
other contingent obligations in respect of Indebtedness referred
to in clauses (i) through (v) above and clause (viii) below,
(vii) all obligations of any other Person of the type referred to
in clauses (i) through (vi) 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 the
Company may be required to pay for the acquisition or retirement
of such Disqualified Capital Stock), but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does
not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Capital Stock as
if such Disqualified Capital Stock were purchased on any date on
which Indebtedness shall be required to be determined pursuant to
this
<PAGE>
Indenture, and if such price is based upon, or measured by, the
fair market value of such Disqualified Capital Stock, such fair
market value shall be determined reasonably and in good faith by
the Board of Directors of the issuer of such Disqualified Capital
Stock.
"Indenture" means this Indenture, as amended or
supplemented from time to time in accordance with the terms
hereof.
"Independent Financial Advisor" means a firm (i) which
does not, and whose directors, officers and employees or
Affiliates do not, have a direct or indirect equity beneficial
ownership interest in the Company exceeding 10% and (ii) which,
in the judgment of the Board of Directors of the Company, is
otherwise independent and qualified to perform the task for which
it is to be engaged.
"Initial Notes" has the meaning provided in the
preamble to this Indenture.
"Initial Purchasers" means BT Securities Corporation,
Bankers Trust International, plc, BancAmerica Securities, Inc.
and Bear, Stearns & Co. Inc.
"Institutional Accredited Investor" means an
institution that is an "accredited investor" as that term is
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Swap Obligations" means the obligations of
any Person, pursuant to any arrangement with any other Person,
whereby, directly or indirectly, such Person is entitled to
receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a
stated notional amount in exchange for periodic payments made by
such other Person calculated by applying a fixed or a floating
rate of interest on the same notional amount and shall include,
without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Internal Revenue Code" means the Internal Revenue Code
of 1986.
"Investment" means, with respect to any Person, any
direct or indirect loan or other extension of credit (including,
without limitation, a guarantee) or capital contribution to (by
means of any transfer of cash or other property to others or any
payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any
Capital Stock, bonds, notes, debentures or other securities or
evidences of Indebtedness issued by, any other Person. In the
case of the Company, "Investment" shall exclude extensions of
trade credit (including trade receivables) by the Company and its
Restricted Subsidiaries on commercially
<PAGE>
reasonable terms in accordance with normal trade practices of the
Company or such Restricted Subsidiary, as the case may be. For
the purposes of Section 4.10, (i) "Investment" shall include and
be valued at the portion of the fair market value of the net
assets of any Restricted Subsidiary represented by the Company's
equity interest in such Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary
and shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) the
amount of any Investment shall be the original cost of such
Investment plus the cost of all additional Investments by the
Company or any of its Restricted Subsidiaries, without any
adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment,
reduced by the payment of dividends or distributions in
connection with such Investment or any other amounts received in
respect of such Investment; provided that no such payment of
dividends or distributions or receipt of any such other amounts
shall reduce the amount of any Investment if such payment of
dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes
of any Common Stock of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any
such sale or disposition, the Company no longer owns, directly or
indirectly, 100% of the outstanding Common Stock of such
Restricted Subsidiary, the Company shall be deemed to have made
an Investment on the date of any such sale or disposition equal
to the fair market value of the Common Stock of such Restricted
Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the
Notes.
"Legal Defeasance" has the meaning provided in Section
8.02.
"Legal Holiday" has the meaning provided in Section
13.07.
"Lien" means any lien, mortgage, deed of trust,
pledge, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention
agreement, any lease in the nature thereof and any agreement to
give any security interest).
"Management Advisory Agreement" means the Management
Advisory Agreement dated as of April 18, 1997, by and between the
Company and TPG.
"Maturity Date" means April 15, 2007.
"Merger" means the merger of Shield with and into
Holdings pursuant to the Recapitalization Agreement.
"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
<PAGE>
deferred payment obligations when received in the form of cash or
Cash Equivalents (other than the portion of any such deferred
payment constituting interest) received by the Company or any of
its Restricted Subsidiaries from such Asset Sale net of (a)
reasonable out-of-pocket expenses and fees relating to such Asset
Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions), (b) taxes paid or
payable after taking into account any reduction in consolidated
tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Indebtedness that is
required to be repaid in connection with such Asset Sale and (d)
appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with
such Asset Sale and retained by the Company or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with
such Asset Sale.
"Net Proceeds Offer" has the meaning provided in
Section 4.16.
"Net Proceeds Offer Payment Date" has the meaning
provided in Section 4.16.
"Net Proceeds Offer Trigger Date" has the meaning
provided in Section 4.16.
"Non-U.S. Person" means a Person who is not a U.S.
person, as such term is defined in Regulation S.
"Notes" means the Initial Notes and the Exchange Notes
treated as a single class of securities, as amended or
supplemented from time to time in accordance with the terms
hereof, that are issued pursuant to this Indenture. "Obligations"
means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and
other liabilities payable under the documentation governing any
Indebtedness.
"Offering Memorandum" means the Offering Memorandum
dated April 15, 1997, pursuant to which the Initial Notes were
offered, and any supplement thereto.
"Officer" means, with respect to any Person, the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, the Controller, the
General Counsel, or the Secretary of such Person, or any other
officer designated by the Board of Directors serving in a similar
capacity.
<PAGE>
"Officers' Certificate" means, with respect to any
Person, a certificate signed by two Officers or by an Officer and
either an Assistant Treasurer or an Assistant Secretary of such
Person and otherwise complying with the applicable requirements
of this Indenture, as they relate to the making of an Officers'
Certificate.
"Offshore Physical Notes" has the meaning provided in
Section 2.01.
"Opinion of Counsel" means a written opinion from
legal counsel, who may be internal counsel for the Company, or
who is otherwise reasonably acceptable to the Trustee and not
rendered by any employee of the Company or any of its Affiliates
or Subsidiaries complying with the requirements of Sections 13.04
and 13.05, as they relate to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section
2.03.
"Permitted Indebtedness" means, without duplication,
each of the following:
(i) Indebtedness under the Notes and this Indenture;
(ii) Indebtedness incurred pursuant to the Credit
Agreement in an aggregate principal amount at any time
outstanding not to exceed $730 million less (A) the sum of
(y) the 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 replaced Credit Agreement) actually made by
the Company on or before June 30, 2000 plus (z) the amount
of all mandatory principal payments in respect of such term
loans thereunder (other than such excluded payments) made
from (or attributable to) the proceeds received from Asset
Sales; (B) in the case of the revolving facility
thereunder, any required permanent repayments (which are
accompanied by a corresponding permanent commitment
reduction) thereunder made on or before June 30, 2000 or
made by reason of the receipt of the proceeds of Asset
Sales; and (C) the amount of the Receivables Program
Obligations then outstanding;
(iii) other Indebtedness of the Company and its
Restricted Subsidiaries outstanding on the Issue Date
reduced by the amount of any scheduled amortization
payments or mandatory prepayments when actually paid or
permanent reductions thereon;
(iv) Interest Swap Obligations of the Company covering
Indebtedness of the Company or any of its Restricted
Subsidiaries and Interest Swap Obligations of any
Restricted Subsidiary of the Company covering Indebtedness
of such Restricted Subsidiary; provided, however, that such
Interest Swap Obligations are entered into to protect the
Company and its Restricted Subsidiaries from fluctuations
in interest rates on Indebtedness incurred in
<PAGE>
accordance with this Indenture to the extent the notional
principal amount of such Interest Swap Obligation does not
exceed the principal amount of the Indebtedness to which
such Interest Swap Obligation relates;
(v) Indebtedness under Currency Agreements; provided
that in the case of Currency Agreements which relate to
Indebtedness, such Currency Agreements do not increase the
Indebtedness of the Company and its Restricted Subsidiaries
outstanding other than as a result of fluctuations in
foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(vi) Indebtedness of a Wholly Owned Restricted
Subsidiary of the Company to the Company or to another
Wholly Owned Restricted Subsidiary of the Company, in
either case for so long as such Indebtedness is held by the
Company or a Wholly Owned Restricted Subsidiary of the
Company, in each case subject to no Lien held by a Person
other than the Company or a Wholly Owned Restricted
Subsidiary of the Company; provided that, if as of any date
any Person other than the Company or a Wholly Owned
Restricted Subsidiary of the Company owns or holds any such
Indebtedness or holds a Lien in respect of such
Indebtedness, there shall be deemed to have occurred on
such date, the incurrence of Indebtedness not constituting
Permitted Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned
Restricted Subsidiary of the Company for so long as such
Indebtedness is held by a Wholly Owned Restricted
Subsidiary of the Company, in each case subject to no Lien;
provided that (a) any Indebtedness of the Company to any
Wholly Owned Restricted Subsidiary of the Company is
unsecured and subordinated, pursuant to a written
agreement, to the Company's obligations under this
Indenture and the Notes and (b) if as of any date any
Person other than a Wholly Owned Restricted Subsidiary of
the Company owns or holds any such Indebtedness or any
Person holds a Lien in respect of such Indebtedness, there
shall be deemed to have occurred on such date, the
incurrence of Indebtedness not constituting Permitted
Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a
bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, however, that
such Indebtedness is extinguished within five business days
of incurrence;
(ix) Indebtedness of the Company or any of its
Restricted Subsidiaries in respect of workers' compensation
claims, payment obligations in connection with
self-insurance, performance bonds, surety bonds or similar
requirements in the ordinary course of business;
<PAGE>
(x) Capitalized Lease Obligations and Purchase Money
Indebtedness of the Company and its Restricted Subsidiaries
incurred in the ordinary course of business not to exceed
$25 million at any one time outstanding;
(xi) guarantees by the Company and its Wholly Owned
Restricted Subsidiaries of each other's Indebtedness;
provided that such Indebtedness is permitted to be incurred
under this Indenture, including, with respect to guarantees
by Wholly Owned Restricted Subsidiaries of the Company, the
provisions of Section 4.19;
(xii) Acquired Indebtedness and Acquisition Financing
Indebtedness; provided that (y) if such Indebtedness is
incurred on or before June 30, 1999, the Consolidated Fixed
Charge Coverage Ratio of the Company and its Restricted
Subsidiaries after giving effect to the transaction in
which such Acquired Indebtedness or Acquisition Financing
Indebtedness is incurred (a "pro forma Consolidated Fixed
Charge Coverage Ratio") (A) shall be greater than 1.8 to
1.0 and (B) shall be at least equal to the Consolidated
Fixed Charge Coverage Ratio at such time without giving
effect to the incurrence of such Acquired Indebtedness or
Acquisition Financing Indebtedness or (z) if such
Indebtedness is incurred on or after July 1, 1999, such pro
forma Consolidated Fixed Charge Coverage Ratio shall be
greater than 2.0 to 1.0;
(xiii) Indebtedness arising from agreements providing
for indemnification, adjustment of purchase price or
similar obligations, or from Guarantees or letters of
credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, in each case
incurred in connection with the disposition of any business
assets or Restricted Subsidiary of the Company (other than
Guarantees of Indebtedness or other obligations incurred by
any Person acquiring all or any portion of such business
assets or Restricted Subsidiary of the Company for the
purpose of financing such acquisition) in a principal
amount not to exceed the gross proceeds actually received
by the Company or any of its Restricted Subsidiaries in
connection with such disposition; provided, however, that
the principal amount of any Indebtedness incurred pursuant
to this clause (xiii), when taken together with all
Indebtedness incurred pursuant to this clause (xiii) and
then outstanding, shall not exceed $20 million;
(xiv) guarantees furnished by the Company or its
Restricted Subsidiaries in the ordinary course of business
of Indebtedness of another Person in an aggregate amount
not to exceed $10 million at any time outstanding;
(xv) Refinancing Indebtedness;
<PAGE>
(xvi) Receivables Program Obligations; and
(xvii) additional Indebtedness of the Company and its
Restricted Subsidiaries in an aggregate principal amount
not to exceed $50 million at any one time outstanding
(which amount may, but need not, be incurred in whole or in
part under the Credit Agreement).
"Permitted Investments" means: (i) Investments by the
Company or any Restricted Subsidiary of the Company in any Person
that is or will become immediately after such Investment a
Restricted Subsidiary of the Company or that will merge or
consolidate into the Company or a Restricted Subsidiary of the
Company, provided that such Person is engaged, in all material
respects, solely in the business of food, food distribution and
related businesses; (ii) Investments in the Company by any
Restricted Subsidiary of the Company; provided that any
Indebtedness evidencing such Investment is unsecured and
subordinated, pursuant to a written agreement, to the Company's
obligations under the Notes and this Indenture; (iii) Investments
in cash and Cash Equivalents; (iv) loans and advances to
employees and officers of the Company and its Restricted
Subsidiaries in the ordinary course of business for bona fide
business purposes not in excess of $5 million at any one time
outstanding; (v) Currency Agreements and Interest Swap
Obligations entered into in the ordinary course of the Company's
or its Restricted Subsidiaries' businesses and otherwise in
compliance with this Indenture; (vi) additional Investments not
to exceed $25 million at any one time outstanding; (vii)
Investments in securities of trade creditors or customers
received in settlement of obligations or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers; (viii)
Investments made by the Company or its Restricted Subsidiaries as
a result of consideration received in connection with an Asset
Sale made in compliance with Section 4.16 or not constituting an
Asset Sale by reason of the $1 million threshold contained in the
definition thereof; (ix) Investments specifically permitted by
and made in accordance with the provisions of Section 4.11; (x)
guarantees permitted by Section 4.19; (xi) Related Business
Investments in companies and ventures in which the Company or a
Restricted Subsidiary of the Company holds an equity ownership
interest of not less than 33-1/3% 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, (y) the
proceeds of the sale of certain assets identified in Schedule 1
to this Indenture plus (z) $25 million; and (xii) Investments
made in connection with a Qualified Receivables Transaction.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental
charges or claims either (a) not delinquent or (b)
contested in good faith by appropriate proceedings and as
to which the Company or any of its Restricted Subsidiaries
shall have set aside on its books such reserves as may be
required pursuant to GAAP;
<PAGE>
(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 the Company or any of
its Restricted Subsidiaries;
(vi) any interest or title of a lessor under any
lease, whether or not characterized as capital or
operating; provided that such Liens do not extend to any
property or assets which is not leased property subject to
such lease;
(vii) Liens securing Capitalized Lease Obligations and
Purchase Money Indebtedness permitted by Section 4.12;
provided, however, that in the case of Purchase Money
Indebtedness (A) the Indebtedness shall not exceed the cost
of such property or assets being acquired or constructed
and shall not be secured by any property or assets of the
Company or any Restricted Subsidiary of the Company other
than the property and assets being acquired or constructed
and (B) the Lien securing such Indebtedness shall be
created within 90 days of such acquisition or construction;
(viii) Liens upon specific items of inventory or other
goods and proceeds of any Person securing such Person's
obligations in respect of
<PAGE>
bankers' acceptances issued or created for the account of
such Person to facilitate the purchase, shipment or storage
of such inventory or other goods;
(ix) Liens securing reimbursement obligations with
respect to letters of credit which encumber documents and
other property relating to such letters of credit and
products and proceeds thereof;
(x) Liens encumbering deposits made to secure
obligations arising from statutory, regulatory,
contractual, or warranty requirements of the Company or any
of its Restricted Subsidiaries, including rights of offset
and set-off;
(xi) Liens securing Interest Swap Obligations that
relate to Indebtedness that is otherwise permitted under
this Indenture;
(xii) Liens securing Indebtedness under Currency
Agreements;
(xiii) Liens securing Acquired Indebtedness incurred
in accordance with Section 4.12; provided that (A) such
Liens secured such Acquired Indebtedness at the time of and
prior to the incurrence of such Acquired Indebtedness by
the Company or a Restricted Subsidiary of the Company and
were not granted in connection with, or in anticipation of,
the incurrence of such Acquired Indebtedness by the Company
or a Restricted Subsidiary of the Company and (B) such
Liens do not extend to or cover any property or assets of
the Company or of any of its Restricted Subsidiaries other
than the property or assets that secured the Acquired
Indebtedness prior to the time such Indebtedness became
Acquired Indebtedness of the Company or a Restricted
Subsidiary of the Company and are no more favorable to the
lienholders than those securing the Acquired Indebtedness
prior to the incurrence of such Acquired Indebtedness by
the Company or a Restricted Subsidiary of the Company;
(xiv) leases or subleases granted to others not
interfering in any material respect with the business of the
Company or its Restricted Subsidiaries;
(xv) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the
Company or any of its Restricted Subsidiaries in the
ordinary course of business; and
(xvi) Liens on Receivables Program Assets securing
Receivables Program Obligations.
"Person" means an individual, partnership,
corporation, limited liability company, unincorporated
organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
<PAGE>
"Physical Notes" has the meaning provided in Section
2.01.
"Preferred Stock" of any Person means any Capital
Stock of such Person that has preferential rights to any other
Capital Stock of such Person with respect to dividends or
redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes)
means the outstanding principal amount of such Indebtedness plus
the premium, if any, on such Indebtedness.
"Private Placement Legend" has the meaning provided in
Section 2.15.
"Proceeds Purchase Date" has the meaning provided in
Section 4.16.
"pro forma" means, with respect to any calculation
made or required to be made pursuant to the terms of this
Indenture, a calculation in accordance with Article 11 of
Regulation S-X under the Securities Act, as determined by the
Board of Directors of the Company.
"Public Equity Offering" means an underwritten public
offering of Qualified Capital Stock of Holdings or the Company
pursuant to a registration statement filed with the SEC in
accordance with the Securities Act; provided that, in the event
of a Public Equity Offering by Holdings, Holdings contributes to
the capital of the Company the portion of the net cash proceeds
of such Public Equity Offering necessary to pay the aggregate
redemption price (plus accrued interest to the redemption date)
of the Notes to be redeemed pursuant to Paragraph 6(b) of the
Notes.
"Purchase Money Indebtedness" means Indebtedness of
the Company or any of its Restricted Subsidiaries incurred in the
normal course of business for the purpose of financing all or any
part of the purchase price, or the cost of installation,
construction or improvement, of property or assets.
"Purchase Money Note" means a promissory note
evidencing the obligation of a Receivables Subsidiary to pay the
purchase price for Receivables or other indebtedness to the
Company or to any other Seller in connection with a Qualified
Receivables Transaction, which note shall be repaid from cash
available to the maker of such note, other than cash required to
be held as reserves pursuant to Receivables Documents, amounts
paid in respect of interest, principal and other amounts owing
under Receivables Documents and amounts paid in connection with
the purchase of newly generated Receivables.
"Qualified Capital Stock" means any Capital Stock that
is not Disqualified Capital Stock.
<PAGE>
"Qualified Institutional Buyer" or "QIB" shall have
the meaning specified in Rule 144A under the Securities Act.
"Qualified Receivables Transaction" means any
transaction or series of transactions that may be entered into by
the Company or any Subsidiary of the Company pursuant to which
the Company or any such Subsidiary may sell, convey or otherwise
transfer to a Receivables Subsidiary (in the case of a transfer
by the Company or any other Seller) and any other person (in the
case of a transfer by a Receivables Subsidiary), or may grant a
security interest in, any Receivables Program Assets (whether now
existing or arising in the future); provided that:
(a) no portion of the indebtedness or any other
obligations (contingent or otherwise) of a Receivables
Subsidiary or Special Purpose Vehicle (i) is guaranteed by
the Company or any other Seller (excluding guarantees of
obligations pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates the Company
or any other Seller in any way other than pursuant to
Standard Securitization Undertakings or (iii) subjects any
property or asset of the Company or any other Seller,
directly or indirectly, contingently or otherwise, to the
satisfaction of obligations incurred in such transactions,
other than pursuant to Standard Securitization
Undertakings;
(b) neither the Company or any other Seller has any
material contract, agreement, arrangement or understanding
with a Receivables Subsidiary or a Special Purpose Vehicle
(except in connection with a Purchase Money Note or
Qualified Receivables Transaction) other than on terms no
less favorable to the Company or such Seller than those
that might be obtained at the time from persons that are
not affiliates of the Company, other than fees payable in
the ordinary course of business in connection with
servicing accounts receivable; and
(c) the Company and the other Sellers do not have any
obligation to maintain or preserve the financial condition
of a Receivables Subsidiary or a Special Purpose Vehicle or
cause such entity to achieve certain levels of operating
results.
"Recapitalization" means the recapitalization of
Holdings pursuant to the Merger Agreement.
"Recapitalization Agreement" means 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, Shield and
Holdings.
"Receivables" means all rights of the Company or any
other Seller to payments (whether constituting accounts, chattel
paper, instruments, general intangibles or otherwise, and
including the right to payment of any interest or finance
charges),
<PAGE>
which rights are eligible to be identified in the accounting
records of the Company or such Seller as accounts receivable.
"Receivables Documents" means (x) a receivables
purchase agreement, pooling and servicing agreement, credit
agreement, agreements to acquire undivided interests or other
agreements to transfer, or create a security interest in,
Receivables Program Assets, in each case as amended, modified,
supplemented or restated and in effect from time to time and
entered into by the Company, another Seller and/or a Receivables
Subsidiary, and (y) each other instrument, agreement and other
document entered into by the Company, any other Seller or a
Receivables Subsidiary relating to the transactions contemplated
by the agreements referred to in clause (x) above, in each case
as amended, modified, supplemented or restated and in effect from
time to time.
"Receivables Program Assets" means (a) all Receivables
which are described as being transferred by the Company, another
Seller or a Receivables Subsidiary pursuant to the Receivables
Documents, (b) all Receivables Related Assets, and (c) all
collections (including recoveries) and other proceeds of the
assets described in the foregoing clauses.
"Receivables Program Obligations" means (a) notes,
trust certificates, undivided interests, partnership interests or
other interests representing the right to be paid a specified
principal amount for the Receivables Program Assets, and (b)
related obligations of the Company, a Subsidiary of the Company
or a Special Purpose Vehicle (including, without limitation,
rights in respect of interest or yield, breach of warranty claims
and expense reimbursement and indemnity provisions).
"Receivables Related Assets" means (i) any rights
arising under the documentation governing or relating to
Receivables (including rights in respect of liens securing such
Receivables and other credit support in respect of such
Receivables), (ii) any proceeds of such Receivables and any
lockboxes or accounts in which such proceeds are deposited, (iii)
spread accounts and other similar accounts (and any amounts on
deposit therein) established in connection with a Qualified
Receivables Transaction, (iv) any warranty, indemnity, dilution
and other intercompany claim arising out of Receivables Documents
and (v) other assets which are customarily transferred or in
respect of which security interests are customarily granted in
connection with asset securitization transactions involving
accounts receivable.
"Receivables Subsidiary" means a special purpose
wholly owned Subsidiary of the Company created in connection with
the transactions contemplated by a Qualified Receivables
Transaction, which Subsidiary engages in no activities other than
those incidental to such Qualified Receivables Transaction and
which is designated as a Receivables Subsidiary by the Company's
Board of Directors. Any such designation by the Board of
Directors shall be evidenced by filing with the Trustee a Board
Resolution of the Company giving effect to such designation and
an Officers' Certificate certifying, to the best of such
officers' knowledge and belief after consulting
<PAGE>
with counsel, such designation, and the transactions in which the
Receivables Subsidiary will engage, comply with the requirements
of the definition of Qualified Receivables Transaction.
"Record Date" means each of the dates designated as
such in the Notes, whether or not a Legal Holiday.
"Redemption Date," when used with respect to any Note
to be redeemed, means the date fixed for such redemption pursuant
to this Indenture and the Notes.
"Redemption Price," when used with respect to any Note
to be redeemed, means the price fixed for such redemption
pursuant to this Indenture and the Notes.
"Reference Date" has the meaning provided in Section 4.10.
"Refinance" means, in respect of any security or
Indebtedness, to refinance, extend, renew, refund, repay, prepay,
redeem, defease or retire, or to issue a security or Indebtedness
in exchange or replacement for, such security or Indebtedness, in
whole or in part. "Refinanced" and "Refinancing" shall have
correlative meanings.
"Refinancing Indebtedness" means any Refinancing by
the Company or any Restricted Subsidiary of the Company of
Indebtedness incurred in accordance with Section 4.12 (other than
pursuant to clauses (ii), (iv), (v), (vi), (vii), (viii), (ix),
(x), (xi), (xiii) or (xiv) of the definition of Permitted
Indebtedness), in each case that does not (1) result in an
increase in the aggregate principal amount of Indebtedness of
such Person as of the date of such proposed Refinancing (plus the
amount of any premium required to be paid under the terms of the
instrument governing such Indebtedness and plus the amount of
reasonable expenses incurred by the Company in connection with
such Refinancing) or (2) create Indebtedness with (A) a Weighted
Average Life to Maturity that is less than the Weighted Average
Life to Maturity of the Indebtedness being Refinanced or (B) a
final maturity earlier than the final maturity of the
Indebtedness being Refinanced; provided that (x) if such
Indebtedness being Refinanced is Indebtedness solely of the
Company, then such Refinancing Indebtedness shall be Indebtedness
solely of the Company and (y) if such Indebtedness being
Refinanced is subordinate or junior to the Notes, then such
Refinancing Indebtedness shall be subordinate to the Notes at
least to the same extent and in the same manner as the
Indebtedness being Refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration
Rights Agreement dated April 18, 1997 among the Company and the
Initial Purchasers for the
<PAGE>
benefit of themselves and the Holders, as the same may be amended
or modified from time to time in accordance with the terms
thereof.
"Regulation S" means Regulation S under the Securities
Act.
"Related Business Investment" means (i) any Investment
by a Person in any other Person a majority of whose revenues are
derived from the food, food distribution or related businesses;
and (ii) any Investment by such Person in any cooperative or
other supplier, including, without limitation, any joint venture
which is intended to supply any product or service useful to the
business of the Company and its Restricted Subsidiaries.
"Related Party" means any Affiliate of TPG.
"Replacement Assets" has the meaning provided in
Section 4.16.
"Representative" means the indenture trustee or other
trustee, agent or representative in respect of any Designated
Senior Debt; provided that, if and for so long as any Designated
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 in respect of any Designated Senior Debt.
As of the date first written above, the only representative in
respect of Designated Senior Debt is Bank of America National
Trust and Savings Association, as administrative agent under the
Credit Agreement.
"Restricted Payment" has the meaning provided in
Section 4.10.
"Restricted Security" has the meaning assigned to such
term in Rule 144(a)(3) under the Securities Act; provided that
the Trustee shall be entitled to request and conclusively rely on
an Opinion of Counsel with respect to whether any Note
constitutes a Restricted Security.
"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 under the Securities Act.
"Sale and Leaseback Transaction" means any direct or
indirect arrangement with any Person or to which any such Person
is a party, providing for the leasing to the Company or a
Restricted Subsidiary of the Company of any property, whether
owned by the Company or any Restricted Subsidiary at the Issue
Date or later acquired, which has been or is to be sold or
transferred by the Company or such Restricted Subsidiary to such
Person or to any other Person from whom funds have been or are to
be advanced by such Person on the security of such Property.
<PAGE>
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended, or any successor statute or statutes thereto.
"Seller" means the Company or any Subsidiary or other
Affiliate of the Company (other than a Receivables Subsidiary)
which is a party to a Receivables Document.
"Senior Debt" means the principal of, premium, if any,
and interest (including any interest accruing subsequent to the
filing of a bankruptcy petition at the rate provided for in the
documentation with respect thereto, whether or not such interest
is an allowed claim under applicable law) on any Indebtedness of
the Company, whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing
the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of
payment to the Notes. Without limiting the generality of the
foregoing, "Senior Debt" shall also include the principal of,
premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether
or not such interest is an allowed claim under applicable law)
on, and all other amounts owing in respect of, (x) all monetary
obligations (including guarantees thereof) of every nature of the
Company under the Credit Agreement, including, without
limitation, obligations to pay principal and interest,
reimbursement obligations under letters of credit, fees, expenses
and indemnities, (y) all Interest Swap Obligations (including
guarantees thereof) and (z) all obligations (including guarantees
thereof) under Currency Agreements, in each case whether
outstanding on the Issue Date or thereafter incurred.
Notwithstanding the foregoing, Senior Debt shall not include (i)
any Indebtedness of the Company to a Subsidiary of the Company,
(ii) Indebtedness to, or guaranteed by the Company for the
benefit of, any shareholder (other than a parent corporation),
director, officer or employee of the Company or any Subsidiary of
the Company (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or
services, (iv) Indebtedness represented by Disqualified Capital
Stock, (v) any liability for federal, state, local or other taxes
owed or owing by the Company, (vi) any Indebtedness incurred in
violation of the provisions set forth under Section 4.12 and
(vii) any Indebtedness which is, by its express terms,
subordinated in right of payment to any other Indebtedness of the
Company.
"Shield" means TPG Shield Acquisition Corporation.
"Significant Subsidiary" shall have the meaning set
forth in Rule 1.02(w) of Regulation S-X under the Securities Act.
<PAGE>
"Special Purpose Vehicle" means a trust, partnership
or other special purpose Person established by the Company and/or
any of its Subsidiaries to implement a Qualified Receivables
Transaction.
"Standard Securitization Undertakings" means
representations, warranties, covenants and indemnities entered
into by the Company or any Subsidiary of the Company which are
reasonably customary in accounts receivable transactions.
"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.
"Surviving Entity" has the meaning provided in Section
5.01.
"Surviving Parent Entity" has the meaning provided in
Section 5.03.
"Tax Sharing Agreement" means the tax sharing
agreement between the Company and Holdings allocating the
obligations to contribute amounts for the payment of income taxes
and the benefits of any credits or other reductions of tax
payments so as to approximate the income taxes that would be
payable by the Company and Holdings on a stand-alone basis if no
consolidated tax return were filed by such entities.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbbb), as amended, as in effect on the date of
this Indenture, except as otherwise provided in Section 9.04.
"TPG" means TPG Partners, L.P., a Delaware limited
partnership.
"Transaction Advisory Agreement" means the Transaction
Advisory Agreement, dated as of April 18, 1997, by and between
the Company and TPG.
"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 Release is no longer published, any publicly
available source or similar market data)) closest to the period
from the Change of Control Redemption Date to April 15, 2002;
provided, however, that if the period from the Change of Control
Redemption Date to April 15, 2002, 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
<PAGE>
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 April 15, 2002, 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.
"Trust Officer" means any officer of the Trustee
assigned by the Trustee to administer this Indenture, or in the
case of a successor trustee, an officer assigned to the
department, division or group performing the corporation trust
work of such successor and assigned to administer this Indenture.
"Trustee" means the party named as such in this
Indenture until a successor replaces it in accordance with the
provisions of this Indenture and thereafter means such successor.
"Unrestricted Subsidiary" of any Person means (i) any
Subsidiary of such Person that at the time of determination shall
be or continue to be designated an Unrestricted Subsidiary by the
Board of Directors of such Person in the manner provided below
and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board
of Directors of the Company may designate any Subsidiary of the
Company (including any newly acquired or newly formed Subsidiary)
to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of,
the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated; provided that
(x) the Company certifies to the Trustee in an Officers'
Certificate that such designation complies with Section 4.10 and
(y) each Subsidiary to be so designated and each of its
Subsidiaries has not at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender thereof has recourse to
any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors of the Company may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary only if
(x) immediately after giving effect to such designation, the
Company is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance
with Section 4.12 and (y) immediately before and immediately
after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations
of, and obligations guaranteed by, the United States for the
payment of which the full faith and credit of the United States
is pledged.
<PAGE>
"U.S. Legal Tender" means such coin or currency of the
United States as at the time of payment shall be legal tender for
the payment of public and private debts.
"U.S. Physical Notes" has the meaning provided in
Section 2.01.
"Weighted Average Life to Maturity" means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing (a) the then outstanding aggregate principal
amount of such Indebtedness into (b) the sum of the total of the
products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other
required payment of principal, including payment at final
maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between
such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person
means any Restricted Subsidiary of such Person of which all the
outstanding voting securities (other than, in the case of a
foreign Restricted Subsidiary, directors' qualifying shares or an
immaterial amount of shares otherwise required to be owned by
other Persons pursuant to applicable law) are owned by such
Person or any Wholly Owned Restricted Subsidiary of such Person.
SECTION 1.02 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the
TIA, such provision is incorporated by reference in, and made a
part of, this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a
Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Trustee.
"obligor" on the indenture securities means the Company
or any other obligor on the Notes.
All other TIA terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute
or defined by SEC rule and not otherwise defined herein have the
meanings assigned to them therein.
SECTION 1.03 Rules of Construction.
<PAGE>
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP as in effect
on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words
in the plural include the singular; and
(5) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
ARTICLE TWO
THE NOTES
SECTION 2.01 Form and Dating.
The Initial Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A
hereto. The Exchange Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B
hereto. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or depository rule or usage.
The Company and the Trustee shall approve the form of the Notes
and any notation, legend or endorsement on them. Each Note shall
be dated the date of its issuance and shall show the date of its
authentication.
The terms and provisions contained in the forms of the
Notes annexed hereto as Exhibits A and B, shall constitute, and
are hereby expressly made, a part of this Indenture and, to the
extent applicable, the parties hereto, by their execution and
delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall
be issued initially in the form of one or more permanent global
Notes in registered form, substantially in the form set forth in
Exhibit A (the "Global Note"), deposited with the Registrar as
custodian for the Depository, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Global Note may from time to
time be increased or decreased by adjustments made on the records
of the Registrar, as custodian for the Depository, as hereinafter
provided.
<PAGE>
Notes offered and sold in offshore transactions in
reliance on Regulation S shall be issued in the form of permanent
certificated Notes in registered form in substantially the form
set forth in Exhibit A (the "Offshore Physical Notes"). Notes
offered and sold in reliance on any other applicable exemption
from registration under the Securities Act other than as
described in the preceding paragraph may be issued in the form of
permanent certificated Notes in registered form, in substantially
the form set forth in Exhibit A (the "U.S. Physical Notes"). The
Offshore Physical Notes and the U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes." Physical
Notes initially shall be registered in the name of the Depository
or the nominee of such Depository and be delivered to the
Registrar as custodian for such Depository. Beneficial owners of
Physical Notes, however, may request registration of such
Physical Notes in their names or the names of their nominees.
SECTION 2.02 Execution and Authentication; Aggregate
Principal Amount.
Two Officers, or an Officer and an Assistant
Secretary, shall sign, or one Officer shall sign and one Officer
or an Assistant Secretary (each of whom shall, in each case, have
been duly authorized by all requisite corporate actions) shall
attest to, the Notes for the Company by manual or facsimile
signature.
If an Officer or Assistant Secretary whose signature
is on a Note was an Officer or Assistant Secretary at the time of
such execution but no longer holds that office or position at the
time the Trustee authenticates the Note, the Note shall
nevertheless be valid.
A Note shall not be valid until an authorized
signatory of the Trustee manually signs the certificate of
authentication on the Note. The signature shall be conclusive
evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for
original issue in the aggregate principal amount not to exceed
$150,000,000, and (ii) Exchange Notes from time to time for issue
only in exchange for a like principal amount of Initial Notes, in
each case upon written orders of the Company in the form of an
Officers' Certificate. The Officers' Certificate shall specify
the amount of Notes to be authenticated, the date on which the
Notes are to be authenticated and the aggregate principal amount
of Notes outstanding on the date of authentication, whether the
Notes are to be Initial Notes or Exchange Notes, and shall
further specify the amount of such Notes to be issued as the
Global Note, Offshore Physical Notes or U.S. Physical Notes. The
aggregate principal amount of Notes outstanding at any time may
not exceed $150,000,000, except as provided in Section 2.07.
The Trustee shall not be required to authenticate
Notes if the issuance of such Notes pursuant to this Indenture
will affect the Trustee's own rights, duties or
<PAGE>
immunities under the Notes and this Indenture in a manner which
is not reasonably acceptable to the Trustee.
The Trustee may appoint an authenticating agent (the
"Authenticating Agent") reasonably acceptable to the Company to
authenticate Notes. Unless otherwise provided in the appointment,
an Authenticating Agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such
Authenticating Agent. An Authenticating Agent has the same rights
as an Agent to deal with the Company and Affiliates of the
Company. The Trustee hereby appoints Bankers Trust Company as its
initial Authentication Agent, and by its acknowledgement and
acceptance on the signature page hereto, Bankers Trust Company
hereby agrees to so act.
Any Person into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to
which any Authenticating Agent shall be a party, or any Person
succeeding to the corporate agency business of any Authenticating
Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part
of the Trustee or the Authenticating Agent.
Any Authenticating Agent may at any time resign by
giving at least 30 days' advance written notice of resignation to
the Trustee and the Company. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving
written notice of resignation or upon such a termination, the
Trustee may appoint a successor Authenticating Agent, shall give
written notice of such appointment to the Company and shall mail
notice of such appointment (at the Company's expense) to all
Holders. Any successor Authenticating Agent upon acceptance of
its appointment hereunder shall become vested with all the
rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as
Authenticating Agent. Any such Authenticating Agent shall be
entitled to reasonable compensation for its services and, if paid
by the Trustee, it shall be a reimbursable expense pursuant to
Section 7.07.
The Notes shall be issuable in fully registered form
only, without coupons, in denominations of $1,000 and any
integral multiple thereof.
<PAGE>
SECTION 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency (which
shall be located in the Borough of Manhattan in the City of New
York, State of New York) where (a) Notes may be presented or
surrendered for registration of transfer or for exchange (the
"Registrar"), (b) Notes may be presented or surrendered for
payment (the "Paying Agent") and (c) notices and demands to or
upon the Company in respect of the Notes and this Indenture may
be served. The Registrar shall keep a register of the Notes and
of their transfer and exchange. The Company, upon prior written
notice to the Trustee, may have one or more co-Registrars and one
or more additional paying agents reasonably acceptable to the
Trustee. The term "Paying Agent" includes any additional Paying
Agent.
The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which
agreement shall incorporate the provisions of the TIA and
implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee, in advance, of the
name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such.
The Company initially appoints Bankers Trust Company
as Registrar, Paying Agent and agent for service of demands and
notices in connection with the Notes, until such time as the
Trustee has resigned or a successor has been appointed, and by
its acknowledgement and acceptance on the signature page hereto,
Bankers Trust Company hereby agrees to so act. The Paying Agent
or Registrar may resign upon 30 days written notice to the
Company and the Trustee, provided that a replacement Paying Agent
or Registrar, as the case may be, has been duly appointed and has
agreed to act as such, or that the Trustee has assumed the duties
of the Paying Agent or the Registrar, as the case may be.
Upon the occurrence of an Event of Default described
in Section 6.01(6) or (7), the Trustee shall, or upon the
occurrence of any other Event of Default by notice to the
Company, the Registrar and the Paying Agent, the Trustee may,
assume the duties and obligations of the Registrar and the Paying
Agent hereunder.
SECTION 2.04 Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than
the Trustee to agree in writing that each Paying Agent shall hold
in trust for the benefit of the Holders or the Trustee all assets
held by the Paying Agent for the payment of principal of, or
interest on, the Notes (whether such assets have been distributed
to it by the Company or any other obligor on the Notes), and the
Company and the Paying Agent shall notify the Trustee of any
Default by the Company (or any other obligor on the Notes) in
making any such payment. The Company at any time may require a
Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any
time during the continuance of any payment Default or Event of
<PAGE>
Default, upon written request to a Paying Agent, require such
Paying Agent to distri bute all assets held by it to the Trustee
and to account for any assets distributed. Upon distribution to
the Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent shall have no
further liability for such assets.
SECTION 2.05 Noteholder Lists.
The Registrar shall preserve in as current a form as
is reasonably practicable the most recent list available to it of
the names and addresses of the Holders. If the Trustee or any
Paying Agent is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee or any such Paying
Agent on or before the third Business Day preceding each Record
Date and at such other times as the Trustee or any such Paying
Agent may request in writing a list as of such date and in such
form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied
upon by the Trustee or any such Paying Agent.
SECTION 2.06 Transfer and Exchange.
Subject to the provisions of Sections 2.16 and 2.17,
when Notes are presented to the Registrar or a co-Registrar with
a request to register the transfer of such Notes or to exchange
such Notes for an equal principal amount of Notes of other
authorized denominations, the Registrar or co-Registrar shall
register the transfer or make the exchange as requested if the
requirements for such transaction are met; provided, however,
that the Notes presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the
Company and the Registrar or co-Registrar, duly executed by the
Holder thereof or his or her attorney duly authorized in writing.
To permit registrations of transfer and exchanges, the Company
shall execute and the Trustee shall authenticate Notes at the
Registrar's or co-Registrar's request. No service charge shall be
made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar
governmental charge payable upon exchanges or transfers pursuant
to Sections 2.10, 3.06, 4.15, 4.16 or 9.06, in which event the
Company shall be responsible for the payment of such taxes).
In the event that the Company delivers to the Trustee
a copy of an Officers' Certificate certifying that a registration
statement under the Securities Act with respect to the Exchange
Offer has been declared effective by the SEC and that the Company
has offered registered Notes to the Holders in accordance with
the Exchange Offer, the Registrar shall exchange, upon request of
any Holder, such Holder's Initial Notes of any series for
registered Notes of such series upon the terms set forth in the
Exchange Offer and in accordance with Section 2.06 hereof,
provided that the Initial Notes so surrendered for exchange are
duly endorsed and accompanied by a letter of
<PAGE>
transmittal or written instrument of transfer in form
satisfactory to the Company and the Registrar, in addition to any
certifications and representations required by the provisions of
the Registration Rights Agreement, and duly executed by the
Holder thereof or such Holder's attorney who shall be duly
authorized in writing to execute such document on behalf of such
Holder.
The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of any Note (i) during a
period beginning at the opening of business 15 days before the
mailing of a notice of redemption of Notes and ending at the
close of business on the day of such mailing and (ii) selected
for redemption in whole or in part pursuant to Article Three,
except the unredeemed portion of any Note being redeemed in part.
Any Holder of an interest in any Global Note shall, by
acceptance of such interest, agree that transfers of beneficial
interests in such Global Note may be effected only through a
book-entry system maintained by the Holder of such Global Note
(or its agent), and that ownership of a beneficial interest in
the Global Note shall be required to be reflected in a book-entry
system.
SECTION 2.07 Replacement Notes.
If a mutilated Note is surrendered to the Registrar or
if the Holder of a Note claims that the Note has been lost,
destroyed or wrongfully taken, the Company shall issue and the
Trustee or any authenticating agent of the Trustee shall
authenticate a replacement Note if the Registrar's requirements
are met. If required by the Registrar or the Company, such Holder
must provide an affidavit of lost certificate and an indemnity
bond or other indemnity, sufficient, in the judgment of both the
Company and the Registrar, to protect the Company, the Trustee
and any Agent from any loss which any of them may suffer if a
Note is replaced. The Company may charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Note, including
reasonable fees and expenses of counsel. Every replacement Note
shall constitute an additional obligation of the Company.
SECTION 2.08 Outstanding Notes.
Notes outstanding at any time are all the Notes that
have been authenticated by the Trustee except those cancelled by
the Registrar, those delivered to the Registrar for cancellation
and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be
outstanding because the Company or any of its Affiliates holds
the Note.
If a Note is replaced pursuant to Section 2.07 (other
than a mutilated Note surrendered for replacement), it ceases to
be outstanding unless the Registrar receives an Opinion of
Counsel that the replaced Note is held by a bona fide purchaser.
<PAGE>
A mutilated Note ceases to be outstanding upon surrender of such
Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the
Paying Agent holds U.S. Legal Tender or U.S. Government
Obligations sufficient to pay all of the principal and interest
due on the Notes payable on that date and is not prohibited from
paying such money to the Holders thereof pursuant to the terms of
this Indenture, then on and after that date such Notes cease to
be outstanding and interest on them ceases to accrue.
SECTION 2.09 Treasury Notes.
In determining whether the Holders of the required
principal amount of Notes have concurred in any direction,
waiver, consent or notice, Notes owned by the Company or any of
its Affiliates shall be considered as though they are not
outstanding, except that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction,
waiver or consent, only Notes which a Trust Officer of the
Trustee actually knows are so owned shall be so considered. The
Company shall notify the Trustee, in writing, when it or any of
its Affiliates repurchases or otherwise acquires Notes, of the
aggregate principal amount of such Notes so repurchased or
otherwise acquired.
SECTION 2.10 Temporary Notes.
Until definitive Notes are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary
Notes upon receipt of a written order of the Company in the form
of an Officers' Certificate. The Officers' Certificate shall
specify the amount of temporary Notes to be authenticated and the
date on which the temporary Notes are to be authenticated.
Temporary Notes shall be substantially in the form of definitive
Notes but may have variations that the Company considers
appropriate for temporary Notes. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate upon
receipt of a written order of the Company pursuant to Section
2.02 definitive Notes in exchange for temporary Notes.
<PAGE>
SECTION 2.11 Cancellation.
The Company at any time may deliver Notes to the
Registrar for cancellation. The Paying Agent shall forward to the
Registrar any Notes surrendered to it for registration of
transfer, exchange, purchase or payment. The Registrar shall
cancel and, at the written direction of the Company, shall
dispose of all Notes surrendered for registration of transfer,
exchange, purchase, payment or cancellation. Subject to Section
2.07, the Company may not issue new Notes to replace Notes that
it has paid or delivered to the Registrar for cancellation. If
the Company shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same
are surrendered to the Registrar for cancellation pursuant to
this Section 2.11.
SECTION 2.12 Defaulted Interest.
If the Company defaults in a payment of interest on
the Notes, it shall pay the defaulted interest, plus (to the
extent lawful) any interest payable on the defaulted interest to
the Persons who are Holders on a subsequent special record date,
which date shall be the fifteenth day next preceding the date
fixed by the Company for the payment of defaulted interest or the
next succeeding Business Day if such date is not a Business Day.
At least 15 days before the subsequent special record date, the
Company shall mail to each Person who was a Holder as of a recent
date selected by the Company, with a copy to the Trustee and the
Paying Agent, a notice that states the subsequent special record
date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.
SECTION 2.13 CUSIP Number.
The Company in issuing the Notes may use a "CUSIP"
number, and if so, the Trustee shall use the CUSIP number in
notices of redemption or exchange as a convenience to Holders;
provided that no representation is hereby deemed to be made by
the Trustee as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be
placed only on the other identification numbers printed on the
Notes. The Company shall promptly notify the Trustee and the
Registrar of any change in the CUSIP number.
SECTION 2.14 Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each
Interest Payment Date and on the Maturity Date, the Company shall
have deposited with the Paying Agent in immediately available
funds money sufficient to make cash payments, if any, due on such
Interest Payment Date or Maturity Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to
the Holders on such Interest Payment Date or Maturity Date, as
the case may be.
<PAGE>
SECTION 2.15 Restrictive Legends.
Each Global Note and Physical Note that constitutes a
Restricted Security shall bear the following legend (the "Private
Placement Legend") on the face thereof until April 18, 2000 (or
such earlier date as shall be specified in an Officer's
Certificate to the effect that the Notes are no longer Restricted
Securities delivered to the Trustee and the Registrar) unless
otherwise agreed by the Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT,, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS
(OR SUCH SHORTER PERIOD AS MAY BE PROVIDED UNDER THE SECURITIES
ACT FOR THE RESALE BY NON-AFFILIATES OF RESTRICTED SECURITIES)
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR PURCHASES THIS SECURITY IN A MINIMUM
PRINCIPAL AMOUNT OF NOT LESS THAN $250,000 AND THAT, PRIOR TO
SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE REGISTRAR A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE OR REGISTRAR), (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN THREE YEARS (OR SUCH SHORTER PERIOD AS MAY BE PROVIDED
UNDER THE SECURITIES
<PAGE>
ACT FOR THE RESALE BY NON-AFFILIATES OF RESTRICTED SECURITIES)
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE REGISTRAR AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
Each Global Note shall also bear the following legend
on the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF
THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY
THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK LIMITED PURPOSE TRUST COMPANY ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION
2.17 OF THE INDENTURE.
SECTION 2.16 Book-Entry Provisions for Global Note.
(a) The Global Note initially shall (i) be registered
in the name of the Depository or the nominee of such Depository,
(ii) be delivered to the Registrar as custodian for such
Depository and (iii) bear legends as set forth in Section 2.15.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect
to any Global Note held on their behalf by the Depository, or the
Registrar as its custodian, or under the Global Note, and the
Depository may be treated by the Company, the Trustee, each Agent
and any agent of the Company, the Trustee or any Agent as the
absolute owner of the Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee, each Agent or any agent of the Company, the
Trustee or any Agent from giving effect to any written
certification, proxy or other authorization furnished by the
Depository or impair, as between the Depository and its Agent
<PAGE>
Members, the operation of customary practices governing the
exercise of the rights of a holder of any Note.
(b) Transfers of the Global Note shall be limited to
transfers in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of beneficial
owners in the Global Note may be transferred or exchanged for
Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition,
Physical Notes shall be transferred to all beneficial owners in
exchange for their beneficial interests in the Global Note only
if (i) the Depository notifies the Company that it is unwilling
or unable to continue as Depository for the Global Note and a
successor depositary is not appointed by the Company within 90
days of such notice or (ii) an Event of Default has occurred and
is continuing and the Registrar has received a written request
from the Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a
portion of the beneficial interest in the Global Note to
beneficial owners pursuant to paragraph (b), the Registrar shall
(if one or more Physical Notes are to be issued) reflect on its
books and records the date and a decrease in the principal amount
of the Global Note in an amount equal to the principal amount of
the beneficial interest in the Global Note to be transferred, and
the Company shall execute, and the Trustee shall authenticate and
deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global
Note to beneficial owners pursuant to paragraph (b), the Global
Note shall be deemed to be surrendered to the Registrar for
cancellation, and the Company shall execute, and the Trustee
shall authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial
interest in the Global Note, an equal aggregate principal amount
of Physical Notes of authorized denominations.
<PAGE>
(e) Any Physical Note constituting a Restricted Security
delivered in exchange for an interest in the Global Note pursuant
to paragraph (b) or (c) shall, except as otherwise provided by
paragraphs (a)(i)(x) and (c) of Section 2.17, bear the legend
regarding transfer restrictions applicable to the Physical Notes
set forth in Section 2.15.
(f) The Holder of the Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this
Indenture or the Notes.
SECTION 2.17 Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited
Investors and Non-U.S. Persons. The following provisions shall
apply with respect to the registration of any proposed transfer
of a Note constituting a Restricted Security to any Institutional
Accredited Investor which is not a QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any
Note constituting a Restricted Security, whether or not
such Note bears the Private Placement Legend, if (x) the
requested transfer is after April 18, 2000 (or such earlier
date as shall be specified in an Officers' Certificate to
the effect that the Notes are no longer Restricted
Securities delivered to the Trustee and the Registrar) or
(y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S.
Persons), such transfer is made with respect to Notes in a
minimum principal amount of not less than $250,000 and the
proposed transferee has delivered to the Registrar a
certificate substantially in the form of Exhibit C hereto
or (2) in the case of a transfer to a Non-U.S. Person, the
proposed transferor has delivered to the Registrar a
certificate substantially in the form of Exhibit D hereto
and such other information that the Registrar may
reasonably request in order to confirm that such
transaction is being made pursuant to an exemption from or
in a transaction not subject to the registration
requirements of the Securities Act; and
(ii) if the proposed transferor is an Agent Member
holding a beneficial interest in the Global Note, upon
receipt by the Registrar of (x) the certificate, if any,
required by paragraph (i) above and (y) instructions given
in accordance with the Depository's and the Registrar's
procedures,
whereupon (a) the Registrar shall reflect on its books and
records the date and (if the transfer does not involve a transfer
of outstanding Physical Notes) a decrease in the principal amount
of the Global Note in an amount equal to the principal amount of
the beneficial interest in the Global Note to be transferred, and
(b) the Company shall execute and the Trustee or its
authentication agent shall authenticate and deliver one or more
Physical Notes of like tenor and amount.
<PAGE>
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer
of a Note constituting a Restricted Security to a QIB (excluding
transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has
checked the box provided for on the form of Note stating,
or has otherwise advised the Company and the Registrar in
writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Note stating, or
has otherwise advised the Company and the Registrar in
writing, that it is purchasing the Note for its own account
or an account with respect to which it exercises sole
investment discretion and that it and any such account is a
QIB within the meaning of Rule 144A, and is aware that the
sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and
that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption
from registration provided by Rule 144A; and
(ii) if the Notes to be transferred consist of
Physical Notes which after transfer are to be evidenced by
an interest in the Global Note, upon receipt by the
Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar
shall reflect on its books and records the date and an
increase in the principal amount of the Global Note in an
amount equal to the principal amount of the Physical Notes
to be transferred, and the Registrar shall cancel the
Physical Notes so transferred.
(c) Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Notes not bearing the
Private Placement Legend, the Registrar shall deliver Notes that
do not bear the Private Placement Legend. Upon the registration
of transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Registrar shall deliver only Notes that
bear the Private Placement Legend unless (i) the circumstance
contemplated by paragraph (a)(i)(x) of this Section 2.17 exists
or (ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Registrar to the
effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) General. By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such a Note acknowledges
the restrictions on transfer of such Note set forth in this
Indenture and in the Private Placement Legend and agrees that it
will transfer such Note only as provided in this Indenture.
The Registrar shall retain copies of all letters,
notices and other written communications received pursuant to
Section 2.16 or this Section 2.17. The Company shall have the
right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01 Notices to Trustee.
<PAGE>
If the Company elects to redeem Notes pursuant to
Paragraph 6 of the Notes, it shall notify the Trustee and the
Paying Agent in writing of the Redemption Date and the principal
amount of the Notes to be redeemed.
The Company shall give each notice provided for in
this Section 3.01 at least 30 days before the Redemption Date
(unless a shorter notice period shall be satisfactory to the
Trustee and the Paying Agent, as evidenced in a writing signed on
behalf of the Trustee and the Paying Agent), together with an
Officers' Certificate stating that such redemption shall comply
with the conditions contained herein and in the Notes.
SECTION 3.02 Selection of Notes To Be Redeemed.
If fewer than all of the Notes are to be redeemed,
selection of the Notes to be redeemed will be made by the Trustee
in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if
the Notes are not then listed on a national securities exchange,
on a pro rata basis, by lot or in such other fair and reasonable
manner chosen at the discretion of the Trustee; provided,
however, that if a partial redemption is made with the proceeds
of a Public Equity Offering, selection of the Notes or portion
thereof for redemption shall be made by the Trustee only on a pro
rata basis, to the extent practical, unless such method is
otherwise prohibited. The Company shall promptly notify the
Trustee and the Paying Agent in writing of the date of listing
and the name of the securities exchange if and when the Notes are
listed on a principal national securities exchange. The Trustee
shall make the selection from the Notes outstanding and not
previously called for redemption and shall promptly notify the
Company and the Paying Agent in writing of the Notes selected for
redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes in
denominations of $1,000 may be redeemed only in whole. The
Trustee may select for redemption portions (equal to $1,000 or
any integral multiple thereof) of the principal of Notes that
have denominations larger than $1,000. Provisions of this
Indenture that apply to Notes called for redemption also apply to
portions of Notes called for redemption.
SECTION 3.03 Notice of Redemption.
At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail or cause to be mailed a
notice of redemption by first class mail, postage prepaid, to
each Holder whose Notes are to be redeemed, with a copy to the
Trustee and any Paying Agent. At the Company's written request,
the Paying Agent shall give the notice of redemption in the
Company's name and at the Company's expense.
Each notice for redemption shall identify the Notes to
be redeemed and shall state:
<PAGE>
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued
interest, if any, to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which
such redemption is being made;
(5) that Notes called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Priceplus accrued interest, if any, and that interest on
the Notes to be redeemed will cease to accrue on and
after the applicable Redemption Date, whether or not
such Notes are presented for payment.
(6) that, unless the Company defaults in making the
redemption payment, interest on Notes called for redemption
ceases to accrue on and after the Redemption Date, and the
only remaining right of the Holders of such Notes is to
receive payment of the Redemption Price plus accrued
interest, if any, upon surrender to the Paying Agent of the
Notes redeemed;
(7) if any Note is being redeemed in part, the portion
of the principal amount of such Note to be redeemed and
that, after the Redemption Date, and upon surrender of such
Note, a new Note or Notes in the aggregate principal amount
equal to the unredeemed portion thereof will be issued; and
(8) if fewer than all the Notes are to be redeemed,
the identification of the particular Notes (or portion
thereof) to be redeemed, as well as the aggregate principal
amount of Notes to be redeemed and the aggregate principal
amount of Notes to be outstanding after such partial
redemption.
SECTION 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with
Section 3.03, Notes called for redemption become due and payable
on the Redemption Date and at the Redemption Price plus accrued
interest, if any. Upon surrender to the Paying Agent, such Notes
called for redemption shall be paid at the Redemption Price
(which shall include accrued interest thereon to the Redemption
Date), but installments of interest, the maturity of which is on
or prior to the Redemption Date, shall be payable to Holders of
record at the close of business on the relevant record dates
referred to in the Notes.
SECTION 3.05 Deposit of Redemption Price.
<PAGE>
On or before 11:00 a.m. New York City time on the
Redemption Date, the Company shall deposit with the Paying Agent
U.S. Legal Tender sufficient to pay the Redemption Price plus
accrued interest, if any, of all Notes to be redeemed on that
date. The Paying Agent shall promptly return to the Company any
U.S. Legal Tender so deposited which is not required for that
purpose, except with respect to monies owed as obligations to the
Trustee pursuant to Article Seven.
If the Company complies with the preceding paragraph,
then, unless the Company defaults in the payment of such
Redemption Price plus accrued interest, if any, interest on the
Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are
presented for payment.
SECTION 3.06 Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in
part, the Company shall execute and the Trustee shall
authenticate for the Holder a new Note or Notes equal in
principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01 Payment of Notes.
The Company shall pay the principal of and interest on
the Notes on the dates and in the manner provided in the Notes
and in this Indenture. An installment of principal of or interest
on the Notes shall be considered paid on the date it is due if
the Trustee or Paying Agent (other than the Company or an
Affiliate of the Company) holds on that date U.S. Legal Tender
designated for and sufficient to pay the installment in full and
is not prohibited from paying such money to the Holders pursuant
to the terms of this Indenture.
The Company shall pay, to the extent such payments are
lawful, interest on overdue principal and on overdue installments
of interest (without regard to any applicable grace periods) from
time to time on demand at the rate borne by the Notes plus 2% per
annum. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in
this Indenture, the Company may, to the extent it is required to
do so by law, deduct or withhold income or other similar taxes
imposed by the United States from principal or interest payments
hereunder.
<PAGE>
SECTION 4.02 Maintenance of Office or Agency.
The Company shall maintain the office or agency
required under Section 2.03. The Company shall give prior written
notice to the Trustee and the Paying Agent of the location, and
any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office
or agency or shall fail to furnish the Trustee and the Paying
Agent with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the
Trustee set forth in Section 13.02.
The Company may also from time to time designate one or
more other offices or agencies where the Notes may be presented
or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough
of Manhattan, The City of New York, for such purposes. The
Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 4.03 Corporate Existence.
Except as otherwise permitted by Article Five and
Section 4.16, the Company shall do or cause to be done, at its
own cost and expense, all things necessary to preserve and keep
in full force and effect its corporate existence and the
corporate existence of each of its Restricted Subsidiaries in
accordance with the respective organizational documents of each
such Restricted Subsidiary and the material rights (charter and
statutory) and franchises of the Company and each such Restricted
Subsidiary.
SECTION 4.04 Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (i) all
material taxes, assessments and governmental charges (including
withholding taxes and any penalties, interest and additions to
taxes) levied or imposed upon it or any of its Subsidiaries or
properties of it or any of its Subsidiaries and (ii) all lawful
claims for labor, materials and supplies that, if unpaid, might
by law become a Lien upon the property of it or any of its
Subsidiaries; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by
appropriate proceedings properly instituted and diligently
conducted for which adequate reserves, to the extent required
under GAAP, have been taken.
SECTION 4.05 Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each of its
Restricted Subsidiaries to, maintain its material properties in
good working order and condition (subject to ordinary wear and
tear) and make all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto and actively
conduct and carry on its business; provided, however, that
nothing in this Section 4.05 shall prevent the Company or any of
its Restricted Subsidiaries from discontinuing the operation and
maintenance of any of its properties, if such discontinuance is,
in the good faith judgment of the Board of Directors of the
Company or the Restricted Subsidiary, as the case may be,
desirable in the conduct of their respective businesses and is
not disadvantageous in any material respect to the Holders.
(b) The Company shall provide or cause to be provided,
for itself and each of its Restricted Subsidiaries, insurance
(including appropriate self-insurance) against loss or damage of
the kinds that, in the good faith judgment of the Board of
Directors of the Company, are adequate and appropriate for the
conduct of the business of the Company and such Restricted
Subsidiaries in a prudent manner, with reputable insurers or with
the government of the United States or an agency or
instrumentality thereof, in such amounts, with such deductibles,
and by such methods as shall be customary, in the good faith
judgment of the Board of Directors of the Company, for companies
similarly situated in the industry.
SECTION 4.06 Compliance Certificate; Notice of Default.
(a) The Company and each Guarantor shall deliver to
the Trustee, within 90 days after the end of the Company's fiscal
year, an Officers' Certificate stating that a review of its
activities and the activities of its Subsidiaries during the
preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company
or such Guarantor, as the case may be, has kept, observed,
performed and fulfilled its obligations under this Indenture and
further stating, as to each such Officer signing such
certificate, that to the best of such Officer's knowledge the
Company or such Guarantor, as the case may be, during such
preceding fiscal year has kept, observed, performed and fulfilled
each and every such covenant and no Default or Event of Default
occurred during such year and at the date of such certificate
there is no Default or Event of Default that has occurred and is
continuing or, if such signers do know of such Default or Event
of Default, the certificate shall describe the Default or Event
of Default and its status with particularity. The Officers'
Certificate of the Company shall also notify the Trustee should
the Company elect to change the manner in which it fixes its
fiscal year end.
(b) The annual financial statements delivered pursuant
to Section 4.08 shall be accompanied by a written report of the
Company's independent accountants (who shall be a firm of
established national reputation) that in conducting their audit
of such financial statements nothing has come to their attention
that would lead them to believe that the Company has violated any
provisions of Article Four, Five or Six of this Indenture insofar
<PAGE>
as they relate to accounting matters or, if any such violation
has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to
obtain knowledge of any such violation.
(c) (i) If any Default or Event of Default has occurred
and is continuing or (ii) if any Holder seeks to exercise any
remedy hereunder with respect to a claimed Default under this
Indenture or the Notes, the Company shall deliver to the Trustee,
at its address set forth in Section 13.02 hereof, by registered
or certified mail or by telegram or facsimile transmission
followed by hard copy by registered or certified mail an
Officers' Certificate specifying such event, notice or other
action within five Business Days of its becoming aware of such
occurrence. The Trustee shall not be deemed to have notice of any
Default or Event of Default unless one of its Trust Officers
receives written notice thereof from the Company or any of the
Holders.
SECTION 4.07 Compliance with Laws.
The Company shall comply, and shall cause each of its
Restricted Subsidiaries to comply, with all applicable statutes,
rules, regulations, orders and restrictions of the United States,
all states and municipalities thereof, and of any governmental
department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing, in respect of the
conduct of their respective businesses and the ownership of their
respective properties, except for such noncompliances as are not
in the aggregate reasonably likely to have a material adverse
effect on the financial condition or results of operations of the
Company and its Restricted Subsidiaries, taken as a whole.
SECTION 4.08 SEC Reports.
(a) So long as the Notes are outstanding, the Company
and each Guarantor (at its own expense) shall file with the SEC
and shall file with the Trustee within 15 days after it files
them with the SEC copies of the quarterly and annual reports and
of the information, documents, and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) to be filed pursuant to Section 13 or
15(d) of the Exchange Act (without regard to whether the Company
or such Guarantor is subject to the requirements of such Section
13 or 15(d) of the Exchange Act); provided that prior to the
consummation of the Exchange Offer and the issuance of the
Exchange Notes, the Company and each Guarantor (at their own
expense) will mail to the Trustee and Holders in accordance with
paragraph (b) of this Section 4.08 substantially the same
information that would have been required by the foregoing
documents within 15 days of when any such document would
otherwise have been required to be filed with the SEC. Upon
qualification of this Indenture under the TIA, the Company shall
also comply with the provisions of TIA ss. 314(a).
(b) At the Company's expense, the Company shall cause
an annual report if furnished by it to stockholders generally and
each quarterly or other financial report if furnished by it to
stockholders generally to be filed with the Trustee and mailed to
the Holders at their addresses appearing in the register of Notes
maintained by the Registrar at the time of such mailing or
furnishing to stockholders.
(c) The Company shall provide to any Holder any
information reasonably requested by such Holder concerning the
Company (including financial statements) and in order to permit
such Holder to sell or transfer Notes in compliance with Rule
144A under the Securities Act.
SECTION 4.09 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law or other
law that would prohibit or forgive the Company from paying all or
any portion of the principal of or interest on the Notes as
contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 4.10 Limitation on Restricted Payments.
The Company shall not, and shall not cause or permit
any of its Restricted Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other
than dividends or distributions payable in Qualified Capital
Stock of the Company or in options, warrants or other rights to
purchase such Qualified Capital Stock) on or in respect of shares
of the Company's Capital Stock to holders of such Capital Stock,
(b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options
to purchase or acquire shares of any class of such Capital Stock
(in each case other than in exchange for Qualified Capital Stock
of the Company or options, warrants or other rights to purchase
such Qualified Capital Stock), (c) make any principal payment on,
purchase, defease, redeem, prepay, decrease or otherwise acquire
or retire for value, prior to any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, any
<PAGE>
Indebtedness of the Company that is subordinate or
junior in right of payment to the Notes or (d) make any
Investment (other than Permitted Investments) (each of the
foregoing actions set forth in clauses (a), (b) (c) and (d) being
referred to as a "Restricted Payment"), if at the time of such
Restricted Payment or immediately after giving effect thereto,
(i) a Default or an Event of Default shall have occurred and be
continuing or (ii) the Company is not able to incur at least
$1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.12 or (iii) the
aggregate amount of Restricted Payments (including such proposed
Restricted Payment) made subsequent to the Issue Date (the amount
expended for such purposes, if other than in cash, being the fair
market value of such property as determined reasonably and in
good faith by the Board of Directors of the Company) shall exceed
the sum of: (v) $10,000,000; plus (w) 50% of the cumulative
Consolidated Net Income (or if cumulative Consolidated Net Income
shall be a loss, minus 100% of such loss) of the Company earned
subsequent to the Issue Date 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
(x) 100% of the aggregate net cash proceeds received by the
Company from any Person (other than a Subsidiary of the Company)
from the issuance and sale subsequent to the Issue Date and on or
prior to the Reference Date of Qualified Capital Stock of the
Company (including by conversion of Indebtedness into Qualified
Capital Stock) and, subject to the limitation set forth in clause
(8) of the immediately succeeding paragraph, 100% of the fair
market value of non-cash consideration received in any such
issuance and sale; plus (y) without duplication of any amounts
included in clause (iii)(x) above, 100% of the aggregate net cash
proceeds of any equity contribution received by the Company from
a holder of the Company's Capital Stock and, subject to the
limitation set forth in clause (8) of the immediately succeeding
paragraph, 100% of the fair market value of non-cash
consideration of any equity contribution received by the Company
from a holder of the Company's Capital Stock; plus (z) without
duplication, the sum of (1) the aggregate amount returned in cash
on or with respect to Investments (other than Permitted
Investments) made subsequent to the Issue Date whether through
interest payments, principal payments, dividends or other
distributions or payments, (2) the net cash proceeds received by
the Company or any Restricted Subsidiary from the disposition of
all or any portion of such Investments (other than to a
Subsidiary of the Company) and, subject to the limitations set
forth in clause (8) of the immediately succeeding paragraph, 100%
of the fair market value of non-cash consideration received in
any such disposition and (3) upon redesignation of an
Unrestricted Subsidiary as a Restricted Subsidiary, the fair
market value of such Subsidiary; 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 the Company, either (i) solely in
exchange for shares of Qualified Capital Stock of the Company or
<PAGE>
(ii) through the application of net proceeds of a
substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of shares of Qualified Capital Stock
of the Company; (3) if no Default or Event of Default shall have
occurred and be continuing, the acquisition of any Indebtedness
of the Company that is subordinate or junior in right of payment
to the Notes either (i) solely in exchange for shares of
Qualified Capital Stock of the Company or Indebtedness of the
Company that is subordinate or junior in right of payment to the
Notes at least to the extent of the subordination provisions
contained in Article Ten of this Indenture and having no
maturity, sinking fund payment or scheduled mandatory redemption
prior to maturity of the Notes, or (ii) through the application
of net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of (A) shares of
Qualified Capital Stock of the Company or (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 the employment of
such employees or officers in an aggregate amount not to exceed
$10 million; (5) the making of distributions, loans or advances
in an amount not to exceed $1 million per annum sufficient to
permit Holdings to pay the ordinary operating expenses of
Holdings related to Holdings' ownership of Capital Stock of the
Company; (6) the payment of any amounts pursuant to the Tax
Sharing Agreement; (7) aggregate payments of not more than $835
million pursuant to the Recapitalization and made within 30 days
of the date of the consummation of the Recapitalization; and (8)
in the event that the Company has not realized cash from the
proceeds of the payment, sale or disposition of any non-cash
consideration referred to in clause (iii)(x), (iii)(y) and
(iii)(z)(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),
(2), (4) and (8) shall be included in such calculation and
amounts expended pursuant to clauses (3), (5), (6) and (7) shall
be excluded from such calculation.
Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment complies with
this Indenture and setting forth in reasonable detail the basis
upon which the required calculations were computed, which
calculations may be based upon the Company's 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'
Certificates.
SECTION 4.11 Limitation on Transactions with
Affiliates.
(a) The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, enter
into or permit to exist any transaction or series of related
transactions (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (each
an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y)
Affiliate Transactions on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that
might reasonably have been obtained in a comparable transaction
at such time on an arm's-length basis from a Person that is not
an Affiliate of the Company or such Restricted Subsidiary. All
Affiliate Transactions (and each series of related Affiliate
Transactions which are related to a common plan) involving
aggregate payments or other property with a fair market value in
excess of $1 million shall be approved by the Board of Directors
of the Company or such Restricted Subsidiary, as the case may be,
such approval to be evidenced by a Board Resolution stating that
such Board of Directors has determined that such transaction
complies with the foregoing provisions. If the Company or any
Restricted Subsidiary of the Company enters into an Affiliate
Transaction (or a series of related Affiliate Transactions
related to a common plan) that involves an aggregate fair market
value or payments to an Affiliate, as the case may be, of more
than $10 million, the Company or such Restricted Subsidiary, as
the case may be, shall, prior to the consummation thereof, obtain
a favorable opinion as to the fairness of such transaction or
series of related transactions to the Company or the relevant
Restricted Subsidiary, as the case may be, from a financial point
of view, from an Independent Financial Advisor and file the same
with the Trustee.
(b) The foregoing restrictions shall not apply to (i)
reasonable fees and compensation paid to (including issuances and
grant of securities and stock options), employment agreements and
stock option and ownership plans for the benefit of, and
indemnity provided on behalf of, officers, directors, employees
or consultants of the Company or any Restricted Subsidiary of the
Company as determined in good faith by the Company's Board of
Directors or senior management; (ii) transactions between or
among the Company and any of its Restricted Subsidiaries or
exclusively between or among such Restricted Subsidiaries,
provided that such transactions are not otherwise prohibited by
this Indenture; (iii) any agreement as in effect as of the Issue
Date or any amendment thereto or any transaction contemplated
thereby (including pursuant to any amendment thereto or any
replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders
in any material respect than the original agreement as in effect
on the Issue Date); (iv) payments and investments permitted by
this Indenture; (v) payments made in connection with the
Recapitalization, including transaction fees to stockholders of
Holdings not exceeding $10,000,000); (vi) the issuance of
Qualified Capital Stock of the Company; (vii) any obligations of
the Company pursuant to the Management Advisory Agreement and the
Transaction Advisory Agreement; (viii) transactions permitted by,
and complying with, Article Five; (ix) 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 this Indenture which are fair to
the Company, in the good faith determination of the Board of
Directors of the Company or the senior management thereof, and on
terms at least as favorable as might reasonably have been
obtained at such time from an unaffiliated party; and (x)
Qualified Receivables Transactions.
<PAGE>
SECTION 4.12 Limitation on Incurrence of Additional
Indebtedness.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create,
incur, assume, guarantee, acquire, become liable, contingently or
otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than
Permitted Indebtedness); provided, however, that if no Default or
Event of Default shall have occurred and be continuing at the
time or as a consequence of the incurrence of any such
Indebtedness, the Company may incur Indebtedness (including,
without limitation, Acquired Indebtedness) and the Restricted
Subsidiaries of the Company may incur Acquired Indebtedness, in
each case if on the date of the incurrence of such Indebtedness,
after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 2.0 to
1.0.
SECTION 4.13 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company shall not, and shall not cause or permit
any of its Restricted Subsidiaries to, directly or indirectly,
create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company to (a) pay dividends or make
any other distributions on or in respect of its Capital Stock;
(b) make loans or advances or to pay any Indebtedness or other
obligation owed to the Company or any other Restricted Subsidiary
of the Company; or (c) transfer any of its property or assets to
the Company or any other Restricted Subsidiary of the Company,
except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) this Indenture; (3) customary
non-assignment provisions of any contract or lease governing a
leasehold or ownership interest of any Restricted Subsidiary of
the Company; (4) any instrument governing Acquired Indebtedness,
which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person
or the properties or assets of the Person so acquired; (5)
agreements existing on the Issue Date (including, without
limitation, the Credit Agreement) to the extent and in the manner
such agreements are in effect on the Issue Date; (6) secured
Indebtedness otherwise permitted to be incurred pursuant to the
provisions of Sections 4.12 and 4.18 that limit the right of the
debtor to dispose of the assets securing such Indebtedness; (7)
customary net worth 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
<PAGE>
favorable to the Company in any material respect as determined by
the Board of Directors of the Company in its reasonable and good
faith judgment than the provisions relating to such encumbrance
or restriction contained in agreements referred to in such clause
(2), (4), (5) or (6); and (11) Standard Securitization
Undertakings relating to a Receivables Subsidiary or Special
Purpose Vehicle.
SECTION 4.14 Prohibition on Incurrence of Senior
Subordinated Debt.
The Company shall not incur or suffer to exist
Indebtedness that is senior in right of payment to the Notes and
subordinate in right of payment to any other Indebtedness of the
Company.
SECTION 4.15 Change of Control.
(a) At any time on or prior to April 15, 2002, the
Company may, at its option, redeem the Notes, in whole, upon the
occurrence of a Change of Control, upon not less than 30 nor more
than 60 days prior notice (but in no event more than 90 days
after the occurrence of such Change of Control) at a redemption
price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued and unpaid interest, if
any, to the date fixed for such redemption (the "Change of
Control Redemption Date") (subject to the right of the Holders of
record on the relevant record date to receive interest due on the
relevant interest payment date).
(b) Upon the occurrence of a Change of Control, if the
Company does not redeem the Notes as provided in Section 4.15(a)
of this Indenture, Company shall make the "Change of Control
Offer", and each Holder will have the right to require that the
Company purchase all or a portion of such Holder's Notes pursuant
to such Change of Control Offer, at a purchase price equal to
101% of the principal amount thereof plus accrued interest, if
any, to the date of purchase. Prior to the mailing of the notice
referred to below, but in any event within 30 days following any
Change of Control, the Company shall (i) repay in full and
terminate all commitments under Indebtedness under the Credit
Agreement and all other Senior Debt 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 to repay the
Indebtedness owed to each lender in full which has accepted such
offer or (ii) obtain the requisite consents under the Credit
Agreement and all other Senior Debt to permit the repurchase of
the Notes as provided below. The Company shall first comply with
the covenant in the immediately preceding sentence before it
shall be required to repurchase Notes pursuant to the provisions
described in this Section 4.15. The Company's failure to comply
with the immediately preceding sentence shall constitute an Event
of Default under Section 6.01(3) and not under Section 6.01(2).
<PAGE>
(c) Within 30 days following the date upon which the
Change of Control occurred (the "Change of Control Date"), unless
the Company has mailed a notice with respect to a redemption
pursuant to Section 4.15(a) of this Indenture, the Company shall
send, by first class mail, a notice to each Holder, with a copy
to the Trustee and each Paying Agent, which notice shall govern
the terms of the Change of Control Offer. The notice to the
Holders shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Change of
Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made
pursuant to this Section 4.15 and that all Notes tendered
and not withdrawn will be accepted for payment;
(2) the purchase price (including the amount of
accrued interest) and the purchase date (which shall be no
earlier than 30 days nor later than 45 days from the date
such notice is mailed, other than as may be required by
law) (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making
payment therefor, any Note accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased
pursuant to a Change of Control Offer will be required to
surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third
Business Day prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than
five Business Days prior to the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount
of the Notes the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to
have such Notes purchased;
(7) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal
to the unpurchased portion of the Notes surrendered;
provided that each Note purchased and each new Note issued
shall be in an original principal amount of $1,000 or
integral multiples thereof; and
<PAGE>
(8) the circumstances and relevant facts regarding such
Change of Control.
On or before the Change of Control Payment Date, the
Company shall (i) accept for payment Notes or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent U.S. Legal Tender sufficient to pay the
purchase price plus accrued interest, if any, of all Notes so
tendered and (iii) deliver to the Registrar Notes so accepted
together with an Officers' Certificate stating the Notes or
portions thereof being purchased by the Company. The Paying Agent
shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price plus accrued interest,
if any, and the Trustee shall promptly authenticate and mail to
such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. Any Notes not so
accepted shall be promptly mailed by the Company to the Holder
thereof.
Any amounts remaining after the purchase of Notes
pursuant to a Change of Control Offer shall be returned by the
Paying Agent to the Company.
The Company shall 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 the
provisions of any securities laws or regulations conflict with
this Section 4.15, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 4.15 by virtue
thereof.
SECTION 4.16 Limitation on Asset Sales.
(a) The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless
(i) the Company or the applicable Restricted Subsidiary, as the
case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets sold
or otherwise disposed of (in each case as determined in good
faith by the Company's Board of Directors); (ii) at least 75% of
the consideration received by the Company or the Restricted
Subsidiary, as the case may be, from such Asset Sale shall be in
the form of cash or Cash Equivalents (provided that (A) the
amount of any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet) of the Company
or any such Restricted Subsidiary (other than liabilities that
are by their terms subordinated to the Notes) that are assumed by
the transferee of any such assets and (B) the fair market value
of any marketable securities received by the Company or a
Restricted Subsidiary in exchange for any such assets that are
promptly converted into cash shall be deemed to be cash for the
purposes of this provision) and is received at the time of such
disposition; provided that the Company and its Restricted
Subsidiaries may make Asset Sales not exceeding $2 million in the
aggregate in each year for non-cash consideration; and (iii) upon
the consummation of an Asset Sale, the
<PAGE>
Company shall apply, or cause such Restricted Subsidiary to
apply, the Net Cash Proceeds relating to such Asset Sale within
360 days of receipt thereof either (A) to prepay any Senior Debt
and, in the case of any 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 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 the
Company and its Restricted Subsidiaries as it exists on the date
of such Asset Sale or in businesses the same, 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). Subject to the last
sentence of this paragraph, on the 361st day after an Asset Sale
or such earlier date, if any, as the Board of Directors of the
Company or of such Restricted Subsidiary determines not to apply
the Net Cash Proceeds relating to such Asset Sale as set forth in
clause (iii)(A), (iii)(B) or (iii)(C) of the next preceding
sentence (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied
on or before such Net Proceeds Offer Trigger Date as permitted in
clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding
sentence (each a "Net Proceeds Offer Amount") shall be applied by
the Company or such Restricted Subsidiary to make an offer to
purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds
Offer Payment Date") not less than 30 nor more than 45 days
following the applicable Net Proceeds Offer Trigger Date, from
all Holders on a pro rata basis, that amount of Notes equal to
the Net Proceeds Offer Amount at a price equal to 100% of the
principal amount of the Notes to be purchased, plus accrued and
unpaid interest thereon, if any, to the date of purchase;
provided, however, that if at any time any non-cash consideration
received by the Company or any Restricted Subsidiary of the
Company, as the case may be, in connection with any Asset Sale is
converted into or sold or otherwise disposed of for cash (other
than interest received with respect to any such non-cash
consideration), then such conversion or disposition shall be
deemed to constitute an Asset Sale hereunder and the Net Cash
Proceeds thereof shall be applied in accordance with this
covenant. The Company may defer the Net Proceeds Offer until
there is an aggregate unutilized Net Proceeds Offer Amount equal
to or in excess of $10 million resulting from one or more Asset
Sales (at which time, the entire unutilized Net Proceeds Offer
Amount, and not just the amount in excess of $10 million, shall
be applied as required pursuant to this paragraph).
In the event of the transfer of substantially all (but
not all) of the property and assets of the Company and its
Restricted Subsidiaries as an entirety to a Person in a
transaction permitted under Section 5.01, the successor Person
shall be deemed to have sold the properties and assets of the
Company and its Restricted Subsidiaries not so transferred for
purposes of this covenant, and shall comply with the provisions
of this covenant with respect to such deemed sale as if it were
an Asset Sale. In addition, the fair market value of such
properties and assets of the Company or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this Section 4.16.
<PAGE>
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 each Paying Agent, and shall comply with the
procedures set forth in this Indenture. Upon receiving notice of
the Net Proceeds Offer, Holders may elect to tender their Notes
in whole or in part in integral multiples of $1,000 in exchange
for cash. To the extent Holders properly tender Notes in an
amount exceeding the Net Proceeds Offer Amount, Notes of
tendering Holders will be purchased on a pro rata basis (based on
amounts tendered). To the extent that the aggregate amount of
Notes tendered pursuant to a Net Proceeds Offer is less than the
Net Proceeds Offer Amount, the Company may use such excess Net
Proceeds Offer Amount for general corporate purposes or for any
other purpose not prohibited by this 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.
Notwithstanding the foregoing, the Company and its
Restricted Subsidiaries will be permitted to consummate an Asset
Swap if (i) at the time of entering into such Asset Swap or
immediately after giving effect to such Asset Swap, no Default or
Event of Default shall have occurred or be continuing or would
occur as a consequence thereof, (ii) in the event that such Asset
Swap involves an aggregate amount in excess of $10 million, the
terms of such Asset Swap have been approved by a majority of the
members of the Board of Directors of the Company, and (iii) in
the event such Asset Swap involves an aggregate amount in excess
of $50 million, the Company has received a written opinion from
an Independent Financial Advisor that such Asset Swap is fair to
the Company or such Restricted Subsidiary, as the case may be,
from a financial point of view.
(b) Subject to the deferral of the Net Proceeds Offer
Trigger Date contained in the second paragraph of subsection (a)
above, each notice of a Net Proceeds Offer pursuant to this
Section 4.16 shall be mailed or caused to be mailed, by first
class mail, by the Company not more than 25 days after the Net
Proceeds Offer Trigger Date to all Holders at their last
registered addresses as of a date within 15 days of the mailing
of such notice, with a copy to the Trustee and each Paying Agent.
The notice shall contain all instructions and materials necessary
to enable such Holders to tender Notes pursuant to the Net
Proceeds Offer and shall state the following terms:
(1) that the Net Proceeds Offer is being made pursuant
to Section 4.16 and that all Notes tendered will be
accepted for payment; provided, however, that if the
aggregate principal amount of Notes tendered in a Net
Proceeds Offer exceeds the aggregate amount of the Net
Proceeds Offer, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may
be deemed appropriate by the Company so that only Notes in
denominations of $1,000 or multiples thereof shall be
purchased);
<PAGE>
(2) the purchase price (including the amount of
accrued interest) and the purchase date (which shall be 20
Business Days from the date of mailing of notice of such
Net Proceeds Offer, or such longer period as required by
law) (the "Proceeds Purchase Date");
(3) that any Note not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making
payment therefor, any Note accepted for payment pursuant to
the Net Proceeds Offer shall cease to accrue interest after
the Proceeds Purchase Date;
(5) that Holders electing to have a Note purchased
pursuant to a Net Proceeds Offer will be required to
surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third
Business Day prior to the Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than five
Business Days prior to the Proceeds Purchase Date, a
telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the
Notes the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such
Note purchased; and
(7) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal
to the unpurchased portion of the Notes surrendered;
provided that each Note purchased and each new Note issued
shall be in an original principal amount of $1,000 or
integral multiples thereof;
On or before the Proceeds Purchase Date, the Company
shall (i) accept for payment Notes or portions thereof tendered
pursuant to the Net Proceeds Offer which are to be purchased in
accordance with item (b)(1) above, (ii) deposit with the Paying
Agent U.S. Legal Tender sufficient to pay the purchase price plus
accrued interest, if any, of all Notes to be purchased and (iii)
deliver to the Paying Agent Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to
the Holders of Notes so accepted payment in an amount equal to
the purchase price plus accrued interest, if any.
Any amounts remaining after the purchase of Notes
pursuant to a Net Proceeds Offer shall be returned by the Trustee
to the Company.
The Company shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent
<PAGE>
such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the
extent that the provisions of any securities laws or regulations
conflict with this Section 4.16, the Company shall comply with
the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.16
by virtue thereof.
SECTION 4.17 Limitation on Preferred Stock of
Restricted Subsidiaries.
The Company shall not permit any of its Restricted
Subsidiaries (other than a Receivables Subsidiary or a Special
Purpose Vehicle) to issue any Preferred Stock (other than to the
Company or to a Wholly Owned Restricted Subsidiary of the
Company) or permit any Person (other than the Company or a Wholly
Owned Restricted Subsidiary of the Company) to own any Preferred
Stock of any Restricted Subsidiary of the Company (other than a
Receivables Subsidiary or a Special Purpose Vehicle).
SECTION 4.18 Limitation on Liens.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, create, incur, assume or suffer to
exist any Liens of any kind against or upon any property or
assets of the Company or any of its Restricted Subsidiaries
whether owned on the Issue Date or acquired after the Issue Date,
or any proceeds therefrom, or assign or otherwise convey any
right to receive income or profits therefrom for purposes of
security unless (i) in the case of Liens securing Indebtedness
that is expressly subordinate or junior in right of payment to
the Notes, the Notes are secured by a Lien on such property,
assets or proceeds 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 as of the
Issue Date; (B) Liens securing Senior Debt and Liens on assets of
Restricted Subsidiaries securing guarantees of Senior Debt; (C)
Liens securing the Notes; (D) Liens of the Company or a Wholly
Owned Restricted Subsidiary of the Company on assets of any
Restricted Subsidiary of the Company; (E) Liens securing
Refinancing Indebtedness which is incurred to Refinance
Indebtedness which has been secured by a Lien permitted under
this Indenture and which has been incurred in accordance with the
provisions of this Indenture; provided, however, that such Liens
(1) are not materially less favorable to the Holders and are not
materially more favorable to the lienholders with respect to such
Liens than the Liens in respect of the Indebtedness being
Refinanced and (2) do not extend to or cover any property or
assets of the Company or any of its Restricted Subsidiaries not
securing the Indebtedness so Refinanced; and (F) Permitted Liens.
SECTION 4.19 Limitation on Guarantees by Restricted
Subsidiaries.
The Company shall not permit any of its domestic
Restricted Subsidiaries, directly or indirectly, by way of the
pledge of any intercompany note or otherwise, to assume,
guarantee or in any other manner become liable with respect to
any Indebtedness of the Company or any other Restricted
Subsidiary (other than Permitted Indebtedness of a Restricted
Subsidiary), unless, in any such case (a) such Restricted
Subsidiary executes and delivers a supplemental indenture to this
Indenture, providing a guarantee of payment of the Notes by such
Restricted Subsidiary (a "Guarantee") substantially similar to
the Guarantee of Holdings contained in Article Eleven and (b) (x)
if any such assumption, guarantee or other liability of such
Restricted Subsidiary is provided in respect of Senior Debt, the
guarantee or other instrument provided by such Restricted
Subsidiary in respect of such Senior Debt may be superior to such
Guarantee pursuant to subordination provisions no less favorable
to the Holders of the Notes than those contained in this
Indenture (and in particular the subordination of Guaranteed
Obligations of Holdings set forth in Article Twelve), and (y) if
such assumption, guarantee or other liability of such Restricted
Subsidiary is provided in respect of Indebtedness that is
expressly subordinated to the Notes, the guarantee or other
instrument provided by such Restricted Subsidiary in respect of
such subordinated Indebtedness shall be subordinated to such
Guarantee pursuant to subordination provisions no less favorable
to the Holders of the Notes than those contained in this
Indenture.
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 a 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; provided that
in the event that such Guarantee is subordinated in right of
payment to a guaranty constituting Guarantor Senior Debt
containing a comparable limitation, such limitation in such other
guaranty shall not be given effect in calculating the limitation
on the amount of the Guarantee made to this Section 4.19. In
addition, such Guarantee shall contain appropriate provisions
relating to contribution among all Restricted Subsidiaries
executing Guarantees.
Notwithstanding the foregoing, any such Guarantee of
the Notes by a Restricted Subsidiary of the Company 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
preceding paragraph; or (ii) any sale or other disposition (by
merger or otherwise) to any Person which is not a Restricted
Subsidiary of the Company, of all of the Company's Capital Stock
in, or all or substantially all of the assets of, such Restricted
Subsidiary; provided that (a) such sale or disposition of such
Capital Stock or assets is otherwise in compliance with the terms
of this Indenture and (b) such assumption, guarantee or other
liability of such Restricted Subsidiary has been released by the
holders of the other Indebtedness so guaranteed.
<PAGE>
SECTION 4.20 Restriction of Lines of Business to Food,
Food Distribution and Related Businesses.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, engage in any material business
activity except for food, food distribution and related
businesses.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01 Merger, Consolidation and Sale of Assets
of the Company.
(a) The Company shall not, in a single transaction or
a series of related transactions, consolidate with or merge with
or into any Person, or sell, assign, transfer, lease, convey or
otherwise dispose of (or cause or permit any Restricted
Subsidiary of the Company to sell, assign, transfer, lease,
convey or otherwise dispose of) all or substantially all of the
Company's assets (determined on a consolidated basis for the
Company and its Restricted Subsidiaries), whether as an entirety
or substantially as an entirety, to any Person unless:
(1) either (A) the Company shall be the surviving or
continuing corporation or (B) the Person (if other than the
Company) formed by such consolidation or into which the
Company is merged or the Person which acquires by sale,
assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and
its Restricted Subsidiaries 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 on all of the Notes and the performance of every
covenant of the Notes, this Indenture and, if applicable,
the Registration Rights Agreement on the part of the
Company to be performed or observed;
<PAGE>
(2) immediately after giving effect to such transaction
and the assumption contemplated by clause (1) (B) (y)
above (including giving effect to any Indebtedness and
Acquired Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the
case may be, shall be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness)
in compliance with Section 4.12;
(3) immediately after giving effect to such
transaction, the Company or the Surviving Entity, as the
case may be, will have Consolidated Net Worth in an amount
that is not less than the Consolidated Net Worth of the
Company immediately prior to such transaction;
(4) immediately before and immediately after giving
effect to such transaction and the assumption contemplated
by clause (1)(B)(y) above (including, without limitation,
giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred and any Lien granted
in connection with or in respect of such transaction), no
Default or Event of Default shall have occurred and be
continuing; and
(5) the Company or the Surviving Entity, as the case
may be, shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, sale, assignment, transfer,
lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture complies with the
applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such
transaction have been satisfied.
(b) For purposes of the foregoing, the transfer (by
lease, assignment, sale or otherwise, in a single transaction or
series of transactions) of all or substantially all of the
properties and assets of one or more Restricted Subsidiaries of
the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company,
shall be deemed to be the transfer of all or substantially all of
the properties and assets of the Company.
(c) Notwithstanding the foregoing, the merger of the
Company with an Affiliate incorporated solely for the purpose of
reincorporating the Company in another jurisdiction shall be
permitted without regard to Section 5.01(a)(2) and (3) hereof.
SECTION 5.02 Successor Corporation Substituted for the
Company.
Upon any consolidation, combination or merger or any
transfer of all or substantially all of the assets of the Company
in accordance with the foregoing, in which the Company is not the
continuing corporation, the successor Person formed by such
consolidation or into which the Company is merged or to which
such conveyance, lease or transfer is made shall succeed to, and
be substituted for, and may exercise
<PAGE>
every right and power of, the Company under this Indenture and
the Notes with the same effect as if such surviving entity had
been named as such; provided, however that solely for purposes of
computing amounts described in subclause (iii) of the first
paragraph of Section 4.10, any such surviving entity shall only
be deemed to have succeeded to and be substituted for the Company
with respect to periods subsequent to the effective time of such
merger, consolidation or transfer of assets.
SECTION 5.03 Merger, Consolidation and Sale of Assets
of Holdings.
(a) Holdings shall not, in a single transaction or a
series of related transactions, consolidate with or merge with or
into any Person, or 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, unless:
(1) either (A) Holdings shall be the surviving or
continuing corporation or (B) the Person (if other than
Holdings) formed by such consolidation or into which
Holdings is merged or the Person which acquires by sale,
assignment, transfer, lease, conveyance or other
disposition the properties and assets of Holdings and its
Subsidiaries 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, obligations of Holdings of
the due and punctual payment of the principal of and
premium, if any, and interest on all of the Notes and the
performance of every covenant of this Indenture to be
performed or observed by Holdings;
(2) immediately before and immediately after giving
effect to such transaction and the assumption contemplated
by clause (1)(B)(y) above (including, without limitation,
giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred and any Lien granted
in connection with or in respect of the transaction), no
Default or Event of Default shall have occurred and be
continuing; and
(3) Holdings or the Surviving Parent Entity, as the
case may be, shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture complies with the
applicable provisions of this Indenture and that all
conditions precedent in this Indenture relating to such
transaction have been satisfied.
<PAGE>
(b) For purposes of the foregoing, the transfer (by
lease, assignment, sale or otherwise, in a single transaction or
series of transactions) of all or substantially all of the
properties and assets of one or more Subsidiaries of Holdings,
the Capital Stock of which constitutes all or substantially all
of the properties and assets of Holdings, shall be deemed to be
the transfer of all or substantially all of the properties and
assets of Holdings.
(c) Notwithstanding the foregoing, the merger of
Shield with and into Holdings and the merger of Holdings with and
into the Company shall be permitted; provided that, with respect
to the merger of Holdings with and into the Company, the
requirements of Section 5.01(a) shall be satisfied.
SECTION 5.04 Successor Corporation Substituted for
Holdings.
Upon any consolidation, combination or merger or any
transfer 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
conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of,
Holdings under this Indenture with the same effect as if such
surviving entity had been named as such.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Notes
when the same becomes due and payable and the Default
continues for a period of 30 days (whether or not such
payment shall be prohibited by Article Ten of this
Indenture); or
(2) the Company fails to pay the principal on any
Notes when such principal becomes due and payable, at
maturity, upon redemption or otherwise (including the
failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or a Net Proceeds
Offer) (whether or not such payment shall be prohibited by
Article Ten); or
(3) the Company defaults in the observance or
performance of any other covenant or agreement contained in
this Indenture and which default continues for a period
of 30 days after written notice specifying the default (and
demanding that such default be remedied) is received by
the Company from the Trustee or by the Company and the
Trustee from the Holders of at least 25% of the outstanding
principal amount of the Notes; or
(4) the Company fails to pay at final stated maturity
(giving effect to any applicable grace periods and any
extensions thereof) the principal amount of any
Indebtedness for borrowed money of the Company or any
Restricted Subsidiary of the Company, or the acceleration
of the final stated maturity of any such Indebtedness, in
either case, if the aggregate principal amount of such
Indebtedness, together with the principal amount of any
other such Indebtedness in default for failure to pay
principal at final stated maturity or which has been
accelerated, aggregates $20 million or more at any time; or
(5) one or more judgments for the payment of money in
an aggregate amount in excess of $20 million (to the extent
not covered by insurance) shall have been rendered against
the Company or any of its Restricted Subsidiaries and such
judgments remain undischarged, unpaid or unstayed for a
period of 60 days after such judgment or judgments become
final and non-appealable; or
(6) the Company or any Significant Subsidiary of the
Company (A) commences a voluntary case or proceeding under
any Bankruptcy Law with respect to itself, (B) consents to
the entry of a judgment, decree or order for relief against
it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a
Custodian of it or for substantially all of its property,
(D) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, (E)
makes a general assignment for the benefit of its
creditors, or (F) takes any corporate action to authorize
or effect any of the foregoing; or
(7) a court of competent jurisdiction enters a
judgment, decree or order for relief in respect of the
Company or any Significant Subsidiary of the Company in an
involuntary case or proceeding under any Bankruptcy Law,
which shall (A) approve as properly filed a petition
seeking reorganization, arrangement, adjustment or
composition in respect of the Company or any such
Significant Subsidiary, (B) appoint a Custodian of the
Company or any such Significant Subsidiary or for
substantially all of its property or (C) order the
winding-up or liquidation of its affairs; and such
judgment, decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
<PAGE>
(8) the failure of a Guarantee to be in full force and
effect (except as contemplated by the terms thereof) or the
denial or disaffirmation of such obligations by a
Guarantor.
SECTION 6.02 Acceleration.
(a) If an Event of Default (other than an Event of
Default specified in Section 6.01(6) or (7) with respect to the
Company) occurs and is continuing and has not been waived
pursuant to Section 6.04, then the Trustee or the Holders of at
least 25% in principal amount of outstanding Notes may declare
the principal of and accrued interest on all the Notes to be due
and payable by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that it is a
"notice of acceleration" (the "Acceleration Notice"), and the
same (i) shall become immediately due and payable or (ii) if
there are any amounts outstanding under the Credit Agreement,
shall become immediately due and payable upon the first to occur
of an acceleration under the Credit Agreement or five Business
Days after receipt by the Company and the Representative under
the Credit Agreement of such Acceleration Notice, but only if
such Event of Default is then continuing. Upon any such
declaration, but subject to the immediately preceding sentence,
such amount shall be immediately due and payable.
(b) If an Event of Default specified in Section
6.01(6) or (7) occurs and is continuing with respect to the
Company, all unpaid principal of and premium, if any, and accrued
and unpaid interest on all of the outstanding Notes shall ipso
facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any
Holder.
(c) At any time after the delivery of an Acceleration
Notice with respect to the Notes in accordance with Section
6.02(a), the Holders of a majority in principal amount of the
Notes may, on behalf of the Holders of all of the Notes, rescind
and cancel such declaration and its consequences (i) if the
rescission would not conflict with any judgment or decree, (ii)
if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due
solely because of the acceleration, (iii) to the extent the
payment of such interest is lawful, interest on overdue
installments of interest and overdue principal, which has become
due otherwise than by such declaration of acceleration, has been
paid, (iv) if the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its expenses,
disbursements and any other amounts due the Trustee under Section
7.07 and advances and (v) in the event of the cure or waiver of
an Event of Default of the type described in Section 6.01(6) or
(7), the Trustee shall have received an Officers' Certificate and
an Opinion of Counsel that such Event of Default has been cured
or waived. No such rescission shall affect any subsequent Default
or impair any right consequent thereto. The Holders of a majority
in principal amount of the Notes may waive any existing Default
or Event of Default under this Indenture and its consequences,
except a default in the payment of the principal of or interest
on any Notes.
<PAGE>
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of or interest on
the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does
not possess any of the Notes or does not produce any of them in
the proceeding. A delay or omission by the Trustee or any Holder
in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are
cumulative to the extent permitted by law.
SECTION 6.04 Waiver of Past Defaults.
Subject to Sections 2.09, 6.07 and 9.02, the Holders
of a majority in principal amount of the outstanding Notes by
notice to the Trustee may waive an existing Default or Event of
Default and its consequences, except a Default in the payment of
principal of or interest on any Note as specified in clauses (1)
and (2) of Section 6.01. When a Default or Event of Default is
waived, it is cured and ceases.
SECTION 6.05 Control by Majority.
Subject to Section 2.09, the Holders of a majority in
principal amount of the outstanding Notes may direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power
conferred on it, including, without limitation, any remedies
provided for in Section 6.03. Subject to Section 7.01, however,
the Trustee may refuse to follow any direction that the Trustee
reasonably believes conflicts with any law or this Indenture,
that the Trustee determines may be unduly prejudicial to the
rights of another Holder, or that may involve the Trustee in
personal liability; provided that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent
with such direction; and provided further that this provision
shall not affect the rights of the Trustee set forth in Section
7.01(d).
SECTION 6.06 Limitation on Suits.
A Holder may not pursue any remedy with respect to
this Indenture or the Notes unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
<PAGE>
(2) Holders of at least 25% in principal amount of the
outstanding Notes make a written request to the Trustee to
pursue the remedy;
(3) such Holders offer to the Trustee indemnity in its
sole discretion satisfactory to the Trustee against any
loss, liability or expense to be incurred in compliance
with such request;
(4) the Trustee does not comply with the request
within 45 days after receipt of the request and the offer
of satisfactory indemnity; and
(5) during such 45-day period the Holders of a
majority in principal amount of the outstanding Notes do
not give the Trustee a direction which, in the opinion of
the Trustee, is inconsistent with the request.
A Holder may not use this Indenture to prejudice the
rights of another Holder or to obtain a preference or priority
over such other Holder.
SECTION 6.07 Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture,
the right of any Holder to receive payment of principal of and
interest on a Note, on or after the respective due dates
expressed in such Note, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08 Collection Suit by Trustee.
If an Event of Default in payment of principal or
interest specified in clause (1) or (2) of Section 6.01 occurs
and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against the Company or
any other obligor on the Notes for the whole amount of principal
and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest
at the rate set forth in Section 4.01 and such further amount as
shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and its
counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.09 Trustee May File Proofs of Claim.
<PAGE>
The Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the
reasonable expenses and disbursements of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section
7.07) and the Holders allowed in any judicial proceedings
relating to the Company or any other obligor upon the Notes, any
of their respective creditors or any of their respective property
and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such
claims and to distribute the same, and any Custodian in any such
judicial proceedings is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the
reasonable expenses and disbursements of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under
Section 7.07. The Company's payment obligations under this
Section 6.09 shall be secured in accordance with the provisions
of Section 7.07 hereunder. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting
the Notes or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 6.10 Priorities.
If the Trustee collects any money or property pursuant
to this Article Six, it shall pay out the money in the following
order:
First: to the Trustee for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the
Company directly without the Trustee, to Holders for their
collection costs;
Third: to Holders for amounts due and unpaid on the Notes
for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable
on the Notes for principal and interest, respectively; and
Fourth: to the Company or any other obligor on the Notes,
as their interests may appear, or as a court of competent
jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix
a record date and payment date for any payment to Holders
pursuant to this Section 6.10.
SECTION 6.11 Undertaking for Costs.
<PAGE>
In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of
more than 10% in principal amount of the outstanding Notes.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If a Default or an Event of Default has occurred
and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture and use the same degree
of care and skill in its exercise thereof as a prudent person
would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants
or obligations shall be implied in this Indenture against
the Trustee.
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein
contained, the Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01.
<PAGE>
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it
is proved that the Trustee was negligent in ascertaining
the pertinent facts.
(3) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(e) Whether or not herein expressly provided, every
provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this
Section 7.01.
(f) The Trustee shall not be liable for interest on
any money or assets received by it except as the Trustee may
agree in writing with the Company. Assets held in trust by the
Trustee need not be segregated from other assets except to the
extent required by law.
SECTION 7.02 Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate
any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate, an
Opinion of Counsel or both, which shall conform to Sections 11.04
and 11.05. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or
indirectly or by or through agents or attorneys and the Trustee
shall not be responsible for the misconduct or negligence of any
agent or attorney appointed with due care.
<PAGE>
(d) The Trustee shall not be liable for any action that it
takes or omits to take in good faith which it reasonably believes
to be authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, notice, request,
direction, consent, order, bond, debenture, or other paper or
document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled, upon
reasonable notice to the Company and to the extent reasonably
related to such facts or matters to examine the books, records,
and premises of the Company, personally or by agent or attorney
and to consult with the officers and representatives of the
Company, including the Company's accountants and attorneys.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Holders pursuant to the
provisions of this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the
Trustee in its sole discretion against the costs, expenses and
liabilities which may be incurred by it in compliance with such
request, order or direction.
(g) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties
hereunder.
SECTION 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity
may become the owner or pledgee of Notes and may otherwise deal
with the Company, any Subsidiary of the Company or their
respective Affiliates with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
The recitals contained herein and in the Notes shall
be taken as statements of the Company and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representation as to the validity or adequacy of this Indenture
or the Notes, and it shall not be accountable for the Company's
use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Company in this Indenture or
the Notes other than the Trustee's certificate of authentication.
SECTION 7.05 Notice of Default.
<PAGE>
If a Default or an Event of Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall
mail to each Holder notice of the uncured Default or Event of
Default within 90 days after such Default or Event of Default
occurs. Except in the case of a Default or an Event of Default in
payment of principal of, or interest on, any Note, including an
accelerated payment and the failure to make payment on the Change
of Control Payment Date pursuant to a Change of Control Offer or
on the Proceeds Purchase Date pursuant to a Net Proceeds Offer
and, except in the case of a failure to comply with Article Five
hereof, the Trustee may withhold such notice if and so long as
its Board of Directors, the executive committee of its Board of
Directors or a committee of its directors and/or Trust Officers
in good faith determines that withholding the notice is in the
interest of the Holders.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each May 15, the Trustee shall,
to the extent that any of the events described in TIA ss. 313(a)
occurred within the previous twelve months, but not otherwise,
mail to each Holder a brief report dated as of such date that
complies with TIA ss. 313(a). The Trustee also shall comply with
TIA ss.ss. 313(b), (c) and (d).
A copy of each report at the time of its mailing to
Holders shall be mailed to the Company and filed with the SEC and
each stock exchange, if any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the
Notes become listed on any stock exchange and the Trustee shall
comply with TIA ss. 313(d).
SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee and each Agent
from time to time reasonable compensation for their respective
services. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable fees
and expenses, including reasonable and documented out-of-pocket
expenses incurred or made by it in connection with the
performance of its duties under this Indenture. Such expenses
shall include the reasonable fees and expenses of the Trustee's
and such Agent's agents, consultants and counsel.
The Company shall indemnify the Trustee and each Agent
and their respective agents, employees, stockholders and
directors and officers for, and hold them harmless against, any
loss, liability or expense incurred by them except for such
actions to the extent caused by any negligence, bad faith or
willful misconduct on their part, arising out of or in connection
with the administration of this trust including the reasonable
costs and expenses of defending themselves against any claim or
liability in
<PAGE>
connection with the exercise or performance of any of their
rights, powers or duties hereunder. The Trustee and each Agent
shall notify the Company promptly of any claim asserted against
the Trustee or such Agent for which it may seek indemnity. At the
Trustee's or such Agent's, as the case may be, sole discretion,
the Company shall defend the claim and the Trustee or such Agent,
as the case may be, shall cooperate and may participate in the
defense; provided that any settlement of a claim shall be
approved in writing by the Trustee or such Agent, as the case may
be. Alternatively, the Trustee or such Agent, as the case may be,
may at its option have separate counsel of its own choosing and
the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without
its written consent. The Company need not reimburse any expense
or indemnify against any loss or liability to the extent incurred
by the Trustee through its negligence, bad faith or willful
misconduct.
To secure the Company's payment obligations in this
Section 7.07, the Trustee shall have a lien prior to the Notes on
all assets or money held or collected by the Trustee, in its
capacity as Trustee, except assets or money held in trust to pay
principal of or interest on particular Notes. The Trustee's right
to receive payment of any amounts due under this Section 7.07
shall not be subordinate to any other liability or indebtedness
of the Company (even though the Notes may be subordinate to such
other liability or indebtedness).
When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.01(6) or (7)
shall have occurred, such expenses and the compensation for such
services are intended to constitute expenses of administration
under any Bankruptcy Law; provided, however, that this shall not
affect the Trustee's rights as set forth in the preceding
paragraph or Section 6.10.
The Company's obligations under this Section 7.07 and
any lien arising hereunder shall survive the resignation or
removal of the Trustee, the discharge of the Company's
obligations pursuant to Article Eight or other termination of
this Indenture and any rejection or termination of this Indenture
under any Bankruptcy Law.
SECTION 7.08 Replacement of Trustee.
The Trustee may resign by so notifying the Company.
The Holders of a majority in principal amount of the outstanding
Notes may remove the Trustee by so notifying the Company and the
Trustee and may appoint a successor Trustee reasonably acceptable
to the Company. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
<PAGE>
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall
notify each Holder of such event and shall promptly appoint a
successor Trustee. Within one year after the successor Trustee
takes office, the Holders of a majority in principal amount of
the Notes may appoint a successor Trustee reasonably acceptable
to the Company to replace the successor Trustee appointed by the
Company.
A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company.
Immediately thereafter, the retiring Trustee shall transfer all
property held by it as Trustee to the successor Trustee, subject
to the lien provided in Section 7.07, the resignation or removal
of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in
principal amount of the outstanding Notes may petition any court
of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any
Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor
Trustee.
Notwithstanding replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07
shall continue for the benefit of the retiring Trustee.
SECTION 7.09 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all of its corporate
trust business to another corporation, the resulting, surviving
or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee; provided that such
corporation shall be otherwise qualified and eligible under this
Article Seven.
SECTION 7.10 Eligibility; Disqualification.
<PAGE>
This Indenture shall always have a Trustee who
satisfies the requirement of TIA ss.ss. 310(a)(1), (2) and (5).
The Trustee (or, in the case of a corporation included in a bank
holding company system, the related bank holding company) shall
have a combined capital and surplus of at least $50 million as
set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included
in a bank holding company system, the Trustee, independently of
such bank holding company, shall meet the capital requirements of
TIA ss. 310(a)(2). The Trustee shall comply with TIA ss. 310(b);
provided, however, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under
which other securities, or certificates of interest or
participation in other securities, of the Company are
outstanding, if the requirements for such exclusion set forth in
TIA ss. 310(b)(1) are met. The provisions of TIA ss. 310 shall
apply to the Company, as obligor of the Notes.
SECTION 7.11 Preferential Collection of Claims Against
Company.
The Trustee shall comply with TIA ss. 311(a),
excluding any creditor relationship listed in TIA ss. 311(b). A
Trustee who has resigned or been removed shall be subject to TIA
ss. 311(a) to the extent indicated therein. The provisions of TIA
ss. 311 shall apply to the Company, as obligor on the Notes.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01 Termination of the Company's Obligations.
The Company may terminate its obligations under the
Notes and this Indenture, except those obligations referred to in
the penultimate paragraph of this Section 8.01, if all Notes
previously authenticated and delivered (other than destroyed,
lost or stolen Notes which have been replaced or paid or Notes
for whose payment U.S. Legal Tender has theretofore been
deposited with the Trustee or the Paying Agent in trust or
segregated and held in trust by the Company and thereafter repaid
to the Company, as provided in Section 8.05) have been delivered
to the Registrar for cancellation and the Company has paid all
sums payable by it hereunder, or if:
(a) either (i) pursuant to Article Three, the Company shall
have given notice to the Trustee and each Paying Agent and mailed
a notice of redemption to each Holder of the redemption of all of
the Notes under arrangements satisfactory to the Trustee for the
giving of such notice or (ii) all Notes have otherwise become due
and payable hereunder;
<PAGE>
(b) the Company shall have irrevocably deposited or caused
to be deposited with the Trustee or a trustee satisfactory to the
Trustee, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, as trust funds in
trust solely for the benefit of the Holders for that purpose,
U.S. Legal Tender in such amount as is sufficient without
consideration of reinvestment of such interest, to pay principal
of, premium, if any, and interest on the outstanding Notes to
maturity or redemption; provided that the Trustee shall have been
irrevocably instructed to apply such U.S. Legal Tender to the
payment of said principal, premium, if any, and interest with
respect to the Notes and; provided, further, that from and after
the time of deposit, the money deposited shall not be subject to
the rights of holders of Senior Debt pursuant to the provisions
of Article Ten;
(c) no Default or Event of Default with respect to this
Indenture or the Notes shall have occurred and be continuing on
the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation
of, or constitute a default under, any other instrument to which
the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by
it hereunder; and
(e) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent providing for or relating to the
termination of the Company's obligations under the Notes and this
Indenture have been complied with. Such Opinion of Counsel shall
also state that such satisfaction and discharge does not result
in a default under the Credit Agreement (if then in effect) or
any other agreement or instrument then known to such counsel that
binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07,
8.05 and 8.06 shall survive until the Notes are no longer
outstanding pursuant to the last paragraph of Section 2.08. After
the Notes are no longer outstanding, the Company's obligations in
Sections 7.07, 8.05 and 8.06 shall survive.
After such delivery or irrevocable deposit, the
Trustee upon request shall acknowledge in writing the discharge
of the Company's obligations under the Notes and this Indenture
except for those surviving obligations specified above.
SECTION 8.02 Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board
Resolution, at any time, elect to have either paragraph (b) or
(c) below be applied to all outstanding Notes upon compliance
with the conditions set forth in Section 8.03.
<PAGE>
(b) Upon the Company's exercise under paragraph (a)
hereof of the option applicable to this paragraph (b), the
Company shall, subject to the satisfaction of the conditions set
forth in Section 8.03, be deemed to have been discharged from its
obligations with respect to all outstanding Notes on the date the
conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall
thereafter be deemed to be "outstanding" only for the purposes of
Section 8.04 hereof and the other Sections of this Indenture
referred to in (i) and (ii) below, and to have satisfied all its
other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall
execute proper instruments acknowledging the same), and Holders
of the Notes and any amounts deposited under Section 8.03 hereof
shall cease to be subject to any obligations to, or the rights
of, any holder of Senior Debt under Article Ten or otherwise,
except for the following provisions, which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Notes to receive solely from the trust
fund described in Section 8.04 hereof, and as more fully set
forth in such Section, payments in respect of the principal of
and interest on such Notes when such payments are due, (ii) the
Company's obligations with respect to such Notes under Article
Two and Section 4.02 hereof, (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (iv) this Article Eight.
Subject to compliance with this Article Eight, the Company may
exercise its option under this paragraph (b) notwithstanding the
prior exercise of its option under paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a)
hereof of the option applicable to this paragraph (c), the
Company shall, subject to the satisfaction of the conditions set
forth in Section 8.03 hereof, be released from its obligations
under the covenants contained in Sections 4.10 through 4.20 and
Article Five hereof with respect to the outstanding Notes on and
after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all
other purposes hereunder (it being understood that such Notes
shall not be deemed outstanding for accounting purposes) and
Holders of the Notes and any amounts deposited under Section 8.03
hereof shall cease to be subject to any obligations to, or the
rights of, any holder of Senior Debt under Article Ten or
otherwise. For this purpose, such Covenant Defeasance means that,
with respect to the outstanding Notes, the Company may omit to
comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any
such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a
Default or an Event or Default under Section 6.01(3) hereof, but,
except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under paragraph (a) hereof of the option
applicable to this paragraph (c), subject to
<PAGE>
the satisfaction of the conditions set forth in Section 8.03
hereof, Sections 6.01(3), 6.01(4) and 6.01(5) shall not
constitute Events of Default.
SECTION 8.03 Conditions to Legal Defeasance or Covenant
Defeasance.
The following shall be the conditions to the
application of either Section 8.02(b) or 8.02(c) hereof to the
outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders, U.S.
Legal Tender or U.S. Government Obligations which through
the scheduled payment of principal and interest in respect
thereof in accordance with their terms, will provide, not
later than one day before the due date of any scheduled
payment on the Notes, U.S. Legal Tender, 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, of such
principal or installment of principal of or interest on the
Notes; provided that the Trustee shall have received an
irrevocable written order from the Company instructing the
Trustee to apply or cause the Paying Agent to apply such
U.S. Legal Tender or the proceeds of such U.S. Government
Obligations to said payments with respect to the Notes;
(b) in the case of an election under Section 8.02(b)
hereof, the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of
this Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that,
and based thereon such Opinion of Counsel shall confirm
that, the Holders of the Notes will not recognize income,
gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance
had not occurred;
(c) in the case of an election under Section 8.02(c)
hereof, the Company shall have delivered to the Trustee an
Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the Notes will not recognize
income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
<PAGE>
(d) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit (other than a
Default or Event of Default resulting from the incurrence
of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article
Eight concurrently with such incurrence) or insofar as
Sections 6.01(6) and 6.01(7) hereof are concerned, at any
time in the period ending on the 91st day after the date of
such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of or constitute a
default under this Indenture or any other material
agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made
by the Company with the intent of preferring the Holders
over any other creditors of the Company or with the intent
of defeating, hindering, delaying or defrauding any other
creditors of the Company or others;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance
have been complied with; and
(h) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that (i) the trust funds
will not be subject to any rights of any holders of Senior
Debt, including, without limitation, those arising under
this Indenture, and (ii) assuming no intervening bankruptcy
or insolvency of the Company between the date of deposit
and the 91st day following the deposit and that no Holder
is an insider of the Company, after the 91st day following
the deposit, the trust funds will not be subject to the
effect of any applicable Bankruptcy Law.
SECTION 8.04 Application of Trust Money.
The Trustee or Paying Agent shall hold in trust U.S.
Legal Tender or U.S. Government Obligations deposited with it
pursuant to Article Eight, and shall apply the deposited U.S.
Legal Tender and the proceeds from U.S. Government Obligations in
accordance with this Indenture to the payment of principal of and
interest on the Notes. The Trustee shall be under no obligation
to invest said U.S. Legal Tender or U.S. Government Obligations
except as it may agree with the Company.
The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed
against the U.S. Legal Tender or U.S. Government Obligations
deposited pursuant to Section 8.03 hereof or the principal and
interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of
the outstanding Notes.
<PAGE>
Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall, or shall request the Paying
Agent to, deliver or pay to the Company from time to time upon
the Company's request any U.S. Legal Tender or U. S. Government
Obligations held by it as provided in Section 8.03 hereof which,
in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof
that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.05 Repayment to the Company.
Subject to Article Eight, the Trustee and the Paying
Agent shall promptly pay to the Company upon request any excess
U.S. Legal Tender or U.S. Government Obligations held by them at
any time and thereupon shall be relieved from all liability with
respect thereto. The Trustee and the Paying Agent shall pay to
the Company upon request any money held by them for the payment
of principal or interest that remains unclaimed for two years;
provided that the Trustee or such Paying Agent, before being
required to make any payment, may at the expense of the Company
cause to be published once in a newspaper of general circulation
in the City of New York or mail to each Holder entitled to such
money notice that such money remains unclaimed and that after a
date specified therein which shall be at least 30 days from the
date of such publication or mailing any unclaimed balance of such
money then remaining will be repaid to the Company. After payment
to the Company, Holders entitled to such money must look to the
Company for payment as general creditors unless an applicable law
designates another Person to whom such Holders may look.
SECTION 8.06 Reinstatement.
If the Trustee or Paying Agent is unable to apply any
U.S. Legal Tender or U.S. Government Obligations in accordance
with Article Eight by reason of any legal proceeding or by reason
of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application,
the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred
pursuant to Article Eight until such time as the Trustee or
Paying Agent is permitted to apply all such U.S. Legal Tender or
U.S. Government Obligations in accordance with Article Eight;
provided that if the Company has made any payment of interest on
or principal of any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the
Holders of such Notes to receive such payment from the U.S. Legal
Tender or U.S. Government Obligations held by the Trustee or
Paying Agent.
<PAGE>
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01 Without Consent of Holders.
The Company and Holdings, each when authorized by a
Board Resolution, and the Trustee, together, may amend or
supplement this Indenture or the Notes without notice to or
consent of any Holder:
(1) to cure any ambiguity herein, or to correct or
supplement any provision hereof which may be inconsistent
with any other provision hereof or to add any other
provisions with respect to matters or questions arising
under this Indenture; provided that such actions shall not
adversely affect the interests of the Holders of Notes in
any material respect;
(2) to comply with Article Five;
(3) to provide for uncertificated Notes in addition to
or in place of certificated Notes;
(4) to comply with any requirements of the SEC in
order to effect or maintain the qualification of this
Indenture under the TIA;
(5) to make any change that would provide any additional benefit or
rights to the Holders;
(6) to provide for issuance of the Exchange Notes,
which will have terms substantially identical in all
material respects to the Initial Notes (except that the
transfer restrictions contained in the Initial Notes will
be modified or eliminated, as appropriate), and which will
be treated together with any outstanding Initial Notes, as
a single issue of securities;
(7) to add a Guarantor pursuant to Section 4.19; or
(8) to make any other change that does not, in the
good faith judgment of the Trustee, adversely affect in any
material respect the rights of any Holders hereunder;
provided that the Company has delivered to the Trustee an Opinion
of Counsel stating that such amendment or supplement complies
with the provisions of this Section 9.01.
<PAGE>
In addition, without the consent of the Holders, the
Company and the Trustee may amend this Indenture to provide for
the assumption by a successor corporation, partnership, trust or
limited liability company of the obligations of the Company under
this Indenture as permitted by Article Five, to add further
Guarantees with respect to the Notes, to secure the Notes, to add
to the covenants of the Company for the benefit of the Holders or
to surrender any right or power conferred upon the Company by
this Indenture or the Notes.
SECTION 9.02 With Consent of Holders.
Subject to Section 6.07, the Company and Holdings,
each when authorized by a Board Resolution, and the Trustee,
together, upon receipt of the written consent of the Holder or
Holders of at least a majority of the aggregate outstanding
principal amount of the Notes, may amend or supplement this
Indenture or the Notes, without notice to any other Holders.
Subject to Section 6.07, the Holder or Holders of a majority in
aggregate outstanding principal amount of the Notes may waive
compliance by the Company with any provision of this Indenture or
the Notes without notice to any other Holder. Notwithstanding the
forgoing, no amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, shall, without the consent of each
Holder of each Note affected thereby:
(1) reduce the amount of Notes whose Holders must
consent to an amendment;
(2) reduce the rate of or change or have the effect of
changing the time for payment of interest, including
defaulted interest, on any Notes;
(3) reduce the principal of or change or have the
effect of changing the fixed maturity of any Notes, or
change the date on which any Notes may be subject to
redemption, or reduce the redemption price therefor;
(4) make any Notes payable in a currency other than
that stated in the Notes;
(5) make any change in provisions of this Indenture
protecting the right of each Holder to receive payment of
principal of and interest on such Note on or after the due
date thereof or to bring suit to enforce such payment, or
permitting Holders of a majority in principal amount of
Notes to waive Defaults or Events of Default, other than
ones with respect to the payment of principal of or
interest on the Notes;
(6) amend, modify, change or waive any provision of
this Section 9.02;
(7) amend, modify or change in any material respect the
obligation of the Company to make or consummate a Change
<PAGE>
of Control Offer in the event of a Change of Control or
modify any of the provisions or definitions with respect
thereto after a Change of Control has occurred; or
(8) modify Articles Ten or Twelve or the definitions
used in Articles Ten or Twelve to adversely affect the
Holders of the Notes in any material respect.
It shall not be necessary for the consent of the
Holders under this Section to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be
sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to the
Holders affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental
indenture.
SECTION 9.03 Effect on Senior Debt.
No amendment of this Indenture shall adversely affect
the rights of any holder of Senior Debt under Article Ten of this
Indenture, without the consent of such holder.
SECTION 9.04 Compliance with TIA.
Every amendment, waiver or supplement of this
Indenture or the Notes shall comply with the TIA as then in
effect.
SECTION 9.05 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes
effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any Note.
Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Note or portion
of such Note by written notice to the Trustee or the Company
received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not
theretofore revoked such consent) to the amendment, supplement or
waiver.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled
to consent to any amendment, supplement or waiver, which record
date shall be at least 10 days prior to the first solicitation of
such consent. If a record date is fixed, then notwithstanding the
last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to
revoke any consent
<PAGE>
previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or
effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes
effective, it shall bind every Holder, unless it makes a change
described in any of clauses (1) through (8) of Section 9.02, in
which case the amendment, supplement or waiver shall bind only
each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note; provided that any
such waiver shall not impair or affect the right of any Holder to
receive payment of principal of and interest on a Note on or
after the respective due dates expressed in such Note, or to
bring suit for the enforcement of any such payment on or after
such respective dates without the consent of such Holder.
SECTION 9.06 Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the
terms of a Note, the Trustee may require the Holder of such Note
to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Note about the changed terms and
return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Note shall
issue and the Trustee shall authenticate a new Note that reflects
the changed terms. Any such notation or exchange shall be made at
the sole cost and expense of the Company.
SECTION 9.07 Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or
waiver authorized pursuant to this Article Nine; provided that
the Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own
rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel and an Officers' Certificate
each complying with Section 13.04 and 13.05 and stating that the
execution of any amendment, supplement or waiver authorized
pursuant to this Article Nine is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the
Trustee.
SECTION 9.08 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under
this Article Nine, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Notes
theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
<PAGE>
ARTICLE TEN
SUBORDINATION
SECTION 10.01 Notes Subordinated to Senior Debt.
The Company covenants and agrees, and each Holder of
the Notes, by its acceptance thereof, likewise covenants and
agrees, that all Notes shall be issued subject to the provisions
of this Article Ten; and each Person holding any Note, whether
upon original issue or upon registration of transfer, assignment
or exchange thereof, accepts and agrees that the payment of all
Obligations on the Notes by the Company shall, to the extent and
in the manner herein set forth, be subordinated and junior in
right of payment to the prior payment in full in cash or Cash
Equivalents of all Obligations on or in respect of Senior Debt;
that the subordination is for the benefit of, and shall be
enforceable directly by, the holders of Senior Debt, and that
each holder of Senior Debt whether now outstanding or hereafter
created, incurred, assumed or guaranteed shall be deemed to have
acquired Senior Debt in reliance upon the covenants and
provisions contained in this Indenture and the Notes.
SECTION 10.02 No Payment on Notes in Certain Circumstances.
(a) If any default occurs and is continuing in the
payment when due, whether at maturity, upon redemption, by
declaration or otherwise, of any principal of, interest on,
unpaid drawings for letters of credit issued in respect of, or
regularly accruing fees with respect to, any Senior Debt, no
payment of any kind or character shall be made by, or on behalf
of, the Company or any other Person on its or their behalf with
respect to any Obligations on the Notes, or to acquire any of the
Notes for cash or property or otherwise. In addition, if any
other event of default occurs and is continuing with respect to
any Designated Senior Debt, as such event of default is defined
in the instrument creating or evidencing such Designated Senior
Debt, permitting the holders of such Designated Senior Debt then
outstanding to accelerate the maturity thereof and if the
Representative for the respective issue of Designated Senior Debt
gives written notice of the event of default to the Trustee and
each Paying Agent (a "Default Notice"), then, unless and until
all events of default have been cured or waived or have ceased to
exist or the Trustee and each Paying Agent receives notice
thereof from the Representative for the respective issue of
Designated Senior Debt terminating the Blockage Period (as
defined below), during the 179 days after the delivery of such
Default Notice (the "Blockage Period"), neither the Company nor
any other Person on its behalf shall (x) make any payment of any
kind or character with respect to any Obligations on the Notes
(other than payment of amounts already deposited in accordance
with the defeasance provisions of this Indenture) or (y) acquire
any of the Notes for cash or property or otherwise.
Notwithstanding anything herein to the contrary, in no event will
a Blockage Period extend beyond 180 days from the date the
payment on the Notes was due and only one such Blockage Period
may be commenced within any 360
<PAGE>
consecutive days. No event of default which existed or was
continuing on the date of the commencement of any Blockage Period
with respect to the Designated Senior Debt shall be, or be made,
the basis for the commencement of a second Blockage Period by the
Representative of such Designated Senior Debt whether or not
within a period of 360 consecutive days, unless such event of
default shall have been cured or waived for a period of not less
than 90 consecutive days (it being acknowledged that any
subsequent action or any breach of any financial covenants for a
period commencing after the date of commencement of such Blockage
Period that, in either case, would give rise to an event of
default pursuant to any provisions under which an event of
default previously existed or was continuing shall constitute a
new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing,
any payment shall be received by the Trustee, any Paying Agent or
any Holder when such payment is prohibited by Section 10.02(a),
such payment shall be held in trust for the benefit of, and shall
be forthwith paid over or delivered to, the holders of Senior
Debt (pro rata to such holders on the basis of the respective
amount of Senior Debt held by such holders) or their respective
Representatives, as their respective interests may appear for
application to the payment of such Senior Debt until all such
Senior Debt shall have been paid in full, after giving effect to
any concurrent payment or distribution or provision therefor to
the holders of such Senior Debt. The Trustee and each Paying
Agent shall be entitled to rely on information regarding amounts
then due and owing on the Senior Debt, if any, received from the
holders of Senior Debt (or their Representatives) or, if such
information is not received from such holders or their
Representatives, from the Company and only amounts included in
the information provided to the Trustee or any Paying Agent shall
be paid to the holders of Senior Debt.
Nothing contained in this Article Ten shall limit the
right of the Trustee or the Holders of Notes to take any action
to accelerate the maturity of the Notes pursuant to Section 6.02
or to pursue any rights or remedies hereunder; provided that all
Senior Debt thereafter due or declared to be due shall first be
paid in full in cash or Cash Equivalents before the Holders are
entitled to receive any payment of any kind or character with
respect to Obligations on the Notes.
SECTION 10.03 Payment Over of Proceeds upon
Dissolution, Etc.
(a) Upon any payment or distribution of assets of the
Company of any kind or character to creditors, whether in cash,
property or securities upon any total or partial liquidation,
dissolution, winding-up, reorganization, assignment for the
benefit of creditors or marshaling of assets of the Company or in
a bankruptcy, reorganization, insolvency, receivership or other
similar proceeding relating to the Company or its property,
whether voluntary or involuntary, all Obligations due or to
become due upon all Senior Debt shall first be paid in full in
cash or Cash Equivalents, or such payment duly provided for to
the satisfaction of the holders of Senior Debt, before any
payment or distribution of any kind or character is made on
account of any Obligations on the Notes, or for the acquisition
of any of the Notes for cash or property or otherwise. Upon any
such dissolution, winding-up, liquidation, reorganization,
receivership or similar proceeding, any payment or distribution
<PAGE>
of assets of the Company of any kind or character, whether in
cash, property or securities, to which the Holders of the Notes
would be entitled, except for the provisions hereof, shall be
paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders if received by them, directly to
the holders of Senior Debt (pro rata to such holders on the basis
of the respective amounts of Senior Debt held by such holders) or
their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Debt may
have been issued, as their respective interests may appear, for
application to the payment of Senior Debt remaining unpaid until
all such Senior Debt has been paid in full in cash or Cash
Equivalents after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of
Senior Debt.
(b) To the extent any payment of Senior Debt (whether
by or on behalf of the Company, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to
be fraudulent or preferential, set aside or required to be paid
to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then, if such
payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar
Person, the Senior Debt or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred.
(c) In the event that, notwithstanding the foregoing,
any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, shall be
received by any Holder when such payment or distribution is
prohibited by this Section 10.03(c), such payment or distribution
shall be held in trust for the benefit of, and shall be forthwith
paid over or delivered to, the holders of Senior Debt (pro rata
to such holders on the basis of the respective amount of Senior
Debt held by such holders) or their respective Representatives,
or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their
respective interests may appear, for application to the payment
of Senior Debt remaining unpaid until all such Senior Debt has
been paid in full in cash or Cash Equivalents, after giving
effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Debt.
(d) The consolidation of the Company with, or the
merger of the Company with or into, another Person or the
liquidation or dissolution of the Company following the
conveyance or transfer of all or substantially all of its assets,
to another Person upon the terms and conditions provided in
Article Five hereof and as long as permitted under the terms of
the Senior Debt shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section
10.03 if such other Person shall, as a part of such
consolidation, merger, conveyance or transfer, assume the
Company's obligations hereunder in accordance with Article Five
hereof.
SECTION 10.04 Payments May Be Paid Prior to Dissolution.
<PAGE>
Nothing contained in this Article Ten or elsewhere in
this Indenture shall prevent (i) the Company, except under the
conditions described in Sections 10.02 and 10.03, from making
payments at any time in respect of principal of and interest on
the Notes, or from depositing with the Trustee any moneys for
such payments, or (ii) in the absence of actual knowledge by the
Trustee or any Paying Agent that a given payment would be
prohibited by Section 10.02 or 10.03, the application by the
Trustee or such Paying Agent, as the case may be, of any moneys
deposited with it for the purpose of making such payments of
principal of, and interest on, the Notes to the Holders entitled
thereto unless at least two Business Days prior to the date upon
which such payment would otherwise become due and payable a Trust
Officer or officers of the Paying Agent, as the case may be,
shall have actually received the written notice provided for in
the second sentence of Section 10.02(a) or in Section 10.07
(provided that, notwithstanding the foregoing, such application
shall otherwise be subject to the provisions of the first
sentence of Section 10.02(a) and Section 10.03). The Company
shall give prompt written notice to the Trustee and each Paying
Agent of any dissolution, winding-up, liquidation or
reorganization of the Company.
SECTION 10.05 Subrogation.
Subject to the payment in full in cash or Cash
Equivalents of all Senior Debt, the Holders of the Notes shall be
subrogated to the rights of the holders of Senior Debt to receive
payments or distributions of cash, property or securities of the
Company applicable to the Senior Debt until the Notes shall be
paid in full; and, for the purposes of such subrogation, no such
payments or distributions to the holders of the Senior Debt by or
on behalf of the Company or by or on behalf of the Holders by
virtue of this Article Ten which otherwise would have been made
to the Holders shall, as between the Company and the Holders of
the Notes, be deemed to be a payment by the Company to or on
account of the Senior Debt, it being understood that the
provisions of this Article Ten are and are intended solely for
the purpose of defining the relative rights of the Holders of the
Notes, on the one hand, and the holders of the Senior Debt, on
the other hand.
SECTION 10.06 Obligations of the Company
Unconditional.
Nothing contained in this Article Ten or elsewhere in
this Indenture or in the Notes is intended to or shall impair, as
among the Company, its creditors other than the holders of Senior
Debt, and the Holders, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders the principal
of and any interest on the Notes as and when the same shall
become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders
and creditors of the Company other than the holders of the Senior
Debt, nor shall anything herein or therein prevent the Holder of
any Note or the Trustee on its behalf from exercising all
remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, in respect of
cash, property or securities of the Company received upon the
exercise of any such remedy.
<PAGE>
SECTION 10.07 Notice to Trustee and Paying Agents.
The Company shall give prompt written notice to the
Trustee and each Paying Agent of any fact known to the Company
which would prohibit the making of any payment to or by the
Trustee or any Paying Agent in respect of the Notes pursuant to
the provisions of this Article Ten. Regardless of anything to the
contrary contained in this Article Ten or elsewhere in this
Indenture, neither the Trustee nor any Paying Agent shall be
charged with knowledge of the existence of any default or event
of default with respect to any Senior Debt or of any other facts
which would prohibit the making of any payment to or by the
Trustee or any Paying Agent unless and until the Trustee or such
Paying Agent, as the case may be, shall have received notice in
writing from the Company, or from a holder of Senior Debt or a
Representative therefor, together with proof satisfactory to the
Trustee or such Paying Agent, as the case may be, of such holding
of Senior Debt or of the authority of such Representative, and,
prior to the receipt of any such written notice, the Trustee
shall be entitled to assume (in the absence of actual knowledge
to the contrary) that no such facts exist.
In the event that the Trustee or any Paying Agent
determines in good faith that any evidence is required with
respect to the right of any Person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this
Article Ten, the Trustee or such Paying Agent, as the case may
be, may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee or such Paying Agent, as the case may
be, as to the amounts of Senior Debt held by such Person, the
extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the
rights of such Person under this Article Ten, and if such
evidence is not furnished the Trustee or such Paying Agent, as
the case may be, may defer any payment to such Person pending
judicial determination as to the right of such Person to receive
such payment.
SECTION 10.08 Reliance on Judicial Order or Certificate
of Liquidating Agent.
Upon any payment or distribution of assets of the
Company referred to in this Article Ten, the Trustee, subject to
the provisions of Article Seven hereof, each Paying Agent and the
Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which any
insolvency, bankruptcy, receivership, dissolution, winding-up,
liquidation, reorganization or similar case or proceeding is
pending, or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, receiver, assignee for the
benefit of creditors, agent or other Person making such payment
or distribution, delivered to the Trustee or the Holders of the
Notes, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the
Senior Debt and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Article Ten.
<PAGE>
SECTION 10.09 Trustee's Relation to Senior Debt.
The Trustee, each Agent and any agent of the Company,
of the Trustee or any Agent shall be entitled to all the rights
set forth in this Article Ten with respect to any Senior Debt
which may at any time be held by it in its individual or any
other capacity to the same extent as any other holder of Senior
Debt and nothing in this Indenture shall deprive the Trustee, any
Agent or any such agent of any of its rights as such a holder.
With respect to the holders of Senior Debt, the
Trustee and each Agent undertakes to perform or to observe only
such of its covenants and obligations as are specifically set
forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be
read into this Indenture against the Trustee or any Agent.
Neither the Trustee nor any Agent shall be deemed to owe any
fiduciary duty to the holders of Senior Debt.
Whenever a distribution is to be made or a notice is
to be given to holders or owners of Senior Debt, the distribution
may be made and the notice may be given to their Representatives,
if any.
SECTION 10.10 Subordination Rights Not Impaired by
Acts or Omissions of the Company or Holders of Senior Debt.
No right of any present or future holders of any
Senior Debt to enforce subordination as provided herein shall at
any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Debt may, at any time
and from time to time, without the consent of or notice to the
Trustee, without incurring responsibility to the Trustee or the
Holders of the Notes and without impairing or releasing the
subordination provided in this Article Ten or the obligations
hereunder of the Holders of the Notes to the holders of the
Senior Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment
of, or renew or alter, Senior Debt, or otherwise amend or
supplement in any manner Senior Debt, or any instrument
evidencing the same or any agreement under which Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior
Debt; (iii) release any Person liable in any manner for the
payment or collection of Senior Debt; and (iv) exercise or
refrain from exercising any rights against the Company and any
other Person.
SECTION 10.11 Noteholders Authorize Trustee and Paying
Agent To Effectuate Subordination of Notes.
<PAGE>
Each Holder of Notes by its acceptance of them
authorizes and expressly directs the Trustee and each Paying
Agent on its behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Debt
and the Holders of Notes, the subordination provided in this
Article Ten, and appoints the Trustee and each Paying Agent its
attorney-in-fact for such purposes, including, in the event of
any dissolution, winding-up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of the Company, the filing
of a claim for the unpaid balance of its Notes and accrued
interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof
of debt in the form required in such proceeding prior to 30 days
before the expiration of the time to file such claim or claims,
then the holders of the Senior Debt or their Representatives are
hereby authorized to have the right to file and are hereby
authorized to file an appropriate claim for and on behalf of the
Holders of said Notes. Nothing herein contained shall be deemed
to authorize the Trustee or the holders of Senior Debt or their
Representatives to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of
any Holder thereof, or to authorize the Trustee or the holders of
Senior Debt or their Representatives to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 10.12 This Article Ten Not To Prevent Events of
Default.
The failure to make a payment on account of principal
of or interest on the Notes by reason of any provision of this
Article Ten will not be construed as preventing the occurrence of
an Event of Default.
SECTION 10.13 Trustee's Compensation Not Prejudiced.
Nothing in this Article Ten will apply to amounts due
to the Trustee pursuant to other sections in this Indenture.
ARTICLE ELEVEN
GUARANTEE OF HOLDINGS
SECTION 11.01 Unconditional Guarantee.
<PAGE>
Holdings hereby unconditionally guarantees (such
guarantee to be referred to herein as the "Guarantee") to each
Holder of a Note authenticated and delivered by the Trustee and
to the Trustee and its successors and assigns on behalf of such
Holder, the Notes or the obligations of the Company hereunder or
thereunder, that: (i) the principal of and interest on the Notes
will be promptly paid in full when due, subject to any applicable
grace period, whether at maturity, by acceleration or otherwise
and interest on the overdue principal, if any, and interest on
any interest, to the extent lawful, of the Notes and all other
obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof;
and (ii) in case of any extension of time of payment or renewal
of any Notes or of any such other obligations, the same will be
promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, subject to any applicable
grace period, whether at stated maturity, by acceleration or
otherwise. Holdings hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity
or enforceability of the Notes or this Indenture, the absence of
any action to enforce the same, any waiver or consent by any
Holder of the Notes with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance with might
otherwise constitute a legal or equitable discharge or defense of
a guarantor. Holdings hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all
demands whatsoever and covenants that this Guarantee will not be
discharged except by complete performance of the obligations
contained in the Notes, this Indenture and in this Guarantee. If
any Noteholder, the Trustee or any Paying Agent is required by
any court or otherwise to return to the Company, Holdings, or any
custodian, trustee, liquidator or other similar official acting
in relation to the Company or Holdings, any amount paid by the
Company or Holdings to the Trustee or such Paying Agent or
Noteholder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Holdings further
agrees that, as between Holdings, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed hereby may be accelerated as provided
in Article Six for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of
such obligations as provided in Article Six, such obligations
(whether or not due and payable) shall forthwith become due and
payable by Holdings for the purpose of this Guarantee.
SECTION 11.02 Subordination of Guarantee.
The obligations of Holdings to the Holders of the
Notes and to the Trustee on behalf of the Holders pursuant to the
Guarantee and this Indenture are expressly subordinate and
subject in right of payment to the prior payment in full of all
Guarantor Senior Debt of Holdings, to the extent and in the
manner provided in Article Twelve.
SECTION 11.03 Severability.
<PAGE>
In case any provision of this Guarantee shall be
invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 11.04 Release of Guarantee.
Upon (i) the release by the lenders under the Credit
Agreement and future refinancings thereof of all guarantees of
Holdings relating to such Indebtedness, or (ii) the sale or
disposition (whether by merger, stock purchase, asset sale or
otherwise) of Holdings (or all or substantially all of its
assets) to an entity which is not a Subsidiary of the Company and
which sale or disposition is otherwise in compliance with the
terms of this Indenture, Holdings shall be deemed released from
all obligations under this Article Eleven without any further
action required on the part of the Trustee or any Holder;
provided, however, that any such release shall occur only to the
extent that all obligations of Holdings under all of its
guarantees of such Indebtedness of the Company shall also be
released upon such release, sale or disposition.
The Trustee shall deliver an appropriate instrument
evidencing such release upon receipt of a request by the Company
accompanied by an Officers' Certificate certifying as to the
compliance with this Section 11.04.
SECTION 11.05 Waiver of Subrogation.
Until payment in full is made of the Notes and all
other obligations of the Company to the Holders or the Trustee on
behalf of the Holders hereunder and under the Notes, Holdings
hereby irrevocably waives any claim or other rights which it may
now or hereafter acquire against the Company that arise from the
existence, payment, performance or enforcement of Holdings'
obligations under the Guarantee of this Indenture, including
without limitation, any right of subrogation, reimbursement,
exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Notes against the Company,
whether or not such claim, remedy or right arises in equity, or
under contract, statute or common law, including, without
limitation, the right to take or receive from the Company,
directly or indirectly, in cash or other property or by set-off
or any other manner, payment or security on account of such claim
or other rights. If any amount shall be paid to Holdings in
violation of the preceding sentence and the Notes shall not have
been paid in full, such amount shall have been deemed to have
been paid to Holdings for the benefit of, and held in trust for
the benefit of, the Holders of the Notes, and shall forthwith be
paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Notes, whether matured or
unmatured, in accordance with the terms of this Indenture.
Holdings acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this
Indenture and that the waiver set forth in this Section 11.05 is
knowingly made in contemplation of such benefits.
SECTION 11.06 Execution of Guarantee.
<PAGE>
To evidence its guarantee to the Noteholders set forth
in this Article Eleven, Holdings hereby agrees to execute the
Guarantee in substantially the form included in Exhibits A and
Exhibit B, which shall be endorsed on such Note ordered to be
authenticated and delivered by the Trustee. Holdings hereby
agrees that its Guarantee set forth in this Article Eleven shall
remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guarantee. Each such
Guarantee shall be signed on behalf of Holdings by two Officers,
or an Officer and an Assistant Secretary prior to the
authentication of the Note on which it is endorsed, and the
delivery of such Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of such
Guarantee on behalf of Holdings. Such signatures upon the
Guarantee may be by manual or facsimile signature of such
officers and may be imprinted or otherwise reproduced on the
Guarantee, and in case any such officer who shall have signed the
Guarantee shall cease to be such officer before the Note on which
such Guarantee is endorsed shall have been authenticated and
delivered by the Trustee or disposed of by the Company, such Note
nevertheless may be authenticated and delivered or disposed of as
though the person who signed the Guarantee had not ceased to be
such Officer of Holdings.
SECTION 11.07 Waiver of Stay, Extension or Usury Laws.
Holdings covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any
stay or extension law or any usury law or other law that would
prohibit or forgive Holdings from performing its Guarantee as
contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may
lawfully do so) Holdings hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE OBLIGATIONS
SECTION 12.01 Guarantee Obligations Subordinated to Guarantor
Senior Debt of Holdings.
<PAGE>
Holdings covenants and agrees, and each Holder of the
Notes, by its acceptance thereof, likewise covenants and agrees,
that any payment of obligations by Holdings in respect of its
Guarantee (its "Guarantee Obligations") shall be made subject to
the provisions of this Article Twelve, and each Person holding
any Note, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that the
payment of all Guarantee Obligations by Holdings shall, to the
extent and in the manner herein set forth, be subordinated and
junior in right of payment to the prior payment in full in cash
or Cash Equivalents of all Obligations on the Guarantor Senior
Debt of Holdings, that the subordination is for the benefit of,
and shall be enforceable directly by, the holders of Guarantor
Senior Debt of Holdings, and that each holder of Guarantor Senior
Debt of Holdings whether now outstanding or hereafter created,
incurred, assumed or guaranteed shall be deemed to have acquired
Guarantor Senior Debt of Holdings in reliance upon the covenants
and provisions contained in this Indenture and the Notes.
SECTION 12.02 No Payment on Notes in Certain
Circumstances.
(a) If any default occurs and is continuing in the
payment when due, whether at maturity, upon redemption, by
declaration or otherwise, of any principal of, interest on,
unpaid drawings for letters of credit issued in respect of, or
regularly accruing fees with respect to, any Guarantor Senior
Debt of Holdings, no payment of any kind or character shall be
made by, or on behalf of, Holdings, or any other Person on its or
their behalf with respect to any Guarantee Obligations, or to
acquire any of the Notes for cash or property or otherwise. In
addition, if any other event of default occurs and is continuing
with respect to any Guarantor Senior Debt of Holdings, as such
event of default is defined in the instrument creating or
evidencing such Guarantor Senior Debt of Holdings, permitting the
holders of such Guarantor Senior Debt of Holdings then
outstanding to accelerate the maturity thereof and if the
Representative for the respective issue of Guarantor Senior Debt
of Holdings gives notice of the event of default to the Trustee
and each Paying Agent (a "Guarantor Default Notice"), then,
unless and until all events of default have been cured or waived
or have ceased to exist or the Trustee and each Paying Agent
receives notice thereof from the Representative for the
respective issue of Guarantor Senior Debt of Holdings terminating
the Guarantor Blockage Period (as defined below), during the 179
days after the delivery of such Guarantor Default Notice (the
"Guarantor Blockage Period"), neither Holdings nor any other
Person on its behalf shall (x) make any payment of any kind or
character with respect to any Guarantee Obligations or (y)
acquire any of the Notes for cash or property or otherwise.
Notwithstanding anything herein to the contrary, in no event will
a Guarantor Blockage Period extend beyond 180 days from the date
the payment on the Notes was due and only one such Guarantor
Blockage Period may be commenced within any 360 consecutive days.
No event of default which existed or was continuing on the date
of the commencement of any Guarantor Blockage Period with respect
to the Guarantor Senior Debt of Holdings shall be, or be made,
the basis for the commencement of a second Guarantor Blockage
Period by the Representative of such Guarantor Senior Debt of
Holdings whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for
a period of not less than 90
<PAGE>
consecutive days (it being acknowledged that any subsequent
action or any breach of any financial covenants for a period
commencing after the date of commencement of such Guarantor
Blockage Period that, in either case, would give rise to an event
of default pursuant to any provisions under which an event of
default previously existed or was continuing shall constitute a
new event of default for this purpose).
(b) In the event that, notwithstanding the foregoing,
any payment shall be received by the Trustee, any Paying Agent or
any Holder when such payment is prohibited by Section 12.02(a),
such payment shall be held in trust for the benefit of, and shall
be forthwith paid over or delivered to, the holders of Guarantor
Senior Debt of Holdings (pro rata to such holders on the basis of
the respective amount of Guarantor Senior Debt of Holdings held
by such holders) or their respective Representatives, as their
respective interests may appear. The Trustee and each Paying
Agent shall be entitled to rely on information regarding amounts
then due and owing on the Guarantor Senior Debt of Holdings, if
any, received from the holders of such Guarantor Senior Debt (or
their Representatives) or, if such information is not received
from such holders or their Representatives, from Holdings and
only amounts included in the information provided to the Trustee
and each Paying Agent shall be paid to the holders of Guarantor
Senior Debt of Holdings.
Nothing contained in this Article Twelve shall limit
the right of the Trustee or the Holders of Notes to take any
action to accelerate the maturity of the Notes pursuant to
Section 6.02 or to pursue any rights or remedies hereunder;
provided that all Guarantor Senior Debt of Holdings thereafter
due or declared to be due shall first be paid in full in cash or
Cash Equivalents before the Holders are entitled to receive any
payment of any kind or character with respect to Guarantee
Obligations.
SECTION 12.03 Payment Over of Proceeds upon
Dissolution, Etc.
(a) Upon any payment or distribution of assets of
Holdings of any kind or character to creditors, whether in cash,
property or securities, upon any total or partial liquidation,
dissolution, winding-up, reorganization, assignment for the
benefit of creditors or marshaling of assets of Holdings or in a
bankruptcy, reorganization, insolvency, receivership or other
similar proceeding relating to Holdings or its property, whether
voluntary or involuntary, all Obligations due or to become due
upon all Guarantor Senior Debt of Holdings shall first be paid in
full in cash or Cash Equivalents, or such payment duly provided
for to the satisfaction of the holders of Guarantor Senior Debt
of Holdings, before any payment or distribution of any kind or
character is made on account of any Guarantee Obligations, or for
the acquisition of any of the Notes for cash or property or
otherwise. Upon any such dissolution, winding-up, liquidation,
reorganization, receivership or similar proceeding, any payment
or distribution of assets of Holdings of any kind or character,
whether in cash, property or securities, to which the Holders of
the Notes or the Trustee under this Indenture would be entitled,
except for the provisions hereof, shall be paid by Holdings or by
any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the
Holders or by
<PAGE>
the Trustee under this Indenture if received by them, directly to
the holders of Guarantor Senior Debt of Holdings (pro rata to
such holders on the basis of the respective amounts of Guarantor
Senior Debt of Holdings held by such holders) or their respective
Representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Guarantor Senior Debt of
Holdings may have been issued, as their respective interests may
appear, for application to the payment of Guarantor Senior Debt
of Holdings remaining unpaid until all such Guarantor Senior Debt
of Holdings has been paid in full in cash or Cash Equivalents
after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of Guarantor Senior Debt
of Holdings.
(b) To the extent any payment of Guarantor Senior Debt
of Holdings (whether by or on behalf of Holdings, as proceeds of
security or enforcement of any right of setoff or otherwise) is
declared to be fraudulent or preferential, set aside or required
to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such
receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person, the Guarantor Senior Debt of Holdings or
part thereof originally intended to be satisfied shall be deemed
to be reinstated and outstanding as if such payment had not
occurred.
(c) In the event that, notwithstanding the foregoing,
any payment or distribution of assets of Holdings of any kind or
character, whether in cash, property or securities, shall be
received by any Holder when such payment or distribution is
prohibited by this Section 12.03(c), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Guarantor Senior Debt of Holdings
(pro rata to such holders on the basis of the respective amount
of Guarantor Senior Debt of Holdings held by such holders) or
their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Guarantor
Senior Debt of Holdings may have been issued, as their respective
interests may appear, for application to the payment of Guarantor
Senior Debt of Holdings remaining unpaid until all such Guarantor
Senior Debt of Holdings has been paid in full in cash or Cash
Equivalents, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such
Guarantor Senior Debt of Holdings.
(d) The consolidation of Holdings with, or the merger
of Holdings with or into, another Person or the liquidation or
dissolution of Holdings following the conveyance or transfer of
all or substantially all of its assets, to another Person upon
the terms and conditions provided in Article Five hereof and as
long as permitted under the terms of the Guarantor Senior Debt of
Holdings shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section
12.03 if such other Person shall, as a part of such
consolidation, merger, conveyance or transfer, assume Holdings'
obligations hereunder in accordance with Article Five hereof.
SECTION 12.04 Payments May Be Paid Prior to
Dissolution.
<PAGE>
Nothing contained in this Article Twelve or elsewhere
in this Indenture shall prevent (i) Holdings, except under the
conditions described in Sections 12.02 and 12.03, from making
payments at any time in respect of Guarantee Obligations, or from
depositing with the Trustee any moneys for such payments, or (ii)
in the absence of actual knowledge by the Trustee or any Paying
Agent that a given payment would be prohibited by Section 12.02
or 12.03, the application by the Trustee or such Paying Agent, as
the case may be, of any moneys deposited with it for the purpose
of making such payments of principal of, and interest on,
Guarantee Obligations to the Holders entitled thereto unless at
least two Business Days prior to the date upon which such payment
would otherwise become due and payable a Trust Officer or officer
of the Paying Agent, as the case may be, shall have actually
received the written notice provided for in the second sentence
of Section 12.02(a) or in Section 12.07 (provided that,
notwithstanding the foregoing, such application shall otherwise
be subject to the provisions of the first sentence of Section
12.02(a) and Section 12.03). Holdings shall give prompt written
notice to the Trustee and each Paying Agent of any dissolution,
winding-up, liquidation or reorganization of Holdings.
SECTION 12.05 Subrogation.
Subject to the payment in full in cash or Cash
Equivalents of all Guarantor Senior Debt of Holdings, the Holders
of the Guarantee Obligations shall be subrogated to the rights of
the holders of Guarantor Senior Debt of Holdings to receive
payments or distributions of cash, property or securities of
Holdings applicable to the Guarantor Senior Debt of Holdings
until the Guarantee Obligations shall be paid in full; and, for
the purposes of such subrogation, no such payments or
distributions to the holders of the Guarantor Senior Debt of
Holdings by or on behalf of Holdings or by or on behalf of the
Holders by virtue of this Article Twelve which otherwise would
have been made to the Holders shall, as between Holdings and the
Holders of the Guarantee Obligations, be deemed to be a payment
by Holdings to or on account of the Guarantor Senior Debt of
Holdings, it being understood that the provisions of this Article
Twelve are and are intended solely for the purpose of defining
the relative rights of the Holders of the Guarantee Obligations,
on the one hand, and the holders of the Guarantor Senior Debt of
Holdings, on the other hand.
SECTION 12.06 Obligations of Holdings Unconditional.
<PAGE>
Nothing contained in this Article Twelve or elsewhere
in this Indenture or in the Notes is intended to or shall impair,
as among Holdings, its creditors other than the holders of
Guarantor Senior Debt of Holdings, and the Holders, the
obligation of Holdings, which is absolute and unconditional, to
pay the Guarantee Obligations to the Holders as and when the same
shall become due and payable in accordance with their terms, or
is intended to or shall affect the relative rights of the Holders
and creditors of Holdings other than the holders of the Guarantor
Senior Debt of Holdings, nor shall anything herein or therein
prevent the Holder of any Note or the Trustee on its behalf from
exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any,
in respect of cash, property or securities of Holdings received
upon the exercise of any such remedy.
SECTION 12.07 Notice to Trustee and Paying Agents.
Holdings shall give prompt written notice to the
Trustee and each Paying Agent of any fact known to Holdings which
would prohibit the making of any payment to or by the Trustee in
respect of the Notes pursuant to the provisions of this Article
Twelve. Regardless of anything to the contrary contained in this
Article Twelve or elsewhere in this Indenture, neither the
Trustee nor any Paying Agent shall be charged with knowledge of
the existence of any default or event of default with respect to
any Guarantor Senior Debt of Holdings or of any other facts which
would prohibit the making of any payment to or by the Trustee or
any Paying Agent unless and until the Trustee or such Paying
Agent, as the case may be, shall have received notice in writing
from Holdings, or from a holder of Guarantor Senior Debt of
Holdings or a Representative therefor, together with proof
satisfactory to the Trustee or such Paying Agent, as the case may
be, of such holding of Guarantor Senior Debt of Holdings or of
the authority of such Representative, and, prior to the receipt
of any such written notice, the Trustee shall be entitled to
assume (in the absence of actual knowledge to the contrary) that
no such facts exist.
In the event that the Trustee or any Paying Agent
determines in good faith that any evidence is required with
respect to the right of any Person as a holder of Guarantor
Senior Debt of Holdings to participate in any payment or
distribution pursuant to this Article Twelve, the Trustee or such
Paying Agent, as the case may be, may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee or
such Paying Agent, as the case may be, as to the amounts of
Guarantor Senior Debt of Holdings held by such Person, the extent
to which such Person is entitled to participate in such payment
or distribution and any other facts pertinent to the rights of
such Person under this Article Twelve, and if such evidence is
not furnished, the Trustee or such Paying Agent, as the case may
be, may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such
payment.
SECTION 12.08 Reliance on Judicial Order or Certificate
of Liquidating Agent.
<PAGE>
Upon any payment or distribution of assets of Holdings
referred to in this Article Twelve, the Trustee, subject to the
provisions of Article Seven hereof, such Paying Agent and the
Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which any
insolvency, bankruptcy, receivership, dissolution, winding-up,
liquidation, reorganization or similar case or proceeding is
pending, or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, receiver, assignee for the
benefit of creditors, agent or other Person making such payment
or distribution, delivered to the Trustee or the Holders of the
Notes, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of the
Guarantor Senior Debt of Holdings and other Indebtedness of
Holdings, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Twelve.
SECTION 12.09 Trustee's Relation to Guarantor Senior
Debt of Holdings.
The Trustee, each Agent and any agent of Holdings, the
Trustee or any Agent shall be entitled to all the rights set
forth in this Article Twelve with respect to any Guarantor Senior
Debt of Holdings which may at any time be held by it in its
individual or any other capacity to the same extent as any other
holder of Guarantor Senior Debt of Holdings and nothing in this
Indenture shall deprive the Trustee, any Agent or any such agent
of any of its rights as such a holder.
With respect to the holders of Guarantor Senior Debt
of Holdings, the Trustee and each Agent undertakes to perform or
to observe only such of its covenants and obligations as are
specifically set forth in this Article Twelve, and no implied
covenants or obligations with respect to the holders of Guarantor
Senior Debt of Holdings shall be read into this Indenture against
the Trustee. Neither the Trustee nor any Agent shall be deemed to
owe any fiduciary duty to the holders of Guarantor Senior Debt of
Holdings.
Whenever a distribution is to be made or a notice is
to be given to holders or owners of Guarantor Senior Debt of
Holdings, the distribution may be made and the notice may be
given to their Representatives, if any.
SECTION 12.10. Subordination Rights Not Impaired by Acts or
Omissions of Holdings or Holders of Guarantor Senior Debt of Holdings.
No right of any present or future holders of any
Guarantor Senior Debt of Holdings to enforce subordination as
provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of Holdings or
by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by Holdings with the terms of this
Indenture, regardless of any knowledge thereof which any such
holder may have or otherwise be charged with.
<PAGE>
Without in any way limiting the generality of the
foregoing paragraph, the holders of Guarantor Senior Debt of
Holdings may, at any time and from time to time, without the
consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and
without impairing or releasing the subordination provided in this
Article Twelve or the obligations hereunder of the Holders of the
Notes to the holders of the Guarantor Senior Debt of Holdings, do
any one or more of the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or
alter, Guarantor Senior Debt of Holdings, or otherwise amend or
supplement in any manner Guarantor Senior Debt of Holdings, or
any instrument evidencing the same or any agreement under which
Guarantor Senior Debt of Holdings is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Guarantor Senior Debt of
Holdings; (iii) release any Person liable in any manner for the
payment or collection of Guarantor Senior Debt of Holdings; and
(iv) exercise or refrain from exercising any rights against
Holdings and any other Person.
SECTION 12.11. Noteholders Authorize Trustee and Paying
Agent To Effectuate Subordination of Notes.
Each Holder of Notes by its acceptance of them
authorizes and expressly directs the Trustee and each Paying
Agent on its behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Guarantor
Senior Debt of Holdings and the Holders of Notes, the
subordination provided in this Article Twelve, and appoints the
Trustee and each Paying Agent its attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up,
liquidation or reorganization of Holdings (whether in bankruptcy,
insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors or otherwise)
tending towards liquidation of the business and assets of
Holdings, the filing of a claim for the unpaid balance of its
Notes and accrued interest in the form required in those
proceedings.
If the Trustee does not file a proper claim or proof
of debt in the form required in such proceeding prior to 30 days
before the expiration of the time to file such claim or claims,
then the holders of the Guarantor Senior Debt of Holdings or
their Representatives are hereby authorized to have the right to
file and are hereby authorized to file an appropriate claim for
and on behalf of the Holders of said Notes. Nothing herein
contained shall be deemed to authorize the Trustee or the holders
of Guarantor Senior Debt of Holdings or their Representatives to
authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder
thereof, or to authorize the Trustee or the holders of Guarantor
Senior Debt of Holdings or their Representatives to vote in
respect of the claim of any Holder in any such proceeding.
<PAGE>
SECTION 12.12. This Article Twelve Not To Prevent Events of Default.
The failure to make a payment on account of Guarantee
Obligations by reason of any provision of this Article Twelve
will not be construed as preventing the occurrence of an Event of
Default.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01 TIA Controls.
If any provision of this Indenture limits, qualifies,
or conflicts with another provision which is required to be
included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02 Notices.
Any notices or other communications required or
permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by commercial
courier service, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
if to the Company or Holdings:
Del Monte Corporation
and
Del Monte Foods Company
One Market Street
San Francisco, California 94119
Attn: Thomas E. Gibbons
Senior Vice President and Treasurer
Telephone No.: (415) 247-3336
Facsimile No.: (415) 247-3339
<PAGE>
with a copy to:
Del Monte Corporation
and
Del Monte Foods Company
One Market Street
San Francisco, California 94119
Attn: William R. Sawyers
Vice President, Legal Affairs
and Secretary
Telephone No.: (415) 247-3262
Facsimile No.: (415) 247-3263
and a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attn: Paul J. Shim, Esq.
Telephone No.: (212) 225-2000
Facsimile No: (212) 225-3999
if to the Trustee:
Marine Midland Bank
140 Broadway
New York, New York 10005
Attn: Corporate Trust Department
Telephone No.: (212) 658-6564
Facsimile No.: (212) 658-6425
<PAGE>
if to the Paying Agent or Registrar:
Bankers Trust Company
4th Floor
4 Albany Street
New York, New York 10006
Attn: Corporate Market Services
Telephone No.: (212) 250-6382
Facsimile No.: (212) 250-6392
Each of the Company, Holdings, the Trustee and the
Paying Agent by written notice to each other such Person may
designate additional or different addresses for notices to such
Person. Any notice or communication to the Company, Holdings, the
Trustee and the Paying Agent shall be deemed to have been given
or made as of the date so delivered if personally delivered; when
receipt is confirmed if delivered by commercial courier service;
when receipt is acknowledged, if faxed; and five (5) calendar
days after mailing if sent by registered or certified mail,
postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the
addressee).
In the event any additional Guarantors are added
pursuant to Section 4.19, this Section 13.02 shall be
supplemented to provide for delivery of any notices or
communications described herein to each such Guarantor.
Any notice or communication mailed to a Holder shall
be mailed to him by first class mail or other equivalent means at
his address as it appears on the registration books of the
Registrar and shall be sufficiently given to him if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Holder
or any defect in it shall not affect its sufficiency with respect
to other Holders. If a notice or communication is mailed in the
manner provided above, it is duly given, whether or not the
addressee receives it.
SECTION 13.03 Communications by Holders with Other
Holders.
Holders may communicate pursuant to TIA ss. 312(b)
with other Holders with respect to their rights under this
Indenture or the Notes. The Company, the Trustee, the Registrar
and any other Person shall have the protection of TIA ss. 312(c).
SECTION 13.04 Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company or
Holdings to the Trustee to take any action under this Indenture,
the Company or Holdings, as the case may be, shall furnish to the
Trustee:
<PAGE>
(1) an Officers' Certificate, in form and substance
reasonably satisfactory to the Trustee, stating that, in
the opinion of the signers, all conditions precedent to be
performed by the Company, if any, provided for in this
Indenture relating to the proposed action have been
complied with; and
(2) an Opinion of Counsel stating that, in the opinion
of such counsel, all such conditions precedent to be
performed by the Company, if any, provided for in this
Indenture relating to the proposed action have been
complied with.
SECTION 13.05 Statements Required in Certificate or
Opinion.
Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture,
other than the Officers' Certificate required by Section 4.06,
shall include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or condition
and the definitions relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of such Person,
he or she has made such examination or investigation as is
reasonably necessary to enable him or her to express an
informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion
of each such Person, such condition or covenant has been
complied with.
SECTION 13.06 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance
with the Trustee's customary practices for action by or at a
meeting of Holders. Each of the Paying Agent or Registrar may
make reasonable rules in accordance with customary practices for
its functions.
SECTION 13.07 Legal Holidays.
A "Legal Holiday" used with respect to a particular
place of payment is a Saturday, a Sunday or a day on which
banking institutions in New York, New York or at such place of
payment are not required to be open. If a payment date is a Legal
Holiday at such place, payment may be made at such place on the
next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period.
<PAGE>
SECTION 13.08 Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH
OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE.
SECTION 13.09 No Adverse Interpretation of Other
Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or any of its
Subsidiaries. Any such indenture, loan or debt agreement may not
be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others.
A director, officer, employee, stockholder or
incorporator, as such, of the Company, any Guarantor or of the
Trustee shall not have any liability for any obligations of the
Company or any Guarantor under the Notes, the Guarantees or this
Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the
Notes.
SECTION 13.11. Successors.
All agreements of the Company and Holdings in this
Indenture and the Notes shall bind their respective successors.
All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 13.12. Duplicate Originals.
All parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them
together shall represent the same agreement.
SECTION 13.13. Severability.
In case any one or more of the provisions in this
Indenture or in the Notes shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity,
legality and enforceability of any such provision in every other
respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent
permitted by law.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the date first
written above.
Issuer:
DEL MONTE CORPORATION
By: /s/ William R. Sawyers
------------------------------
Name:
Title:
Guarantor:
DEL MONTE FOODS COMPANY
By: /s/ Thomas E. Gibbons
------------------------------
Name:
Title:
Trustee:
MARINE MIDLAND BANK,
as Trustee
By: /s/ Metin Cancer
------------------------------
Name: Metin Cancer
Title: Vice President
<PAGE>
ACKNOWLEDGED AND AGREED:
BANKERS TRUST COMPANY,
as Registrar, Paying Agent
and Authenticating Agent
By: /s/ Kevin Weeks
------------------------------
Name: Kevin Weeks
Title: Assistant Treasurer
<PAGE>
EXHIBIT A
CUSIP No.:
DEL MONTE CORPORATION
12-1/4% SENIOR SUBORDINATED NOTE DUE 2007
No. $
DEL MONTE CORPORATION, a New York corporation (the
"Company," which term includes any successor entity), for value
received promises to pay to or registered assigns, the principal
sum of Dollars, on April 15, 2007.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Reference is made to the further provisions of this
Note contained herein, which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note
to be signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed
hereto or imprinted hereon.
DEL MONTE CORPORATION
By:
Name:
Title:
By:
Name:
Dated: __________, Title:
Certificate of Authentication
This is one of the 12-1/4% Senior Subordinated Notes
due 2007 referred to in the within-mentioned Indenture.
MARINE MIDLAND BANK, or MARINE MIDLAND BANK,
as Trustee as Trustee
By:
Authorized Signatory By: BANKERS TRUST COMPANY,
as Authenticating Agent
By:
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
12-1/4% SENIOR SUBORDINATED NOTE DUE 2007
1. Interest. DEL MONTE CORPORATION, a New York
corporation (the "Company"), promises to pay interest on the
principal amount of this Note at the rate per annum shown above.
Interest on the Notes will accrue from the most recent date on
which interest has been paid or, if no interest has been paid,
from April 18, 1997. The Company will pay interest semi-annually
in arrears on each Interest Payment Date, commencing October 15,
1997. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
The Company shall pay interest on overdue principal
and on overdue installments of interest from time to time on
demand at the rate borne by the Notes plus 2% per annum and on
overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest
on the Notes (except defaulted interest) to the Persons who are
the registered Holders at the close of business on the Record
Date immediately preceding the Interest Payment Date even if the
Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes
to a Paying Agent to collect principal payments. The Company
shall pay principal and interest in money of the United States
that at the time of payment is legal tender for payment of public
and private debts ("U.S. Legal Tender"). However, the Company may
pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment
to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, Bankers Trust
Company, 4 Albany Street, New York, New York 10006, will act as
Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders.
4. Indenture and Guarantee. The Company issued the
Notes under an Indenture, dated as of April 18, 1997 (amended and
supplemented from time to time, the "Indenture"), among the
Company, Del Monte Foods Company ("Holdings") and Marine Midland
Bank, as Trustee (the "Trustee", which term includes any
successor Trustee under the Indenture). This Note is one of a
duly authorized issue of Initial Notes of the Company designated
as its 12-1/4% Senior Subordinated Notes due 2007 (the "Initial
Notes"). The Notes are limited in aggregate principal amount to
$150,000,000. The Notes include the Initial Notes and the
Exchange Notes, as defined below, issued in exchange for the
Initial Notes pursuant to the Indenture. The Initial Notes and
the Exchange Notes are treated as a single class of securities
under the Indenture. Capitalized terms herein are used as defined
in the Indenture unless otherwise defined herein. The terms of
the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect
on the date of the Indenture. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and
Holders of Notes are referred to the Indenture and said Act for a
statement of such terms, including the respective rights, duties
and immunities thereunder of the Company, the Guarantors, the
Trustee and the
<PAGE>
Holders of the Notes and the terms upon which the Notes are, and
are to be, authenticated and delivered. The Notes are general
unsecured obligations of the Company. Payment on each Note is
guaranteed on a senior subordinated basis by Holdings pursuant to
Article Eleven of the Indenture.
5. Subordination. The Notes are subordinated in right
of payment, in the manner and to the extent set forth in the
Indenture, to the prior payment in full in cash or Cash
Equivalents of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed. Each Holder by his acceptance
hereof agrees to be bound by such provisions and authorizes and
expressly directs the Trustee and the Paying Agent, on his
behalf, to take such action as may be necessary or appropriate to
effectuate the subordination provided for in the Indenture and
appoints the Trustee his attorney-in-fact for such purposes.
6. Redemption.
(a) Optional Redemption. The Notes will be redeemable,
at the Company's option, in whole at any time or in part from
time to time, on and after April 15, 2002, upon not less than 30
nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on April 15 of
the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
Year Percentage
2002.............................................. 106.313%
2003.............................................. 104.734%
2004.............................................. 103.156%
2005.............................................. 101.587%
2006 and thereafter .............................. 100.000%
(b) Optional Redemption Upon Public Equity Offerings.
At any time, or from time to time, on or prior to April 15, 2000,
the Company may, at its option, use the net cash proceeds of one
or more Public Equity Offerings (as defined in the Indenture) to
redeem up to 35% of the aggregate principal amount of Notes
originally issued at a redemption price equal to 112.625% of the
principal amount thereof plus, in each case, accrued interest to
the date of redemption; provided that at least 65% of the
principal amount of Notes originally issued remains outstanding
immediately after any such redemption.
In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Company shall make
such redemption not more than 120 days after the consummation of
any such Public Equity Offering.
(c) Optional Redemption Upon Change of Control. At any
time, on or prior to April 15, 2002, the Company may, at its
option, redeem the Notes, in whole, upon the occurrence of a
Change of Control (as defined in the Indenture), upon not less
than 30 nor more than 60 days prior notice (but in no event more
than 90 days after the occurrence of such Change
<PAGE>
of Control) at a redemption price equal to 100% of the principal
amount thereof plus the Applicable Premium (as defined below) as
of, and accrued and unpaid interest, if any, to the date of
redemption (the "Change of Control Redemption Date").
"Applicable Premium" means, with respect to a Note at
any Change of Control Redemption Date, the greater of (i) 1.0% of
the principal amount of such Note and (ii) the excess of (A) the
present value at such time of (1) the redemption price of such
Note at April 15, 2002, determined in accordance with Paragraph
6(a) above, plus (2) all required interest payments due on such
Note through April 15, 2002, computed using a discount rate equal
to the Treasury Rate plus 1.00% per annum, over (B) the principal
amount of such Note.
"Treasury Rate" means the yield to maturity at the
time of computation of U.S. Treasury securities with a constant
maturity (as compiled and published in the most recent Federal
Reserve Release H.15 (519) which has become publicly available at
least two Business Days prior to the Change of Control Redemption
Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) closest to the
period from the Change of Control Redemption Date to April 15,
2002; provided, however, that if the period from the Change of
Control Redemption Date to April 15, 2002, 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 April 15,
2002, is less than one year, the weekly average yield on actually
traded U.S. Treasury securities adjusted to a constant maturity
of one year shall be used.
7. Notice of Redemption. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address. Notes in denominations larger than
$1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for
the redemption of the Notes called for redemption shall have been
deposited with the Paying Agent for redemption on such Redemption
Date, then, unless the Company defaults in the payment of such
Redemption Price plus accrued and unpaid interest, if any, the
Notes called for redemption will cease to bear interest from and
after such Redemption Date and the only right of the Holders of
such Notes will be to receive payment of the Redemption Price
plus accrued and unpaid interest, if any.
8. Offers to Purchase. Sections 4.15 and 4.16 of the
Indenture provide that, after certain Asset Sales (as defined in
the Indenture) and upon the occurrence of a Change of Control (as
defined in the Indenture), and subject to further limitations
contained therein, the Company will make an offer to purchase
certain amounts of the Notes in accordance with the procedures
set forth in the Indenture.
9. Registration Rights. Pursuant to the Registration
Rights Agreement (as defined in the Indenture), the Company will
be obligated to consummate an exchange offer pursuant to which
the Holder of this Note shall have the right to exchange this
Note for the Company's Series B 12-1/4% Senior Subordinated Notes
due 2007 (the "Exchange Notes"),
<PAGE>
which have been registered under the Securities Act, in like
principal amount and having terms identical in all material
respects to the Initial Notes. The Holders of the Initial Notes
shall be entitled to receive certain additional interest payments
in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with
the terms of the Registration Rights Agreement.
10. Denominations; Transfer; Exchange. The Notes are
in registered form, without coupons, in denominations of $1,000
and integral multiples of $1,000. A Holder shall register the
transfer of or exchange Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges
payable in connection therewith as permitted by the Indenture.
The Registrar need not register the transfer of or exchange of
any Notes or portions thereof selected for redemption.
11. Persons Deemed Owners. The registered Holder of a
Note shall be treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of
principal or interest remains unclaimed for two years, the
Trustee and the Paying Agent will pay the money back to the
Company. After that, all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the
Company at any time deposits with the Trustee U.S. Legal Tender
or U.S. Government Obligations sufficient to pay the principal of
and interest on the Notes to redemption or maturity and complies
with the other provisions of the Indenture relating thereto, the
Company will be discharged from certain provisions of the
Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on
the Notes).
14. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of at least
a majority in aggregate principal amount of the Notes then
outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal
amount of the Notes then outstanding. Without notice to or
consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things,
cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated
Notes, or comply with Article Five of the Indenture or make any
other change that does not adversely affect in any material
respect the rights of any Holder of a Note.
15. Restrictive Covenants. The Indenture imposes
certain limitations on the ability of the Company and its
Restricted Subsidiaries to, among other things, incur additional
Indebtedness, make payments in respect of its Capital Stock or
certain Indebtedness, enter into transactions with Affiliates,
create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets or adopt a plan of liquidation.
Such limitations are
<PAGE>
subject to a number of important qualifications and exceptions.
The Company and Holdings must annually report to the Trustee on
compliance with such limitations.
16. Successors. When a successor assumes, in accordance
with the Indenture, all the obligations of its predecessor under
the Notes and the Indenture, the predecessor will be released
from those obligations.
17. Defaults and Remedies. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least
25% in aggregate principal amount of Notes then outstanding may
declare all the Notes to be due and payable in the manner, at the
time and with the effect provided in the Indenture. Holders of
Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Notes unless it has received
indemnity reasonably satisfactory to it. The Indenture permits,
subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of
any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines that
withholding notice is in their interest.
18. Trustee Dealings with Company. The Trustee under
the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with
the Company, its Subsidiaries or their respective Affiliates as
if it were not the Trustee.
19. No Recourse Against Others. No stockholder,
director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation of the
Company under the Notes or the Indenture or for any claim based
on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Note by accepting a Note waives and
releases all such liability. The waiver and release are part of
the consideration for the issuance of the Notes.
20. Authentication. This Note shall not be valid until
the Trustee or an Authenticating Agent manually signs the
certificate of authentication on this Note.
21. Governing Law. The Laws of the State of New York
shall govern this Note and the Indenture, without regard to
principles of conflict of laws.
22. Abbreviations and Defined Terms. Customary
abbreviations may be used in the name of a Holder of a Note or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian),
and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on
the Notes as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
<PAGE>
24. Indenture. Each Holder, by accepting a Note, agrees
to be bound by all of the terms and provisions of the Indenture,
as the same may be amended from time to time.
The Company will furnish to any Holder of a Note upon
written request and without charge a copy of the Indenture, which
has the text of this Note in larger type. Requests may be made
to: Vice President, Legal Affairs and Secretary, Del Monte
Corporation, One Market Street, San Francisco, California 94119.
<PAGE>
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
Del Monte Foods Company ("Holdings") has
unconditionally guaranteed on a senior subordinated basis (such
guarantee by Holdings being referred to herein as the
"Guarantee") (i) the due and punctual payment of the principal of
and interest on the Notes, whether at maturity, by acceleration
or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Notes, to the
extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee all in
accordance with the terms set forth in Article Eleven of the
Indenture and (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.
The obligations of Holdings to the Holders of Notes
and to the Trustee pursuant to the Guarantee and the Indenture
are expressly subordinated in right of payment to the prior
payment in full of all Guarantor Senior Debt (as defined in the
Indenture) of Holdings, to the extent and in the manner provided,
in Articles Eleven and Twelve of the Indenture, and reference is
hereby made to such Indenture for the precise terms of the
Guarantee therein made.
No stockholder, officer, director or incorporator, as
such, past, present or future, of Holdings shall have any
liability under the Guarantee by reason of his or its status as
such stockholder, officer, director or incorporator.
The Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Notes upon
which the Guarantee is noted shall have been executed by the
Trustee or an Authenticating Agent under the Indenture by the
manual signature of one of its authorized officers.
DEL MONTE FOODS COMPANY
By:
Name:
By:
Name:
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint , agent to transfer this Note
on the books of the Company. The agent may substitute another to
act for him.
Date: Signed:
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:
In connection with any transfer of this Note occurring
prior to the date which is the earlier of (i) the date of the
declaration by the SEC of the effectiveness of a registration
statement under the Securities Act of 1933, as amended (the
"Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the
date of the transfer) and (ii) April 18, 2000 (or such earlier
date as shall be specified in an Officers' Certificate to the
effect that the Notes are no longer Restricted Securities
delivered to the Trustee and the Registrar), the undersigned
confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer and that this
Note is being transferred:
<PAGE>
[Check One]
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A
under the Securities Act; or
(3) __ to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the
form of which letter can be obtained from the Trustee); or
(4) __ outside the United states to a "foreign person" in
compliance with Rule 904 of Regulation S under the
Securities Act; or
(5) __ pursuant to the exemption from registration provided
by Rule 144 under the Securities Act; or
(6) __ pursuant to an effective registration statement under the
Securities Act; or
(7) __ pursuant to another available exemption from the
registration requirements of the Securities Act.
Unless one of the boxes is checked, the Registrar will refuse to
register any of the Notes evidenced by this certificate in the
name of any Person other than the registered Holder thereof;
provided that if box (3), (4), (5) or (7) is checked, the Company
or the Registrar may require, prior to registering any such
transfer of the Notes, in its sole discretion, such legal
opinions, certifications (including an investment letter in the
case of box (3) or (4)) and other information as the Registrar or
the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act.
<PAGE>
If none of the foregoing boxes is checked, the Trustee or
Registrar shall not be obligated to register this Note in the
name of any Person other than the Holder hereof unless and until
the conditions to any such transfer of registration set forth
herein and in Section 2.17 of the Indenture shall have been
satisfied.
Dated: Signed:
(Sign exactly as name
appears on the other side
of this Security)
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is
purchasing this Note for its own account or an account with
respect to which it exercises sole investment discretion and that
it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act and is
aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule
144A or has determined not to request such information and that
it is aware that the transferor is relying upon the undersigned's
foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
NOTICE: To be executed by
an executive officer
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the
Indenture, check the appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note
purchased by the Company pursuant to Section 4.15 or Section 4.16
of the Indenture, state the amount you elect to have purchased:
$_____________________
Dated: __________________ ____________________________________
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in
every particular without alteration
or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee:______________________
<PAGE>
EXHIBIT B
CUSIP No.:
DEL MONTE CORPORATION
SERIES B 12-1/4% SENIOR SUBORDINATED NOTE DUE 2007
No. $
DEL MONTE CORPORATION, a New York corporation (the
"Company," which term includes any successor entity), for value
received promises to pay to or registered assigns,
the principal sum of Dollars, on April 15, 2007.
Interest Payment Dates: April 15 and October 15,
Record Dates: April 1 and October 1
Reference is made to the further provisions of this
Note contained herein, which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note
to be signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed
hereto or imprinted hereon.
DEL MONTE CORPORATION
By:
Name:
Title:
By:
Name:
Dated: Title:
Certificate of Authentication
This is one of the Series B 12-1/4% Senior
Subordinated Notes due 2007 referred to in the within-mentioned
Indenture.
MARINE MIDLAND BANK, or MARINE MIDLAND BANK,
as Trustee as Trustee
By:
Authorized Signatory By: BANKERS TRUST COMPANY,
as Authenticating Agent
By:
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
SERIES B 12-1/4% SENIOR SUBORDINATED NOTE DUE 2007
1. Interest. DEL MONTE CORPORATION, a New York
corporation (the "Company"), promises to pay interest on the
principal amount of this Note at the rate per annum
shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest
has been paid, from April 18, 1997. The Company will pay interest
semi-annually in arrears on each Interest Payment Date,
commencing October 15, 1997. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal
and on overdue installments of interest from time to time on
demand at the rate borne by the Notes plus 2% per annum and on
overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest
on the Notes (except defaulted interest) to the Persons who are
the registered Holders at the close of business on the Record
Date immediately preceding the Interest Payment Date even if the
Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes
to a Paying Agent to collect principal payments. The Company
shall pay principal and interest in money of the United States
that at the time of payment is legal tender for payment of public
and private debts ("U.S. Legal Tender"). However, the Company may
pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment
to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, Bankers Trust
Company, 4 Albany Street, New York, New York 1006, will act as
Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders.
4. Indenture and Guarantee. The Company issued the
Notes under an Indenture, dated as of April 18, 1997 (the
"Indenture"), among the Company, Del Monte Foods Company
("Holdings"), and Marine Midland Bank, as Trustee (the
"Trustee"). This Note is one of a duly authorized issue of
Exchange Notes of the Company designated as its Series B 12-1/4%
Senior Subordinated Notes due 2007 (the "Exchange Notes"). The
Notes are limited in aggregate principal amount to $150,000,000.
The Notes include the Initial Notes (the 12-1/4% Senior
Subordinated Notes due 2007) and the Exchange Notes, issued in
exchange for the Initial Notes pursuant to the Indenture. The
Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein
are used as defined in the Indenture unless otherwise defined
herein. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the
Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and said Act for a statement of them.
The Notes are general unsecured obligations of the Company.
Payment of each Note is guaranteed on a senior subordinated basis
by Holdings pursuant to Article Eleven of the Indenture.
<PAGE>
5. Subordination. The Notes are subordinated in right
of payment, in the manner and to the extent set forth in the
Indenture, to the prior payment in full in cash or Cash
Equivalents of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed. Each Holder by his acceptance
hereof agrees to be bound by such provisions and authorizes and
expressly directs the Trustee and the Paying Agent, on his
behalf, to take such action as may be necessary or appropriate to
effectuate the subordination provided for in the Indenture and
appoints the Trustee his attorney-in-fact for such purposes.
6. Redemption.
(a) Optional Redemption. The Notes will be redeemable,
at the Company's option, in whole at any time or in part from
time to time, on and after April 15, 2002, upon not less than 30
nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on April 15 of
the year set forth below, plus, in each case, accrued and unpaid
interest to the date of redemption:
Year Percentage
2002.............................................. 106.313%
2003.............................................. 104.734%
2004.............................................. 103.156%
2005.............................................. 101.578%
2006 and thereafter .............................. 100.000%
(b) Optional Redemption Upon Public Equity Offerings.
At any time, or from time to time, on or prior to April 15, 2000,
the Company may, at its option, use the net cash proceeds of one
or more Public Equity Offerings (as defined in the Indenture) to
redeem up to 35% of the aggregate principal amount of Notes
originally issued at a redemption price equal to 112.625% of the
principal amount thereof plus, in each case, accrued interest to
the date of redemption; provided that at least 65% of the
principal amount of Notes originally issued remains outstanding
immediately after any such redemption.
In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Company shall make
such redemption not more than 120 days after the consummation of
any such Public Equity Offering.
(c) Optional Redemption Upon Change of Control. At any
time, on or prior to April 15, 2002, the Company may, at its
option, redeem the Notes, in whole, upon the occurrence of a
Change of Control (as defined in the Indenture), upon not less
than 30 or more than 60 days prior notice (but in no event more
than 90 days after the occurrence of such Change of Control) at a
redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium (as defined below) as of, and accrued
and unpaid interest, if any, to the date of redemption (the
"Change of Control Redemption Date").
<PAGE>
"Applicable Premium" means, with respect to a Note at
any Change of Control Redemption Date, the greater of (i) 1.0% of
the principal amount of such Note and (ii) the excess of (A) the
present value at such time of (1) the redemption price of such
Note at April 15, 2002, determined in accordance with Paragraph
6(a), above, plus (2) all required interest payments due on such
Note through April 15, 2002, computed using a discount rate equal
to the Treasury Rate plus 1.0)% per annum, over (B) the principal
amount of such Note.
"Treasury Rate" means the yield to maturity at the
time of computation of U.S. Treasury securities with a constant
maturity (as compiled and published in the most recent Federal
Reserve Release H.15 (519) which has become publicly available at
least two Business Days prior to the Change of Control Redemption
Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) closest to the
period from the Change of Control Redemption Date to April 15,
2002; provided, however, that if the period from the Change of
Control Redemption Date to April 15, 2002, 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 United States
Treasury securities for which such yields are given, except that
if the period from the Change of Control Redemption Date to April
15, 2002, is less than one year, the weekly average yield on
actually traded U.S. Treasury securities adjusted to a constant
maturity of one year shall be used.
7. Notice of Redemption. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address. Notes in denominations larger than
$1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for
the redemption of the Notes called for redemption shall have been
deposited with the Paying Agent for redemption on such Redemption
Date, then, unless the Company defaults in the payment of such
Redemption Price plus accrued and unpaid interest, if any, the
Notes called for redemption will cease to bear interest from and
after such Redemption Date and the only right of the Holders of
such Notes will be to receive payment of the Redemption Price
plus accrued and unpaid interest, if any.
8. Offers to Purchase. Sections 4.15 and 4.16 of the
Indenture provide that, after certain Asset Sales (as defined in
the Indenture) and upon the occurrence of a Change of Control (as
defined in the Indenture), and subject to further limitations
contained therein, the Company will make an offer to purchase
certain amounts of the Notes in accordance with the procedures
set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and
integral multiples of $1,000. A Holder shall register the
transfer of or exchange Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges
payable in connection therewith as permitted by the Indenture.
The Registrar need not register the transfer of or exchange of
any Notes or portions thereof selected for redemption.
<PAGE>
10. Persons Deemed Owners. The registered Holder of a
Note shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal
or interest remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Company. After that,
all liability of the Trustee and such Paying Agent with respect
to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the
Company at any time deposits with the Trustee U.S. Legal Tender
or U.S. Government Obligations sufficient to pay the principal of
and interest on the Notes to redemption or maturity and complies
with the other provisions of the Indenture relating thereto, the
Company will be discharged from certain provisions of the
Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on
the Notes).
13. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of at least
a majority in aggregate principal amount of the Notes then
outstanding, and any existing Default or Event of Default or
noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal
amount of the Notes then outstanding. Without notice to or
consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things,
cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated
Notes, or comply with Article Five of the Indenture or make any
other change that does not adversely affect in any material
respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes
certain limitations on the ability of the Company and its
Restricted Subsidiaries to, among other things, incur additional
Indebtedness, make payments in respect of its Capital Stock or
certain Indebtedness, enter into transactions with Affiliates,
create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets or adopt a plan of liquidation.
Such limitations are subject to a number of important
qualifications and exceptions. The Company and Holdings must
annually report to the Trustee on compliance with such
limitations.
15. Successors. When a successor assumes, in accordance
with the Indenture, all the obligations of its predecessor under
the Notes and the Indenture, the predecessor will be released from
those obligations.
16. Defaults and Remedies. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least
25% in aggregate principal amount of Notes then outstanding may
declare all the Notes to be due and payable in the manner, at the
time and with the effect provided in the Indenture. Holders of
Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Notes unless it has received
indemnity reasonably satisfactory to it. The Indenture permits,
subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or
<PAGE>
power. The Trustee may withhold from Holders of Notes notice of
any continuing Default or Event of Default (except a Default in
payment of principal or interest) if it determines that
withholding notice is in their interest.
17. Trustee Dealings with Company. The Trustee under
the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with
the Company, its Subsidiaries or their respective Affiliates as
if it were not the Trustee.
18. No Recourse Against Others. No stockholder,
director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation of the
Company under the Notes or the Indenture or for any claim based
on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Note by accepting a Note waives and
releases all such liability. The waiver and release are part of
the consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until
the Trustee or an Authenticating Agent manually signs the certificate
of authentication on this Note.
20. Governing Law. The Laws of the State of New York
shall govern this Note and the Indenture, without regard to
principles of conflict of laws.
21. Abbreviations and Defined Terms. Customary
abbreviations may be used in the name of a Holder of a Note or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian),
and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on
the Notes as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees
to be bound by all of the terms and provisions of the Indenture, as
the same may be amended from time to time.
The Company will furnish to any Holder of a Note upon
written request and without charge a copy of the Indenture, which
has the text of this Note in larger type. Requests may be made
to: Vice President, Legal Affairs and Secretary, Del Monte
Corporation, One Market Street, San Francisco, California 94119.
<PAGE>
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
Del Monte Foods Company ("Holdings") has
unconditionally guaranteed on a senior subordinated basis (such
guarantee by Holdings being referred to herein as the
"Guarantee") (i) the due and punctual payment of the principal of
and interest on the Notes, whether at maturity, by acceleration
or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Notes, to the
extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee all in
accordance with the terms set forth in Article Eleven of the
Indenture and (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.
The obligations of Holdings to the Holders of Notes
and to the Trustee pursuant to the Guarantee and the Indenture
are expressly subordinated in right of payment to the prior
payment in full of all Guarantor Senior Debt (as defined in the
Indenture) of Holdings, to the extent and in the manner provided,
in Articles Eleven and Twelve of the Indenture, and reference is
hereby made to such Indenture for the precise terms of the
Guarantee therein made.
No stockholder, officer, director or incorporator, as
such, past, present or future, of Holdings shall have any
liability under the Guarantee by reason of his or its status as
such stockholder, officer, director or incorporator.
The Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Notes upon
which the Guarantee is noted shall have been executed by the
Trustee or an Authenticating Agent under the Indenture by the
manual signature of one of its authorized officers.
DEL MONTE FOODS COMPANY
By:
Name:
By:
Name:
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Dated:__________ Signed:
(Sign exactly as name
appears on the other side
of this Note)
Signature Guarantee:__________________
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by
the Company pursuant to Section 4.15 or Section 4.16 of the
Indenture, check the appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note
purchased by the Company pursuant to Section 4.15 or Section 4.16
of the Indenture, state the amount you elect to have purchased:
$_______________________
Dated: _________________ _____________________________________
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in
every particular without alteration
or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee:
<PAGE>
Exhibit 4.4
Conformed Copy
==============================================================================
CREDIT AGREEMENT
dated as of April 18, 1997
among
DEL MONTE CORPORATION,
VARIOUS FINANCIAL INSTITUTIONS,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent,
BANKERS TRUST COMPANY,
as Documentation Agent,
and
THE FIRST NATIONAL BANK OF BOSTON,
CITICORP USA, INC.,
GENERAL ELECTRIC CAPITAL CORPORATION
and
THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY,
as Co-Agents
Arranged by
BANCAMERICA SECURITIES, INC.
==============================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms....................................1
1.2 Other Interpretive Provisions...........................33
1.3 Accounting Principles...................................34
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments........................34
(a) The Term A Credit...................................34
(b) The Term B Credit...................................35
(c) The Revolving Credit................................35
2.2 Loan Accounts...........................................35
2.3 Procedure for Borrowing.................................35
2.4 Conversion and Continuation Elections...................36
2.5 Swingline Loans.........................................37
2.6 Termination or Reduction of Revolving Commitments.......40
2.7 Optional Prepayments....................................41
2.8 Mandatory Prepayments of Loans..........................41
2.9 Repayment...............................................44
(a) The Term A Credit...................................44
(b) The Term B Credit...................................44
(c) The Revolving Credit................................44
2.10 Interest................................................44
2.11 Fees....................................................45
(a) Arranger and Agency Fees............................45
(b) Commitment Fees.....................................45
2.12 Computation of Fees and Interest........................46
2.13 Payments by the Company.................................46
2.14 Payments by the Lenders to the Administrative Agent.....47
2.15 Sharing of Payments, Etc................................47
2.16 Limitation on Offshore Rate Option......................48
ARTICLE III
THE LETTERS OF CREDIT
3.1 The Letter of Credit Subfacility........................48
3.2 Issuance, Amendment and Extension of Letters of Credit..49
3.3 Risk Participations, Drawings and Reimbursements........51
3.4 Repayment of Participations.............................53
3.5 Role of the Issuing Lender..............................53
3.6 Obligations Absolute....................................54
3.7 Cash Collateral Pledge..................................55
3.8 Letter of Credit Fees...................................55
3.9 Uniform Customs and Practice............................56
3.10 Non-Dollar Letters of Credit............................56
3.11 Prior Letters of Credit.................................58
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes...................................................58
4.2 Illegality..............................................59
4.3 Increased Costs and Reduction of Return.................60
4.4 Funding Losses..........................................61
4.5 Inability to Determine Rates............................61
4.6 Certificates of Lenders.................................62
4.7 Substitution of Lenders.................................62
4.8 Survival................................................62
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions of Initial Credit Extensions.................62
(a) Credit Agreement and Notes.........................63
(b) Resolutions and Incumbency.........................63
(c) Organization Documents; Good Standing..............63
(d) DMFC Recapitalization..............................63
(e) Legal Opinions.....................................64
(f) Payment of Fees....................................64
(g) Security Agreements, etc...........................64
(h) Parent Guaranty....................................64
(i) Pledge Agreements..................................64
(j) Real Property......................................65
(k) Intellectual Property License......................65
(1) Certificate........................................65
(m) Other Documents....................................65
(n) Solvency Certificates..............................66
(o) Borrowing Base Certificate.........................66
(p) Environmental Indemnities..........................66
(q) Other Documents....................................66
5.2 Other Conditions to Initial Credit Extension............66
(a) Subordinated Notes.................................66
(b) Capitalization of TPG Acquisition..................66
5.3 Conditions to All Credit Extensions.....................66
(a) Notice, Application................................66
(b) Continuation of Representations and Warranties.....66
(c) No Existing Default................................67
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Corporate Existence and Power...........................67
6.2 Corporate Authorization; No Contravention...............67
6.3 Governmental Authorization..............................68
6.4 Binding Effect..........................................68
6.5 Litigation..............................................68
6.6 No Default..............................................68
6.7 ERISA Compliance........................................69
6.8 Use of Proceeds; Margin Regulations.....................69
6.9 Title to Properties.....................................69
6.10 Taxes...................................................69
6.11 Financial Condition.....................................70
6.12 Regulated Entities......................................70
6.13 No Burdensome Restrictions..............................71
6.14 Copyrights, Patents, Trademarks and Licenses, etc.......71
6.15 Subsidiaries............................................71
6.16 Insurance...............................................71
6.17 Solvency, etc...........................................71
6.18 Merger, Subordinated Notes, etc.........................72
6.19 Real Property...........................................72
6.20 Swap Obligations........................................72
6.21 Senior Indebtedness.....................................73
6.22 Environmental Warranties................................73
6.23 Full Disclosure.........................................74
ARTICLE VII
AFFIRMATIVE COVENANTS
7.1 Financial Statements....................................74
7.2 Certificates; Other Information.........................75
7.3 Notices.................................................76
7.4 Preservation of Corporate Existence, Etc................77
7.5 Maintenance of Property.................................77
7.6 Insurance...............................................77
7.7 Payment of Obligations..................................77
7.8 Compliance with Laws....................................78
7.9 Compliance with ERISA...................................78
7.10 Inspection of Property and Books and Records............78
7.11 Interest Rate Protection................................78
7.12 Environmental Covenant..................................78
7.13 Use of Proceeds.........................................79
7.14 Further Assurances......................................79
ARTICLE VIII
NEGATIVE COVENANTS
8.1 Limitation on Liens.....................................81
8.2 Disposition of Assets...................................83
8.3 Consolidations and Mergers..............................84
8.4 Loans and Investments...................................84
8.5 Limitation on Indebtedness..............................86
8.6 Transactions with Affiliates............................87
8.7 Use of Proceeds.........................................87
8.8 Contingent Obligations..................................87
8.9 Joint Ventures..........................................88
8.10 Lease Obligations.......................................88
8.11 Minimum Fixed Charge Coverage...........................88
8.12 Minimum EBITDA..........................................89
8.13 Minimum Adjusted Net Worth..............................89
8.14 Maximum Senior Debt Ratio...............................90
8.15 Maximum Total Debt Ratio................................90
8.16 Maximum Capital Expenditures............................90
8.17 Restricted Payments.....................................91
8.18 ERISA...................................................92
8.19 Limitations on Sale and Leaseback Transactions..........92
8.20 Limitation on Restriction of Subsidiary
Dividends and Distributions.............................92
8.21 Inconsistent Agreements.................................93
8.22 Change in Business......................................93
8.23 Amendments to Certain Documents.........................93
8.24 Fiscal Year.............................................93
8.25 Limitation on Issuance of Guaranty Obligations..........93
ARTICLE IX
EVENTS OF DEFAULT
9.1 Event of Default........................................94
(a) Non-Payment........................................94
(b) Representation or Warranty.........................94
(c) Specific Defaults..................................94
(d) Other Defaults.....................................94
(e) Cross-Default......................................95
(f) Insolvency; Voluntary Proceedings..................95
(g) Involuntary Proceedings............................95
(h) ERISA..............................................96
(i) Monetary Judgments.................................96
(j) Non-Monetary Judgments.............................96
(k) Change of Control..................................96
(1) Guarantor Defaults.................................96
(m) Collateral Documents, etc..........................96
(n) Merger.............................................97
9.2 Remedies................................................97
9.3 Rights Not Exclusive....................................97
ARTICLE X
THE AGENTS
10.1 Appointment and Authorization...........................97
10.2 Delegation of Duties....................................98
10.3 Liability of Administrative Agent.......................98
10.4 Reliance by Administrative Agent........................99
10.5 Notice of Default.......................................99
10.6 Credit Decision.........................................99
10.7 Indemnification of Agents...............................100
10.8 Administrative Agent in Individual Capacity.............100
10.9 Successor Administrative Agent..........................101
10.10 Withholding Tax........................................101
10.11 Collateral Matters.....................................103
ARTICLE XI
MISCELLANEOUS
11.1 Amendments and Waivers..................................105
11.2 Notices.................................................106
11.3 No Waiver; Cumulative Remedies..........................107
11.4 Costs and Expenses......................................107
11.5 Company Indemnification.................................108
11.6 Payments Set Aside......................................108
11.7 Successors and Assigns..................................109
11.8 Assignments, Participations, etc........................109
11.9 Confidentiality.........................................111
11.10 Set-off................................................111
11.11 Automatic Debits of Fees...............................112
11.12 Notification of Addresses, Lending Offices, Etc........112
11.13 Counterparts...........................................112
11.14 Severability...........................................112
11.15 No Third Parties Benefited.............................112
11.16 Governing Law and Jurisdiction.........................112
11.17 Waiver of Jury Trial...................................113
11.18 Entire Agreement.......................................113
SCHEDULES
PRICING SCHEDULE
SCHEDULE 1.1 COMMITMENTS, TOTAL PERCENTAGES, REVOLVING
PERCENTAGES, TERM A PERCENTAGES, TERM B
PERCENTAGES
SCHEDULE 2.8 ASSETS HELD FOR SALE
SCHEDULE 3.11 PRIOR LETTERS OF CREDIT
SCHEDULE 5.1 DEBT TO BE REPAID
SCHEDULE 5.1(J) REAL PROPERTY TO BE MORTGAGED
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 6.19 REAL PROPERTY
SCHEDULE 6.22 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-1 FORM OF PARENT GUARANTY
EXHIBIT F-2 FORM O 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
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 WILLIAM R. SAWYERS, GENERAL
COUNSEL TO THE COMPANY, PARENT AND MIKE MAC
EXHIBIT J-1 FORM OF OPINION OF CALIFORNIA COUNSEL TO THE
COMPANY
i
<PAGE>
EXHIBIT J-2 FORM OF OPINION OF MARYLAND COUNSEL TO PARENT
EXHIBIT J-3 FORM OF OPINION OF WASHINGTON COUNSEL TO THE
ADMINISTRATIVE AGENT
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
ii
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of April 18, 1997,
among DEL MONTE CORPORATION, the several financial institutions
from time to time party to this Agreement, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as administrative agent
for the Lenders, BANKERS TRUST COMPANY, as documentation agent
for the Lenders, and THE FIRST NATIONAL BANK OF BOSTON, CITICORP
USA, INC., GENERAL ELECTRIC CAPITAL CORPORATION and THE LONG-TERM
CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY, as co-agents for
the Lenders.
WHEREAS, the Lenders have agreed to make available to the
Company term loans and a revolving credit facility with a letter
of credit subfacility upon the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. 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.
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
<PAGE>
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.
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 BofA and any successor
administrative agent arising under Section 10.9, BofA and
any successor Issuing Lender, BofA and any successor
Swingline Lender, together with their respective Affiliates
(including the Arranger), 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.
Agents means the Administrative Agent, the
Documentation Agent and the Co- Agents.
Agreement means this 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.
Arranger means BancAmerica Securities, Inc., a
Delaware corporation.
Assets Held For Sale means assets of the Company and
its Subsidiaries listed on Schedule 2.8.
2
<PAGE>
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 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. ss.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 San Francisco, California 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 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 National Trust and Savings
Association, a national banking association.
Borrowing means a borrowing hereunder consisting of
(a) Revolving Loans, Term A Loans or Term B 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) 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) 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) plus (d)
an amount equal to (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
3
<PAGE>
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) 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 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 is to
be included in the Borrowing Base, deducted from the
Borrowing Base and such Inventory shall not, solely by
virtue of clause (3) or clause (4) of the definition of
"Eligible Inventory," be deemed ineligible).
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, 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 Company,
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
4
<PAGE>
replaced or restored or (ii) with awards of compensation
arising from the taking by eminent domain or condemnation
of the assets being replaced.
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 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
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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) the failure of the holders
of capital stock of Parent immediately after the Merger
(collectively with (A) in the case of TPG Partners, any
other investment partnership, limited liability company or
other entity established for investment purposes and
controlled by the principals of TPG Partners, (B) in the
case of any other shareholder of Parent that is a
corporation, any other entity that owns, directly or
indirectly, at least 51% of the equity securities of such
shareholder ("majority ownership") or that is under common
majority ownership with such shareholder, (C) in the case
of any other shareholder of Parent that is an investment
partnership, limited liability company or other entity
established for investment purposes, the partners, members
or other owners thereof or another investment partnership,
limited liability company or other entity established for
investment purposes and controlled by such partners,
members or other owners, or an employee co-investment
partnership and (D) in the case of any other shareholder of
Parent that is an individual, any successor by death or
divorce) to own not less than 51% of the issued and
outstanding capital stock of the Parent free and clear of
all Liens (other than Permitted Liens of the type described
in subsection 8.1(b), (c) or (g), (ii) 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) or (iii) while any Subordinated Notes or
Exchange Notes are outstanding, any "Change of Control" as
defined in the 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.
Closing Date means the date on which all conditions
precedent set forth in Sections 5.1 and 5.2 are satisfied
or waived by all Lenders in their sole discretion (or, in
the case of subsection 5.1(f), waived by the Person
entitled to receive the applicable payment).
Co-Agents means The First National Bank of Boston,
Citicorp USA, Inc., General Electric Capital Corporation
and The Long-Term Credit Bank of Japan, Ltd., Los Angeles
Agency in their capacities as co-agents for the Lenders.
Code means the Internal Revenue Code of 1986.
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Collateral means any property of Parent, the Company or any
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 each Lender, such Lender's
Revolving Commitment, Term A Commitment or Term B
Commitment, as applicable.
Commitment Fee Rate - see the Pricing Schedule.
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 - see subsection 5.1(i).
Compliance Certificate means a certificate
substantially in the form of Exhibit C.
Computation Period means, except as otherwise
expressly provided herein, any period of four consecutive
fiscal quarters and in any case ending on the last day of a
fiscal quarter.
Consolidated Net Income means, with respect to Parent
and its Subsidiaries for any period, the net income (or
loss) of Parent and its Subsidiaries on a consolidated
basis for such period.
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
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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 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.
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.
Credit Extension means (a) the making of any Loan
hereunder and (b) the Issuance of any Letter of Credit
hereunder.
Debt to be Repaid means all Indebtedness listed on
Schedule 5.1.
Designated Proceeds - see subsection 2.8(a).
DMFC Recapitalization means, collectively, the Merger,
the repayment of the Debt to be Repaid, the issuance of the
Subordinated Notes, the issuance of capital stock by TPG
Acquisition to certain investors (including TPG Partners),
and the dividend by the Company to Parent permitted by
subsection 8.17(f).
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<PAGE>
DMFC Recapitalization Documents means the Merger Agreement, the
Subordinated Indenture, the Subordinated Note Purchase
Agreement and the subscription agreement pursuant to which
certain investors agree to purchase capital stock of
Parent.
Documentation Agent means BTCo., in its capacity as
documentation agent for the Lenders.
Dollar Amount means, in relation to any Indebtedness
(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, for any Computation Period, the sum of
(a) Consolidated Net Income of Parent for such period
excluding, to the extent reflected in determining such
Consolidated Net Income, extraordinary gains and losses for
such period
plus,
(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) for such period, non-cash charges and losses from
sales of assets other than Inventory sold in the ordinary
course of business,
minus
(c) to the extent reflected in determining
Consolidated Net Income and without duplication, non-cash
credits and gains from sales of assets other than Inventory
sold in the ordinary course of business,
plus
(d) to the extent deducted in determining Consolidated
Net Income and without duplication, management incentive
payments in connection with the DMFC Recapitalization and
other fees and expenses in connection with the DMFC
Recapitalization.
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<PAGE>
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
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;
(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 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
10
<PAGE>
of the Uniform Commercial Code or as may be approved by the
Administrative Agent or Required 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 acceptable to
the Administrative Agent or 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
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 Closing 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 the
Company may grant exceptions to such credit limits
consistent with past practice and in the ordinary course of
business);
(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
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 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
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<PAGE>
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 their reasonable discretion 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 (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") or (iv) any fund that invests in
bank loans that is managed by the same investment adviser
as another Lender that is such a fund (provided such
assignee fund is 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));
(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
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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 for the first 60 days
following the Closing Date);
(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, Warehouseman's
Consents or other such agreements, instruments or documents
shall be required for the first 60 days following the
Closing Date);
(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. ss.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) discretion that it is unacceptable due to age, type,
category, quality, quantity and/or any other reason
whatsoever.
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.
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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
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
(a) EBITDA for such period,
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
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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 (other than
any such voluntary prepayments to the extent that the
same are applied during such period to the scheduled
unpaid principal installments of the Term Loans in
forward order of maturity pursuant to Section 2.7),
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, 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 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.
Exchange Act means the Securities Exchange Act of 1934.
Exchange Notes means the 12-1/4% Series B Senior
Subordinated Notes due April 15, 2007 of the Company to be
issued pursuant to the Subordinated Indenture in a
principal amount equal to the then outstanding principal
amount of the Subordinated Notes exchanged, as amended from
time to time in accordance with Section 8.23.
Excluded Taxes - see the definition of "Taxes."
Federal Funds Rate means, for any day, the rate set
forth in the weekly statistical release designated
H.15(519) as or any successor publication, published by the
Federal
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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 the Computation
Period most recently ended on or before such date, the
ratio of (a) EBITDA for such Computation Period to (b) the
sum of (i) Interest Expense for such Computation Period and
(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 B
Loans to the extent that such installments are refinanced
with Indebtedness maturing after, and having no mandatory
prepayments or sinking fund payments prior to, March 31,
2005 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); provided, however that
with respect to Computation Periods ending prior to March
31, 1998, Interest Expense and scheduled installments of
principal of the Term Loans shall be measured from the
period from April 1, 1997 through the end of any such
Computation Period and annualized as follows (x) with
respect to the Computation Period ending June 30, 1997,
Interest Expense and scheduled installments of principal on
the Term Loans during such Computation Period shall be
multiplied by four, (y) with respect to the Computation
Period ending September 28, 1997, Interest Expense and
scheduled installments of principal on the Term Loans
during such Computation Period shall be multiplied by two
and (z) with respect to the Computation Period ending
December 28, 1997, Interest Expense and scheduled
installments of principal on the Term Loans during such
Computation Period shall be multiplied by four-thirds.
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.
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.
Guarantor means Parent and each Subsidiary that from
time to time executes and delivers a counterpart of the
Subsidiary Guaranty.
Guaranty means the Parent Guaranty or the Subsidiary
Guaranty, as applicable.
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,
dangerous or toxic chemical, material or substance within
the meaning of any other Environmental Law.
Honor Date - see subsection 3.3(b).
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, 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
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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,
marshalling 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 O.
Interest Expense means for any period the consolidated
interest expense of Parent 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:
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(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 A Loan or a Term B 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
A Loans or Term B Loans, as applicable, unless the
aggregate principal amount of Term A Loans or Term B
Loans, as applicable, 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).
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.
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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 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 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.
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. For
purposes of
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making any determination with respect to Citicorp USA, Inc.
under Section 4.2 or 4.3, "Lender" shall be deemed to include Citibank.
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).
Loan Documents means this Agreement, any Notes, the
Fee Letter, the L/C-Related Documents, the Guaranties, 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 G, 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
21
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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.
Merger means the merger of TPG Acquisition with and
into Parent pursuant to the terms of the Merger Agreement.
Merger Agreement means the Agreement and Plan of
Merger, dated as of February 21, 1997, among TPG Partners,
TPG Acquisition and Parent, as amended and restated as of
April 14, 1997, and as amended from time to time in
accordance with Section 8.23.
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:
(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
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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; and
(b) with respect to any issuance of equity securities or
Other Debt, the aggregate cash proceeds received by
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).
Net Worth means Parent's consolidated stockholders'
equity (without giving effect to any decrease in retained
earnings of Parent caused by a dividend on the TPG
Acquisition Preferred Stock that is paid in kind) plus,
without duplication, the liquidation preference of all
outstanding TPG Acquisition Preferred Stock (without giving
effect to any increase in such TPG Acquisition preferred
Stock caused by a dividend on the TPG Acquisition Preferred
Stock that is paid in kind).
Non-Dollar Letter of Credit - see Section 3.10.
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
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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.
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.
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
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thereof) of such corporation and (b) for any foreign corporation,
the equivalent documents.
Other Debt means debt securities of Parent, the
Company and its Subsidiaries, other than as expressly
permitted by (i) Section 8.5 or, (ii) with respect to
Parent, the Parent Guaranty.
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 Maryland corporation.
Parent Guaranty means the guaranty, substantially in
the form of Exhibit F-1, which will be executed by Parent
on the Closing Date.
Parent Pledge Agreement - see subsection 5.1(i).
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.
Permitted Liens - see Section 8.1.
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 Company and Del Monte
Tropical Fruit Company, North America, each dated December
5, 1989, the Intellectual Property Security Agreement and
Assignment
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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 agreements 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;" 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.
Prior Financing Agreements - see Section 5.1.
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
Subordinated Indenture, and with terms no less advantageous
to the Lenders than the terms of the Subordinated
Indenture, as amended from time to time in accordance with
Section 8.23.
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Qualified Notes means subordinated notes of the Company
which shall not require scheduled payments of principal prior to
April 15, 2007, which shall not require cash interest payments
thereon at a rate in excess of 12-1/4% 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 8.23.
Qualified Refinancing means a refinancing of the
Subordinated Notes or the Exchange 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).
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(b) 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 A Lenders means, at any time, Term A
Lenders having an aggregate Term A Percentage of more than
50%.
Required Term B Lenders means, at any time, Term B
Lenders having an aggregate Term B 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
Authority, in each case applicable to or binding upon
Person or any of its property or to which such Person 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 or the president of the Company, or
any other officer having substantially the same authority
and responsibility or the chief financial officer, the
treasurer or the chief accounting officer of the Company,
or any other officer having substantially the same
authority and responsibility.
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Revolving Commitment means, as to any Lender, the
commitment of such Lender to make Revolving Loans pursuant to
subsection 2.1(c). The initial amount of each Revolving Lender's
Revolving Commitment 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(c).
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 the
Revolving Lenders' Revolving Commitments and (b) after the
termination of the Revolving Commitments, (x) amount of
such Lender's Revolving Loans is of (y) the aggregate
amount of all Revolving Loans of all Revolving Lenders.
Revolving Termination Date means the earlier to occur of:
(a) March 31, 2003; and
(b) the date on which the Revolving Commitments
terminate in accordance with the provisions of
this Agreement.
SEC means the Securities and Exchange Commission, or
any Governmental Authority succeeding to any of its
principal functions.
Security Agreement means either the Security Agreement
(Company and Parent) or the Subsidiary Security Agreement.
Security Agreement (Company and Parent) - see
subsection 5.1(g).
Senior Debt Ratio means for each Computation Period the ratio of
(i) the quotient of (A) the sum of the aggregate
outstanding principal amount of all Total Debt (other
than Subordinated Debt) as of the last day of each of
the last twelve fiscal months divided by (B) twelve
to
(ii) EBITDA for such Computation Period most recently
ended on or before such date;
provided, however, that (x) with respect to the Computation
Period ending June 30, 1997, clause (i) shall be the
quotient of (1) the sum of the aggregate outstanding
principal amount of all Total Debt (other than Subordinated
Debt) as of the last day of the last three fiscal months
divided by (2) three, (y) with respect to the Computation
Period ending
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September 28, 1997, clause (i) shall be the quotient of (1)
the sum of the aggregate outstanding principal amount of
all Total Debt (other than Subordinated Debt) as of the
last day of the last six fiscal months divided by (2) six
and (z) with respect to the Computation Period ending
December 28, 1997, clause (i) shall be the quotient of (1)
the sum of the aggregate outstanding principal amount of
all Total Debt (other than Subordinated Debt) as of the
last day of the last nine fiscal months divided by (2)
nine.
Standby Letter of Credit means any Letter of Credit
that is not a Commercial Letter of Credit.
Subordinated Debt means the Subordinated Notes, the
Exchange 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).
Subordinated Debt Proceeds means, at any time, the
lesser of (x) the aggregate original principal amount of,
or (y) the gross proceeds received by the Company (before
deduction of underwriting discounts, placement fees and all
other related fees and expenses) upon issuance of, all
outstanding Subordinated Notes, Exchange Notes or Qualified
Notes of the Company at such time.
Subordinated Indenture means the indenture governing
the Subordinated Notes and the Exchange Notes, as amended
from time to time in accordance with Section 8.23.
Subordinated Note Purchase Agreement means the
Purchase Agreement dated as of April 15, 1997 relating to
the Subordinated Notes, as amended from time to time in
accordance with Section 8.23.
Subordinated Notes means the 12-1/4% Senior
Subordinated Notes due April 15, 2007 of the Company issued
under the Subordinated Indenture, as amended from time to
time in accordance with Section 8.23.
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-2, which may be executed from time
to time by certain Subsidiaries of the Company.
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Subsidiary Pledge Agreement - see subsection 5.1(i);
such pledge agreement may be joined after the Closing 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).
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 8.23.
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 such Lender or the Administrative
Agent, as the case may be, is organized, maintains a
lending office or conducts business (collectively,
"Excluded Taxes").
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Term A Commitment means, as to any Lender, the
commitment of such Lender to make a Term A Loan pursuant to
subsection 2.1(a). The initial amount of each Term A Lender's
Term A Commitment is set forth across from such Lender's name on
Schedule 1.1.
Term A Lender means, at any time, a Lender with a Term
A Commitment at such time or which then holds any Term A
Loan.
Term A Loan - see subsection 2.1 (a).
Term A Percentage means, as to any Lender, the
percentage which (a) the Term A Commitment of such Lender
(or, after the making of the Term A Loans, the principal
amount of such Lender's Term A Loan) is of (b) the
aggregate amount of Term A Commitments (or after the making
of the Term A Loans, the aggregate principal amount of all
Term A Loans). The initial Term A Percentage of each Lender
is set forth across from such Lender's name on Schedule
1.1.
Term B Commitment means, as to any Lender, the
commitment of such Lender to make a Term B Loan pursuant to
subsection 2.1(b). The initial amount of each Term B
Lender's Term B Commitment is set forth across from such
Lender's name on Schedule 1.1.
Term B Lender means, at any time, a Lender with a Term
B Commitment at such time or which then holds any Term B
Loan.
Term B Loan - see subsection 2.1(b).
Term B Percentage means, as to any Lender, the
percentage which (a) the Term B Commitment of such Lender
(or, after the making of the Term B Loans, the principal
amount of such Lender's Term B Loan) is of (b) the
aggregate amount of Term B Commitments (or after the making
of the Term B Loans, the aggregate principal amount of all
Term B Loans). The initial Term B Percentage of each Lender
is set forth across from such Lender's name on Schedule
1.1.
Term Loan means a Term A Loan or a Term B Loan.
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
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.
Total Debt Ratio means as of June 30 of each year the ratio of
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(i) the aggregate outstanding principal amount
of all Total Debt as of such day
to
(ii) EBITDA for the fiscal year ended on such date.
Total Percentage means, as to any Lender, the
percentage which (a) the aggregate amount of such (i)
Lender's Revolving Commitment plus (ii) such Lender's Term
A Commitment (or, after the making of the Term A Loans, the
outstanding principal amount of such Lender's Term A Loans)
plus (iii) such Lender's Term B Commitment (or, after the
making of the Term B Loans, the outstanding principal
amount of such Lender's Term B Loans) is of (b) the
aggregate amount of (i) the Revolving Commitments of all
Lenders plus (ii) the Term A Commitments of all Lenders
(or, after the making of the Term A Loans, the outstanding
principal amount of all Term A Loans) plus (iii) the Term B
Commitments of all Lenders (or, after the making of the
Term B Loans, the outstanding principal amount of all Term
B Loans); provided that, after the Revolving 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 initial Total Percentage of each
Lender is set forth opposite such Lender's name on Schedule
1.1.
TPG Acquisition means TPG Shield Acquisition
Corporation, a Maryland corporation.
TPG Acquisition Preferred Stock means the 14% Series A
and Series B Redeemable Preferred Stock, liquidation
preference $1,000 per share, of TPG Acquisition and, after
the effectiveness of the Merger, shall include the
corresponding class of preferred stock 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 8.23.
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."
Unfunded Pension Liability means the excess of a
Pension Plan's accumulated benefit obligations over the
current value of such Pension Plan's assets, determined in
accordance with SFAS No. 87 as of the Company's most recent
fiscal year end prior to the date of determination.
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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.
Wholly-Owned Subsidiary means any corporation in which
(other than director's 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 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.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) 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.
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(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 A Lenders,
the Required Term B 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 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" and "fiscal
quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments. (a) The Term A
Credit. Each Term A Lender severally agrees, on the terms and
conditions set forth herein, to make a single loan to the Company
(each such loan, a "Term A Loan") on the Closing Date in an
amount not to exceed such Term A Lender's Term A Percentage of
$200,000,000. Amounts borrowed as Term A Loans which are repaid
or prepaid by the Company may not be reborrowed. The Term A
Commitments shall expire concurrently with the making of the Term
A Loans on the Closing Date.
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(b) The Term B Credit. Each Term B Lender severally agrees,
on the terms and conditions set forth herein, to make a single loan to the
Company (each such loan, a "Term B Loan") on the Closing Date in
an amount not to exceed such Term B Lender's Term B Percentage of
$180,000,000. Amounts borrowed as Term B Loans which are repaid
or prepaid by the Company may not be reborrowed. The Term B
Commitments shall expire concurrently with the making of the Term
B Loans on the Closing Date.
(c) The Revolving Credit. 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 Closing 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, 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; and
provided, further, the amount of all Revolving Loans and
Swingline Loans made on the Closing Date shall not exceed
$160,000,000. Within the foregoing limits, and subject to the
other terms and conditions hereof, the Company may borrow under
this subsection 2.1(c), prepay under Section 2.7 and reborrow
under this subsection 2.1(c).
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
conclusive (absent manifest error) 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 shall 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.
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
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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
(subject to Section 2.16); 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, Term A Percentage or Term B
Percentage, as applicable.
(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) Subject
to Section 2.16, 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 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);
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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 not later than (i) 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
Lender of its receipt of a Notice of Conversion/Continuation 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.
(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
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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 Closing 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 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)).
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(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(c) 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(c) 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 5.3;
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 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
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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. 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, Term A Percentage, in
the case of a prepayment of Term A Loans or Term B Percentage, in
the case of a prepayment of Term B 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 pro rata to the Term A
Loans and Term B Loans; provided, that if the Company elects to
provide the holders of Term B Loans with the option to waive
their right to accept any such voluntary 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 of prepayment, 50% of the portion of any such prepayment
which would have been applied to such Lender's Term B Loans shall
be applied pro rata to the remaining installments of the Term A
Loans of all Lenders and the remaining 50% may be retained by the
Company; provided, further, that once the Term A Loans shall have
been fully repaid, such remaining prepayment amounts, if any,
shall be applied pro rata to the Term B Loans. All prepayments of
the Term Loans pursuant to this Section 2.7 shall be applied pro
rata to the unpaid installments of each of the Term A Loans and
Term B Loans; provided, however, that, at the Company's option, a
portion of any such prepayment may be applied to unpaid
installments of the Term A Loans in forward order of maturity,
but the amount so applied in any period of four consecutive
fiscal quarters may not exceed 50% of the amount of the scheduled
installments of the Term A Loans during such period (without
giving effect to any reduction to such scheduled installments as
a result of mandatory or voluntary prepayments).
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
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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 120 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 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 120 days after any such sale
or (y) to the extent that the Net Cash Proceeds of all such
sales, transfers or other dispositions in any fiscal year
is less than $5,000,000.
(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.
(iii) Within 120 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 120 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 $1,000,000.
(iv) Concurrently with 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) any such Net
Cash Proceeds from equity issuances of Parent to the extent
used to redeem the TPG Acquisition Preferred Stock), in an
amount equal to 50% of such Net Cash Proceeds.
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(v) Concurrently with the receipt of any Net Cash
Proceeds from the issuance of any Other Debt of Parent, the
Company or any Subsidiary in an amount equal to 100% of such Net
Cash Proceeds.
(vi) If the net proceeds of the Subordinated Notes
exceeds the net proceeds the Company would have received on
issuance of $150,000,000 of Subordinated Notes, or if the
net proceeds received on issuance of any Qualified Notes
exceeds the net proceeds received by the Company in the
issuance of the Subordinated Notes or on any prior issuance
of Qualified Notes, concurrently with 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, 1998), 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 $190,000,000, hen the amount of the required
prepayment shall be 50% of Excess Cash Flow.
(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)).
All prepayments of Term Loans pursuant to this subsection
2.8(a) shall be applied to the prepayment of the Term Loans pro
rata among the Term A Loans and Term B Loans, with application to
the remaining installments of each (x) in inverse order of
maturity, in the case of prepayments pursuant to clauses (v) and
(vi) 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 B
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, 50% of the portion of any
prepayment which would have been applied to such Lender's Term B
Loans shall be applied pro rata to the remaining installments of
the Term A Loans of all Lenders and the remaining 50% may be
retained by the Company; and provided, further, that once the
Term A Loans shall have been fully prepaid, such remaining
prepayment amounts, if any, shall be applied pro rata to the Term
B Loans.
(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 LIC Obligations
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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
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 A Credit. The Company shall
repay the Term A Loans in quarterly installments on the last
Business Day of each fiscal quarter, commencing on September 25,
1998, in the amount set forth opposite the period below in which
such quarterly date occurs:
Quarterly
Period Amounts
9/25/98 through 6/30/99 $ 7,500,000
7/01/99 through 6/30/00 $ 8,750,000
7/01/00 through 6/30/01 $10,000,000
7/01/01 through 6/30/02 $11,250,000
7/01/02 through 12/31/02 $16,666,666.66
1/01/03 through 3/31/03 $16,666,666.68.
(b) The Term B Credit. The Company shall repay the
Term B Loans in quarterly installments on the last Business Day
of each fiscal quarter, commencing on March 27, 1998, in the
amount set forth opposite the period below in which such
quarterly date occurs:
Quarterly
Period Amounts
3/27/98 through 3/31/04 $ 450,000
4/01/04 through 3/31/05 $42,187,500.
(c) 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
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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 Arranger and BT Securities Corporation 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
Arranger, Bankers Trust Company and the Administrative Agent
dated April 14, 1997.
(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 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)
plus the Effective Amount of all L/C Obligations then
outstanding. Such commitment fee shall accrue from the Closing
Date to the Revolving
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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 Closing 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 conclusive and binding on the
Company and the Lenders in the absence of manifest error. 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, its Term A Percentage of any
portion of such payment relating to the Term A Loans or its Term
B Percentage of any portion of such payment relating to the Term
B 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 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.
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2.14 Payments by the Lenders to the Administrative
Agent. (a) Unless the Administrative Agent receives notice from a
Lender on or prior to the Closing Date, or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior
to the date of such 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 A Percentage or Term B Percentage, 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 another Lender may, to the
fullest extent permitted by law, exercise all its rights of
payment
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(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 Limitation on Offshore Rate Option. Notwithstanding
anything to the contrary herein, until the earlier to occur of
(x) the fifth Business Day after the Closing Date and (y) the
Arranger giving notice to the Company that it has completed
syndication of the Loans and Commitments, the Company may not
borrow Offshore Rate Loans or convert Base Rate Loans into
Offshore Rate Loans.
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
Closing 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, 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
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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
Closing Date, or shall impose upon the Issuing Lender any
unreimbursed loss, cost or expense which was not applicable
on the Closing 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
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
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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 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 Letter of Credit issued by it. Each
such request for extension of a 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 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, in the case of Standby Letters of Credit, prior to the
Revolving Termination Date and, in the case of Commercial Letters
of Credit, shall be prior to the date which is 15 days 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
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shall nonetheless be permitted to allow such Letter of Credit to
extend, 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 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 Letters of Credit 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 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
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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
5.3 other than subsection 5.3(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 33(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 5.3 (other than subsection
5.3(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 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 5.3.
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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 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
iii 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
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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;
(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
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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. Such letter of credit fee 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 on the first such quarterly date to occur after the
Closing 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).
(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 on the first such quarterly
date to occur after the Closing 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
Letters of Credit shall be considered outstanding and available
to be drawn upon for 15 days after their expiry date.
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(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, (a) 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 (b) 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.
(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 face amount
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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
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applicable offshore interbank market) shall be the
Overnight Rate for the immediately preceding Business Day.
3.11 Prior Letters of Credit. The Company, the Issuing
Lender, the Lenders and the Administrative Agent agree that, on
the Closing Date, the letters of credit issued by BofA and listed
on Schedule 3.11 shall 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 Closing Date
pursuant to subsection 3.3(a). BofA represents to the Lenders
that all participations in such Letters of Credit under the Prior
Financing Agreements will be terminated on the Closing Date. The
letter of credit fees payable under subsection 3.8(a) and the
fronting fees payable under subsection 3.8(b) with respect to
such Letters of Credit shall accrue from the Closing Date. The
Company shall be deemed to have satisfied the condition precedent
to issuance of such Letters of Credit set forth in subsection
5.3(a) by virtue of its agreements set forth in this Section
3.11.
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
after-tax yield such Lender would have received 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 willful 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.
(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;
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(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
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).
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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.
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 corporation 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 corporation controlling such Lender and (taking
into consideration such Lender's or such corporation'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.
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(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;
(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.
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
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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 conclusive and binding on the Company
in the absence of manifest error.
4.7 Substitution of Lenders. In the event the Company
becomes obligated to pay additional amounts to any Lender
pursuant to Section 4.3, 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 of Initial Credit Extensions. The obligation
of each Lender to make its initial Credit Extension is subject to
the conditions (in addition to the conditions set forth in
Sections 5.2 and 5.3) that (i) the Company shall have submitted
evidence reasonably satisfactory to the Administrative Agent that
all Debt to be Repaid has been (or concurrently with the initial
Borrowing will be) paid in full, that all agreements and
instruments governing the Debt to be Repaid (including (A) the
Senior Subordinated Guaranteed PIK Notes due 2002 of the Company,
guaranteed by Parent, issued pursuant to the Indenture, dated as
of September 1, 1996, among the Company, Parent and Bankers Trust
Company, (B) the Amended and Restated Revolving Loan and Security
Agreement, dated as of June 15, 1995, among the Company, various
lenders and BankAmerica Business Credit, Inc., as agent, as
amended, and (C) the Term Loan and Security Agreement dated as of
June 15, 1995 among the Company, various lenders, and General
Electric Capital Corporation, as agent, as amended (collectively
the "Prior Financing Agreements")) and that all Liens securing
such Debt to be Repaid have been (or concurrently with the
initial
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Borrowing will be) terminated and (ii) 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
Notes) in sufficient copies for the Administrative Agent and each
Lender:
(a) Credit Agreement and Notes. This Agreement and the Notes
executed by each party thereto.
(b) Resolutions and Incumbency.
(i) Copies of resolutions of the board of directors of
the Company, Parent and Mike Mac authorizing the transactions
contemplated hereby, certified as of the Closing Date by the
Secretary or an Assistant Secretary of such Person; and
(ii) 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:
(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 Closing Date,
certified by the Secretary or Treasurer of such Person, as of the
Closing 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) DMFC Recapitalization. (i) Copies of each of the DMFC
Recapitalization Documents fully executed by the parties thereto
and of all material instruments, agreements and other documents
required to be delivered or furnished thereunder or in connection
therewith (including, in the case of opinions of counsel, if any,
reliance letters expressly permitting the Administrative Agent
and the Lenders to rely thereon as if such opinions had been
addressed thereto) and, except as expressly permitted by the
Administrative Agent and the Lenders, none of the material terms
of the DMFC Recapitalization (including any condition precedent
to Parent's performance thereof or obligation to consummate the
DMFC Recapitalization) shall have been amended, waived or
otherwise modified in any material respect.
(ii) Evidence that, after giving effect to the Loans
and other Credit Extensions to be made hereunder on the Closing
Date and the application thereof by the Company, the
DMFC Recapitalization has been or will be duly consummated in
accordance with the DMFC Recapitalization Documents without
amendment, waiver or other modification thereof unless the
Administrative Agent and the Lenders shall have expressly
consented thereto in writing.
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(e) Legal Opinions.
(i) An opinion of Cleary, Gottlieb, Steen & Hamilton,
special counsel to the Company, Parent and Mike Mac,
substantially in the form of Exhibit 1-1, and
(ii) An opinion of William R. Sawyers, General Counsel to the
Company, Parent and Mike Mac, substantially in the form of Exhibit 1-2,
(iii) opinions of local counsel to the Company, Mike
Mac and/or Parent in California and Maryland, substantially
in the forms of Exhibits J-l and J-2 hereto, and
(iv) An opinion of local counsel to the Administrative
Agent in the State of Washington, substantially in the form
of Exhibit J-3 hereto.
(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 Closing Date, together with
Attorney Costs of the Administrative Agent, the Documentation
Agent and the Arranger to the extent invoiced at least three
Business Days prior to the Closing Date, plus such additional
amounts of Attorney Costs as shall constitute such Agents'
reasonable estimate of Attorney Costs incurred or to be incurred
by them or the Arranger through the closing proceedings (provided
that such estimate shall not thereafter preclude final settling
of accounts between the Company and such Agents), including any
such costs, fees and expenses arising under or referenced in
Section 2.11 or 11.4.
(g) Security Agreements, etc. (1) A security
agreement, substantially in the form of Exhibit E-l (the
"Security Agreement (Company and Parent)"), executed by the
Company and Parent, together with evidence, satisfactory to the
Administrative Agent that all filings and recordings necessary to
perfect the Lien granted to the Administrative Agent (for the
benefit of itself and the Lenders) on any Collateral granted
under such Security Agreement have been duly made and are in full
force and effect; (2) a Trademark Security Agreement, issued by
the Company; (3) a Patent Security Agreement, issued by the
Company; and (4) a Copyright Security Agreement, issued by the
Company.
(h) Parent Guaranty. The Parent Guaranty executed by Parent.
(i) Pledge Agreements. A pledge agreement,
substantially in the form of Exhibit G-l, issued by the Parent
(the "Parent Pledge Agreement") with respect to its pledge of
100% of the stock of the Company and all intercompany
Indebtedness owing to Parent; a pledge agreement, substantially
in the form of Exhibit G-2, issued by the Company (the "Company
Pledge Agreement") with respect to its pledge of 100% of the
stock of each Subsidiary owned by it and all intercompany
Indebtedness owing to the Company; a pledge agreement,
substantially in the form of Exhibit G-3, issued by Mike Mac (the
"Subsidiary Pledge Agreement"), with respect to its pledge of all
intercompany Indebtedness owing to such Subsidiary; in each case
together with the stock certificates (if any) to be pledged
thereunder and undated stock powers, or other instruments of
transfer in form and substance satisfactory to the Administrative
Agent, duly
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executed in blank and all intercompany notes (if any) to be
pledged thereunder, duly endorsed to the order of the
Administrative Agent.
(j) Real Property. With respect to each parcel of real
property owned or leased by the Company or any Subsidiary and
listed on Schedule 5.1(1), a duly executed Mortgage providing for
a fully perfected Lien, in favor of the Administrative Agent for
the benefit of the Agents and the Lenders, in all right, title
and interest of the Company and each Subsidiary to the real
property subject to such Mortgage, superior in right to any Lien
(other than Permitted Liens), existing or future, which the
Company or any Subsidiary or any creditors thereof or purchasers
therefrom, or any other Person, may have against such real
property, together with:
(A) an ALTA (or other form acceptable to the
Administrative Agent) mortgagee policy of title insurance
or a binder issued by a title insurance company
satisfactory to the Administrative Agent insuring (or
undertaking to insure, in the case of a binder) that the
Mortgage creates and constitutes a valid first mortgage
Lien against such real property in favor of the
Administrative Agent, subject only to exceptions acceptable
to the Administrative Agent, with such endorsements and
affirmative insurance as the Administrative Agent or the
Required Lenders may reasonably request;
(B) copies of all documents of record concerning such
parcel as shown on the commitment for the ALTA Loan Title
Insurance Policy referred to above; and
(C) original or certified copies of all insurance
policies required to be maintained with respect to such
real property by this Agreement, any Mortgage or any other
Loan Document.
(k) Intellectual Property License. The Intellectual
Property License executed by the Company.
(1) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing 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 initial Credit Extension; and
(iii) no event or circumstance has occurred since
December 31, 1996 that has resulted, or would reasonably be
expected to result, in a Material Adverse Effect.
(m) Other Documents. A copy, certified as true and
correct by the Secretary or the Treasurer of the Company, of each
of (a) the Subordinated Indenture, (b) the Subordinated Note
Purchase Agreement, (c) the registration rights agreement
executed by the Company in
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connection with the issuance of the Subordinated Notes, (d) the
Intercreditor Agreement, (e) the Tax Sharing Agreement and (f)
the TPG Agreements.
(n) Solvency Certificates. A Solvency Certificate,
substantially in the form of Exhibit H-l, executed by the chief
financial officer of the Company and a Solvency Certificate,
substantially in the form of Exhibit H-2, executed by the chief
financial officer of Parent.
(o) Borrowing Base Certificate. A Borrowing Base
Certificate dated as of March 31, 1997, appropriately completed.
(p) Environmental Indemnities. An Environmental
Indemnity from the Company with respect to all Mortgages in
California, Minnesota, New Jersey and Washington.
(q) Other Documents. Such other approvals, opinions, documents or
materials as any Agent or any Lender may reasonably request.
5.2 Other Conditions to Initial Credit Extension. The
obligation of each Lender to make its initial Credit Extension
is, in addition to the conditions precedent specified in Sections
5.1 and 5.3, subject to the following conditions precedent:
(a) Subordinated Notes. The Company shall have issued
the Subordinated Notes on terms and conditions satisfactory to
the Administrative Agent for gross proceeds of not less than
$146,850,000.
(b) Capitalization of TPG Acquisition. The
Administrative Agent shall have received evidence that TPG
Acquisition has received a $161,000,000 cash equity investment
from TPG Partners and others on terms and conditions satisfactory
to the Administrative Agent. Without limiting the generality of
the foregoing, not more than $35,000,000 of such cash equity
investment shall be in the form of TPG Acquisition Preferred
Stock and each share of such TPG Acquisition Preferred Stock
shall have been issued for not less than the liquidation
preference thereof.
5.3 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
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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 5.3 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Agent and each
Lender that:
6.1 Corporate Existence and Power. 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;
(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 the Company of this Agreement and each
other Loan Document to which it is a party, the Borrowings
hereunder, the execution and delivery by Parent and each
Subsidiary of each Loan Document to which it is a party and the
performance by each of the Company, Parent and each Subsidiary of
its obligations under each Loan Document to which it is a party
(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;
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(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
in connection with the execution, delivery or performance by, or
enforcement against, (i) the Company of this Agreement or any
other Loan Document to which it is a party or (ii) Parent or 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 is a party constitutes the legal,
valid and binding obligation of the Company, enforceable against
the Company 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 Parent and each
Subsidiary, each Loan Document to which such Person is a party
constitutes the legal, valid and binding obligation of such
Person, enforceable against such Person 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. As of the Closing Date, neither the
Company nor any Subsidiary is in default under or with respect to
any Contractual Obligation in any respect which, 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 Closing Date, create an Event of Default
under subsection 9.1(e).
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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) neither the
Company nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability to the PBGC under Title IV of
ERISA with respect to any Pension Plan.
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
Closing 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,
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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, 1994, June 30, 1995
and June 30, 1996, 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.
(b) The Company has furnished to each Agent and each
Lender an estimated consolidated pro forma balance sheet of
Parent and its Subsidiaries as of March 31, 1997 (giving effect
to the Merger, the refinancing of the Debt to be Repaid, the
incurrence of the Obligations and the Subordinated Notes and the
consummation of all other transactions contemplated to occur on
the Closing Date, assuming all such transactions had occurred on
March 31, 1997), prepared by the Company and certified as true
and correct in all material respects by the Chief Financial
Officer of the Company.
(c) The Company has furnished to each Agent and each
Lender financial projections dated the Closing Date and covering
the period from March 31, 1997 to June 30, 2006. 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
Closing 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).
(d) Since December 31, 1996 there has been no Material Adverse
Effect.
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.
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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 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 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 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 Closing 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 Closing 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 Closing Date (or, in the case of
any Person that becomes a party to any Loan Document after the
Closing 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's, Parent's and each Material
Subsidiary's assets will exceed its liabilities, (c) each of the
Company, Parent and each Material Subsidiary will be
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solvent, will be able to pay its liabilities as they mature and
(d) 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 Merger, Subordinated Notes, etc.
(a) As of the consummation thereof, the Merger has
been consummated in accordance with the terms of the Merger
Agreement, without waiver of any of the conditions thereof.
(b) As of the consummation thereof, the Merger and
the issuance and sale of the Subordinated Notes complied with all
Requirements of Law (including the Securities Act of 1933), and
all necessary governmental, regulatory, shareholder and other
consents and approvals required for the consummation of the
Merger and the issuance and sale of the Subordinated Notes were,
prior to the consummation thereof, duly obtained and in full
force and effect. All applicable waiting periods with respect to
the Merger and the issuance and sale of the Subordinated Notes
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.
(c) The execution and delivery of the Merger
Agreement and the issuance and sale of the Subordinated Notes did
not, and the consummation of the Merger will not, violate 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 which, individually or in the
aggregate, is reasonably likely to have a Material Adverse
Effect.
(d) There does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions
upon the consummation of the Merger and the issuance and sale of
the Subordinated Notes.
(e) All of the representations and warranties of the
Company contained in the Merger Agreement are true and correct in
all material respects as of the date hereof.
(f) All of the representations and warranties of the
Company set forth in the Subordinated Note Purchase Agreement are
true and correct in all material respects as of the date hereof.
6.19 Real Property. Set forth on Schedule 6.19 is a
complete and accurate list, as of the date of this Agreement, of
the address and legal description of any real property owned by
the Company or any Subsidiary.
6.20 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
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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.
6.21 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
Subordinated Indenture. Parent's obligation to pay its Guaranty
Obligations under the Parent Guaranty constitutes "Guarantor
Senior Debt" of Parent as such term is defined in the
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 Subordinated Notes and the Subordinated
Indenture. If any Qualified Notes are outstanding, the foregoing
representation and warranty shall be deemed made with respect to
Qualified Notes and the related Qualified Indenture to the same
extent made with respect to Subordinated Notes and the
Subordinated Indenture.
6.22 Environmental Warranties. Except as set forth in Schedule 6.22:
(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 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
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(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.
6.23 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 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 provided (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).
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:
(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
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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;
(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;
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(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;
(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) any proposed payment of principal of Subordinated Debt prior
to the making thereof; and
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(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, and
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. The Company 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.
7.7 Payment of Obligations. The Company 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:
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(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.
7.8 Compliance with Laws. The Company 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. The
Company 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. The
Company 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.
7.11 Interest Rate Protection. The Company shall, not later
than 90 days after the Closing Date, enter into one or more
Permitted Swap Obligations, each with a term of at least three
years, on an ISDA standard form with one or more Lenders or
Affiliates thereof or with counterparties reasonably acceptable
to the Administrative Agent with respect to not less than
$235,000,000 of the principal amount of the Loans in form and
substance reasonably satisfactory to the Administrative Agent.
7.12 Environmental Covenant. The Company will, and will cause each
of its Subsidiaries to,
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(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
shall 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 Merger,
(ii), to repay Debt to be Repaid, (iii) to pay fees and expenses
related to the DMFC Recapitalization and (iv) 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) After the Merger has been
consummated, the Company shall cause to be delivered to the
Agents and Lenders evidence of such consummation, in form and
substance satisfactory to the Administrative Agent.
(b) The Company shall, and shall cause each Subsidiary
to, execute, acknowledge, deliver, record, re-record, file,
refile, 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 hereunder and under the
other Loan Documents are secured by substantially all assets of
the Company (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
Guaranties, 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 the Company
under the Loan Documents are secured by substantially all of the
assets of Parent and each Domestic Subsidiary that is a Material
Subsidiary (provided, that unless 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), (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
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intended to be granted to the Administrative Agent and the
Lenders under any Loan Documents or under any other document
executed in connection therewith. Contemporaneously with the
execution and delivery of any document referred to above, the
Company 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 (i) the Company's
leasehold interests in real property in Dallas (#228), Stockton
(#222), Kingsbury, California (Warehouse #28), Kingsbury
California (Nebraska and Chestnut), San Jose (#3), California,
San Jose (#4), California, Modesto (4318 Yosemite), California,
Sleepy Eye, Minnesota, and Plover (Warehouse #115) , Wisconsin,
and (ii) 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.
(c) 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)(ii), (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.
(d) Subject to the following sentence, within 30 days
after the Closing Date, 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 Company's accounts at
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Wells Fargo Bank, Mellon Bank East and The Northern Trust Company
which are listed on Schedule V of the Security Agreement (Company
and Parent), the Company shall have 120 days after the Closing
Date (A) to obtain an agreement from the related bank covering
such account and satisfying the requirements of the prior
sentence or (B) to close such account, and, 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 such account and satisfying the requirements of the
prior 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 prior 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 shall not, and shall
not permit Parent or 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 Closing 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;
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(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;
(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, provided that such
capital leases are otherwise permitted hereunder;
(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;
(1) 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;
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(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 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
(p) does not exceed $5,000,000 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 and including a
disposition pursuant to a sale and lease-back 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) 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 Wholly-Owned Subsidiaries;
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(f) dispositions of Assets Held for Sale which are made
for fair market value; and
(g) dispositions of assets not exceeding $2,000,000 in
any fiscal year for non- cash consideration.
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 Closing 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 $5,000,000;
(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 (with all such
investments valued at the time of investment
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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);
(g) investments constituting Permitted Swap
Obligations or payments or advances under Swap Contracts relating
to Permitted Swap Obligations;
(h) other investments in an aggregate amount not
exceeding $5,000,000 during the term of this Agreement (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, 8.14 and
8.15 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, without giving
effect to any adjustment for expected cost savings or
other synergies),
(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
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(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(k),
does not exceed in the aggregate during the term of
this Agreement an amount equal to the sum of (x)
$75,000,000 plus (y) an amount equal to the aggregate
amount received by the Company as capital
contributions from Parent after the Closing Date;
(j) investments existing on the Closing Date and set
forth on Schedule 8.4; and
(k) 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) $75,000,000 plus (y) an amount
equal to the aggregate amount received by the ---- Company as
capital contributions from Parent after the Closing Date.
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) the Subordinated Notes and the Exchange Notes and
any Qualified Notes issued in a Qualified Refinancing and related
Guaranty Obligations by Subsidiaries of the Company;
(c) Indebtedness consisting of Contingent Obligations
permitted pursuant to Section 8.8;
(d) Indebtedness existing on the Closing 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 and other
investments by the Company and its Subsidiaries in Foreign
Subsidiaries shall not exceed $25,000,000;
(f) Indebtedness up to $20,000,000 outstanding at any
time secured by Liens permitted by subsection 8.1(i);
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(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 $20,000,000 of Acquired Indebtedness assumed in
Acquisitions permitted under subsection 8.4(i); and
(l) other Indebtedness in an aggregate amount not at any time
exceeding $5,000,000.
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, the Tax Sharing Agreement and payments (not exceeding
$900,000) to Citicorp Venture Capital and its Affiliates in
connection with the DMFC Recapitalization 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
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;
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(c) Contingent Obligations of the Company and its
Subsidiaries existing as of the Closing Date and listed in
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;
(d) Contingent Obligations arising under the Loan Documents;
(e) Guaranty Obligations described in subsection 8.5(b); and
(f) 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 Closing Date and any renewal, extension or
refinancing thereof;
(b) operating leases entered into by the Company or any
Subsidiary after the Closing Date in the ordinary course of
business; and
(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 of the Company contemplated
thereby.
8.11 Minimum Fixed Charge Coverage. The Company 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:
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Period Ratio
6/30/97 - 9/26/99 1.20:1.0
12/26/99 - 3/26/00 1.25:1.0
6/30/00 - 4/01/01 1.30:1.0
6/30/01 - 6/30/03 1.35:1.0
9/28/03 1.40:1.0
12/26/03 - 3/28/04 1.45:1.0
6/30/04 and 1.50:1.0.
thereafter
8.12 Minimum EBITDA. The Company will not permit EBITDA for any
Computation Period to be less than the amount set forth below
opposite the period in which such Computation Period ends:
Period EBITDA
6/30/97 - 3/29/98 $95,000,000
6/30/98 - 9/27/98 $100,000,000
12/27/98 - 3/28/99 $105,000,000
6/30/99 - 3/26/00 $110,000,000
6/30/00 - 4/01/01 $120,000,000
6/30/01 - 3/31/02 $130,000,000
6/30/02 and thereafter $140,000,000
8.13 Minimum Adjusted Net Worth. The Company will not
permit at any time (i) Net Worth at such time plus
Subordinated Debt Proceeds at such time plus the initial
principal amount of the Term Loans to be less than (ii) (a)
$115,000,000, plus (b) 80% of cumulative Consolidated Net
Income for the period beginning on the Closing Date and ending
on the date of calculation (provided that if Consolidated Net
Income is less than zero for any fiscal year, or for the
completed portion of the then-current fiscal year,
Consolidated Net Income for such fiscal year or portion shall
be deemed to be zero); provided that no Event of Default shall
arise by reason of clause (i) above being less than clause
(ii) above if, within ten days of the occurrence of any such
deficiency, Parent receives a capital contribution from its
shareholders at least equal to
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the amount of such deficiency and Parent in turn makes a
capital contribution of such amount to the Company.
8.14 Maximum Senior Debt Ratio. The Company 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
6/30/97 - 3/29/98 5.25:1.0
6/30/98 - 3/28/99 5.00:1.0
6/30/99 - 3/26/00 4.25:1.0
6/30/00 - 4/01/01 3.75: 1.0
6/30/01 - 3/31/02 3.25:1.0
6/30/02 - 3/30/03 2.75:1.0
6/30/03 and thereafter 2.25:1.0.
8.15 Maximum Total Debt Ratio. The Company will not permit
the Total Debt Ratio on the last day of any fiscal year to
exceed the ratio set forth below opposite such fiscal year:
Fiscal Year Ending Ratio
6/30/97 6.50:1.0
6/30/98 6.25:1.0
6/30/99 5.50:1.0
6/30/00 5.00:1.0
6/30/01 4.50:1.0
6/30/02 4.00:1.0
6/30/03 and each fiscal year thereaft3.50:1.0.
8.16 Maximum Capital Expenditures. The Company will not
permit the aggregate amount of all Capital Expenditures made by
the Company and its Subsidiaries for any fiscal year to exceed
the amount set forth below opposite such fiscal year (it being
understood that with respect to the line item below for June 30,
1997, such expenditures shall be measured from the Closing Date
to June 30, 1997):
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Fiscal Year Amount
ending 6/30/97 $15,000,000
ending 6/30/98 $55,000,000
ending 6/30/99 $50,000,000
ending 6/30/00 $45,000,000
ending 6/30/01 and each fiscal year $40,000,000;
thereafter
provided, however, that to the extent Capital Expenditures
actually made in any fiscal year are less than the amount
permitted to be made in such fiscal year (without giving effect
to any carryforward), the lesser of (x) the amount of the
difference and (y) 50% (100% with respect to the fiscal period
ending June 30, 1997) of the amount of Capital Expenditures
permitted to be made in such year as set forth in the table above
may be carried forward and used to make Capital Expenditures in
the next succeeding fiscal year; provided, further, however, that
in any period the Company and its Subsidiaries may only use a
carryforward to such period if the entire amount set forth in the
table above for such period has been utilized.
8.17 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 Subordinated Notes may be exchanged for the
Exchange Notes pursuant to the terms of the Subordinated Note
Purchase Agreement and the Exchange Notes or the 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) 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, provided that any such payments
do not exceed $2,000,000 in any fiscal year or $10,000,000 in the
aggregate;
(e) upon an initial Public Offering of the Company or
Parent, the Company may repurchase or redeem Subordinated Notes,
Exchange Notes or Qualified Notes with the Net Cash Proceeds of
such initial Public Offering, provided that no more than
$52,500,000 principal
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amount of Subordinated Debt may be repurchased or redeemed
pursuant to this clause (e) and provided further that any such
application of the proceeds of such Public Offering to repurchase
Subordinated Debt may only be made following the making of any
mandatory prepayment required under subsection 2.8(a) in
connection with such Public Offering;
(f) the Company may pay a dividend to Parent on the
Closing Date in an amount not exceeding $265,000,000 to finance
Parent's payment consideration for the Merger to its shareholders
pursuant to the terms of the Merger Agreement and related fees
and expenses, provided that such funds are actually used by
Parent to pay such Merger consideration and such fees and
expenses within 30 days of the payment of such dividend;
(g) the Company may make payments to Parent at the times and in
the amounts provided in the Tax Sharing Agreement;
(h) the Company may make payments to TPG Partners of fees and
expenses at the times and in the amounts provided in the TPG Agreements; and
(i) 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.
8.18 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 be subject to Section 4069 or 4212(c)
of ERISA.
8.19 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 to the extent the fair market value of the
property sold or transferred is in an aggregate amount in excess
of $25,000,000.
8.20 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) prior to the termination thereof
on the Closing Date, the Prior Financing Agreements, (iv)
customary non-assignment provisions of any contract or lease
governing a leasehold or ownership interest of any Subsidiary,
(v) 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
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Person or the properties or assets of the Person so acquired,
(vi) customary net worth provisions contained in leases and other
agreements entered into by a Subsidiary in the ordinary course of
business, (vii) 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, (viii) 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 and (ix) an agreement governing
Indebtedness incurred to refinance the Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in
clause (v) 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 (v).
8.21 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 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.
8.22 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.
8.23 Amendments to Certain Documents. The Company shall not
make or agree to any amendment to or modification of, or waive
any of its rights under, any of the terms of (a) the Merger
Agreement, (b) the Subordinated Note Purchase Agreement, (c) the
Subordinated Indenture, (d) any Qualified Indenture, (d) any
other instrument evidencing Subordinated Debt, (e) the Tax
Sharing Agreement or (f) the TPG Agreements, unless any such
amendment, modification or waiver is not adverse in any respect
to the Lenders.
8.24 Fiscal Year. The Company shall not, and shall not
permit any Subsidiary to, change the fiscal year of the Company
or of any Subsidiary; provided, that any Subsidiary acquired in
an Acquisition permitted hereunder may change its fiscal year to
end on June 30.
8.25 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
(i) 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
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Subsidiary Guaranty, together with such supporting
documentation as the Administrative Agent may reasonably
request, notwithstanding Section 7.14,
(ii) 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 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
(iii) 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.
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,
8.17(1) or 8.19).
(d) Other Defaults. The Company fails to perform or
observe any term or covenant contained in Section 8.1, 8.5, 8.6,
8.17(1) or 8.19 (or the Parent shall fail to perform its
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agreement in the Parent Guaranty to comply with Section 8.1), 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 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,
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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.
(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.
(1) Guarantor Defaults. Any Guaranty shall cease to be
in full force and effect with respect to any Guarantor (other
than as expressly permitted hereunder), any Guarantor shall fail
to comply with or to perform any applicable provision of any
Guaranty, 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.
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(n) Merger. The Merger shall not have become effective
within three Business Days of the Closing Date.
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 , 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.
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 BTCO,
as Documentation Agent for the Lenders and The
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First National Bank of Boston, Citicorp USA, Inc., General
Electric Capital Corporation and The Long-Term Credit Bank of
Japan, Ltd., Los Angeles Agency as Co-Agents for the Lenders. The
Documentation Agent and the Co-Agents, 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 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 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
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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 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
represents 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
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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
solely 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 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.
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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 a "foreign
corporation, partnership or trust" within the meaning of the Code
and such Lender claims exemption from, or a reduction of, U.S.
withholding tax under Section 1441 or 1442 of the Code, such
Lender shall deliver to the Administrative Agent and the Company:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax
treaty, properly completed IRS Forms 1001 and W-8 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;
(ii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States
trade or business of such Lender, two properly completed
and executed copies of IRS Form 4224 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;
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(iii) if such Lender is not a "bank" within the
meaning of Section 881(c) (3) (A) of the Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224,
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-8
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;
and
(iv) such other form or forms as may be required under
the Code or other laws of the United States as a condition
to exemption from, or reduction of, United States
withholding tax.
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.
(b) If any Lender claims exemption from, or reduction
of, withholding tax under a United States tax treaty by providing
IRS Form 1001 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 1001 as no longer valid.
(c) If any Lender claiming exemption from United
States withholding tax by filing IRS Form 4224 with the
Administrative Agent and the Company 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
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 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
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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-8 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-8 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(g), all the Lenders. Upon request by
the Administrative Agent at any time, the Lenders will confirm in
writing the 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.
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(d) (i) Any and all proceeds of disposition or other
realization on the Collateral or from any realization on any
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 any 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
Lender's 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 any Guaranty to any Lender Party shall be based
upon the proportion which the amount of such Liabilities of such
Lender 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.
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(iii) Payments of proceeds of Collateral or of any
realization on any Guaranty by the Administrative Agent in
respect of (i) the Obligations shall be made to the
Administrative Agent for distribution to the Lenders pro rata and
(ii) 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 therefrom,
shall be effective unless the same shall be in writing and signed
by the Required Lenders and the Company 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 (provided, that any date fixed for repayment of
principal of any Term A Loan may be postponed or delayed (but not
beyond March 31, 2003) with the consent of Term A Lenders with an
aggregate Term A Percentage of at least 66-2/3%);
(c) 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, shall be made without the written consent of the
Required Revolving Lenders, Required Term A Lenders and Required
Term B Lenders;
(d) 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;
(e) no such waiver, amendment or consent shall
(subject to clause (m) 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;
(f) no such waiver, amendment or consent shall (w)
change the aggregate percentage of the Total Percentage which is
required for the Lenders or any of them to take any
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action hereunder without the written consent of all Lenders, (x)
amend the definition of "Required Revolving Lenders" without the
written consent of all Revolving Lenders, (y) amend the
definition of "Required Term A Lenders" without the written
consent of all Term A Lenders or (z) amend the definition of
"Required Term B Lenders" without the written consent of all Term
B Lenders;
(g) no such waiver, amendment or consent shall release
any Guaranty 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;
(h) 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;
(i) after the making of the Term Loans, Sections 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;
(j) 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;
(k) 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;
(1) 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
(m) 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
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
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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 Administrative
Agent, the Documentation Agent and the Arranger and their
Affiliates (including BofA in its capacities as Swingline Lender
and Issuing Lender) within five Business Days after demand
therefor (subject to subsection 5.1(f)) for all reasonable and
documented costs and expenses incurred by such Agents and the
Arranger 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 such Agents and the Arranger
with respect thereto; and
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(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 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 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.
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
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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) or (iv) 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, Term A Loans or Term B 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) or (iv) of the definition of Eligible Assignee)
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 has paid to the Administrative Agent a processing fee in
the amount of $3,500 and (B) the Company shall not, as a result
of any assignment by any Lender to any of such Lender's
Affiliates, 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.
(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
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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.
(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, Required Term A Lenders or Required
Term B Lenders, in each case as described in clauses (a) through
(h) of the proviso to Section 11.1. In the case of any such
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
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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 ss. CFR 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, with the consent of the Company,
the Administrative Agent, and in the case of an assignment of a
Revolving Commitment or L/C Obligations, the Issuing Lender and
the Swingline Lender, 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
nonpublic 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 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,
any such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits
111
<PAGE>
(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 against any and all Obligations owing
to such Lender, now or hereafter existing, irrespective of
whether or not the Administrative Agent or such Lender shall have
made demand under this Agreement or any other Loan Document and
although such Obligations may be contingent or unmatured 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, the
Company hereby irrevocably authorizes BofA to debit any deposit
account of the Company 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.
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, the Lenders, 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
112
<PAGE>
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, 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, 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, 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, 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, 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 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, 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.
113
<PAGE>
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: /s/ Thomas E. Gibbons
Title: Senior Vice President and Treasurer
S-1
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent
By: /s/ Eric A. Schubert
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Issuing Lender
By: /s/ Eric A. Schubert
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Swingline Lender
By: /s/ Eric A. Schubert
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Lender
By: /s/ Eric A. Schubert
Title: Managing Director
S-2
<PAGE>
BANKERS TRUST COMPANY, as
Documentation Agent and as a Lender
By: /s/ Robert R. Telesca
Title: Assistant Vice President
S-3
<PAGE>
CITICORP USA, INC., as Co-Agent and as a
Lender
By: /s/ Michael M. Leyland
Title: Attorney-in-fact and Vice President
S-4
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
as Co-Agent and as a Lender
By: /s/ Diane J. Exter
Title: Managing Director
S-5
<PAGE>
GENERAL ELECTRIC CAPITAL
CORPORATION, as Co-Agent and as a
Lender
By: /s/ Michael McGonigle
Title:
S-6
<PAGE>
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY,
as Co-Agent and as a Lender
By: /s/ Paul B. Clifford
Title: Deputy General Manager
S-7
<PAGE>
ABN AMRO BANK N.V., as a Lender
By: /s/ [signature illegible]
Title: Vice President
By: /s/ Daniel P. Taylor
Title: AVP
S-8
<PAGE>
BHF-BANK AKTIENGESELLSCHAFT, as a
Lender
By: /s/ Anthony Heyman
Title: Assistant Treasurer
By: /s/ Dana McDougall
Title: Vice President
S-9
<PAGE>
CREDIT LYONNAIS LOS ANGELES
BRANCH, as a Lender
By: /s/ David Miller
Title: Vice President
S-10
<PAGE>
THE FIRST NATIONAL BANK OF
CHICAGO, as a Lender
By: /s/ Jacqueline Hopkins
Title: Authorized Agent
S-11
<PAGE>
FLEET NATIONAL BANK, as a Lender
By: /s/ James Silva
Title: AVP
S-12
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS
L.P., as a Lender
By: /s/ Edward C. Forst
Title: Authorized Signatory
S-13
<PAGE>
MARINE MIDLAND BANK, as a Lender
By: /s/ J.B. Lyons
Title: Senior Vice President
S-14
<PAGE>
MERITA BANK LTD., NEW YORK
BRANCH as a Lender
By: /s/ C. Foster
Title: VP
By: /s/ [signature illegible]
Title: VP
S-15
<PAGE>
MITSUI LEASING (U.S.A.) INC., as a Lender
By: /s/ Jerry Parisi
Title: Senior Vice President
S-16
<PAGE>
NATIONAL CITY BANK, as a Lender
By: /s/ Joseph D. Robison
Title: Vice President
S-17
<PAGE>
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND" NEW
YORK BRANCH, as a Lender
By: /s/ Ian Reece
Title: Vice President & Manager
By: /s/ M. Christina Debler
Title: Vice President
S-18
<PAGE>
THE BANK OF NEW YORK, as a Lender
By: /s/ Jonathan Rollins
Title: Assistant Vice President
S-19
<PAGE>
THE BANK OF NOVA SCOTIA, as a Lender
By: /s/ John Quick
Title: Sr. Relationship Manager
S-20
<PAGE>
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR, as a Lender
By: /s/ Iain Whyte
Title: Vice President
By: /s/ Daniel Touffu
Title: 1st Vice President and Regional
Manager
S-21
<PAGE>
CITY NATIONAL BANK, as a Lender
By: /s/ Kim R. Bingham
Title: Senior Vice President
S-22
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE, as a Lender
By: /s/ Sean Mounier
Title: First Vice President
By: /s/ Bernard Laleuf
Title: Senior Vice President and Deputy
General Manger
S-23
<PAGE>
DRESDNER BANK AG, NEW YORK
BRANCH AND GRAND CAYMAN
BRANCH, as a Lender
By: /s/ John. W. Sweeney
Title: Assistant Vice President
By: /s/ Christopher E. Sarisky
Title: Assistant Treasurer
s-24
<PAGE>
HELLER FINANCIAL, INC., as a Lender
By: /s/ Joann L. Holman
Title: Assistant Vice President
S-25
<PAGE>
IMPERIAL BANK, a California banking
corporation, as a Lender
By:/s/ Margo L. Gravin
Title: Vice President
S-26
<PAGE>
THE INDUSTRIAL BANK OF JAPAN,
Limited, Los Angeles Agency, as a Lender
By: /s/ Carl-Eric Benzinger
Title: SVP & Senior Manager
S-27
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION, Los Angeles Agency, as a
Lender
By: /s/ Hiroaki Koseki
Title: Deputy General Manager
S-28
<PAGE>
SANWA BUSINESS CREDIT CORP., as a
Lender
By: /s/ Jennifer S. Kawar
Title: Vice President
S-29
<PAGE>
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as a Lender
By: /s/ [signature illegible]
Title: SVP
S-30
<PAGE>
UNION BANK OF CALIFORNIA, N.A., as a
Lender
By: /s/ Alison Amonette
Title: Vice President
S-31
<PAGE>
KZH HOLDING CORPORATION, as a Lender
By: /s/ Robert Goodwin
Title: Authorized Agent
S-32
<PAGE>
METROPOLITAN LIFE INSURANCE
COMPANY, as a Lender
By: /s/ James R. Dingler
Title: Assistant Vice President
S-33
<PAGE>
NEW YORK LIFE INSURANCE COMPANY,
as a Lender
By: /s/ Adam Clemens
Title: Managing Director
S-34
<PAGE>
OAK HILL SECURITIES FUND, L.P., as a
Lender
By: Oak Hill Securities GenPar, L.P., its
General Partner
By: Oak Hill Securities MGP, Inc., its
General Partner
By: /s/ Glenn R. August
Title: President
S-35
<PAGE>
MORGAN STANLEY SENIOR FUNDING,
INC., as a Lender
By: /s/ Christopher Pucillo
Title: Vice President
S-36
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST, as a
Lender
By: /s/ Jeffrey W. Maillet
Title: Senior Vice President & Director
S-37
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY,
as a Lender
By: /s/ [signature illegible]
Title: Authorized Signatory
By: /s/ [signature illegible]
Title: Authorized Signatory
S-38
<PAGE>
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
By: ING Capital Advisors, Inc., as
Investment Advisor, as a Lender
By: /s/ Michael D. Haley
Title: Vice President & Portfolio Manager
S-39
<PAGE>
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY, as a Lender
By: /s/ Michael P. Hermsen
Title: Managing Director
S-40
<PAGE>
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (a Unit of The Chase
Manhattan Bank), as a Lender
By: /s/ Richard W. Stewart
Title: Managing Director
S-41
<PAGE>
PILGRIM AMERICA PRIME RATE TRUST,
as a Lender
By: /s/ Howard Tiffen
Title: Senior Vice President
S-42
<PAGE>
ORIX USA Corporation, as a Lender
By: /s/ [signature illegible]
Title: Senior Vice President
S-43
<PAGE>
PPM AMERICA, INC., as attorney in fact, on
behalf of Jackson National Life Insurance
Company
By: /s/ Michael Di Re
Title: Managing Director
S-44
<PAGE>
TCW ASSET MANAGEMENT COMPANY as
Attorney-in-Fact for Integon Life Insurance
Corporation, as a Lender
By: /s/ Justin Driscoll
Title: SVP
S-45
<PAGE>
TCW ASSET MANAGEMENT COMPANY as
Attorney-in-Fact for United Companies Life
Insurance Company, as a Lender
By: /s/ Justin Driscoll
Title: SVP
S-46
<PAGE>
Exhibit 4.5
Conformed Copy
PARENT GUARANTY
This PARENT GUARANTY (this "Guaranty"), dated as of April
18, 1997, is executed by DEL MONTE FOODS COMPANY, a Maryland
corporation (the "Guarantor"), in favor of BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, in its capacity as
administrative agent for the Lender Parties referred to below (in
such capacity, together with its successors in such capacity, the
"Administrative Agent").
W I T N E S S E T H
WHEREAS, Del Monte Corporation, a New York corporation and
a wholly-owned Subsidiary of the Guarantor (the "Company"), has
entered into a Credit Agreement dated as of even date herewith
(as amended, supplemented, restated or otherwise modified from
time to time, the "Credit Agreement"; terms used but not defined
herein are used herein as defined in the Credit Agreement) with
various financial institutions, the Administrative Agent, Bankers
Trust Company, as documentation agent, and The First National
Bank of Boston, Citicorp USA, Inc., General Electric Capital
Corporation and The Long-Term Credit Bank of Japan, Ltd., Los
Angeles Agency, as co-agents, pursuant to which such financial
institutions have agreed to make available to the Company term
loans and a revolving credit facility with a letter of credit
subfacility;
WHEREAS, as a condition to the making of extensions of
credit under the Credit Agreement, the Guarantor has authorized
the execution, delivery and performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to
execute this Guaranty inasmuch as the Guarantor will derive
substantial direct and indirect benefits from the making of loans
and issuance of letters of credit pursuant to the Credit
Agreement, and the Guarantor is willing to guarantee the
Liabilities (as defined below) as hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Guarantor hereby unconditionally and irrevocably, as primary
obligor and not merely as surety, guarantees to the
Administrative Agent for its benefit and the benefit of the
Lender Parties the full and prompt payment and performance when
due (taking into consideration any applicable grace periods given
under the Credit Agreement), whether by acceleration or
otherwise, and at all times thereafter, of (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) (all the foregoing being herein
collectively called the "Liabilities"); provided, however, that
the liability of the Guarantor hereunder shall be limited to the
maximum amount which the Guarantor may incur
<PAGE>
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 Guaranty against the Guarantor); provided,
further, that the term "Liabilities" shall not include any
obligations arising under any Environmental Indemnity. As used
herein, (i) the term "Lender Party" means each Agent and each
Lender under and as defined in the Credit Agreement and any
Affiliate of such a Lender which is a party to a Swap Contract
with the Company, and (ii) the term "Obligor" means the Company,
the Guarantor and any other Person (other than any Agent or any
Lender or their permitted successors and assigns) obligated under
any Loan Document, and their permitted successors and assigns.
The Guarantor agrees that upon the occurrence of any Event
of Default under Section 9.1(f) or (g)} of the Credit Agreement
with respect to the Company, the Parent or any Material
Subsidiary, and if such event shall occur at a time when any of
the Liabilities may not then be due and payable, the Guarantor
will pay to the Administrative Agent for the account of the
Lender Parties forthwith the full amount which would be payable
hereunder by the Guarantor if all Liabilities were then due and
payable.
This Guaranty shall in all respects be a continuing,
irrevocable, absolute and unconditional guaranty of payment, and
not a guaranty of collection, and shall remain in full force and
effect (notwithstanding, without limitation, the dissolution of
the Guarantor or the Company or any other Obligor or that at any
time or from time to time no Liabilities are outstanding) until,
subject to the next paragraph, the payment in full of all the
Liabilities (other than Liabilities in the nature of contingent
continuing indemnification obligations), the expiration or
termination of all Letters of Credit and 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).
All obligations of the Guarantor hereunder are secured by,
among other things, that certain Security Agreement dated as of
April 18, 1997 (as amended, supplemented, restated or otherwise
modified from time to time, the "Security Agreement") among the
Company, the Guarantor and the Administrative Agent and by that
certain Parent Pledge Agreement dated as of April 18, 1997 (as
amended, supplemented, restated or otherwise modified from time
to time, the "Parent Pledge Agreement"), between the Guarantor
and the Administrative Agent.
The Guarantor further agrees that if at any time all or any
part of any payment theretofore applied by the Administrative
Agent or any Lender Party to any of the Liabilities is or must be
rescinded or returned by the Administrative Agent or such Lender
Party for any reason whatsoever (including, the insolvency,
bankruptcy or reorganization of the Company or the Guarantor or
any other Obligor), such Liabilities shall, for the purposes of
this Guaranty, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Administrative Agent or
such Lender Party, and this Guaranty shall continue to be
effective or be reinstated, as the case may be, as to such
Liabilities, all as though such application by the Administrative
Agent or such Lender Party had not been made.
2
<PAGE>
The Guarantor represents and warrants to the Administrative
Agent and each Lender Party that (i) it is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, (ii) it is engaged solely
in the business of being a holding company for the Company, (iii)
the execution and delivery of this Guaranty and the performance
by it of its obligations hereunder are within its corporate
powers, have been duly authorized by all necessary corporate
action (including, without limitation, any necessary shareholder
approval), have received all necessary governmental approvals (if
any shall be required), and do not and will not contravene or
conflict with any Requirement of Law or of any Contractual
Obligation binding upon or applicable to it or any of its
property, and (iv) this Guaranty is its legal, valid and binding
obligation, enforceable against it 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 equitable principles relating to
enforceability.
The Guarantor further 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.
The Guarantor covenants that (i) it will not permit any
change to be made in the character of its business as carried 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
Guaranty, (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
liabilities arising directly as a result of its ownership of the
Company and in any event will not incur or suffer to exist any
Indebtedness for borrowed money or any Guaranty Obligations
(other than pursuant to this Guaranty or pursuant to the
Subordinated Indenture, provided that the Guaranty Obligations
that arise pursuant to the Subordinated Indenture are
subordinated to the Guaranty Obligations that arise pursuant to
this Guaranty on substantially the same terms as the Subordinated
Debt is subordinated to the Liabilities), (v) it will comply with
Sections 8.1, 8.11, 8.12, 8.13, 8.14, and 8.15 of the Credit
Agreement, (vi) 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 (1))
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) of the Credit Agreement has occurred and is
continuing, Redemptions made with the Net Cash Proceeds of an
equity issuance by, or capital contribution to, the Guarantor and
(vii) it will not issue any TPG Acquisition Preferred Stock for a
price per share less than the
3
<PAGE>
liquidation preference thereof (i.e., $1,000 per share), other
than in payment of regularly scheduled dividends thereon.
The Administrative Agent or any Lender Party may, from time
to time, at its sole discretion and without notice to the
Guarantor, take any or all of the following actions without
impairing the obligations of the Guarantor under this Guaranty:
(a) retain or obtain a security interest in any property to
secure any of the Liabilities or any obligation hereunder, (b)
retain or obtain the primary or secondary obligation of any
obligor or obligors, in addition to the Guarantor, with respect
to any of the Liabilities, (c) extend or renew any of the
Liabilities for one or more periods (whether or not longer than
the original period), alter, modify or exchange any of the
Liabilities, or release or compromise any obligation of the
Guarantor hereunder or any obligation of any nature of any other
obligor with respect to any of the Liabilities, (d) release or
fail to perfect its security interest in, or impair, surrender,
release or permit any substitution or exchange for, all or any
part of any property securing any of the Liabilities or any
obligation hereunder, or extend or renew for one or more periods
(whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of
any obligor with respect to any such property, and (e) resort to
the Guarantor for payment of any of the Liabilities when due,
whether or not the Administrative Agent or such Lender Party
shall have resorted to any property securing any of the
Liabilities or any obligation hereunder or shall have proceeded
against the Guarantor or any other obligor primarily or
secondarily obligated with respect to any of the Liabilities (all
of the foregoing being expressly waived by the Guarantor to the
extent permitted by applicable law).
The Guarantor hereby expressly waives (a) notice of the
acceptance by the Administrative Agent or any Lender Party of
this Guaranty, (b) notice of the existence or creation or
non-payment of all or any of the Liabilities, (c) presentment,
demand, notice of dishonor, notice of intent to accelerate,
notice of acceleration, notice of intent to foreclose, protest,
and all other notices whatsoever and (d) all diligence in
collection or protection of or realization upon any Liabilities
or any security for or guaranty of any Liabilities.
Notwithstanding any payment made by or for the account of
the Guarantor pursuant to this Guaranty, the Guarantor shall not
be subrogated to any right of the Administrative Agent or any
Lender Party until such time as the Administrative Agent and the
Lender Parties shall have received final payment in cash of the
full amount of all Liabilities and all Commitments and all
Letters of Credit shall have terminated or expired.
The Guarantor 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
Liabilities of the Guarantor, or any part thereof, and in
enforcing this Guaranty against the Guarantor.
The creation or existence from time to time of additional
Liabilities to the Administrative Agent or the Lender Parties or
any of them is hereby authorized, without notice to the
Guarantor, and shall in no way affect or impair the rights of the
Administrative Agent or the Lender Parties
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or the obligations of the Guarantor under this Guaranty,
including the Guarantor's guaranty of such additional
Liabilities.
The Administrative Agent and any Lender Party may from time
to time without notice to the Guarantor, assign or transfer any
or all of the Liabilities or any interest therein; and,
notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Liabilities shall be and
remain Liabilities for the purposes of this Guaranty, and each
and every immediate and successive assignee or transferee of any
of the Liabilities or of any interest therein shall, to the
extent of the interest of such assignee or transferee in the
Liabilities, be entitled to the benefits of this Guaranty to the
same extent as if such assignee or transferee were an original
Lender Party.
No delay on the part of the Administrative Agent or any
Lender Party in the exercise of any right or remedy shall operate
as a waiver thereof, and no single or partial exercise by the
Administrative Agent or any Lender Party of any right or remedy
shall preclude other or further exercise thereof or the exercise
of any other right or remedy; nor shall any modification or
waiver of any provision of this Guaranty be binding upon the
Administrative Agent or the Lender Parties except as expressly
set forth in writing duly signed and delivered on behalf of the
Administrative Agent. No action of the Administrative Agent or
any Lender Party permitted hereunder shall in any way affect or
impair the rights of the Administrative Agent or any Lender Party
or the obligations of the Guarantor under this Guaranty.
Notwithstanding anything herein to the contrary, the guarantee by
the Guarantor of the Liabilities shall not be subject to any
right or power of the Company or anyone else to assert any claim
or defense as to the invalidity or unenforceability of any such
Liabilities, and no such claim or defense shall affect or impair
the obligations of the Guarantor hereunder.
Pursuant to the Credit Agreement, (a) this Guaranty has
been delivered to the Administrative Agent and (b) the
Administrative Agent has been authorized to enforce this Guaranty
on behalf of itself and each of the Lender Parties. All payments
by the Guarantor pursuant to this Guaranty shall be made to the
Administrative Agent for the ratable benefit of the Lender
Parties.
This Guaranty shall be binding upon the Guarantor and the
successors and assigns of the Guarantor; and to the extent that
the Company or the Guarantor is either a partnership or a
corporation, all references herein to the Company and to the
Guarantor, respectively, shall be deemed to include any successor
or successors, whether immediate or remote, to such partnership
or corporation.
THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. Wherever
possible each provision of this Guaranty shall be interpreted in
such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
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This Guaranty may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, and
each such counterpart shall be deemed to be an original but all
such counterparts shall together constitute one and the same
Guaranty. At any time after the date of this Guaranty, one or
more additional Persons may become parties hereto by executing
and delivering to the Administrative Agent a counterpart of this
Guaranty. Immediately upon such execution and delivery (and
without any further action), each such additional Person will
become a party to, and will be bound by all of the terms of, this
Guaranty.
To the extent that any provisions of this Guaranty conflict
with any provisions of the Credit Agreement, the provisions of
the Credit Agreement control.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY 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
GUARANTY, THE GUARANTOR, AND BY ACCEPTING THE BENEFITS HEREOF,
THE ADMINISTRATIVE AGENT AND EACH LENDER PARTY, CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURTS. THE GUARANTOR, THE ADMINISTRATIVE
AGENT AND EACH LENDER PARTY 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 GUARANTY OR ANY DOCUMENT RELATED
HERETO. THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER
PARTY EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW.
THE GUARANTOR, AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
OF THE ADMINISTRATIVE AGENT AND EACH LENDER PARTY, 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
GUARANTY, 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 GUARANTOR, THE ADMINISTRATIVE AGENT AND
THE LENDER PARTIES 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 ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS,
IN WHOLE OR IN
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<PAGE>
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
GUARANTY 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 GUARANTY AND THE
OTHER LOAN DOCUMENTS.
THIS WRITTEN GUARANTY, THE CREDIT AGREEMENT, THE NOTES, THE
OTHER LOAN DOCUMENTS, AND THE INSTRUMENTS AND DOCUMENTS EXECUTED
IN CONNECTION HEREWITH, REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly executed and
delivered as of the day and year first above written.
DEL MONTE FOODS COMPANY
By: /s/ Jon W. Graves
-------------------------------
Title: Assistant Treasurer
----------------------------
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Exhibit 4.6
Conformed Copy
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement"), dated as
of April 18, 1997, is among DEL MONTE CORPORATION, a New York
corporation (the "Company"); DEL MONTE FOODS COMPANY, a Maryland
corporation (the "Parent") (the Company and the Parent
collectively, the "Debtors" and individually each a "Debtor");
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, in
its capacity as administrative agent for the Lender Parties
referred to below (in such capacity, together with its successors
in such capacity, the "Administrative Agent").
W I T N E S S E T H
WHEREAS, the Company has entered into a Credit
Agreement, dated as of April 18, 1997 (as amended, supplemented,
restated or otherwise modified from time to time, the "Credit
Agreement"), with the several financial institutions from time to
time party to the Credit Agreement, the Administrative Agent,
Bankers Trust Company, as documentation agent, and The First
National Bank of Boston, Citicorp USA, Inc., General Electric
Capital Corporation and The Long-Term Credit Bank of Japan, Ltd.,
Los Angeles Agency, as co-agents, pursuant to which such
financial institutions have agreed to make available to the
Company term loans and a revolving credit facility with a letter
of credit subfacility;
WHEREAS, the Parent has executed and delivered that
certain Parent Guaranty of even date herewith (as amended,
supplemented, restated or otherwise modified from time to time,
the "Parent Guaranty") covering the obligations of the Company
under the Credit Agreement;
WHEREAS, the obligations of the Company and the other
Obligors under the Credit Agreement and the other Loan Documents
and the obligations of the Parent under the Parent Guaranty and
the other Loan Documents are to be secured pursuant to this
Agreement;
WHEREAS, as a condition to the making of extensions of
credit under the Credit Agreement, each of the Debtors has duly
authorized the execution, delivery and performance of this
Agreement; and
WHEREAS, it is in the best interests of the Parent to
execute this Agreement inasmuch as the Parent will derive
substantial direct and indirect benefits from the making of the
Loans and the issuance of the Letters of Credit.
NOW, THEREFORE, for and in consideration of any loan,
advance or other financial accommodation heretofore or hereafter
made to the Company under or in connection with the Credit
Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
<PAGE>
1. Definitions. When used herein, (a) the terms Account,
Certificated Security, Chattel Paper, Deposit Account, Document,
Equipment, Fixture, General Intangible, Goods, Inventory,
Instrument, Money, Security and Uncertificated Security have the
respective meanings assigned to such terms in the Uniform
Commercial Code (as defined below), (b) the terms Commodity
Account, Commodity Contract, Investment Property, Security
Entitlement and Securities Account have the respective meanings
assigned thereto in the 1994 Amendments to Articles 8 and 9 of
the Uniform Commercial Code promulgated by the American Law
Institute and the National Conference of Commissioners for
Uniform State Laws and (c) the following terms have the following
meanings (such definitions to be applicable to both the singular
and plural forms of such terms):
Account Debtor means the party who is obligated on or
under any Non-Tangible Collateral.
Assignee Deposit Account - see Section 4.
Benefits - see Section 6.
Cash Instruments means all cash, checks, drafts and
other instruments or writings for the payment of money.
Collateral means, with respect to any Debtor, all
property and rights of such Debtor in which a security interest
is granted hereunder.
Computer Hardware and Software means, with respect to
any Debtor, all of such Debtor's rights (including without
limitation rights as licensee and lessee) with respect to: (i)
all computer and other electronic data processing hardware,
including without limitation all integrated computer systems,
central processing units, memory units, display terminals,
printers, computer elements, card readers, tape drives, hard and
soft disk drives, cables, electrical supply hardware, generators,
power equalizers, accessories, peripheral devices and other
related computer hardware; (ii) all operating system software,
utilities and application programs in whatsoever form (source
code and object code in magnetic tape, disk or hard copy format
or any other listings whatsoever) designed for use on the
computers and electronic data processing hardware described in
clause (i) above; (iii) all firmware associated with any of the
foregoing; and (iv) any documentation for hardware, software and
firmware described in clauses (i), (ii) and (iii) above,
including without limitation flow charts, logic diagrams,
manuals, specifications, training materials, charts and pseudo
codes.
Concentration Account - see Section 7(a).
Concentration Bank means First Chicago NBD
Corporation, in its capacity as bank at which the Concentration
Account is maintained, or any successor thereto appointed
pursuant to Section 7.
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<PAGE>
Contract Right means, with respect to any Debtor, any
right of such Debtor to payment under a contract for the sale or
lease of goods or the rendering of services, which right is at
the time not yet earned by performance.
Default means the occurrence of: (a) any Unmatured
Event of Default under subsection 9.1(f) or (g) of the Credit
Agreement; or (b) any Event of Default.
Disbursement Account - see Section 7(a).
Disbursement Bank means any of the banks or other
financial institutions listed as a "Disbursement Bank" on
Schedule V hereto, as amended from time to time in accordance
with Section 7(c).
Intellectual Property means, with respect to any
Debtor, all of such Debtor's rights now or hereafter acquired
(including without limitation rights as licensor, licensee,
lessor or lessee) in all: trade secrets and other proprietary
information; trademarks, service marks, business names, designs,
logos, indicia and other source and/or business identifiers, and
the goodwill of the business relating thereto and all
registrations or applications for registrations which have
heretofore been or may hereafter be issued or filed thereon and
all renewals thereof throughout the world; copyrights (including
without limitation copyrights for computer programs) and
copyright registrations or applications for registrations which
have heretofore been or may hereafter be issued or filed,
including all renewals thereof, throughout the world and all
tangible property embodying the copyrights; unpatented inventions
(whether or not patentable); patent applications and patents; and
all reissues, divisions, continuations, extensions, renewals and
continuations-in-part of any of the foregoing; industrial
designs, industrial design applications and registered industrial
designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, source codes, object
codes and other physical manifestations, embodiments or
incorporations of any of the foregoing; the right to sue for all
past, present and future infringements of any of the foregoing;
and all common law and other rights throughout the world in and
to all of the foregoing.
Intercreditor Agreement means that certain Amended and
Restated Intercreditor Agreement, dated as of December 5, 1989,
among The First National Bank of Chicago, as administrative
agent, and the Creditors (as defined therein) which are now or
hereafter become parties thereto.
Lender Party means each Agent and each Lender under
and as defined in the Credit Agreement and any Affiliate of such
a Lender which is a party to a Swap Contract with the Company.
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.
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<PAGE>
License Agreement means that License Agreement date as
of April 18, 1997, between the Company and the Administrative
Agent, as may be amended, supplemented, restated or otherwise
modified from time to time.
Lockbox Account - see Section 7(a).
Lockbox - see Section 7(a).
Non-Tangible Collateral means, with respect to any
Debtor, collectively, such Debtor's Accounts, Contract Rights and
General Intangibles.
Obligor means the Company, the Parent or any other
Person (other than any Agent or any Lender or their permitted
successors and assigns) obligated under any Loan Document, and
their permitted successors and assigns.
Permitted Senior Security Interest has the meaning set
forth in the Intercreditor Agreement.
Primary Intellectual Property Collateral means that
portion, to the extent subject to the Intercreditor Agreement, of
the Collateral relating to or arising from the Intellectual
Property arising under the laws of or located in the United
States with respect to products produced and sold by the Company
in its business, excluding, however, from the foregoing, as long
as a Prior Arrangement with respect thereto in favor of a third
party remains in effect, any of such Collateral used with respect
to those products covered by the license agreements listed as
items 1, 3, 12 and 15 of Schedule A to the License Agreement.
Prior Arrangements has the meaning set forth in the
License Agreement.
Receiving Account - see Section 7(a).
Receiving Bank means any of the banks or other
financial institutions listed as a "Receiving Bank" on Schedule V
hereto, as amended from time to time in accordance with Section
7(c) which banks are all the Banks that maintain Lockbox Accounts
or Receiving Accounts.
Trademarks means, with respect to any Debtor, all of
such Debtor's rights now or hereafter acquired (including without
limitation rights as licensor, licensee, lessor or lessee) in all
trademarks (including without limitation the trademarks listed on
Schedule IV attached hereto), all designs and logotypes related
to such trademarks, in any and all forms, and all trademark
registrations and applications for registration related to such
trademarks, including the right to sue for all past, present and
future infringements of any of the foregoing and all common law
and other rights throughout the world in and to all of the
foregoing.
Trade Secrets means, with respect to any Debtor, all
of such Debtor's rights now or hereafter acquired in all trade
secrets (including without limitation the trade secrets listed on
Schedule VI hereto), including the right to sue for all past,
present and future infringements of
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<PAGE>
any of the foregoing and all common law and other rights throughout
the world in and to all of the foregoing.
Uniform Commercial Code means the Uniform Commercial
Code as in effect in the State of New York on the date of this
Agreement; provided, however, as used in Section 8 hereof and in
the definitions of "Commodity Account", "Commodity Contract",
"Investment Property", "Security Entitlement" and "Securities
Account", "Uniform Commercial Code" shall mean the Uniform
Commercial Code as in effect from time to time in the applicable
jurisdiction.
Terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit
Agreement.
2. Grant of Security Interest. As security for the
payment of all Liabilities, each Debtor hereby assigns to the
Administrative Agent for the benefit of the Lender Parties, and
grants to the Administrative Agent for the benefit of the Lender
Parties, a continuing security interest in the following, whether
now or hereafter existing or acquired:
All of such Debtor's:
(i) Accounts;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv)Computer Hardware and Software and all rights
with respect thereto, including without limitation
all licenses, options, warranties, service
contracts, program services, test rights,
maintenance rights, support rights, improvement
rights, renewal rights and indemnifications, and
all substitutions, replacements, additions or
model conversions of any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) General Intangibles;
(ix)Goods (including without limitation all of its
Equipment, Fixtures and Inventory), and all
accessions, additions, attachments, improvements,
substitutions and replacements thereto and
therefor;
(x) Instruments;
(xi) Intellectual Property;
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<PAGE>
(xii) Money;
(xiii)Commodity Accounts, Commodity Contracts,
Investment Property, Security Entitlements and Securities
Accounts;
(xiv) Uncertificated Securities; and
(xv) to the extent not included in the foregoing, other
personal property of any kind or description;
together with all books, records, writings, data
bases, information and other property relating to,
used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of
the foregoing, and all proceeds, products,
offspring, rents, issues, profits and returns of
and from any of the foregoing.
3. Warranties. Each Debtor warrants to the
Administrative Agent and each Lender Party that: (i) no financing
statement (other than any which may have been filed on behalf of
the Administrative Agent or in connection with Permitted Liens)
covering any of the Collateral is on file in any public office,
except for those relating to the Debt to be Repaid; (ii) such
Debtor is and will be the lawful owner of all of its Collateral,
free of all liens and claims whatsoever, other than the security
interest hereunder and Permitted Liens with full power and
authority to execute this Agreement and perform such Debtor's
obligations hereunder, and to subject the Collateral to the
security interest hereunder; (iii) all information with respect
to Collateral and Account Debtors set forth in any schedule,
certificate or other writing delivered on the Closing Date or
hereafter furnished by such Debtor to the Administrative Agent or
any Lender Party is and will be true and correct in all material
respects as of the date furnished; (iv) such Debtor's chief
executive office and principal place of business are as set forth
on Schedule I hereto (and such Debtor has not maintained its
chief executive office and principal place of business at any
other location at any time after January 1, 1996); (v) each other
location where such Debtor maintains a place of business (or
where Goods of such Debtor are located) is set forth on Schedule
II hereto, and no Goods of any Debtor have been kept at any other
place during the four months preceding the date of this
Agreement; (vi) except as set forth on Schedule III hereto, such
Debtor is not now known and during the five years preceding the
date hereof has not previously been known by any trade name;
(vii) except as set forth on Schedule III hereto, during the five
years preceding the date hereof such Debtor has not been known by
any legal name different from the one set forth on the signature
pages of this Agreement with respect to such Debtor nor has such
Debtor been the subject of any merger or other corporate
reorganization (other than, with respect to the Parent, the
Merger); (viii) Schedule IV hereto contains a complete listing of
all of such Debtor's Intellectual Property which is the subject
of a pending or issued registration statute (including without
limitation registrations and applications therefor), and such
Debtor is the exclusive owner of the entire and unencumbered
right, title and interest in and to such Intellectual Property
but subject to the Intercreditor Agreement and the Prior
Arrangements; (ix) such Debtor is a corporation duly organized,
validly existing and in good standing under the laws of the state
of its incorporation; (x) the execution and delivery of this
Agreement and the
6
<PAGE>
performance by such Debtor of its obligations hereunder are
within such Debtor's corporate powers, have been duly authorized
by all necessary corporate action, have received all necessary
governmental approval (if any shall be required), and do not and
will not contravene or conflict with any provision of law or of
the charter or by-laws of such Debtor or of any material
agreement, indenture, instrument or other document, or any
material judgment, order or decree, which is binding upon such
Debtor; (xi) this Agreement is a legal, valid and binding
obligation of such Debtor, enforceable in accordance with its
terms, except that the enforceability of this Agreement may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by equitable principles relating
to enforceability; (xii) such Debtor is in compliance with the
requirements of all applicable laws (including without limitation
the provisions of the Fair Labor Standards Act), rules,
regulations and orders of every governmental authority, the
non-compliance with which would reasonably be expected to result
in a Material Adverse Effect; (xiii) [intentionally omitted];
(xiv) the Parent has no Subsidiary other than the Company, and
the Company has no other Subsidiary except as disclosed in
Schedule 6.15 of the Credit Agreement; (xv) if the Collateral
includes Inventory located in the State of California, such
Debtor is not a "retail merchant" within the meaning of Section
9102 of the Uniform Commercial Code - Secured Transactions of the
State of California; (xvi) the Company has delivered or caused to
be delivered to the Administrative Agent a copy of the most
recent and fully executed Intercreditor Agreement which has been
certified as true, correct and complete by an authorized officer
of the Company and which is in full force and effect; (xvii) the
Intercreditor Agreement has not been amended, supplemented,
restated or otherwise modified in any respect since the date the
certified copy of the Intercreditor Agreement described in clause
(xvi) above was last delivered to the Administrative Agent;
(xviii) the Company has delivered or caused to be delivered to
the Administrative Agent a list identifying all of the Creditors
(as defined in the Intercreditor Agreement) currently party to
the Intercreditor Agreement as of the date hereof; (xix) the
Intellectual Property covered by the Intercreditor Agreement is
truly, correctly and completely described in all material
respects in the License Agreement; (xx) all of (a) the Cash
Instruments in the Lockboxes, Lockbox Accounts, Receiving
Accounts, Concentration Accounts and Disbursement Accounts and
all other Deposit Accounts, (b) the Lockbox Accounts, the
Receiving Accounts, the Concentration Accounts and the
Disbursement Accounts and all other Deposit Accounts, and (c) all
other Money from time to time on deposit in any of the accounts
described in the immediately preceding clause (b) and all
investments thereof and proceeds from such investments, are owned
by the Parent or the Company, or both, and no other Person holds
any right, title or interest to such Cash Instruments, Deposit
Accounts, Money or investments; and (xxi) as of the Closing Date
and upon the execution of the Intercreditor Agreement by the
Administrative Agent and delivery to each of the Creditors (as
defined thereunder): (a) the Liabilities are Eligible Senior
Claims (as defined in the Intercreditor Agreement) and the
security interest granted hereunder in the Primary Intellectual
Property Collateral held by the Administrative Agent for the
benefit of the Lender Parties is a Permitted Senior Security
Interest, (b) such Eligible Senior Claims of a Lender Party
secured by such Permitted Senior Security Interest in clause
(xxi)(a) above have a Value Share (as defined in the
Intercreditor Agreement) greater than zero (as calculated and
determined under the Intercreditor Agreement), (c) there are no
Permitted Non-Lender Licenses (as defined in the Intercreditor
Agreement) with respect to any of the Primary Intellectual
Property Collateral, (d) there are no Eligible Senior Claims
secured by Permitted Senior Security Interests in the Primary
Intellectual Property Collateral
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<PAGE>
with a Value Share greater than zero (as calculated and
determined under the Intercreditor Agreement) other than the
Liabilities, (e) there are no Liens on the Primary Intellectual
Property Collateral except the security interests granted
hereunder and under the License Agreement, and the Permitted
Licensee Security Interests (as defined in the Intercreditor
Agreement) securing Eligible Licensee Claims (as defined in the
Intercreditor Agreement) held by licensees under the Prior
Arrangements, (f) the security interest granted hereunder is a
valid and, upon due filings, perfected Lien upon the Primary
Intellectual Property Collateral granted hereunder, and is a
first priority Lien thereon subject only to the Permitted
Licensee Security Interests referenced in clause (xxi)(e) above,
and (g) all of the Creditors (as defined in the Intercreditor
Agreement) are those Persons parties to the Permitted Security
Agreements.
4. Collections, etc. Until such time after the
occurrence and during the continuance of a Default as the
Administrative Agent shall notify such Debtor of the revocation
of such power and authority, each Debtor (a) may, in the ordinary
course of its business, at its own expense, sell, assign, lease,
convey, transfer or otherwise dispose of or furnish under
contracts of service free and clear of the Liens in this
Agreement and all other Collateral Documents any of the Inventory
normally held by such Debtor for such purpose, use and consume,
in the ordinary course of its business, any raw materials, work
in process or materials normally held by such Debtor for such
purpose, and use, in the ordinary course of its business (but
subject to the terms of the Credit Agreement and Section 7 of
this Agreement), the cash proceeds of Collateral and other money
which constitutes Collateral, (b) will, at its own expense,
endeavor to collect, as and when due, all amounts due under any
of the Non-Tangible Collateral, including the taking of such
commercially reasonable action with respect to such collection as
the Administrative Agent may reasonably request or, in the
absence of such request, as such Debtor may deem advisable, and
(c) may grant, in the ordinary course of business, to any party
obligated on any of the Non-Tangible Collateral, any rebate,
refund or allowance to which such party may be lawfully entitled,
and may accept, in connection therewith, the return of Goods, the
sale or lease of which shall have given rise to such Non-Tangible
Collateral and may grant extensions of time to pay amounts due
and such other modifications of payment terms as shall be
commercially reasonable in the circumstances. The Administrative
Agent, however, may, after the occurrence and during the
continuance of a Default, whether before or after any revocation
of such power and authority or the maturity of any of the
Liabilities and, with contemporaneous notice to the Company
(provided that the failure to give such notice shall not give
rise to any liability to the Administrative Agent or any Lender
Party), notify any parties obligated on any of the Non-Tangible
Collateral to make payment to the Administrative Agent of any
amounts due or to become due thereunder and enforce collection of
any of the Non-Tangible Collateral by suit or otherwise and
surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not
longer than the original period) any indebtedness thereunder or
evidenced thereby. Upon request of the Administrative Agent after
the occurrence and during the continuance of a Default, each
Debtor will, at its own expense, notify any or all parties
obligated on any of the Non-Tangible Collateral to make payment
to the Administrative Agent of any amounts due or to become due
thereunder.
Upon request by the Administrative Agent after the
occurrence and during the continuance of a Default, each Debtor
will forthwith, upon receipt, transmit and deliver to the
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Administrative Agent, in the form received, all Cash Instruments
(properly endorsed, where required, so that such items may be
collected by the Administrative Agent) which may be received by
such Debtor at any time in full or partial payment or otherwise
as proceeds of any of the Collateral. Except as the
Administrative Agent may otherwise consent in writing, any such
Cash Instruments which may be so received by any Debtor will not
be commingled with any other of its funds or property, but will
be held separate and apart from its own funds or property and
upon express trust for the Administrative Agent until delivery is
made to the Administrative Agent. Each Debtor will comply with
the terms and conditions of any consent given by the
Administrative Agent pursuant to the foregoing sentence.
After the occurrence and during the continuance of a
Default, all items or amounts which are delivered by any Debtor,
any Receiving Bank, the Concentration Bank or any bank or other
financial institution maintaining a Lockbox or a Lockbox Account
to the Administrative Agent on account of partial or full payment
or otherwise as proceeds of any of the Collateral shall be
deposited to the credit of a deposit account (each, an "Assignee
Deposit Account") of such Debtor with the Administrative Agent,
as security for payment of the Liabilities. No Debtor shall have
any right to withdraw any funds deposited in any Assignee Deposit
Account. Subject to the terms and provisions of the Credit
Agreement (including without limitation, Section 10.11(d)
thereof), the Administrative Agent may, from time to time, in its
discretion, and shall upon request of the applicable Debtor made
not more than once in any week, apply all or any of the then
balance, representing collected funds, in the Assignee Deposit
Account toward payment of the Liabilities, whether or not then
due, in such order of application as the Administrative Agent may
determine, and the Administrative Agent may, from time to time,
in its discretion, release all or any of such balance to the
applicable Debtor.
After the occurrence and during the continuance of a
Default, the Administrative Agent is authorized to endorse, in
the name of the applicable Debtor, any item, howsoever received
by the Administrative Agent, representing any payment on or other
proceeds of any of the Collateral.
5. Certificates, Schedules and Reports. Each Debtor
will deliver to the Administrative Agent such schedules,
certificates and reports respecting all or any of the Collateral
subject to the security interest hereunder, and the items or
amounts received by such Debtor in full or partial payment of any
of the Collateral, as the Administrative Agent may reasonably
request from time to time in connection with the renewal of the
Collateral, or the protection, preservation, maintenance or
enforcement of the security interest granted hereunder or the
Collateral including, without limitation, all documents and
things in such Debtor's possession, or subject to its demand for
possession, related to the production and sale by such Debtor, or
any Affiliate, Subsidiary, licensee or subcontractor thereof, of
products or services sold by or under the authority of such
Debtor in connection with the Trademarks or Trade Secrets,
including by way of example, without limiting the interest
granted by this Agreement: (i) all lists and ancillary documents
which identify and describe any of such Debtor's customers, or
those of its Affiliates, Subsidiaries or licensees, for products
sold or services rendered under or in connection with the
Trademarks or Trade Secrets, including, without limitation, such
existing lists and ancillary documents which contain each
customer's full name and address, the full name
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<PAGE>
and address of all of its warehouses and branches, the identity
of the Person or Persons having the principal responsibility on
each customer's behalf for ordering products or services of the
kind supplied by such Debtor, the credit, payment, discount,
delivery and other sale terms applicable to such customer,
together with detailed information setting forth the total
purchases, by brand, product, style and size, and the patterns of
such purchases; (ii) all product and service specification
documents and production and quality control manuals used in the
manufacture of products or provision of services sold under or in
connection with the Trademarks or Trade Secrets; (iii) all
documents which reveal the names and addresses of all sources of
supply, and all terms of purchase and delivery, for all materials
and components used in the production of products or provision of
services, sold under or in connection with the Trademarks or
Trade Secrets; and (iv) all documents constituting or concerning
the then current or proposed advertising and promotion by such
Debtor or its Affiliates, Subsidiaries or licensees of products
or services sold under or in connection with the Trademarks or
Trade Secrets, including, by way of example and not in
limitation, all documents which reveal the media used or to be
used and the cost for all such advertising conducted within the
described period or planned for such products or services. In
connection with its enforcement of the security interest granted
hereunder, the Administrative Agent may use such information or
transfer it to any assignee or sublicensee permitted hereunder
for such assignee's or sublicensee's use.
The parties hereto shall take all reasonable action to
preserve the confidentiality of the Trade Secrets and all other
information disclosed by any Debtor pursuant to this Agreement.
Any schedule, certificate or report delivered
hereunder shall be executed by a duly authorized officer of the
applicable Debtor and shall be in such form and detail as the
Administrative Agent may reasonably specify. Each Debtor shall
immediately notify the Administrative Agent of the occurrence of
any event causing any loss or depreciation in the value of its
Inventory or other Goods which is material to the Company and its
Subsidiaries taken as a whole, and such notice shall specify the
amount of such loss or depreciation.
6. Agreements of the Debtors. Each Debtor: (a) will,
upon request of the Administrative Agent, execute such financing
statements and other documents (and pay the cost of filing or
recording the same in all public offices deemed appropriate by
the Administrative Agent) and do such other acts and things
(including, without limitation, delivery to the Administrative
Agent of any Instruments or Certificated Securities which
constitute Collateral), all as the Administrative Agent may from
time to time reasonably request, to establish and maintain a
valid security interest in the Collateral (free of all other
Liens, claims and rights of third parties whatsoever, other than
Permitted Liens) to secure the payment of the Liabilities; (b)
will keep all its Inventory at, and will not maintain any place
of business at any location other than, its address(es) shown on
Schedules I and II hereto or at such other addresses of which
such Debtor shall have given the Administrative Agent not less
than 30 days' prior written notice, provided that no such notice
shall be required for Inventory which is (i) located in any
jurisdiction in which the Administrative Agent has filed a valid
and effective financing statement covering such Inventory, and
(ii) stored at another address under a temporary arrangement in
the ordinary course of business; (c) will keep its records
concerning the Non-Tangible Collateral in such a manner as will
enable the Administrative Agent or its designees to determine at
any time
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the status of the Non-Tangible Collateral; (d) will furnish the
Administrative Agent such information concerning such Debtor, the
Collateral and the Account Debtors as the Administrative Agent
may from time to time reasonably request; (e) will provide or
cause to be provided the representatives and independent
contractors of the Administrative Agent or any Lender the
inspection rights and other rights and benefits set forth in
Section 7.10 of the Credit Agreement; (f) will, upon the
reasonable request of the Administrative Agent, stamp on its
records concerning the Collateral, and add on all Chattel Paper
constituting a portion of the Collateral, a notation, in form
satisfactory to the Administrative Agent, of the security
interest of the Administrative Agent hereunder; (g) except as
permitted by Section 8.2 of the Credit Agreement, will not, and
will not permit any of its Subsidiaries to, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise
dispose of any Collateral or except as permitted by Section 8.1
of the Credit Agreement, create, incur, assume or suffer to exist
any Lien upon or with respect to any part of the Collateral; (h)
will obtain or cause to be obtained the type of insurance set
forth in Section 7.6 of the Credit Agreement, and cause all such
policies to provide that loss thereunder shall be payable to the
Administrative Agent and the Company such that (1) losses less
than or equal to Five Million Dollars ($5,000,000) per occurrence
shall be payable to the Company only, and (2) losses in excess of
Five Million Dollars ($5,000,000) per occurrence shall be payable
to the Administrative Agent, and such policies or certificates
thereof shall, if the Administrative Agent so requests, be
deposited with or furnished to the Administrative Agent; (i) will
amend and maintain each liability insurance policy insuring such
Debtor, its Inventory or other goods so that each such insurance
policy names the Administrative Agent as an additional insured;
(j) will maintain and preserve its property in the same manner as
set forth in Section 7.5 of the Credit Agreement; (k) will
promptly pay when due all license fees, registration fees, taxes,
assessments and other charges which may be levied upon or
assessed against the ownership, operation, possession,
maintenance or use of its Equipment and other Goods (as
applicable) other than any such items being contested by
appropriate proceedings if such Debtor maintains adequate
reserves therefor in conformity with GAAP; (l) will, upon
reasonable request of the Administrative Agent, (i) cause to be
noted on the applicable certificate, in the event any of its
Equipment is covered by a certificate of title, the security
interest of the Administrative Agent in the Equipment covered
thereby, and (ii) deliver all such certificates covering the
Equipment to the Administrative Agent or its designees; (m) (i)
at any time that the Company, the Parent, any Subsidiary or any
Affiliate of the Company receives any Certificated Security,
intercompany note, other note, Instrument or Chattel Paper with a
face amount or fair market value in excess of $250,000, will
promptly notify the Administrative Agent of such receipt, and
(ii) will take all steps reasonably necessary to protect,
preserve and maintain all of its rights in the Collateral,
including, without limitation, delivery of all Chattel Paper and
Instruments to the Administrative Agent upon request by the
Administrative Agent therefor; (n) during the term hereof, upon
becoming aware of any change in the identity of any of the
parties to the Intercreditor Agreement, such Debtor shall
promptly, but in no event later than fifteen (15) days
thereafter, provide or cause to be provided, notice of the same
to the Administrative Agent and, upon reasonable request of the
Administrative Agent, promptly but in no event later than fifteen
(15) days after such reasonable request, provide or cause to be
provided to the Administrative Agent an updated list of the
Persons then party to the Intercreditor Agreement; and (o) will
reimburse the Administrative Agent for all reasonable, documented
and out-of-pocket expenses, including
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<PAGE>
without limitation Attorney Costs, incurred by the Administrative
Agent in seeking to collect or enforce any rights in respect of
such Debtor's Collateral.
Each Debtor covenants and agrees that it shall not
create or permit to exist any Lien (including license rights)
upon the Primary Intellectual Property Collateral except the
security interest granted hereunder and except those Liens
referenced in Section 3(xxi)(d) and (e) hereof. Each Debtor
covenants and agrees that it shall not enter into or permit to
exist any license agreements other than those in effect on the
Closing Date and other than future license agreements which do
not provide for the licensing of any rights or interests in the
Primary Intellectual Property Collateral and which do not result
in any party (other than those referenced in Section 3(xxi)(d)
and (e) hereof) holding an Eligible Senior Claim (as defined in
the Intercreditor Agreement) secured by a Permitted Senior
Security Interest in the Primary Intellectual Property Collateral
with a Value Share (as defined in the Intercreditor Agreement)
greater than zero (as determined and calculated under the
Intercreditor Agreement).
Without limiting clause (a) of the immediately
preceding paragraph, each Debtor shall, contemporaneously
herewith, execute and deliver to the Administrative Agent a
Patent Security Agreement, a Trademark Security Agreement and a
Copyright Security Agreement in the forms of Exhibits A, B and C
hereto.
Any loss benefits ("Benefits") under any insurance
policy maintained by a Debtor shall be held as additional
Collateral hereunder. So long as no Default shall have occurred
and be continuing, and with respect to such Benefits payable to
the Administrative Agent pursuant to Section 6(h) hereof, the
Administrative Agent shall, upon the Company's instruction and
net of collection expenses, if any, (i) release to the Company
the amount of such Benefits to the extent that the Company has
submitted a written request to use such Benefits for the
financing of the replacement, substitution or restoration of the
assets sustaining the casualty loss giving rise to such Benefits,
and (ii) apply in all other circumstances any Benefits not used
as described in clause (i) toward the payment of the Liabilities
as provided in Section 2.8 of the Credit Agreement and/or toward
reduction of the Commitments as provided in Section 2.6 of the
Credit Agreement. Whenever a Default shall have occurred and be
continuing, all of the Benefits payable to the Administrative
Agent in accordance with Section 6(h) hereof shall be applied by
the Administrative Agent toward the payment of the Liabilities in
such order or form as the Administrative Agent shall determine,
subject to the Credit Agreement (including, without limitation,
Section 10.11(d) thereof).
Any reasonable expenses incurred in protecting,
preserving or maintaining any Collateral shall be borne by the
applicable Debtor. Whenever a Default shall have occurred and be
continuing, the Administrative Agent shall have the right to
bring suit to enforce any or all of the Intellectual Property or
the licenses thereunder, in which event the applicable Debtor
shall at the request of the Administrative Agent do any and all
lawful acts and execute any and all proper documents reasonably
required by the Administrative Agent in aid of such enforcement
and such Debtor shall promptly, upon demand, reimburse and
indemnify the Administrative Agent for all reasonable, documented
and out-of-pocket costs and expenses incurred by the
Administrative Agent in the exercise of its rights under this
Section 6; provided, however, that the
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<PAGE>
Administrative Agent shall have n6 obligation to bring, and will
suffer no liability for any failure to bring, any such suits.
7. Procedures With Respect To Cash.
(a) Subject to the last two sentences of the first
paragraph of Section 4 of this Agreement, each Debtor shall
instruct each Account Debtor obligated to make payments under any
item of Non-Tangible Collateral to make such payments to
lockboxes identified on Schedule V, Item A or a zip code
maintained for the exclusive use of such Debtor by a financial
institution (the "Lockboxes"). Each Debtor shall, with respect to
all Cash Instruments (other than Cash Instruments deposited in a
Lockbox) it holds or receives, transmit, and shall instruct any
financial institution which receives for the account of such
Debtor any Cash Instruments (other than Cash Instruments
deposited in a Lockbox), other than a Disbursement Bank, to
transmit, in the form received, before the close of business on
the Business Day following receipt, all Cash Instruments to a
Receiving Bank for deposit into a deposit account identified on
Schedule V, Item B (a "Receiving Account") or to the
Concentration Bank for deposit into the Concentration Account.
The Company and the Administrative Agent shall instruct each
Receiving Bank maintaining a Lockbox pursuant to this Section to
deposit all Cash Instruments paid into such Lockbox forthwith in
the deposit account associated with such Lockbox (the "Lockbox
Account"), maintained by such Receiving Bank (except that the
Company may otherwise instruct such Receiving Bank with respect
to items which are post-dated or irregular and provided that Cash
Instruments sent to a post office located in a city other than in
which the related Lockbox Account is located may first be
deposited into an account maintained by the Receiving Bank with a
correspondent bank and may then be deposited in a clearing
account maintained by the Receiving Bank before being deposited
in such Lockbox Account) and shall further instruct each
Receiving Bank to transfer all items deposited into such Lockbox
Accounts and Receiving Accounts to the concentration account
identified on Schedule V, Item D (the "Concentration Account")
maintained at the Concentration Bank upon the clearing of such
items in accordance with such Receiving Bank's customary clearing
schedule but not later than ten (10) days after receipt);
provided that whenever a Default has occurred and is continuing
the Administrative Agent may notify the Receiving Banks to
transfer all such items to an Assignee Deposit Account.
Unless a Default has occurred and is continuing, the
Company shall be entitled to instruct the Concentration Bank to
transfer amounts held in the Concentration Account to one or more
disbursement accounts identified on Schedule V, Item C (each
individually, a "Disbursement Account"). On any business day
prior to the occurrence and continuance of a Default, the Company
may transfer (i) to each of the accounts held at First State Bank
Lake Lillian as set forth on Schedule V, an amount not to exceed
$5,000 minus the balance in such account at the beginning of such
business day, (ii) to each of the Company's pension accounts,
payroll accounts, and health and welfare benefit plan accounts,
an amount equal to all accrued pension, payroll, or health and
welfare benefit plan obligations and taxes that are due and
payable, and (iii) to each other Disbursement Account, an
aggregate amount equal to all unpaid checks presented to such
Disbursement Bank and not returned as of the preceding Business
Day. It is understood that each Disbursement Account other than
pension accounts, payroll accounts,
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health and welfare benefit plan accounts and the accounts
referred to in clause (i) of the preceding sentence will be a
"zero-balance account". Any balance remaining in such "zero
balance" Disbursement Account after all disbursements have been
made with respect to such Disbursement Account on a given
business day shall be returned to the Concentration Account by
wire transfer of funds on or before 12:00 a.m., midnight, New
York time, on such business day.
After receiving notice from the Administrative Agent
that a Default has occurred and is continuing, the Concentration
Bank shall immediately and from time to time thereafter (unless
it receives notice from the Administrative Agent to the contrary)
transfer all funds held in its Concentration Account to the
Administrative Agent for deposit in an Assignee Deposit Account
and shall notify the Administrative Agent and the Company by
facsimile transmission as to the details of each such transfer.
Each Debtor will use all reasonable efforts to cause
each Account Debtor, Receiving Bank, Disbursement Bank and
Concentration Bank to comply with the foregoing procedures and
instructions.
(b) The Administrative Agent shall be the holder of a
security interest in the Lockboxes (other than Lockboxes that are
zip codes maintained for the exclusive use of a Debtor by a
financial institution), the Lockbox Accounts, the Receiving
Accounts, the Concentration Account and the Disbursement
Accounts, and the Debtors shall identify or name all such
accounts in a manner sufficient or appropriate to reflect the
Administrative Agent as pledgee thereof; provided, however, that
to the extent that any applicable law requires the Administrative
Agent to be the owner of such accounts in order to establish a
valid, first and prior Lien for the benefit of the Administrative
Agent with respect to such accounts, then the Administrative
Agent shall be deemed the owner of such accounts and the Debtors
shall identify or name all such accounts in a manner sufficient
or appropriate to reflect the Administrative Agent as the owner
of such accounts. The Receiving Banks, Concentration Bank and the
Disbursement Banks shall be notified that the items and funds
deposited therein are property of the Debtors subject to the
security interest of the Administrative Agent.
(c) Except as set forth in the following sentence, (i)
not later than thirty (30) days after the Closing Date, as to all
Lockboxes (other than Lockboxes that are zip codes maintained for
the exclusive use of a Debtor by a financial institution),
Lockbox Accounts, Receiving Accounts, Concentration Accounts and
Disbursement Accounts identified on Schedule V, and (ii) prior to
establishing any such lockboxes or accounts with any bank or
other financial institution after the Closing Date, the Debtors
will cause such bank or other financial institution to deliver a
writing to the Administrative Agent, in form and substance
satisfactory to the Administrative Agent, consenting to and
acknowledging the security interest of the Administrative Agent
in such lockboxes or accounts and all Cash Instruments from time
to time therein, and confirming that the bank or other financial
institution in question has established the relevant accounts and
procedures referred to in this Section and has received and
agreed to follow the instructions of the Administrative Agent
with respect to all such Cash Instruments following the
occurrence of any Event of Default or Unmatured Event of Default
of the type
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specified in Section 9.1(f) or (g) of the Credit Agreement 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
Company's accounts at Wells Fargo Bank, Mellon Bank East and The
Northern Trust Company which are listed on Schedule V, the
Company shall have one hundred and twenty (120) days after the
Closing Date (i) to obtain an agreement from the related bank
covering such account and satisfying the requirements of the
prior sentence or (ii) to close such account, and, with respect
to each of the accounts held at First State Bank Lake Lillian and
listed on Schedule V, the Company shall not be obligated to
obtain an agreement from such bank covering such account and
satisfying the requirements of the prior 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 the Administrative Agent, the Company shall have thirty (30)
days to obtain an agreement covering each of the accounts
referred to in this sentence and satisfying the requirements of
the prior sentence. The Company may, from time to time after the
Closing Date, designate a bank or other financial institution to
act as a Concentration Bank, Receiving Bank or a Disbursement
Bank and such bank or other financial institution shall become a
Concentration Bank, Receiving Bank or a Disbursement Bank for
purposes of this Agreement; provided that (i) such bank is
located in the United States, (ii) such bank or other financial
institution has delivered a writing to the Administrative Agent
confirming the matters set forth in the first sentence of this
clause (c), (iii) the Company has delivered to the Administrative
Agent an amended Schedule V, setting forth the then-current list
of Concentration Banks, Receiving Banks and Disbursement Banks,
and (iv) with respect to the designation of a Concentration Bank,
the Administrative Agent and the Required Lenders must approve
such designation.
(d) Each of the Debtors agrees that it and its
Domestic Subsidiaries will not maintain any deposit or similar
accounts with any other financial institution other than the
accounts specifically described in clauses (a) through (c) above
without the prior written consent of the Administrative Agent and
the Required Lenders.
8. Default. Whenever a Default shall have occurred and
be continuing, the Administrative Agent may exercise from time to
time any right or remedy available to it under applicable law.
Each Debtor agrees, in case of the occurrence and during the
continuance of a Default, (i) to assemble, at its expense, all
its Inventory and other Goods (other than Fixtures) at a
convenient place or places reasonably acceptable to the
Administrative Agent, and (ii) at the Administrative Agent's
request, to execute all such documents and do all such other
things which may be necessary or desirable in order to enable the
Administrative Agent or its nominee to be registered as owner of
the Intellectual Property with any and all competent registration
authority. Any notification of intended disposition of any of the
Collateral required by law shall be deemed reasonably and
properly given if given at least ten days before such
disposition. Any proceeds of any disposition by the
Administrative Agent of any of the Collateral may be applied by
the Administrative Agent to payment of reasonable, documented and
out-of-pocket expenses in connection with the Collateral,
including without limitation Attorney Costs, and any balance of
such proceeds may be applied by the Administrative Agent toward
the payment of such of the Liabilities, and in such order of
application, as the Administrative Agent may from time to time
elect.
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9. General. Each Debtor hereby irrevocably appoints the
Administrative Agent, its attorney-in-fact, with full authority
in the place and stead of such Debtor and in the name of such
Debtor or otherwise, from time to time in the Administrative
Agent's discretion, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or
advisable to accomplish the purposes of this Agreement,
including, without limitation: (a) upon the occurrence of, and
during the continuation of, a Default, to ask, demand, collect,
sue for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in respect of
any of the Collateral; (b) upon the occurrence of, and during the
continuation of, a Default, to receive, endorse, and collect any
drafts or other instruments, documents and chattel paper, in
connection with clause (a) above; (c) upon the occurrence of, and
during the continuation of, a Default, to file any claims or take
any action or institute any proceedings which the Administrative
Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of the
Administrative Agent with respect to any of the Collateral; and
(d) upon the occurrence of, and during the continuation of, a
Default, to perform the affirmative obligations of the Debtor
hereunder. Each Debtor hereby acknowledges, consents and agrees
that the power of attorney granted pursuant to this Section is
irrevocable and coupled with an interest. If any Debtor fails to
perform any agreement contained herein, the Administrative Agent
may itself perform, or cause performance of, such agreement, and
the expenses of the Administrative Agent incurred in connection
therewith shall be payable by the Debtors. The powers conferred
on the Administrative Agent hereunder are solely to protect its
interest (on behalf of the Lender Parties) in the Collateral and
shall not impose any duty on it to exercise any such powers.
Except for reasonable care of any Collateral in its possession
and the accounting for moneys actually received by it hereunder,
the Administrative Agent shall have no duty as to any Collateral
or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any
Collateral. The Administrative Agent is required to exercise
reasonable care in the custody and preservation of any of the
Collateral in its possession. If at any time any Debtor requests
in writing that the Administrative Agent take any action with
respect to any of the Collateral, the Administrative Agent shall
be deemed to have exercised reasonable care with respect to such
Collateral if it takes such action; provided, however, that any
failure of the Administrative Agent to comply with any such
request at any time shall not in itself be deemed a failure to
exercise reasonable care.
All notices, requests and other communications
hereunder shall be given in the manners and to the addresses set
forth in Section 11.2 of the Credit Agreement, and shall be
effective as set forth therein if given in any such manner.
Each of the Debtors agrees to pay all reasonable
expenses (including without limitation Attorney Costs) paid or
incurred by the Administrative Agent or any Lender Party in
endeavoring to collect the Liabilities of such Debtor, or any
part thereof, and in enforcing this Agreement against such
Debtor, and such obligations will themselves be Liabilities.
No delay on the part of the Administrative Agent in
the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise by the Administrative
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Agent of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy.
This Agreement shall remain in full force and effect
until the payment in full of all the Liabilities (other than
Liabilities in the nature of contingent continuing
indemnification obligations), the expiration or termination of
all Letters of Credit and 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) and the termination of all the Commitments under the
Loan Documents. If at any time all or any part of any payment
theretofore applied by the Administrative Agent or any Lender
Party to any of the Liabilities is or must be rescinded or
returned by the Administrative Agent or such Lender Party for any
reason whatsoever (including without limitation the insolvency,
bankruptcy or reorganization of any Debtor or any other Obligor),
such Liabilities shall, for the purposes of this Agreement, to
the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such
application by the Administrative Agent or such Lender Party, and
this Agreement shall continue to be effective or be reinstated,
as the case may be, as to such Liabilities, all as though such
application by the Administrative Agent or such Lender Party had
not been made.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF
ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Whenever possible,
each
provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of
this Agreement.
The rights and privileges of the Administrative Agent
hereunder shall inure to the benefit of its successors and
assigns.
This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute one
and the same Agreement. At any time after the date of this
Agreement, one or more additional Persons may become parties
hereto by executing and delivering to the Administrative Agent a
counterpart of this Agreement. Immediately upon such execution
and delivery (and without any further action), each such
additional Person will become a party to, and will be bound by
all the terms of, this Agreement.
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
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SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE DEBTORS, AND BY ACCEPTING THE
BENEFITS HEREOF, THE ADMINISTRATIVE AGENT AND EACH LENDER PARTY,
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF SUCH COURTS; PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH OF THE DEBTORS, THE ADMINISTRATIVE
AGENT AND EACH LENDER PARTY 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 DEBTORS, THE ADMINISTRATIVE AGENT AND EACH LENDER
PARTY EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW.
EACH OF THE DEBTORS, AND (BY ACCEPTING THE BENEFITS
HEREOF) EACH OF THE ADMINISTRATIVE AGENT AND EACH LENDER PARTY,
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 DEBTORS, THE ADMINISTRATIVE AGENT AND
THE LENDER PARTIES 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 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.
THIS WRITTEN SECURITY AGREEMENT, THE CREDIT
AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS, AND THE
INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH,
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
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BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS.
10. Limit on Collateral. Notwithstanding the
foregoing, "Collateral" shall not include any General Intangibles
or other rights arising under contracts as to which the grant of
a security interest would constitute a violation of a valid and
enforceable restriction on such grant, unless and until any
required consents shall have been obtained, but shall include all
proceeds of any such contracts (each Debtor agrees to use its
best efforts to obtain any such required consent).
11. Release of Security Interest. Upon the payment in
full of all the Liabilities (other than Liabilities in the nature
of contingent continuing indemnification obligations), the
expiration or termination of all the Letters of Credit and
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) and the
termination of all the Commitments under the Loan Documents, the
security interest granted herein shall terminate and all rights
to the Collateral shall revert to the applicable Debtor. Upon any
such termination, the Administrative Agent will, at the
applicable Debtor's sole expense and reasonable request, promptly
return to such Debtor all certificates and instruments then in
its possession representing and evidencing all pledged shares,
notes or securities pledged hereunder, together with all
Collateral held by the Administrative Agent hereunder, and
execute and deliver to such Debtor such releases and documents,
in each case without recourse, representations or warranties of
any kind, as such Debtor shall reasonably request to evidence
such termination. Upon the occurrence of a permitted disposition
of any Collateral pursuant to Section 8.2 of the Credit Agreement
and receipt by the Administrative Agent of all payments required
to be made under the Credit Agreement on account of such
permitted disposition and so long as no Default or Event of
Default shall have occurred and be continuing, the security
interest granted herein with respect to the Collateral which was
the subject of such permitted disposition shall terminate and the
Administrative Agent will, upon the applicable Debtor's
reasonable request and at such Debtor's sole expense, promptly
take such actions as are reasonably necessary to provide a
release, without recourse, representations or warranties of any
kind, of its security interest in such Collateral.
12. Conflicting Provisions. To the extent that any
provisions of this Agreement conflict with any provisions of the
Credit Agreement, the provisions of the Credit Agreement shall
control.
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IN WITNESS WHEREOF, this Agreement has been duly
executed as of the day and year first above written.
THE DEBTORS
DEL MONTE CORPORATION
By: /s/ Jon W. Graves
Title: Assistant Treasurer
DEL MONTE FOODS COMPANY
By: /s/ Jon W. Graves
Title: Assistant Treasurer
THE ADMINISTRATIVE AGENT
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent for the Lender Parties
By: /s/ Eric A. Schubert
Title: Managing Director
S-1
<PAGE>
Exhibit 4.7
Conformed Copy
COMPANY PLEDGE AGREEMENT
This COMPANY PLEDGE AGREEMENT (this "Agreement"),
dated as of April 18, 1997, is between DEL MONTE CORPORATION, a
New York corporation (the "Pledgor"), and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, in its capacity as
administrative agent for the Lender Parties referred to below (in
such capacity, together with its successors in such capacity, the
"Administrative Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement dated as of
even date herewith (as amended, supplemented, restated or
otherwise modified from time to time, the "Credit Agreement")
among the Pledgor, various financial institutions (such financial
institutions, together with their respective successors and
assigns, collectively the "Lenders" and individually each a
"Lender"), the Administrative Agent, Bankers Trust Company, as
documentation agent, and The First National Bank of Boston,
Citicorp USA, Inc., General Electric Capital Corporation and The
Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency, as
co-agents, the Lenders have agreed to make available to the
Pledgor term loans and a revolving credit facility with a letter
of credit subfacility;
WHEREAS, the obligations of the Pledgor and the other
Obligors under the Credit Agreement and the other Loan Documents
are to be secured pursuant to this Agreement; and
WHEREAS, it is a condition precedent to the making of
loans and the issuance of letters of credit under the Credit
Agreement that the Pledgor execute and deliver this Agreement.
NOW, THEREFORE, for and in consideration of any loan,
advance or other financial accommodation heretofore or hereafter
made to the Pledgor under or in connection with the Credit
Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. When used herein, the following terms
have the following meanings (such meanings to be applicable to both
the singular and plural forms of such terms):
Collateral - see Section 2.
Default means the occurrence of: (a) any Unmatured Event
of Default under subsection 9.1(f) or (g) of the Credit
Agreement; or (b) any Event of Default.
Issuer means the issuer of any of the shares of stock
or other securities representing all or any of the
Collateral.
<PAGE>
Lender Party means each Agent and each Lender under
and as defined in the Credit Agreement and any
Affiliate of such Lender which is a party to a Swap
Contract with the Pledgor.
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.
Obligor means the Pledgor or any other Person (other
than any Agent or any Lender or their permitted
successors and assigns) obligated under any Loan
Document, and their permitted successors and assigns.
Terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the
Credit Agreement.
2. Pledge. As security for the payment of all Liabilities,
the Pledgor hereby pledges to the Administrative Agent for the
benefit of the Lender Parties, and grants to the Administrative
Agent for the benefit of the Lender Parties a continuing security
interest in, all of the following:
A. All of the shares of stock, notes and other
securities described in Schedule I hereto, all of the
certificates and/or instruments representing such
shares of stock, notes and other securities, and all
cash, interest, securities, dividends, distributions,
rights and other property at any time and from time to
time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such
shares or other securities;
B. All additional shares of stock of any of the
Issuers listed in Schedule I hereto at any time and
from time to time acquired by the Pledgor in any
manner, all of the certificates representing such
additional shares, and all cash, interest, securities,
dividends, distributions, rights and other property at
any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for
any or all of such shares;
C. All other shares of capital stock or promissory
notes, all other securities and instruments, all of
the certificates representing such additional shares,
and all cash, interest, securities, dividends,
distributions, rights and other property, which are
now being delivered to the Administrative Agent or may
hereafter be delivered to the Administrative Agent for
the purpose of pledge in connection with this
Agreement;
D. All other property hereafter delivered to the
Administrative Agent in substitution for or in addition
to any of the foregoing, all certificates and
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instruments representing or evidencing such property,
and all cash, interest, securities, dividends,
distributions, rights and other property at any time
and from time to time received, receivable or
otherwise distributed in respect of or in exchange for
any or all thereof; and
E. All proceeds of any of the foregoing.
All of the foregoing are herein collectively called the
"Collateral".
The Pledgor agrees to deliver to the Administrative
Agent, promptly upon receipt and in due form for transfer (i.e.,
duly endorsed in blank or accompanied by stock or bond powers
duly executed in blank), all Collateral (other than payments
which the Pledgor is entitled to receive and retain pursuant to
Section 5 hereof) which may at any time or from time to time be
in or come into the possession or control of the Pledgor; and
prior to the delivery thereof to the Administrative Agent, such
Collateral shall be held by the Pledgor separate and apart from
its other property and in express trust for the Administrative
Agent.
3. Warranties; Further Assurances. The Pledgor
warrants to the Administrative Agent and each Lender that:
(a) the Pledgor is (or at the time of any future
delivery, pledge, assignment or transfer thereof will be) the
legal, beneficial and equitable owner of the Collateral free and
clear of all Liens of every description whatsoever other than the
security interest created hereunder; (b) the pledge and delivery
of the Collateral pursuant to this Agreement will create a valid,
perfected, first priority security interest in the Collateral in
favor of the Administrative Agent, free of any adverse claims;
(c) all shares of stock referred to in Schedule I hereto are duly
authorized, validly issued, fully paid and non-assessable and
constitute all of the issued and outstanding shares of capital
stock owned by the Pledgor of each Issuer of such stock as
identified in Schedule I (or, as to any Issuer that is a Foreign
Subsidiary, 65% of the issued and outstanding shares of capital
stock owned by the Pledgor of such Issuer); (d) each note pledged
hereunder has been duly authorized, executed, endorsed, issued
and delivered, is the legal, valid and binding obligation of the
issuer thereof, and is not in default; and (e) the information
contained in Schedule I hereto is true and accurate in all
respects.
Until the payment in full of all the Liabilities
(other than Liabilities in the nature of contingent continuing
indemnification obligations), the expiration or termination of
all Letters of Credit and 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) and the termination of all the Commitments under the
other Loan Documents, the Pledgor: (i) except as otherwise
permitted by the Credit Agreement, shall not, without the express
prior written consent of the Administrative Agent, sell, assign,
exchange, pledge or otherwise transfer, encumber, or grant any
option, warrant or other right to purchase, or otherwise diminish
or impair any of its rights in, to or under any of the
Collateral; (ii) shall execute such Uniform Commercial Code
financing statements and other documents (and pay the costs of
filing and recording or re-filing and re-recording the same in
all public offices deemed reasonably necessary or appropriate by
the Administrative Agent) and do such other acts and things as
described in Section 7.14(b) of the Credit Agreement; (iii)
except as otherwise
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<PAGE>
permitted by the Credit Agreement, shall continue to own and keep
pledged to the Administrative Agent, 100% of the issued and
outstanding shares of capital stock owned by the Pledgor of each
Issuer (or, as to each Issuer that is a Foreign Subsidiary, 65%
of the issued and outstanding shares of capital stock owned by
the Pledgor of such Issuer); and (iv) shall furnish the
Administrative Agent or any Lender Party such information
concerning the Collateral as the Administrative Agent or such
Lender Party may from time to time reasonably request, and will
provide to the representatives and independent contractors of the
Administrative Agent or such Lender Party the same rights and
benefits as set forth in Section 7.10 of the Credit Agreement.
The Pledgor represents and warrants to the
Administrative Agent and each Lender Party that no authorization,
approval or other action by, and no notice to or filing with, any
other Person is required either (a) for the pledge by the Pledgor
of any Collateral pursuant to this Agreement or for the execution
and delivery, and performance of this Agreement by the Pledgor,
or (b) for the exercise by the Administrative Agent of the voting
or other rights provided for in this Agreement (other than those
authorizations, approvals, filings or other actions which apply
to the Administrative Agent solely (1) on account of its status
as a regulated entity, (2) pursuant to its own organizational
documents or contracts or agreements), or, except with respect to
any securities pledged hereunder, as may be required in
connection with a disposition of such pledged securities by laws
affecting the offering and sale of securities generally, the
remedies in respect of the Collateral pursuant to this Agreement.
4. Holding in Name of Administrative Agent, etc. The
Administrative Agent may from time to time after the occurrence
and during the continuance of a Default, without notice to the
Pledgor, take all or any of the following actions (a) transfer
all or any part of the Collateral into the name of the
Administrative Agent or any nominee or sub-agent for the
Administrative Agent, with or without disclosing that such
Collateral is subject to the Lien and security interest
hereunder, (b) appoint one or more sub-agents or nominees for the
purpose of retaining physical possession of the Collateral, (c)
notify the parties obligated on any of the Collateral to make
payment to the Administrative Agent of any amounts due or to
become due thereunder, (d) endorse any checks, drafts or other
writings in the name of the Pledgor to allow collection of the
Collateral, (e) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or any
part thereof, or compromise or renew for any period (whether or
not longer than the original period) any obligations of any
nature of any party with respect thereto and (f) take control of
any proceeds of the Collateral.
5. Voting Rights, Dividends, etc. (a) Notwithstanding
certain provisions of Section 4 hereof, so long as the Administrative
Agent has not given the notice referred to in
paragraph (b) below:
A. The Pledgor shall be entitled to exercise any and
all voting or consensual rights and powers and stock
purchase or subscription rights (but any such exercise
by the Pledgor of stock purchase or subscription
rights may be made only from funds of the Pledgor not
constituting part of the Collateral and only to the
extent permitted by the Credit Agreement) relating or
pertaining to the Collateral or any part thereof for
any purpose; provided, however, that the Pledgor
agrees that it
4
<PAGE>
will not exercise any such right or power in any
manner which would materially adversely impair the
value of the Collateral or any part thereof or violate
any provision of the Credit Agreement or any other
Loan Document in any material respect.
B. The Pledgor shall be entitled to receive and retain
any and all dividends, interest and other cash
payments payable in respect of the Collateral which
are paid in cash by any Issuer if such dividends,
interest and other cash payments are permitted by the
Credit Agreement, but all dividends and distributions
in respect of the Collateral or any part thereof made
in shares of stock or other property or representing
any return of capital, whether resulting from a
subdivision, combination or reclassification of
Collateral or any part thereof or received in exchange
for Collateral or any part thereof or as a result of
any merger, consolidation, acquisition or other
exchange of assets to which any Issuer may be a party
or otherwise or as a result of any exercise of any
stock purchase or subscription right, shall be and
become part of the Collateral hereunder and, if
received by the Pledgor, shall be forthwith delivered
to the Administrative Agent in due form for transfer
(i.e., endorsed in blank or accompanied by stock or
bond powers executed in blank) to be held for the
purposes of this Agreement.
C. The Administrative Agent shall execute and deliver,
or cause to be executed and delivered, to the Pledgor,
all such proxies, powers of attorney, dividend orders
and other instruments as the Pledgor may request for
the purpose of enabling the Pledgor to exercise the
rights and powers which it is entitled to exercise
pursuant to clause (A) above and to receive the
dividends, interest and payments which it is
authorized to retain pursuant to clause (B) above.
(b) Upon notice from the Administrative Agent after
the occurrence and during the continuance of a Default, and so
long as the same shall be continuing, all rights and powers which
the Pledgor is entitled to exercise pursuant to Section 5(a) (A)
hereof, and all rights of the Pledgor to receive and retain
dividends, interest and payments pursuant to Section 5(a) (B)
hereof, shall forthwith cease, and all such rights and powers
shall thereupon become vested in the Administrative Agent which
shall have, during the continuance of such Default, the sole and
exclusive authority to exercise such rights and powers and to
receive such dividends, interest and payments. Any and all money
and other property paid over to or received by the Administrative
Agent pursuant to this paragraph (b) shall be retained by the
Administrative Agent as additional Collateral hereunder and
applied in accordance with the provisions hereof.
6. Remedies. Whenever a Default shall exist, the
Administrative Agent may exercise from time to time any rights
and remedies available to it under the Uniform Commercial Code as
in effect in New York or otherwise available to it, as well as
any other rights and remedies provided for herein or otherwise
available to it. Without limiting the foregoing, whenever a
Default shall have occurred and be continuing the Administrative
Agent (a) may, to the fullest extent permitted by applicable law,
without notice, advertisement, hearing or process of law of any
kind, (i) sell any or all of the Collateral, free of all rights
and claims of the Pledgor
5
<PAGE>
therein and thereto, at any public or private sale or brokers'
board and (ii) bid for and purchase any or all of the Collateral
at any such public sale and (b) shall have the right, for and in
the name, place and stead of the Pledgor, to execute
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the
Collateral. The Pledgor hereby expressly waives, to the fullest
extent permitted by applicable law, any and all notices,
advertisements, hearings or process of law in connection with the
exercise by the Administrative Agent of any of its rights and
remedies during the continuance of a Default. Any notification of
intended disposition of any of the Collateral shall be deemed
reasonably and properly given if given at least ten (10) days
before such disposition. Subject to the terms and provisions of
the Credit Agreement (including, without limitation, Section
10.11(d) thereof), any proceeds of any of the Collateral may be
applied by the Administrative Agent to the payment of reasonable,
documented and out-of-pocket expenses in connection with the
Collateral, including, without limitation, Attorney Costs, and
any balance of such proceeds may be applied by the Administrative
Agent toward the payment of such of the Liabilities, and in such
order of application, as the Administrative Agent may from time
to time elect (and, after the payment in full of all the
Liabilities (other than Liabilities in the nature of contingent
continuing indemnification obligations), the expiration or
termination of all Letters of Credit and 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) and the termination of all the
Commitments under the other Loan Documents, any surplus shall be
delivered to the Pledgor or as a court of competent jurisdiction
shall direct).
The Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with any
sale of Collateral as it may be advised by counsel is necessary
in order to (a) avoid any violation of applicable law (including,
without limitation, compliance with such procedures as may
restrict the number of prospective bidders and purchasers,
require that prospective bidders and purchasers have certain
qualifications and/or further restrict such prospective bidders
or purchasers to persons or entities who will represent and agree
that they are purchasing for their own account for investment and
not with a view to the distribution or resale of such Collateral)
or (b) obtain any required approval of the sale or of the
purchase by any Governmental Authority and the Pledgor agrees
that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially
reasonable manner and that the Administrative Agent shall not be
liable or accountable to the Pledgor for any discount allowed by
reason of the fact that such Collateral is sold in compliance
with any such limitation or restriction.
7. Release of Security Interest. Upon the payment in
full of all the Liabilities (other than Liabilities in the nature
of contingent continuing indemnification obligations), the
expiration or termination of all Letters of Credit and 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) and the termination of all
the Commitments under the Loan Documents, the security interest
granted herein shall terminate and all rights to the Collateral
shall revert to the Pledgor. Upon any such termination, the
Administrative Agent will, at the Pledgor's sole expense and
reasonable request, promptly return to the Pledgor all
certificates and instruments representing and evidencing all
pledged shares, notes or securities
6
<PAGE>
pledged hereunder, together with all Collateral held by the
Administrative Agent hereunder, and execute and deliver to the
Pledgor such releases and documents, in each case without
recourse, representations or warranties of any kind, as the
Pledgor shall reasonably request to evidence such termination.
Upon the occurrence of a permitted disposition of any Collateral
pursuant to Section 8.2 of the Credit Agreement and receipt by
the Administrative Agent of all payments required to be made
under the Credit Agreement on account of such permitted
disposition and so long as no Default shall have occurred and be
continuing, the security interest granted herein with respect to
the Collateral which is the subject of such permitted disposition
shall terminate and the Administrative Agent will, upon the
Pledgor's reasonable request and at the Pledgor's sole expense,
promptly take such actions as are reasonably necessary to provide
a release, without recourse, representation and warranties of any
kind, of its security interest in such Collateral.
8. Reinstatement. The Pledgor further agrees that if
at any time all or any part of any payment theretofore applied by
the Administrative Agent or any Lender Party to any of the
Liabilities is or must be rescinded or returned by the
Administrative Agent or such Lender Party for any reason
whatsoever (including, the insolvency, bankruptcy or
reorganization of the Pledgor or any other Obligor), such
Liabilities shall, for the purposes of this Agreement, to the
extent that such payment is or must be rescinded or returned, be
deemed to have continued in existence, notwithstanding such
application by the Administrative Agent or such Lender Party, and
this Agreement shall continue to be effective or be reinstated,
as the case may be, as to such Liabilities, all as though such
application by the Administrative Agent or such Lender Party had
not been made.
9. General. The Administrative Agent shall be deemed
to have exercised reasonable care in the custody and preservation
of the Collateral in its possession if the Collateral is accorded
treatment substantially equivalent to that which the
Administrative Agent, in its individual capacity, accords its own
property and no failure of the Administrative Agent to preserve
or protect any rights with respect to the Collateral against
prior parties shall be deemed of itself a failure to exercise
reasonable care in the custody or preservation of any Collateral.
No delay on the part of the Administrative Agent in
exercising any right, power or remedy shall operate as a waiver
thereof, and no single or partial exercise of any such right,
power or remedy shall preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. No
amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement shall be effective unless the
same shall be in writing and signed and delivered by the
Administrative Agent, and then such amendment, modification,
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
All obligations of the Pledgor and all rights, powers
and remedies of the Administrative Agent and the Lender Parties
expressed herein are in addition to all other rights, powers and
remedies possessed by them, including, without limitation, those
provided by applicable law or in any other written instrument or
agreement relating to any of the Liabilities or any security
therefor.
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THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF
ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Wherever possible
each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if
any provision of this Agreement shall be prohibited by or invalid
under such law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Agreement.
This Agreement shall be binding upon the Pledgor and
the Administrative Agent and their respective successors and
assigns, and shall inure to the benefit of the Pledgor, each
Lender Party, the Administrative Agent and the successors and
assigns of the Administrative Agent.
This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, and each such counterpart shall be deemed an
original but all such counterparts shall together constitute but
one and the same Agreement.
All notices, requests and other communications
hereunder shall be given in the manners and to the addresses set
forth in Section 11.2 of the Credit Agreement, and shall be
effective as set forth therein if given in any such manner.
To the extent that any provisions of this Agreement
conflict with any provisions of the Credit Agreement, the
provisions of the Credit Agreement shall control.
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, THE PLEDGOR, AND BY ACCEPTING THE BENEFITS HEREOF, THE
ADMINISTRATIVE AGENT AND EACH LENDER PARTY, CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURTS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. THE PLEDGOR, THE ADMINISTRATIVE AGENT AND EACH LENDER
PARTY 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
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RELATED HERETO. THE PLEDGOR, THE ADMINISTRATIVE AGENT AND EACH
LENDER PARTY EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER
MEANS PERMITTED BY NEW YORK LAW.
THE PLEDGOR AND (BY ACCEPTING THE BENEFITS HEREOF)
EACH OF THE ADMINISTRATIVE AGENT AND EACH LENDER PARTY, 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 PLEDGOR, THE ADMINISTRATIVE AGENT AND
THE LENDER PARTIES 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 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.
THIS WRITTEN AGREEMENT, THE CREDIT AGREEMENT, THE
NOTES, THE OTHER LOAN DOCUMENTS, AND THE INSTRUMENTS AND
DOCUMENTS EXECUTED IN CONNECTION HEREWITH, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS.
IN WITNESS WHEREOF, this Agreement has been duly
executed and delivered as of the day and year first written
above.
DEL MONTE CORPORATION
By: /s/ Jon W. Graves
----------------------------
Title: Assistant Treasurer
9
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By: /s/ Eric A. Schubert
----------------------------
Title: Managing Director
10
<PAGE>
Exhibit 4.8
Conformed Copy
PARENT PLEDGE AGREEMENT
This PARENT PLEDGE AGREEMENT (this "Agreement"), dated as
of April 18, 1997, is between DEL MONTE FOODS COMPANY, a Maryland
corporation (the "Pledgor"), and BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, in its capacity as administrative agent
for the Lender Parties referred to below (in such capacity,
together with its successors in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement dated as of even
date herewith (as amended, supplemented, restated or otherwise
modified from time to time, the "Credit Agreement") among Del
Monte Corporation, a New York corporation and a wholly-owned
subsidiary of the Pledgor (the "Company"), various financial
institutions (such financial institutions, together with their
respective successors and assigns, collectively the "Lenders" and
individually each a "Lender"), the Administrative Agent, Bankers
Trust Company, as documentation agent, and The First National
Bank of Boston, Citicorp USA, Inc., General Electric Capital
Corporation and The Long-Term Credit Bank of Japan, Ltd., Los
Angeles Agency, as co-agents, the Lenders have agreed to make
available to the Company term loans and a revolving credit
facility with a letter of credit subfacility;
WHEREAS, pursuant to the Credit Agreement, the Pledgor
guaranteed all obligations of the Company under or in connection
with the Credit Agreement pursuant to a Parent Guaranty dated as
of even date herewith (as amended, supplemented or otherwise
modified from time to time, the "Parent Guaranty");
WHEREAS, the obligations of the Company and the other
Obligors under the Credit Agreement and the other Loan Documents
and the obligations of the Pledgor under the Parent Guaranty are
to be secured pursuant to this Agreement;
WHEREAS, as a condition precedent to the making of the
Loans and the issuance of Letters of Credit under the Credit
Agreement, the Pledgor has duly authorized the execution,
delivery and performance of this Agreement; and
WHEREAS, it is in the best interests of the Pledgor to
execute this Agreement inasmuch as the Pledgor will derive
substantial direct and indirect benefits from the making of the
loans and the issuance of the letters of credit.
NOW, THEREFORE, for and in consideration of any loan,
advance or other financial accommodation heretofore or hereafter
made to the Company under or in connection with the
<PAGE>
Credit Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. When used herein, the following terms
have the following meanings (such meanings to be applicable to both
the singular and plural forms of such terms):
Collateral - see Section 2.
Default means the occurrence of: (a) any Unmatured Event of
Default under subsection 9.1(f) or (g)of the Credit
Agreement; or (b) any Event of Default.
Issuer means the issuer of any of the shares of stock or
other securities representing all or any of the Collateral.
Lender Party means each Agent and each Lender under and as
defined in the Credit Agreement and any Affiliate of such
Lender which is a party to a Swap Contract with the
Company.
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.
Obligor means the Company, the Pledgor or any other Person
(other than any Agent or any Lender or their permitted
successors and assigns) obligated under any Loan Document,
and their permitted successors and assigns.
Terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit
Agreement.
2. Pledge. As security for the payment of all Liabilities,
the Pledgor hereby pledges to the Administrative Agent for the benefit
of the Lender Parties, and grants to the Administrative Agent for
the benefit of the Lender Parties a continuing security interest in,
all of the following:
A. All of the shares of stock, notes and other securities
described in Schedule I hereto, all of the certificates
and/or instruments representing such shares of stock, notes
and other securities, and all cash, interest, securities,
dividends, distributions, rights and other property at any
time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any
or all of such shares or other securities;
B. All additional shares of stock of any of the Issuers
listed in Schedule I hereto at any time and from time to time
acquired by the Pledgor in any manner, all of the certificates
representing such additional shares, and all cash, interest,
securities, dividends, distributions, rights and other property
at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any
or all of such shares;
2
<PAGE>
C. All other shares of capital stock or promissory notes,
all other securities and instruments due, all of the
certificates representing such additional shares, and all
cash, interest, securities, dividends, distributions,
rights and other property, which are now being delivered to
the Administrative Agent or may hereafter be delivered to
the Administrative Agent for the purpose of pledge in
connection with this Agreement;
D. All other property hereafter delivered to the
Administrative Agent in substitution for or in addition to
any of the foregoing, all certificates and instruments
representing or evidencing such property, and all cash,
interest, securities, dividends, distributions, rights and
other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all thereof; and
E. All proceeds of any of the foregoing.
All of the foregoing are herein collectively called the
"Collateral".
The Pledgor agrees to deliver to the Administrative Agent,
promptly upon receipt and in due form for transfer (i.e., duly
endorsed in blank or accompanied by stock or bond powers duly
executed in blank), all Collateral (other than payments which the
Pledgor is entitled to receive and retain pursuant to Section 5
hereof) which may at any time or from time to time be in or come
into the possession or control of the Pledgor; and prior to the
delivery thereof to the Administrative Agent, such Collateral
shall be held by the Pledgor separate and apart from its other
property and in express trust for the Administrative Agent.
3. Warranties; Further Assurances. The Pledgor warrants to
the Administrative Agent and each Lender that: (a) the Pledgor is
(or at the time of any future delivery, pledge, assignment or
transfer thereof will be) the legal, beneficial and equitable
owner of the Collateral free and clear of all Liens of every
description whatsoever other than the security interest created
hereunder; (b) the pledge and delivery of the Collateral pursuant
to this Agreement will create a valid, perfected, first priority
security interest in the Collateral in favor of the
Administrative Agent, free of any adverse claims; (c) all shares
of stock referred to in Schedule I hereto are duly authorized,
validly issued, fully paid and non-assessable and constitute all
of the issued and outstanding shares of capital stock owned by
the Pledgor of each Issuer of such stock as identified in
Schedule I; (d) each note pledged hereunder has been duly
authorized, executed, endorsed, issued and delivered, is the
legal, valid and binding obligation of the issuer thereof, and is
not in default; and (e) the information contained in Schedule I
hereto is true and accurate in all respects.
Until the payment in full of all the Liabilities (other
than Liabilities in the nature of contingent continuing
indemnification obligations), the expiration or termination of
all Letters of Credit and 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)
and the termination of all the Commitments under the other Loan
Documents, the Pledgor: (i) except as otherwise permitted by the
Credit Agreement, shall not, without the express prior written
consent of the Administrative Agent, sell, assign, exchange,
pledge or otherwise transfer, encumber, or grant any option,
warrant or other right to purchase, or otherwise diminish or
3
<PAGE>
impair any of its rights in, to or under any of the Collateral;
(ii) shall execute such Uniform Commercial Code financing
statements and other documents (and pay the costs of filing and
recording or re-filing and re-recording the same in all public
offices deemed reasonably necessary or appropriate by the
Administrative Agent) and do such other acts and things as
described in Section 7.14(b) of the Credit Agreement; (iii)
except as otherwise permitted by the Credit Agreement, shall
continue to own and keep pledged to the Administrative Agent,
l00% of the issued and outstanding shares of capital stock of the
Company and 100% of the issued and outstanding shares of capital
stock owned by the Pledgor of each other Issuer; and (iv) shall
furnish the Administrative Agent or any Lender Party such
information concerning the Collateral as the Administrative Agent
or such Lender Party may from time to time reasonably request,
and will provide to the representatives and independent
contractors of the Administrative Agent or such Lender Party the
same rights and benefits as set forth in Section 7.10 of the
Credit Agreement.
The Pledgor hereby warrants that all representations and
warranties made by the Company with respect to the Pledgor set
forth in Sections 6.1, 6.2, 6.3 and 6.4 of the Credit Agreement
are true and correct in all respects as of the date hereof. The
Pledgor additionally represents and warrants to the
Administrative Agent and each Lender Party that no authorization,
approval or other action by, and no notice to or filing with, any
other Person is required either (a) for the pledge by the Pledgor
of any Collateral pursuant to this Agreement or for the execution
and delivery, and performance of this Agreement by the Pledgor,
or (b) for the exercise by the Administrative Agent of the voting
or other rights provided for in this Agreement (other than those
authorizations, approvals, filings or other actions which apply
to the Administrative Agent solely (1) on account of its status
as a regulated entity, (2) pursuant to its own organizational
documents or contracts or agreements), or, except with respect to
any securities pledged hereunder, as may be required in
connection with a disposition of such pledged securities by laws
affecting the offering and sale of securities generally, the
remedies in respect of the Collateral pursuant to this Agreement.
4. Holding in Name of Administrative Agent, etc. The
Administrative Agent may from time to time after the occurrence
and during the continuance of a Default, without notice to the
Pledgor, take all or any of the following actions (a) transfer
all or any part of the Collateral into the name of the
Administrative Agent or any nominee or sub-agent for the
Administrative Agent, with or without disclosing that such
Collateral is subject to the Lien and security interest
hereunder, (b) appoint one or more sub-agents or nominees for the
purpose of retaining physical possession of the Collateral, (c)
notify the parties obligated on any of the Collateral to make
payment to the Administrative Agent of any amounts due or to
become due thereunder, (d) endorse any checks, drafts or other
writings in the name of the Pledgor to allow collection of the
Collateral, (e) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or any
part thereof, or compromise or renew for any period (whether or
not longer than the original period) any obligations of any
nature of any party with respect thereto and (f) take control of
any proceeds of the Collateral.
4
<PAGE>
5. Voting Rights, Dividends etc. (a) Notwithstanding
certain provisions of Section 4 hereof, so long as the Administrative
Agent has not given the notice referred to in paragraph (b)
below:
A. The Pledgor shall be entitled to exercise any and all
voting or consensual rights and powers and stock purchase
or subscription rights (but any such exercise by the
Pledgor of stock purchase or subscription rights may be
made only from funds of the Pledgor not constituting part
of the Collateral and only to the extent permitted by the
Credit Agreement) relating or pertaining to the Collateral
or any part thereof for any purpose; provided, however,
that the Pledgor agrees that it will not exercise any such
right or power in any manner which would materially
adversely impair the value of the Collateral or any part
thereof or violate any provision of the Credit Agreement or
any other Loan Document in any material respect.
B. The Pledgor shall be entitled to receive and retain any
and all dividends, interest and other cash payments payable
in respect of the Collateral which are paid in cash by any
Issuer if such dividends, interest and other cash payments
are permitted by the Credit Agreement, but all dividends
and distributions in respect of the Collateral or any part
thereof made in shares of stock or other property or
representing any return of capital, whether resulting from
a subdivision, combination or reclassification of
Collateral or any part thereof or received in exchange for
Collateral or any part thereof or as a result of any
merger, consolidation, acquisition or other exchange of
assets to which any Issuer may be a party or otherwise or
as a result of any exercise of any stock purchase or
subscription right, shall be and become part of the
Collateral hereunder and, if received by the Pledgor, shall
be forthwith delivered to the Administrative Agent in due
form for transfer (i.e., endorsed in blank or accompanied
by stock or bond powers executed in blank) to be held for
the purposes of this Agreement.
C. The Administrative Agent shall execute and deliver, or
cause to be executed and delivered, to the Pledgor, all
such proxies, powers of attorney, dividend orders and other
instruments as the Pledgor may request for the purpose of
enabling the Pledgor to exercise the rights and powers
which it is entitled to exercise pursuant to clause (A)
above and to receive the dividends, interest and payments
which it is authorized to retain pursuant to clause (B)
above.
(b) Upon notice from the Administrative Agent after the
occurrence and during the continuance of a Default, and so long
as the same shall be continuing, all rights and powers which the
Pledgor is entitled to exercise pursuant to Section 5(a) (A)
hereof, and all rights of the Pledgor to receive and retain
dividends, interest and payments pursuant to Section 5(a) (B)
hereof, shall forthwith cease, and all such rights and powers
shall thereupon become vested in the Administrative Agent which
shall have, during the continuance of such Default, the sole and
exclusive authority to exercise such rights and powers and to
receive such dividends, interest and payments. Any and all money
and other property paid over to or received by the Administrative
Agent pursuant to this paragraph (b) shall be retained by the
Administrative Agent as additional Collateral hereunder and
applied in accordance with the provisions hereof.
5
<PAGE>
6. Remedies. Whenever a Default shall exist, the
Administrative Agent may exercise from time to time any rights
and remedies available to it under the Uniform Commercial Code as
in effect in New York or otherwise available to it, as well as
any other rights and remedies provided for herein or otherwise
available to it. Without limiting the foregoing, whenever a
Default shall have occurred and be continuing the Administrative
Agent (a) may, to the fullest extent permitted by applicable law,
without notice, advertisement, hearing or process of law of any
kind, (i) sell any or all of the Collateral, free of all rights
and claims of the Pledgor therein and thereto, at any public or
private sale or brokers' board and (ii) bid for and purchase any
or all of the Collateral at any such public sale and (b) shall
have the right, for and in the name, place and stead of the
Pledgor, to execute endorsements, assignments, stock powers and
other instruments of conveyance or transfer with respect to all
or any of the Collateral. The Pledgor hereby expressly waives, to
the fullest extent permitted by applicable law, any and all
notices, advertisements, hearings or process of law in connection
with the exercise by the Administrative Agent of any of its
rights and remedies during the continuance of a Default. Any
notification of intended disposition of any of the Collateral
shall be deemed reasonably and properly given if given at least
ten (10) days before such disposition. Subject to the terms and
provisions of the Credit Agreement (including, without
limitation, Section 10.11(d) thereof), any proceeds of any of the
Collateral may be applied by the Administrative Agent to the
payment of reasonable, documented and out-of-pocket expenses in
connection with the Collateral, including, without limitation,
Attorney Costs, and any balance of such proceeds may be applied
by the Administrative Agent toward the payment of such of the
Liabilities, and in such order of application, as the
Administrative Agent may from time to time elect (and, after the
payment in full of all the Liabilities (other than Liabilities in
the nature of contingent continuing indemnification obligations),
the expiration or termination of all Letters of Credit and
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) and the
termination of all the Commitments under the Loan Documents, any
surplus shall be delivered to the Pledgor or as a court of
competent jurisdiction shall direct).
The Administrative Agent is hereby authorized to comply with
any limitation or restriction in connection with any sale of
Collateral as it may be advised by counsel is necessary in order
to (a) avoid any violation of applicable law (including, without
limitation, compliance with such procedures as may restrict the
number of prospective bidders and purchasers, require that
prospective bidders and purchasers have certain qualifications
and/or further restrict such prospective bidders or purchasers to
persons or entities who will represent and agree that they are
purchasing for their own account for investment and not with a
view to the distribution or resale of such Collateral) or (b)
obtain any required approval of the sale or of the purchase by
any Governmental Authority and the Pledgor agrees that such
compliance shall not result in such sale being considered or
deemed not to have been made in a commercially reasonable manner
and that the Administrative Agent shall not be liable or
accountable to the Pledgor for any discount allowed by reason of
the fact that such Collateral is sold in compliance with any such
limitation or restriction.
7. Release of Security Interest. Upon the payment in full
of all the Liabilities (other than Liabilities in the nature of
contingent continuing indemnification obligations), the expiration
6
<PAGE>
or termination of all Letters of Credit and 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) and the termination of all
the Commitments under the Loan Documents, the security interest
granted herein shall terminate and all rights to the Collateral
shall revert to the Pledgor. Upon any such termination, the
Administrative Agent will, at the Pledgor's sole expense and
reasonable request, promptly return to the Pledgor all
certificates and instruments representing and evidencing all
pledged shares, notes or securities pledged hereunder, together
with all Collateral held by the Administrative Agent hereunder,
and execute and deliver to the Pledgor such releases and
documents, in each case without recourse, representations or
warranties of any kind, as the Pledgor shall reasonably request
to evidence such termination. Upon the occurrence of a permitted
disposition of any Collateral pursuant to Section 8.2 of the
Credit Agreement and receipt by the Administrative Agent of all
payments required to be made under the Credit Agreement on
account of such permitted disposition and so long as no Default
shall have occurred and be continuing, the security interest
granted herein with respect to the Collateral which is the
subject of such permitted disposition shall terminate and the
Administrative Agent will, upon the Pledgor's reasonable request
and at the Pledgor's sole expense, promptly take such actions as
are reasonably necessary to provide a release, without recourse,
representation and warranties of any kind, of its security
interest in such Collateral.
8. Reinstatement. The Pledgor further agrees that if at any
time all or any part of any payment theretofore applied by the
Administrative Agent or any Lender Party to any of the
Liabilities is or must be rescinded or returned by the
Administrative Agent or such Lender Party for any reason
whatsoever (including, the insolvency, bankruptcy or
reorganization of the Company or the Pledgor or any other
Obligor), such Liabilities shall, for the purposes of this
Agreement, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Administrative Agent or
such Lender Party, and this Agreement shall continue to be
effective or be reinstated, as the case may be, as to such
Liabilities, all as though such application by the Administrative
Agent or such Lender Party had not been made.
9. General. The Administrative Agent shall be deemed to
have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded
treatment substantially equivalent to that which the
Administrative Agent, in its individual capacity, accords its own
property and no failure of the Administrative Agent to preserve
or protect any rights with respect to the Collateral against
prior parties shall be deemed of itself a failure to exercise
reasonable care in the custody or preservation of any Collateral.
No delay on the part of the Administrative Agent in
exercising any right, power or remedy shall operate as a waiver
thereof, and no single or partial exercise of any such right,
power or remedy shall preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. No
amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement shall be effective unless the same
shall be in writing and signed and delivered by the Administrative
Agent, and then such amendment, modification, waiver or
7
<PAGE>
consent shall be effective only in the specific instance and for
the specific purpose for which given.
All obligations of the Pledgor and all rights, powers and
remedies of the Administrative Agent and the Lender Parties
expressed herein are in addition to all other rights, powers and
remedies possessed by them, including, without limitation, those
provided by applicable law or in any other written instrument or
agreement relating to any of the Liabilities or any security
therefor.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF
ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Wherever possible
each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if
any provision of this Agreement shall be prohibited by or invalid
under such law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Agreement.
This Agreement shall be binding upon the Pledgor and the
Administrative Agent and their respective successors and assigns,
and shall inure to the benefit of the Pledgor, each Lender Party,
the Administrative Agent and the successors and assigns of the
Administrative Agent.
This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, and each such counterpart shall be deemed an
original but all such counterparts shall together constitute but
one and the same Agreement.
All notices, requests and other communications hereunder
shall be given in the manners and to the addresses set forth in
Section 11.2 of the Credit Agreement, and shall be effective as
set forth therein if given in any such manner.
To the extent that any provisions of this Agreement
conflict with any provisions of the Credit Agreement, the
provisions of the Credit Agreement shall control.
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, THE PLEDGOR, AND BY ACCEPTING THE BENEFITS HEREOF, THE
ADMINISTRATIVE AGENT AND EACH LENDER PARTY, CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURTS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION,
8
<PAGE>
IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. THE PLEDGOR, THE ADMINISTRATIVE AGENT AND
EACH LENDER PARTY 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
PLEDGOR, THE ADMINISTRATIVE AGENT AND EACH LENDER PARTY EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW
YORK LAW.
THE PLEDGOR AND (BY ACCEPTING THE BENEFITS HEREOF) EACH OF
THE ADMINISTRATIVE AGENT AND EACH LENDER PARTY, 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
PLEDGOR, THE ADMINISTRATIVE AGENT AND THE LENDER PARTIES 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 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.
THIS WRITTEN AGREEMENT, THE CREDIT AGREEMENT, THE NOTES,
THE OTHER LOAN DOCUMENTS, AND THE INSTRUMENTS AND DOCUMENTS
EXECUTED IN CONNECTION HEREWITH, REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS.
9
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first written above.
DEL MONTE FOODS COMPANY
By: /s/ Jon W. Graves
----------------------------
Title: Assistant Treasurer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By: /s/ Eric A. Schubert
----------------------------
Title: Managing Director
10
<PAGE>
Exhibit 4.9
CONFORMED COPY
=================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of April 18, 1997
By and Among
DEL MONTE CORPORATION,
DEL MONTE FOODS COMPANY
and
BT SECURITIES CORPORATION,
BANKERS TRUST INTERNATIONAL PLC,
BANCAMERICA SECURITIES, INC.
and
BEAR, STEARNS & CO. INC.,
as Initial Purchasers
12 1/4% Senior Subordinated Notes due 2007
=================================================================
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions................................................1
2. Exchange Offer.............................................4
3. Shelf Registration.........................................8
4. Additional Interest.......................................10
5. Registration Procedures...................................11
6. Registration Expenses.....................................19
7. Indemnification...........................................20
8. Rules 144 and 144A........................................23
9. Underwritten Registrations................................24
10. Miscellaneous.............................................24
(a) No Inconsistent Agreements...........................24
(b) Adjustments Affecting Registrable Notes..............24
(c) Amendments and Waivers...............................24
(d) Notices..............................................25
(e) Successors and Assigns...............................26
(f) Counterparts.........................................26
(g) Headings.............................................26
(h) Governing Law........................................26
(i) Severability.........................................26
(j) Securities Held by the Company, Holdings or
Their Respective Affiliates .........................27
(k) Third Party Beneficiaries............................27
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is
dated as of April 18, 1997, by and between DEL MONTE CORPORATION,
a New York corporation (the "Company") and DEL MONTE FOODS
COMPANY, a Maryland corporation ("Holdings"), on the one hand,
and BT SECURITIES CORPORATION, BANKERS TRUST INTERNATIONAL PLC,
BANCAMERICA SECURITIES, INC. and BEAR, STEARNS & CO. INC. (the
"Initial Purchasers") on the other hand.
This Agreement is entered into in connection with the
Purchase Agreement, dated as of April 15, 1997, by and among the
Company, Holdings and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the
Initial Purchasers of $150,000,000 aggregate principal amount of
its 12 1/4% Senior Subordinated Notes due 2007 (the "Notes") to
be guaranteed by Holdings. The Notes will be issued pursuant to
an Indenture, dated as of April 18, 1997, among the Company,
Holdings and Marine Midland Bank, as trustee (the "Trustee"). In
order to induce the Initial Purchasers to enter into the Purchase
Agreement, the Company and Holdings have agreed to provide the
registration rights set forth in this Agreement for the benefit
of the Initial Purchasers and any subsequent holder or holders of
the Notes. The execution and delivery of this Agreement is a
condition to the Initial Purchasers' obligations to purchase the
Notes under the Purchase Agreement.
The Notes are being issued and sold in connection with
the recapitalization of Holdings pursuant to an Agreement and
Plan of Merger, dated as of February 21, 1997, and amended and
restated as of April 14, 1997, entered into by and among
Holdings, TPG Partners L.P. and TPG Shield Acquisition
Corporation.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall
have the following meanings:
Additional Interest: See Section 4(a) hereof.
Advice: See the last paragraph of Section 5 hereof.
Agreement: See the introductory paragraphs hereto.
Applicable Period: See Section 2(b) hereof.
Company: See the introductory paragraphs hereto.
Effectiveness Date: With respect to (i) the Exchange
Offer Registration Statement, the 135th day after the Issue Date
and (ii) any Shelf Registration Statement, the 60th day after the
Filing Date with respect thereto.
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Effectiveness Period: See Section 3(a) hereof.
Effective Time: See the introductory paragraphs hereto.
Event Date: See Section 4(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a) hereof.
Exchange Offer: See Section 2(a) hereof.
Exchange Offer Registration Statement: See Section 2(a)
hereof.
Filing Date: (A) If no Registration Statement has been
filed by the Company and Holdings pursuant to this Agreement, the
60th day after the Issue Date; and (B) in any other case (which
may be applicable notwithstanding the consummation of the
Exchange Offer), the 45th day after the delivery of a Shelf
Notice.
Holder: Any holder of a Registrable Note or Registrable
Notes.
Holdings: See the introductory paragraphs hereto.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person See Section 7(c) hereof.
Indenture: See the introductory paragraphs hereto.
Initial Purchasers: See the introductory paragraphs hereto.
Initial Shelf Registration: See Section 3(a) hereof.
Inspectors: See Section 5(o) hereof.
Issue Date: April 18, 1997, the date of original issuance
of the Notes.
NASD: See Section 5(s) hereof.
Notes: See the introductory paragraphs hereto.
Participant: See Section 7(a) hereof.
Participant Broker-Dealer: See Section 2(b) hereof.
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Person: An individual, corporation, partnership, joint
venture, trust, unincorporated association, union, business
association, firm or governmental agency or political subdivision
thereof.
Private Exchange: See Section 2(b) hereof.
Private Exchange Notes: See Section 2(b) hereof.
Prospectus: The prospectus included in any
Registration Statement (including, without limitation, any
prospectus subject to completion and a prospectus that includes
any information previously omitted from a prospectus filed as
part of an effective registration statement in reliance upon Rule
430A under the Securities Act and any term sheet filed pursuant
to Rule 434 under the Securities Act), as amended or supplemented
by any prospectus supplement, and all other amendments and
supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs
hereto.
Records: See Section 5(o) hereof.
Registrable Notes: Each Note upon its original
issuance and at all times subsequent thereto, each Exchange Note
as to which Section 2(c) (iv) hereof is applicable upon original
issuance and at all times subsequent thereto and each Private
Exchange Note upon original issuance thereof and at all times
subsequent thereto, until (i) a Registration Statement (other
than, with respect to any Exchange Note as to which Section 2(c)
(iv) hereof is applicable, the Exchange Offer Registration
Statement) covering such Note, Exchange Note or Private Exchange
Note has been declared effective by the SEC and such Note,
Exchange Note or such Private Exchange Note, as the case may be,
has been disposed of in accordance with such effective
Registration Statement, (ii) such Note has been exchanged
pursuant to the Exchange Offer for an Exchange Note or Exchange
Notes that may be resold without restriction under the federal
securities laws, (iii) such Note, Exchange Note or Private
Exchange Note, as the case may be, ceases to be outstanding for
purposes of the Indenture or (iv) such Note, Exchange Note or
Private Exchange Note, as the case may be, may be resold without
restriction pursuant to Rule 144 under the Securities Act.
Registration Statement: Any registration statement of
the Company and Holdings, that covers any of the Notes, the
Exchange Notes or the Private Exchange Notes filed with the SEC
under the Securities Act, including the Prospectus, amendments
and supplements to such registration statement, including
cost-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities
Act, as such Rule may be amended from time to time, or any
similar rule (other than Rule 144A) or regulation hereafter
adopted by the SEC providing for offers and sales of securities
made in compliance therewith
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resulting in offers and sales by subsequent holders that are not
affiliates of the Company or Holdings of such securities being
free of the registration and prospectus delivery requirements of
the Securities Act.
Rule 144A: Rule 144A promulgated under the Securities
Act, as such Rule may be amended from time to time, or any
similar rule (other than Rule 144) or regulation hereafter
adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities
Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(b) hereof.
Shelf Registration: See Section 3(b) hereof.
Shelf Registration Statement: Any Registration Statement
relating to a Shelf Registration.
Subsequent Shelf Registration: See Section 3(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture.
Underwritten registration or underwritten offering: A
registration with the SEC in which securities of the Company are
sold to an underwriter for reoffering to the public.
2. Exchange Offer
(a) To the extent not prohibited by applicable law or
applicable interpretation of the staff of the Division of
Corporation Finance of the SEC, the Company and Holdings shall
file with the SEC, no later than the Filing Date, a Registration
Statement (the "Exchange Offer Registration Statement") on an
appropriate registration form with respect to a registered offer
(the "Exchange Offer") to exchange any and all of the Registrable
Notes for a like aggregate principal amount of notes (the
"Exchange Notes") of the Company guaranteed by Holdings that are
identical in all material respects to the Notes except that the
Exchange Notes shall contain no restrictive legend thereon. The
Exchange Offer shall comply in all material respects with all
applicable rules and regulations under the Exchange Act and other
applicable laws. The Company and Holdings shall use their
respective best efforts to (x) cause the Exchange Offer
Registration Statement to be declared effective under the
Securities Act on or before the Effectiveness Date; (y) keep the
Exchange Offer open for at least 30 days (or longer if required
by applicable law) after the date that notice of the Exchange
Offer is mailed to Holders; and (z)
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consummate the Exchange Offer on or prior to the 60th day
following the date on which the Exchange Offer Registration
Statement is declared effective by the SEC. If, after the
Exchange Offer Registration Statement is initially declared
effective by the SEC, the Exchange Offer or the issuance of the
Exchange Notes thereunder is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other
governmental agency or court, the Exchange Offer Registration
Statement shall be deemed not to have become effective for
purposes of this Agreement unless and until such stop order,
injunction or other order or requirement is stayed, lifted or
otherwise reversed and the Exchange Offer is permitted to
proceed.
Each Holder that participates in the Exchange Offer
will be required to represent that any Exchange Notes to be
received by it will be acquired in the ordinary course of its
business, that at the time of the consummation of the Exchange
Offer such Holder will have no arrangement or understanding with
any Person to participate in the distribution of the Exchange
Notes in violation of the provisions of the Securities Act, and
that such Holder is not an affiliate of the Company or Holdings
within the meaning of the Securities Act, and, if it is a
Participating Broker-Dealer, it acknowledges that it will deliver
a prospectus prepared by the Company and Holdings in accordance
with the terms of this Agreement in connection with any resale of
any Exchange Notes received in respect of such Notes pursuant to
the Exchange Offer.
Upon consummation of the Exchange Offer in accordance
with this Section 2, the provisions of this Agreement shall
continue to apply, solely with respect to Registrable Notes that
are Private Exchange Notes, Exchange Notes as to which Section
2(c) (iv) is applicable and Exchange Notes held by Participating
Broker-Dealers, and the Company and Holdings shall have no
further obligation to register Registrable Notes (other than
Private Exchange Notes and other than in respect of any Exchange
Notes as to which clause 2(c) (iv) hereof applies) pursuant to
Section 3 hereof. No securities other than the Exchange Notes
shall be included in the Exchange Offer Registration Statement.
(b) The Company and Holdings shall include within the
Prospectus contained in the Exchange Offer Registration Statement
a section entitled "Plan of Distribution," reasonably acceptable
to the Holders, which shall contain a summary statement of the
positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule
13d-3 under the Exchange Act) of Exchange Notes received by such
broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the staff of the SEC or such positions
or policies represent the prevailing views of the staff of the
SEC. Such "Plan of Distribution" section shall also expressly
permit, to the extent permitted by applicable policies and
regulations of the SEC, the use of the Prospectus by all Persons
subject to the prospectus delivery requirements of the Securities
Act, including, to the extent permitted by applicable policies
and regulations of the SEC, all Participating Broker-Dealers, and
include a statement describing the means by which Participating
Broker-Dealers may resell the Exchange Notes in compliance with
the Securities Act.
The Company and Holdings shall use their respective
reasonable best efforts to keep the Exchange Offer Registration
Statement effective and to amend and supplement the
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Prospectus contained therein in order to permit such Prospectus
to be lawfully delivered by all Persons subject to the prospectus
delivery requirements of the Securities Act for such period of
time as is necessary to comply with applicable law in connection
with any resale of the Exchange Notes covered thereby; provided,
however, that such period shall not exceed 180 days after such
Exchange Offer Registration Statement is declared effective (or
such longer period if extended pursuant to the last paragraph of
Section 5 hereof) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, any
Initial Purchaser holds any Notes acquired by it that have, or
that are reasonably likely to be determined to have, the status
of an unsold allotment in an initial distribution, or any Holder
is not entitled to participate in the Exchange Offer, the Company
and Holdings upon the request of any such Holder shall
simultaneously with the delivery of the Exchange Notes in the
Exchange Offer, issue and deliver to any such Holder, in exchange
(the "Private Exchange") for such Notes held by any such Holder,
a like principal amount of notes (the "Private Exchange Notes")
of the Company guaranteed by Holdings that are identical in all
material respects to the Exchange Notes (except that they may
bear a customary legend with respect to restrictions on
transfer). The Company and Holdings shall use their best efforts
to cause the Private Exchange Notes to bear the same CUSIP number
as the Exchange Notes. Notwithstanding the foregoing, the Company
and Holdings shall not be obligated to issue and deliver the
Private Exchange Notes if it is not possible for the Company and
Holdings, notwithstanding their best efforts, to cause the
Private Exchange Notes to bear the same CUSIP number as the
Exchange Notes. In the event that the Private Exchange Notes
cannot, for any reason, bear the same CUSIP number as the
Exchange Notes, the Company and Holdings will, as soon as the
Private Exchange Notes become freely transferable and are no
longer required to bear any restrictive legend, issue and deliver
the Private Exchange Notes and use their best efforts to cause
the Private Exchange Notes to bear the same CUSIP number as the
Exchange Notes. The Private Exchange Notes shall, in any event,
be issued pursuant to the same indenture as the Exchange Notes.
Interest on the Exchange Notes and the Private
Exchange Notes will accrue from (A) the later of (i) the last
interest payment date on which interest was paid on the Notes
surrendered in exchange therefor or (ii) if the Notes are
surrendered for exchange on a date subsequent to the record date
for an interest payment date to occur on or after the date of
such exchange and as to which interest will be paid, the date of
such interest payment or (B) if no interest has been paid on the
Notes, from the date of the original issuance of the Notes.
In connection with the Exchange Offer, the Company and
Holdings shall:
(1) mail, or cause to be mailed, to each Holder
entitled to participate in the Exchange Offer a copy of the
Prospectus forming part of the Exchange Offer Registration
Statement, together with an appropriate letter of
transmittal and related documents;
(2) keep the Exchange Offer open for not less than 30
days after the date that notice of the Exchange Offer is
mailed to Holders (or longer if required by applicable
law);
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(3) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City
of New York;
(4) permit Holders to withdraw tendered Notes at any
time prior to the close of business, New York time, on the
last business day on which the Exchange Offer shall remain
open; and
(5) otherwise comply in all material respects with all
applicable laws, rules and regulations.
As soon as practicable after the close of the Exchange
Offer and the Private Exchange, if any, the Company and Holdings
shall:
(1) accept for exchange all Registrable Notes validly
tendered and not validly withdrawn pursuant to the Exchange
Offer and the Private Exchange, if any;
(2) deliver to the Trustee for cancellation all
Registrable Notes so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver
promptly to each Holder, in respect of Notes validly
tendered and not validly withdrawn pursuant to the Exchange
Offer, Exchange Notes or Private Exchange Notes, as the
case may be, equal in principal amount to such Notes of
such Holder.
The Exchange Offer and the Private Exchange shall not
be subject to any conditions, other than that (i) the Exchange
Offer or Private Exchange, as the case may be, does not violate
applicable law or any applicable interpretation of the staff of
the SEC, (ii) no action or proceeding shall have been instituted
or threatened in any court or by any governmental agency which
might materially impair the ability of the Company or Holdings to
proceed with the Exchange Offer or the Private Exchange, and no
material adverse development shall have occurred in any existing
action or proceeding with respect to the Company or Holdings and
(iii) all governmental approvals shall have been obtained, which
approvals the Company or Holdings deems necessary for the
consummation of the Exchange Offer or Private Exchange.
The Exchange Notes and the Private Exchange Notes
shall be issued under (i) the Indenture or (ii) an indenture
identical in all material respects to the Indenture and which, in
either case, has been qualified under the TIA or is exempt from
such qualification and shall provide that the Exchange Notes
shall not be subject to the transfer restrictions set forth in
the Indenture. The Indenture or such indenture shall provide that
the Exchange Notes, the Private Exchange Notes and the Notes
shall vote and consent together on all matters as one class and
that none of the Exchange Notes, the Private Exchange Notes or
the Notes will have the right to vote or consent as a separate
class on any matter.
(c) If, (i) because of any change in law or in
currently prevailing interpretations of the staff of the SEC, the
Company and Holdings are not permitted to effect the Exchange
Offer, (ii) the Exchange Offer is not consummated within 180 days
of the Issue Date, (iii) the
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Representative or any holder of Private Exchange Notes so
requests in writing to the Company at any time after the
consummation of the Exchange Offer, or (iv) in the case of any
Holder that participates in the Exchange Offer, such Holder does
not receive Exchange Notes on the date of the exchange that may
be sold without restriction under the federal securities laws
(other than due solely to the status of such Holder as an
affiliate of the Company or Holdings within the meaning of the
Securities Act) and so notifies the Company within 30 days after
such Holder first becomes aware of such restrictions, in the case
of each of clauses (i) to and including (iv) of this sentence,
then the Company and Holdings shall promptly deliver to the
Holders and the Trustee written notice thereof (the "Shelf
Notice") and shall file a Shelf Registration pursuant to Section
3 hereof.
3. Shelf Registration
If at any time a Shelf Notice is delivered as
contemplated by Section 2(c) hereof, then:
(a) Shelf Registration. The Company and Holdings shall
file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of
the Registrable Notes not permitted to be exchanged in the
Exchange Offer in accordance with the terms of this Agreement,
Private Exchange Notes and Exchange Notes as to which Section
2(c) (iv) is applicable (the "Initial Shelf Registration"). The
Company and Holdings shall use their respective best efforts to
file with the SEC the Initial Shelf Registration on or before the
applicable Filing Date. The Initial Shelf Registration shall be
on Form S-l or another appropriate form permitting registration
of such Registrable Notes for resale by Holders in the manner or
manners designated by them (including, without limitation, one or
more underwritten offerings). Neither the Company nor Holdings
shall permit any securities other than the Registrable Notes to
be included in the Initial Shelf Registration or any Subsequent
Shelf Registration (as defined below).
The Company and Holdings shall use their respective
best efforts to cause the Initial Shelf Registration to be
declared effective under the Securities Act on or prior to the
Effectiveness Date and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date
which is three years from the Issue Date, subject to extension
pursuant to the last paragraph of Section 5 hereof (the
"Effectiveness Period"), or such shorter period ending when all
Registrable Notes covered by the Shelf Registration have been
sold in the manner set forth and as contemplated in the Initial
Shelf Registration or, if applicable, a Subsequent Shelf
Registration; provided, however, that the Effectiveness Period in
respect of the Initial Shelf Registration shall be extended to
the extent required to permit dealers to comply with the
applicable prospectus delivery requirements of Rule 174 under the
Securities Act and as otherwise provided herein and shall be
subject to reduction to the extent that the applicable provisions
of Rule 144 (k) are amended or revised to reduce the three year
holding period set forth therein.
No holder of Registrable Notes may include any of its
Registrable Notes in any Shelf Registration Statement pursuant to
this Agreement unless and until such holder furnishes to
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the Company and Holdings in writing, within 15 business days
after receipt of a request therefor, such information as the
Company and Holdings may reasonably request for use in connection
with any Shelf Registration Statement or Prospectus or
preliminary prospectus included therein. No holder of Registrable
Notes shall be entitled to Additional Interest pursuant to
Section 4 hereof unless and until such holder shall have provided
all such reasonably requested information. Each holder of
Registrable Notes as to which any Shelf Registration Statement is
being effected agrees to furnish promptly to the Company and
Holdings all information required to be disclosed in order to
make information previously furnished to the Company and Holdings
by such Holder not materially misleading.
(b) Subsequent Shelf Registrations. If the Initial
Shelf Registration or any Subsequent Shelf Registration ceases to
be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities
registered thereunder), the Company and Holdings shall use their
respective best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event
shall within 30 days of such cessation of effectiveness amend the
Initial Shelf Registration in a manner to obtain the withdrawal
of the order suspending the effectiveness thereof, or, if in the
reasonable judgment of the Representative it is likely to
accomplish the desired effect, file an additional Shelf
Registration Statement pursuant to Rule 415 covering all of the
Registrable Notes covered by and not sold under the Initial Shelf
Registration or an earlier Subsequent Shelf Registration (each, a
"Subsequent Shelf Registration") . If a Subsequent Shelf
Registration is filed, the Company and Holdings shall use their
respective best efforts to cause the Subsequent Shelf
Registration to be declared effective under the Securities Act as
soon as practicable after such filing and to keep such subsequent
Shelf Registration continuously effective for a period equal to
the number of days in the Effectiveness Period less the aggregate
number of days during which the Initial Shelf Registration or any
Subsequent Shelf Registration was previously continuously
effective. As used herein the term "Shelf Registration" means the
Initial Shelf Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company and
Holdings shall promptly supplement and amend any Shelf
Registration if required by the rules, regulations or
instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if
reasonably requested by the Holders of a majority in aggregate
principal amount of the Registrable Notes covered by such
Registration Statement or by any underwriter of such Registrable
Notes.
(d) Withdrawal of Stop Orders. If the Shelf
Registration ceases to be effective for any reason at any time
during the Effectiveness Period (other than because of the sale
of all of the securities registered thereunder), the Company and
Holdings shall use their respective best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness
thereof.
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4. Additional Interest
(a) The Company and Holdings and the Initial Purchasers
agree that the Holders will suffer damages if the Company or
Holdings fail to fulfill their respective obligations under
Section 2 or Section 3 hereof and that it would not be feasible
to ascertain the extent of such damages with precision.
Accordingly, the Company agrees to pay, as liquidated damages,
additional interest on the Notes ("Additional Interest") under
the circumstances and to the extent set forth below (each of
which shall be given independent effect):
(i) if (A) neither the Exchange Offer Registration
Statement nor the Initial Shelf Registration has been filed on or
prior to the Filing Date applicable thereto (i.e., 60 days after
the Issue Date) or (B) notwithstanding that the Company and
Holdings have consummated or will consummate the Exchange Offer,
the Company and Holdings are required to file a Shelf
Registration and such Shelf Registration is not filed on or prior
to the Filing Date applicable thereto, then, commencing on the
day after any such Filing Date, Additional Interest shall accrue
on the principal amount of the Notes at a rate of 0.50% per annum
for the first 90 days immediately following such applicable
Filing Date, and such Additional Interest rate shall increase by
an additional 0.50% per annum at the beginning of each subsequent
90-day period; or
(ii) if (A) neither the Exchange Offer Registration
Statement nor the Initial Shelf Registration is declared
effective by the SEC on or prior to the Effectiveness Date
applicable thereto (i.e., 135 days after the Issue Date) or (B)
notwithstanding that the Company and Holdings have consummated or
will consummate the Exchange Offer, the Company and Holdings are
required to file a Shelf Registration and such Shelf Registration
is not declared effective by the SEC on or prior to the
Effectiveness Date applicable to such Shelf Registration, then,
commencing on the day after such Effectiveness Date, Additional
Interest shall accrue on the principal amount of the Notes at a
rate of 0.50% per annum for the first 90 days immediately
following the day after such Effectiveness Date, and such
Additional Interest rate shall increase by an additional 0.50%
per annum at the beginning of each subsequent 90-day period; or
(iii) if (A) the Company and Holdings have not
exchanged Exchange Notes for all Notes validly tendered in
accordance with the terms of the Exchange Offer on or prior to
the 45th day after the date on which the Exchange Offer
Registration Statement relating thereto was declared effective or
(B) if applicable, a Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at
any time during the Effectiveness Period, then Additional
Interest shall accrue on the principal amount of the Notes at a
rate of 0.50% per annum for the first 90 days commencing on the
(x) 46th day after such effective date, in the case of (A) above,
or (y) the day such Shelf Registration ceases to be effective in
the case of (B) above, and such Additional Interest rate shall
increase by an additional 0.50% per annum at the beginning of
each such subsequent 90-day period;
provided, however, that the Additional Interest rate on the Notes
may not exceed in the aggregate 1.0% per annum; provided,
further, however, that (1) upon the filing of the applicable
Exchange Offer Registration Statement or the applicable Shelf
Registration as required hereunder (in the case of clause (i)
above of this Section 4), (2) upon the effectiveness of the
Exchange Offer
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Registration Statement or the applicable Shelf Registration
Statement as required hereunder (in the case of clause (ii) of
this Section 4), or (3) upon the exchange of the Exchange Notes
for all Notes tendered (in the case of clause (iii) (A) of this
Section 4), or upon the effectiveness of the applicable Shelf
Registration Statement which had ceased to remain effective (in
the case of (iii) (B) of this Section 4), Additional Interest on
the Notes in respect of which such events relate as a result of
such clause (or the relevant subclause thereof), as the case may
be, shall cease to accrue.
(b) The Company and Holdings shall notify the Trustee
within one business day after each and every date on which an
event occurs in respect of which Additional Interest is required
to be paid (an "Event Date"). Any amounts of Additional Interest
due pursuant to (a) (i), (a) (ii) or (a) (iii) of this Section 4
will be payable in cash semi-annually on each April 1 and October
1 (to the holders of record on the March 15 and September 15
immediately preceding such dates), commencing with the first such
date occurring after any such Additional Interest commences to
accrue. The amount of Additional Interest will be determined by
multiplying the applicable Additional Interest rate by the
principal amount of the Registrable Notes, multiplied by a
fraction, the numerator of which is the number of days such
Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve
30-day months and, in the case of a partial month, the actual
number of days elapsed), and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration
Statement pursuant to Sections 2 or 3 hereof, the Company and
Holdings shall effect such registrations to permit the sale of
the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto
and in connection with any Registration Statement filed by the
Company and Holdings hereunder the Company and Holdings shall:
(a) Prepare and file with the SEC prior to the
applicable Filing Date, a Registration Statement or
Registration Statements as prescribed by Sections 2 or 3
hereof, and use their best efforts to cause each such
Registration Statement to become effective and remain
effective as provided herein; provided, however, that, if
(1) such filing is pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof
is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period relating thereto, before
filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Company and Holdings
shall furnish to and afford the Holders of the Registrable
Notes covered by such Registration Statement or each such
Participating Broker-Dealer, as the case may be, their
counsel and the managing underwriters, if any, a reasonable
opportunity to review copies of all such documents
(including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be
filed (in each case at least five business days prior to
such filing, or such later date as is reasonable under the
circumstances). The Company and Holdings shall not file any
Registration Statement or Prospectus or any amendments or
supplements thereto if the Holders of a majority in
aggregate principal amount of the
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Registrable Notes covered by such Registration Statement,
their counsel, or the managing underwriters, if any, shall
reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration
Statement or Exchange Offer Registration Statement, as the
case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness
Period or the Applicable Period or until consummation of
the Exchange Offer, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement
required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then
in force) promulgated under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange
Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with
respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such
Prospectus. The Company and Holdings shall be deemed not to
have used their best efforts to keep a Registration
Statement effective during the Effective Period or the
Applicable Period, as the case may be, relating thereto if
the Company or Holdings voluntarily takes any action that
would result in selling Holders of the Registrable Notes
covered thereby or Participating Broker-Dealers seeking to
sell Exchange Notes not being able to sell such Registrable
Notes or such Exchange Notes during that period unless (i)
such action is required by applicable law or (ii) the
Company and Holdings comply with this Agreement, including
without limitation, the provisions of Section 5(k) or the
last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the
Exchange Offer Registration Statement filed pursuant to
Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period
relating thereto from whom the Company and Holdings have
received written notice that it will be a Participating
Broker-Dealer in the Exchange Offer, notify the selling
Holders of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, promptly (but in any event
within two business days of senior management becoming
aware of any event specified in clause (i) through (vi) of
the paragraph 5(c)), and confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect
to a Registration Statement or any post-effective
amendment, when the same has become effective under the
Securities Act (including in such notice a written
statement that any Holder may, upon request, obtain, at the
sole expense of the Company and Holdings, one conformed
copy of such Registration Statement or post-effective
amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by
reference therein and exhibits), (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the.
initiation of any proceedings for that purpose, (iii) if at
any time when a prospectus is required by the Securities
Act to be delivered in connection with sales of the
Registrable Notes or resales
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of Exchange Notes by Participating Broker-Dealers the
representations and warranties of the Company or Holdings
contained in any agreement (including any underwriting
agreement) contemplated by Section 5(m) hereof cease to be
true and correct in all material respects, (iv) of the
receipt by the Company or Holdings of any notification with
respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of
the Registrable Notes or the Exchange Notes to be sold by
any Participating Broker-Dealer for offer or sale in any
jurisdiction, or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any
event, the existence of any condition or any information
becoming known that makes any statement made in such
Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein
by reference untrue in any material respect or that
requires the making of any changes in or amendments or
supplements to such Registration Statement, Prospectus or
documents so that, in the case of the Registration
Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the
Prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they
were made, not misleading, and (vi) of any of the Company's
or Holdings' determination that a post-effective amendment
to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the
Exchange Offer Registration Statement filed pursuant to
Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, use
its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of a
Prospectus or suspending the qualification (or exemption
from qualification) of any of the Registrable Notes or the
Exchange Notes to be sold by any Participating
Broker-Dealer, for sale in any jurisdiction, and, if any
such order is issued, to use its best efforts to obtain the
withdrawal of any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to
Section 3 and if requested by the Initial Purchasers or the
Holders of a majority in aggregate principal amount of the
Registrable Notes being sold in connection with an
underwritten offering or by any Participating
Broker-Dealer, (i) promptly as practicable incorporate in a
prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters (if
any), such Holders, any Participating Broker-Dealer or
counsel for any of them reasonably request to be included
therein, (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as
practicable after the Company or Holdings has received
notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment, and
(iii) supplement or make amendments to such Registration
Statement, to the extent required by law or reasonably
requested by the Initial Purchasers or such Holders.
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(f) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the
Exchange Offer Registration Statement filed pursuant to
Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period,
furnish to each selling Holder of Registrable Notes and to
each such Participating Broker-Dealer who so requests and
to counsel and each managing underwriter, if any, at the
sole expense of the Company and Holdings, one conformed
copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if
requested, one copy of all documents incorporated or deemed
to be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the
Exchange Offer Registration Statement filed pursuant to
Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period,
deliver to each selling Holder of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be,
their respective counsel, and the underwriters, if any, at
the sole expense of the Company and Holdings, as many
copies of the Prospectus or Prospectuses (including each
form of preliminary prospectus) and each amendment or
supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request;
and, subject to the last paragraph of this Section 5, the
Company and Holdings hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each
of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Registrable
Notes covered by, or the sale by Participating
Broker-Dealers of the Exchange Notes pursuant to, such
Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes
or any delivery of a Prospectus contained in the Exchange
Offer Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, to use their respective best efforts to
register or qualify, and to cooperate with the selling
Holders of Registrable Notes or each such Participating
Broker-Dealer, as the case may be, the managing underwriter
or underwriters, if any, and their respective counsel in
connection with the registration or qualification (or
exemption from such registration or qualification) of such
Registrable Notes for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United
States as any selling Holder, Participating Broker-Dealer,
or the managing underwriter or underwriters reasonably
request in writing; provided, however, that where Exchange
Notes held by Participating Broker-Dealers or Registrable
Notes are offered other than through an underwritten
offering, the Company and Holdings agree to cause their
counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed
pursuant to this Section 5 (h); keep each such registration
or qualification (or exemption therefrom) effective during
the period such Registration Statement is required to be
kept effective and do any and all other acts or things
reasonably necessary or advisable to enable the
14
<PAGE>
disposition in such jurisdictions of the Exchange Notes
held by Participating Broker-Dealers or the Registrable
Notes covered by the applicable Registration Statement;
provided, however, that neither the Company nor Holdings
shall be required to (A) qualify generally to do business
in any jurisdiction where it is not then so qualified, (B)
take any action that would subject it to general service of
process in any such jurisdiction where it is not then so
subject or (C) subject itself to taxation in excess of a
nominal dollar amount in any such jurisdiction where it is
not then so subject.
(i) If a Shelf Registration is filed pursuant to
Section 3 hereof, cooperate with the selling Holders of
Registrable Notes and the managing underwriter or
underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Notes
to be sold, which certificates shall not bear any
restrictive legends (other than any customary legend
required by the applicable depositary or any or any legend
that would be required by an Exchange Note held by an
affiliate of the Company or Holdings) and shall be in a
form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such
denominations (subject to the terms of the Indenture) and
registered in such names as the managing underwriter or
underwriters, if any, or Holders may request.
(j) Use their respective best efforts to cause the
Registrable Notes covered by the Registration Statement to
be registered with or approved by such other governmental
agencies or authorities as may be reasonably necessary to
enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such
Registrable Notes, except as may be required solely as a
consequence of the nature of such selling Holder's
business, in which case the Company and Holdings will
cooperate in all reasonable respects with the filing of
such Registration Statement and the granting of such
approvals.
(k) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the
Exchange Offer Registration Statement filed pursuant to
Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, upon
the occurrence of any event contemplated by paragraph 5(c)
(v) or 5(c) (vi) hereof, as promptly as practicable prepare
and (subject to Section 5(a) hereof) file with the SEC, at
the sole expense of the Company and Holdings, a supplement
or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable
Notes being sold thereunder or to the purchasers of the
Exchange Notes to whom such Prospectus will be delivered by
a Participating Broker-Dealer, any such Prospectus will not
contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in the light of
the circumstances under which they were made, not
misleading.
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(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide
the Trustee with certificates for the Registrable Notes or
Exchange Notes, as the case may be, in a form eligible for
deposit with The Depository Trust Company and (ii) provide
a CUSIP number for the Registrable Notes or Exchange Notes,
as the case may be.
(m) In connection with any underwritten offering of
Registrable Notes pursuant to a Shelf Registration, enter
into an underwriting agreement as is customary in
underwritten offerings of debt securities similar to the
Notes in form and substance reasonably satisfactory to the
Company and Holdings and take all such other actions as are
reasonably requested by the managing underwriter or
underwriters in order to facilitate the registration or the
disposition of such Registrable Notes and, in such
connection, (i) make such representations and warranties
to, and covenants with, the underwriters with respect to
the business of the Company, Holdings and their respective
subsidiaries and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are
customarily made by issuers to underwriters in underwritten
offerings of debt securities similar to the Notes, and
confirm the same in writing if and when requested in form
and substance reasonably satisfactory to the Company and
Holdings; (ii) obtain the written opinions of counsel to
the Company and Holdings and written updates thereof in
form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters) addressed to the
underwriters covering the matters customarily covered in
opinions to underwriters in primary underwritten offerings
and as are reasonably requested by the managing underwriter
or underwriters; (iii) use its best efforts to obtain "cold
comfort" letters and updates thereof in form, scope and
substance reasonably satisfactory to the managing
underwriter or underwriters from the independent certified
public accountants of the Company and Holdings (and, if
necessary, any other independent certified public
accountants of any subsidiary of the Company or Holdings or
of any business acquired by the Company or Holdings for
which financial statements and financial data are, or are
required to be, included or incorporated by reference in
the Registration Statement), addressed to the underwriter,
such letters to be in customary form and covering matters
of the type customarily covered in "comfort" letters in
connection with primary underwritten offerings of debt
securities similar to the Notes and as are reasonably
requested by the managing underwriter or underwriters as
permitted by the Statement on Auditing Standards No. 72;
and (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and
procedures no less favorable to the sellers and
underwriters, if any, than those set forth in Section 7
hereof (or such other provisions and procedures acceptable
to Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement
and the managing underwriter or underwriters or agents, if
any. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required
thereunder.
(n) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in the
Exchange Offer Registration Statement filed pursuant to
Section 2 hereof is required to be delivered under the
Securities Act by any Participating
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<PAGE>
Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, make available for inspection by any
selling Holder of such Registrable Notes being sold, or
each such Participating Broker-Dealer, as the case may be,
any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or
other agent retained by any such selling Holder or each
such Participating Broker-Dealer, as the case may be, or
underwriter (collectively, the "Inspectors"), at the
offices where normally kept, during reasonable business
hours, all financial and other records, pertinent corporate
documents and instruments of the Company, Holdings and
their respective subsidiaries (collectively, the "Records")
as shall be reasonably necessary to enable the Inspectors
to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the
Company, Holdings and their respective subsidiaries to
supply all information reasonably requested by any such
Inspector in connection with such Registration Statement
and Prospectus. Each Inspector shall agree in writing that
it will keep the Records and any such information
confidential and that it will not disclose any of the
Records or any such information unless (i) the disclosure
of such Records is necessary, in the reasonable written
opinion of counsel to such Inspector, to avoid or correct a
misstatement or omission in such Registration Statement or
Prospectus, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of
competent jurisdiction or (iii) disclosure of such
information is necessary or advisable, in the reasonable
written opinion of counsel for any Inspector, in connection
with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such
Inspector and arising out of, based upon, relating to, or
involving this Agreement or the Purchase Agreement, or any
transactions contemplated hereby or thereby or arising
hereunder or thereunder, or (iv) the information in such
Records has been made generally available to the public.
Each selling Holder of such Registrable Notes and each such
Participating Broker-Dealer will be required to agree that
all Records and any such information obtained by it as a
result of such inspections shall be deemed confidential and
shall not be used by it as the basis for any market
transactions in the securities of the Company or Holdings
or any other entity unless and until such is made generally
available to the public. Each selling Holder of such
Registrable Notes and each such Participating Broker-Dealer
will be required to further agree that it will, upon
learning that disclosure of such Records or any such
information is sought in a court of competent jurisdiction,
give notice to the Company and Holdings and allow the
Company and Holdings to undertake appropriate action to
prevent disclosure of the Records or any such information
deemed confidential at the Company's and Holdings' expense.
(o) Provide an indenture trustee for the Registrable
Notes or the Exchange Notes, as the case may be, and cause
the Indenture or the trust indenture provided for in
Section 2(a) hereof, as the case may be, to be qualified
under the TIA not later than the effective date of the
first Registration Statement relating to the Registrable
Notes; and in connection therewith, cooperate with the
trustee under any such indenture and the Holders of the
Registrable Notes to effect such changes to such indenture
as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use
all reasonable efforts to cause such trustee to execute,
all documents
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<PAGE>
as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely
manner.
(p) Comply with all applicable rules and regulations
of the SEC and make generally available to their respective
securityholders consolidated earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of
any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which
Registrable Notes are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii)
if not sold to underwriters in such an offering, commencing
on the first day of the first fiscal quarter of the Company
and Holdings after the effective date of a Registration
Statement, which statements shall cover said 12-month
periods.
(q) If the Exchange Offer or a Private Exchange is to
be consummated, upon delivery of the Registrable Notes by
Holders to the Company (or to such other Person as directed
by the Company) in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be, the Company
shall mark, or cause to be marked, on such Registrable
Notes that such Registrable Notes are being cancelled in
exchange for the Exchange Notes or the Private Exchange
Notes, as the case may be; in no event shall such
Registrable Notes be marked as paid or otherwise satisfied.
(r) Use their respective best efforts to cause the
Registrable Notes covered by a Registration Statement or
the Exchange Notes, as the case may be, to be rated by each
of the rating agencies which rated the Notes at the time of
their initial issuance, if so requested by the Holders of a
majority in aggregate principal amount of Registrable Notes
covered by such Registration Statement or the Exchange
Notes, as the case may be, or the managing underwriter or
underwriters, if any.
(s) Cooperate, to the extent reasonable, with each
seller of Registrable Notes covered by any Registration
Statement and each underwriter, if any, participating in
the disposition of such Registrable Notes and their
respective counsel in connection with any filings required
to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
(t) Use their respective best efforts to take all
other steps reasonably necessary to effect the registration
of the Exchange Notes and/or Registrable Notes covered by a
Registration Statement contemplated hereby.
The Company and Holdings may require each seller of
Registrable Notes as to which any registration is being effected
to furnish to the Company and Holdings such information regarding
such seller and the distribution of such Registrable Notes as the
Company and Holdings may, from time to time, reasonably request.
The Company and Holdings may exclude from any such registration
the Registrable Notes of any seller so long as such seller fails
to furnish such information within a reasonable time after
receiving such request. Each seller as to which any Shelf
Registration is being effected agrees to furnish promptly to the
Company and
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Holdings all information required to be disclosed in order to
make the information previously furnished to the Company and
Holdings by such seller not materially misleading.
Each Holder of Registrable Notes and each
Participating Broker-Dealer agrees by its acquisition of such
Registrable Notes or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, that, upon
actual receipt of any notice from the Company or Holdings of the
happening of any event of the kind described in Section 5(c) (ii)
, 5(c) (iv) , 5(c) (v) , or 5(c) (vi) hereof, such Holder or
Participating Broker-Dealer will forthwith discontinue
disposition of such Registrable Notes covered by such
Registration Statement or Prospectus or Exchange Notes to be sold
by such Holder or Participating Broker-Dealer, as the case may
be, until such Holder's or Participating Broker-Dealer's receipt
of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof, or until it is advised in
writing (the "Advice") by the Company and Holdings that the use
of the applicable Prospectus may be resumed, and has received
copies of any amendments or supplements thereto. In the event
that the Company or Holdings shall give any such notice, each of
the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and
including the date of the giving of such notice to and including
the date when each seller of Registrable Notes covered by such
Registration Statement or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof or (y) the Advice.
6. Registration Expenses
All fees and expenses incident to the performance of
or compliance with this Agreement by the Company and Holdings
shall be borne by the Company and Holdings whether or not the
Exchange Offer Registration Statement or any Shelf Registration
Statement is filed or becomes effective or the Exchange Offer is
consummated, including, without limitation, (i) all registration
and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in
connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements
of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the
eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions (x) where the
holders of Registrable Notes are located, in the case of the
Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii)
printing expenses, if any, including, without limitation,
expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with The Depository
Trust Company and of printing prospectuses if the printing of
prospectuses is reasonably requested by the managing underwriter
or underwriters, if any, by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in
any Registration Statement or in respect of Exchange Notes to be
sold by any Participating Broker-Dealer during the Applicable
Period, as the case may be, (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the
Company and Holdings and, in the case of a Shelf Registration,
reasonable and documented fees and disbursements of one special
counsel for all of the sellers of Registrable Notes (exclusive of
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any counsel retained pursuant to Section 7 hereof), (v) fees and
disbursements of all independent certified public accountants
referred to in Section 5(m) (iii) hereof (including, without
limitation, the expenses of any special audit and "comfort"
letters required by or incident to such performance), (vi)
Securities Act liability insurance, if the Company and Holdings
desire such insurance, (vii) fees and expenses of all other
Persons retained by the Company and Holdings, (viii) internal
expenses of the Company and Holdings (including, without
limitation, all salaries and expenses of officers and employees
of the Company and Holdings performing legal or accounting
duties), (ix) the expense of any annual audit, (x) the fees and
expenses incurred in connection with the listing of the
securities to be registered on any securities exchange, and the
obtaining of a rating of the securities, in each case, if
applicable, and (xi) the expenses relating to printing, word
processing and distributing all Registration Statements,
underwriting agreements, indentures and any other documents
necessary in order to comply with this Agreement.
7. Indemnification
(a) The Company and Holdings, jointly and severally,
agree to indemnify and hold harmless each Holder of Registrable
Notes and each Participating Broker-Dealer selling Exchange Notes
during the Applicable Period, the officers, directors, employees
and agents of each such Person, and each Person, if any, who
controls any such Person within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims,
damages, judgments, liabilities and expenses (including, without
limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any
claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment
thereto) or Prospectus (as amended or supplemented if the Company
or Holdings shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by, arising out
of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein, in the case of the
Prospectus in the light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims,
damages or liabilities are caused by, arise out of or are based
upon any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with
information relating to any Participant furnished to the Company
and Holdings in writing by such Participant expressly for use
therein; provided, however, that neither the Company nor Holdings
will be liable if such untrue statement or omission or alleged
untrue statement or omission was contained or made in any
preliminary prospectus and corrected in the final Prospectus or
any amendment or supplement thereto and any such loss, liability,
claim, or damage or expense suffered or incurred by the
Participants resulted from any action, claim or suit by any
Person who purchased Registrable Notes or Exchange Notes which
are the subject thereof from such Participant and it is
established in the related proceeding that such Participant
failed to deliver or provide a copy of the final Prospectus (as
amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Notes or Exchange
Notes sold to such Person, unless such failure to deliver or
provide a copy of the Prospectus (as amended or supplemented) was
a result of noncompliance by the Company or Holdings with Section
5 of this Agreement.
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(b) Each Participant agrees, severally and not jointly,
to indemnify and hold harmless the Company, Holdings and their
respective directors, their respective officers who sign the
Registration Statement and each Person who controls the Company
or Holdings within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company and Holdings to each
Participant, but only with reference to information relating to
such Participant furnished to the Company and Holdings in writing
by such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or
any preliminary prospectus. The liability of any Participant
under this paragraph shall in no event exceed the proceeds
received by such Participant from sales of Registrable Notes or
Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall
be brought or asserted against any Person in respect of which
indemnity may be sought pursuant to either of the two preceding
paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Persons against whom such indemnity may be sought (the
"Indemnifying Persons") in writing, and the Indemnifying Persons,
upon request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent
the Indemnified Person and any others the Indemnifying Persons
may reasonably designate in such proceeding and shall pay the
reasonable fees and expenses actually incurred by such counsel
related to such proceeding; provided, however, that the failure
to so notify the Indemnifying Persons shall not relieve any of
them of any obligation or liability which any of them may have
hereunder or otherwise except to the extent it is materially
prejudiced by such failure. In any such proceeding, any
Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the
Indemnifying Persons and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Persons
shall have failed within a reasonable period of time to retain
counsel reasonably satisfactory to the Indemnified Person or
(iii) the named parties in any such proceeding (including any
impleaded parties) include both any Indemnifying Person and the
Indemnified Person or any affiliate thereof and representation of
both parties by the same counsel would be inappropriate due to
actual or potential conflicting interests between them. It is
understood that, unless there exists a conflict among Indemnified
Persons, the Indemnifying Persons shall not, in connection with
such proceeding or separate but substantially similar related
proceeding in the same jurisdiction arising out of the same
general allegations, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be
reimbursed promptly as they are incurred. Any such separate firm
for the Participants and such control Persons of Participants
shall be designated in writing by Participants who sold a
majority in interest of Registrable Notes and Exchange Notes sold
by all such Participants and any such separate firm for the
Company, Holdings and their respective directors, their
respective officers and such control Persons of the Company or
Holdings shall be designated in writing by the Company and
Holdings and shall be reasonably acceptable to the Holders. The
Indemnifying Persons shall not be liable for any settlement of
any proceeding effected without their prior written consent
(which consent shall not be unreasonably withheld or delayed),
but if settled with such consent or if there be a final
non-appealable judgment for the plaintiff for which the
Indemnified Person is entitled to indemnification pursuant to
this Agreement, each of the Indemnifying persons agrees
21
<PAGE>
to indemnify and hold harmless each Indemnified Person from and
against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for reasonable fees and
expenses actually incurred by counsel as contemplated by the
third sentence of this paragraph, the Indemnifying Person agrees
that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance
with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any
settlement effected without its consent pursuant to this sentence
if the Indemnifying Person is contesting, in good faith, the
request for reimbursement. No Indemnifying Person shall, without
the prior written consent of the Indemnified Persons (which
consent shall not be unreasonably withheld or delayed), effect
any settlement or compromise of any pending or threatened
proceeding in respect of which any Indemnified Person is or could
have been a party, or indemnity could have been sought hereunder
by such Indemnified Person, unless such settlement (A) includes
an unconditional written release of such Indemnified Person, in
form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter
of such proceeding and (B) does not include any statement as to
an admission of fault, culpability or failure to act by or on
behalf of such Indemnified Person.
(d) If the indemnification provided for in clauses (a)
and (b) of this Section 7 is for any reason unavailable to, or
insufficient to hold harmless, an Indemnified Person in respect
of any losses, claims, damages or liabilities referred to
therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities
in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from
the offering of the Notes or (ii) if the allocation provided by
the foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the
Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the
statements or omissions or alleged statements or omissions that
resulted in such losses claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant
equitable considerations. The relative benefits received by the
Company and Holdings on the one hand and the Participants on the
other shall be deemed to be in the same proportion as the total
proceeds from the offering (net of discounts and commissions but
before deducting expenses) of the Notes received by the Company,
as set forth in the table on the cover page of the Offering
Memorandum dated April 15, 1997 in respect of the sale of the
Notes, bears to the total proceeds received by such Participant
from the sale of Registrable Notes or Exchange Notes, as the case
may be. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company or Holdings on the one hand or such Participant or
such other Indemnified Person, as the case may be, on the other,
the parties' relative intent, knowledge, access to information
and opportunity to
22
<PAGE>
correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and
equitable if the amount of any contribution pursuant to this
Section 7 was determined by pro rata allocation (even if the
Participants were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as
a result of the losses, claims, damages, judgments, liabilities
and expenses referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred
by such Indemnified Person in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall a Participant be
required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of
Registrable Notes or Exchange Notes, as the case may be, exceeds
the amount of any damages that such Participant has otherwise
been required to pay or has paid by reason of such untrue or
alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or
expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be
paid by the Indemnifying Party to the Indemnified Party as such
losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company
and Holdings set forth in this Agreement shall remain operative
and in full force and effect, regardless of (i) any investigation
made by or on behalf of any Holder or any person who controls a
Holder, the Company or Holdings and their respective directors,
officers, employees or agents or any person controlling the
Company or Holdings, and (ii) any termination of this Agreement.
(g) The indemnity and contribution agreements contained
in this Section 7 will be in addition to any liability which the
Indemnifying Persons may otherwise have to the Indemnified
Persons referred to above.
8. Rules 144 and 144A
Each of the Company and Holdings covenants and agrees
that, so long as Registrable Notes remain outstanding, it will
file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder in a timely manner in accordance
with the requirements of the Securities Act and the Exchange Act
and, if at any time the Company or Holdings is not permitted to
file such reports, the Company or Holdings, as the case may be,
will, upon the request of any Holder or beneficial owner of
Registrable Notes, make publicly available annual reports and
such information, documents and other reports of the type
specified in Sections 13 and 15(d) of the Exchange Act. Each of
the Company and Holdings further covenants for so long as any
Registrable Notes
23
<PAGE>
remain outstanding, to make available to any Holder or beneficial
owner of Registrable Notes in connection with any sale thereof
and any prospective purchaser of such Registrable Notes from such
Holder or beneficial owner the information required by Rule
144A(d) (4) under the Securities Act in order to permit resales
of such Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers
that will manage the offering will be selected by the Holders of
a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably
acceptable to the Company and Holdings.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees
to sell such Holder's Registrable Notes on the basis provided in
any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the
terms of such underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. Neither the Company nor
Holdings has entered into, and neither will enter into, any agreement
with respect to any of its securities that is inconsistent with the
rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to
the holders of any of the Company's or Holdings' other issued and
outstanding securities. As of the date hereof, neither the
Company nor Holdings has entered into and will not enter into any
agreement with respect to any of its securities which will grant
to any Person piggy-back registration rights with respect to any
Registration Statement required to be filed by the Company and
Holdings pursuant to this Agreement.
(b) Adjustments Affecting Registrable Notes. Neither
the Company nor Holdings shall, directly or indirectly, take any
action with respect to the Registrable Notes as a class that
would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration
undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may
not be given, otherwise than with the prior written consent of
(I) the Company and Holdings and (II) (A) the Holders of not less
than a majority in aggregate principal amount of the then
outstanding Registrable Notes and (B) in circumstances that would
adversely affect the Participating Broker-Dealers, the
participating Broker-Dealers holding not less than a majority in
aggregate principal amount of the Exchange Notes held by all
participating Broker-Dealers; provided, however, that Section 7
and this Section 10(c) may not be amended, modified or
24
<PAGE>
supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any person who was a
Holder or Participating Broker-Dealer of Registrable Notes or
Exchange Notes, as the case may be, disposed of pursuant to any
Registration Statement) affected by any such amendment,
modification or supplement. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of
Holders of Registrable Notes whose securities are being sold
pursuant to a Registration Statement and that does not directly
or indirectly affect, impair, limit or compromise the rights of
other Holders of Registrable Notes may be given by Holders of at
least a majority in aggregate principal amount of the Registrable
Notes being sold pursuant to such Registration Statement.
(d) Notices. All notices and other communications
(including, without limitation, any notices or other
communications to the Trustee) provided for or permitted
hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(i) if to a Holder of the Registrable Notes or any
Participating Broker-Dealer, at the most current address of
such Holder or Participating Broker-Dealer, as the case may
be, set forth on the records of the registrar under the
Indenture, with a copy in like manner to the Initial
Purchasers as follows:
BT Securities Corporation,
As representative of the Initial Purchasers
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Facsimile No.: (212) 250-7200
Attention: Corporate Finance
with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
Facsimile No.: (213) 669-6407
Attention: John D. Hardy, Jr., Esq.
(ii) if to the Initial Purchasers, at the address
specified in Section 10 (d) (1);
25
<PAGE>
(iii) if to the Company or Holdings, to the Company at
the address as follows:
Del Monte Corporation
One Market Plaza
San Francisco, California 94105
Facsimile No.: (415) 247-3103
Attention: David C. Meyers Chief Financial Officer
with a copy to:
Attention: William R. Sawyers, Esq.
Vice President-Legal Affairs
Facsimile No.: (415) 247-3263
and to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: Paul J. Shim, Esq.
Facsimile No.: (212) 225-3997
All such notices and communications shall be deemed to
have been duly given: when delivered by hand, if personally
delivered; five business days after being deposited in the mail,
postage prepaid, if mailed; one business day after being timely
delivered to a next-day air courier; and upon receiving
confirmation receipt by the addressee, if sent by facsimile.
Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person
giving the same to the Trustee at the address and in the manner
specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns
of each of the parties hereto, the Holders and the Participating
Broker-Dealers, provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of
Registrable Notes in violation of the terms of the Purchase
Agreement or the Indenture.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
26
<PAGE>
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions
set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.
(j) Securities Held by the Company, Holdings or Their
Respective Affiliates. Whenever the consent or approval of
Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company,
Holdings or any of their respective affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given
by the Holders of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable
Notes and Participating Broker-Dealers are intended third party
beneficiaries of this Agreement, and this Agreement may be
enforced by such Persons.
27
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
DEL MONTE CORPORATION
By: /s/ William R. Sawyers
----------------------------
Name:
Title:
DEL MONTE FOODS COMPANY
By: /s/ Thomas E. Gibbons
----------------------------
Name:
Title:
BT SECURITIES CORPORATION,
as Initial Purchaser
By: /s/ Anthony C. Hass
----------------------------
Name: Anthony C. Hass
Title: Vice President
BANCAMERICA SECURITIES, INC.,
as Initial Purchaser
By: /s/ Jonathan Hakala
----------------------------
Name: Jonathan Hakala
Title: Senior Managing Director
BEAR, STEARNS & CO. INC.
as Initial Purchaser
By: /s/ Michael Offen
----------------------------
Name:
Title:
BANKERS TRUST INTERNATIONAL PLC
By: /s/ Vincent Keith
----------------------------
Name: Vincent Keith
Title: Vice President
<PAGE>
Exhibit 5.1
Conformed Copy
Writer's Direct Dial: (212) 225-2930
June 12, 1997
Del Monte Corporation
Del Monte Foods Company
One Market
San Francisco, California 94105
Ladies and Gentlemen:
We have acted as your counsel in connection with a
Registration Statement on Form S-4 (the "Registration Statement")
filed today with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended (the "Act"), in respect
of the Series B 12 1/4% Senior Subordinated Notes due 2007 (the
"Exchange Notes") of Del Monte Corporation, a New York
corporation (the "Company"), to be offered in exchange for all
outstanding 12 1/4% Senior Subordinated Notes due 2007 (the "Old
Notes") of the Company. The Exchange Notes will be issued
pursuant to an indenture (the "Indenture"), dated as of April 18,
1997, among the Company, Del Monte Foods Company, a Maryland
corporation (the "Guarantor"), and Marine Midland Bank, as
trustee. The obligations of the Company pursuant to the Exchange
Notes, including the repurchase obligation resulting from a
Change in Control (as defined in the Indenture), will be
unconditionally guaranteed on a senior subordinated basis by the
Guarantor (the "Guarantee").
We have participated in the preparation of the
Registration Statement and have reviewed originals or copies
certified or otherwise identified to our satisfaction of such
documents and records of the Company and the Guarantor and such
other instruments and other
<PAGE>
Del Monte Corporation
Del Monte Foods Company, p. 2
certificates of public officials, officers and representatives of
the Company and the Guarantor and such other persons, and we have
made such investigations of law, as we have deemed appropriate as
a basis for the opinions expressed below.
In rendering the opinions expressed below, we have
assumed the authenticity of all documents submitted to us as
originals and the conformity to the originals of all documents
submitted to us as copies. In addition, we have assumed and have
not verified (i) the accuracy as to factual matters of each
document we have reviewed and (ii) that the Old Notes and the
Exchange Notes conform or will conform to the forms thereof that
we have reviewed and have been or will be duly authenticated in
accordance with their terms and the terms of the Indenture.
Based on the foregoing, and subject to the further
assumptions and qualifications set forth below, it is our opinion
that:
1. When the Exchange Notes have been duly executed and
authenticated in accordance with their terms and the terms of the
Indenture, and duly issued and delivered by the Company in
exchange for an equal principal amount of Old Notes pursuant to
the terms of the Registration Rights Agreement (in the form filed
as an exhibit to the Registration Statement), the Exchange Notes
will constitute the valid, binding and enforceable obligations of
the Company, entitled to the benefits of the Indenture.
2. The Indenture (including, without limitation, the
Guarantee included therein) has been duly executed and delivered
by the Company and the Guarantor under the law of the State of
New York, and upon the exchange of Exchange Notes for an equal
principal amount of Old Notes pursuant to the Registration Rights
Agreement (in the form filed as an exhibit to the Registration
Statement), the Guarantee will constitute the valid, binding and
enforceable obligation of the Guarantor.
Insofar as the foregoing opinions relate to the
validity, binding effect or enforceability of any agreement or
obligation of the Company or the Guarantor, (a) we have assumed
that each of the Company, the Guarantor and each other party to
such agreement or obligation has satisfied those legal
requirements that are applicable to it to the extent necessary to
make such agreement or obligation enforceable against it (except
that no such assumption is made as to the Company or the
Guarantor regarding matters of the law of the State of New York);
(b) such opinions are subject to applicable bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting
creditors' rights generally and to general principles of equity;
and (c) we express no opinion as to sections of the Indenture,
the Old Notes and the Exchange Notes which pertain to the defense
of forum non conveniens, submission to jurisdiction, severability
of
illegal provisions, waiver of protection under stay, extension or
usury laws or the conclusiveness of calculations or
certifications.
The foregoing opinion is limited to the law of the
State of New York.
<PAGE>
Del Monte Corporation
Del Monte Foods Company, p. 3
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to this firm
under the heading "Legal Matters" in the Prospectus included in
the Registration Statement. In giving such consent, we do not
thereby admit that we are "experts" within the meaning of the Act
or the rules and regulations of the Securities and Exchange
Commission issued thereunder with respect to any part of the
Registration Statement, including this exhibit.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By /s/ Paul J. Shim
-------------------------
Paul J. Shim, a Partner
<PAGE>
Exhibit 10.1
Conformed Copy
TRANSACTION ADVISORY AGREEMENT
THIS TRANSACTION ADVISORY AGREEMENT (this "Agreement")
is made and entered into as of April 18, 1997, between Del Monte
Corporation, a New York corporation (the "Company"), and TPG
Partners, L.P., a Delaware limited partnership (together with its
successors, "TPG").
WHEREAS, TPG and certain of its affiliates are,
concurrently with the execution of this Agreement, engaging in a
recapitalization of the Company (the "Recapitalization");
WHEREAS, TPG has rendered financial advisory services
in connection with the negotiation of the Recapitalization and
the debt and equity financing transactions related thereto
(collectively with the Recapitalization, the "Transaction"); and
WHEREAS, the Company has requested that TPG render
financial advisory and other similar services to the Company with
respect to any future proposals for a tender offer, acquisition,
sale, merger, exchange offer, recapitalization, restructuring, or
other similar transaction directly or indirectly involving the
Company, or any of its subsidiaries, and any other person or
entity (collectively, "Add-on Transactions");
NOW, THEREFORE, in consideration of the services
rendered and to be rendered by TPG and to evidence the
obligations of the Company to TPG and the mutual covenants herein
contained, the Company and TPG hereby agree as follows:
1. Retention.
(a) The Company hereby acknowledges that it has
retained TPG for the benefit of the Company, and TPG acknowledges
that it has acted as financial advisor to the Company in
connection with the Transaction.
(b) The Company hereby retains TPG as the
exclusive financial advisor in connection with any Add-on
Transactions that may be consummated during the term of this
Agreement, and agrees that the Company will not retain any other
person or entity to provide such services in connection with any
such Add-on Transaction without the prior written consent of TPG.
TPG agrees that it shall provide such financial advisory,
investment banking, and other similar services in connection with
any such Add-on Transaction as may be requested from time to time
by the Board of Directors of the Company.
2. Term. The term of this Agreement shall continue
until the earlier to occur of (i) the tenth anniversary of the
date hereof or (ii) the date on which TPG and its affiliates
cease
<PAGE>
to own beneficially, directly or indirectly, at least twenty-five
percent of the voting power of the securities of Del Monte Foods
Company, a Maryland corporation, or its successors.
3. Compensation.
(a) As compensation for TPG's services as
financial advisor to the Company in connection with the
Transaction, the Company hereby irrevocably agrees to pay to TPG
a cash fee of $8,400,000 to be paid at the closing of the
Transaction.
(b) As compensation for TPG's financial advisory
and other similar services rendered in connection with any Add-on
Transaction pursuant to Section 1(b) hereof, the Company shall
pay to TPG, at the closing of any such Add-on Transaction, a cash
fee in the amount of 1.5% of the Transaction Value of such Add-on
Transaction. As used herein, the term "Transaction Value" means
the total value of the Add-on Transaction, including, without
limitation, the aggregate amount of the funds required to
complete the Add-on Transaction (excluding any fees payable
pursuant to this Section 3(b)), including the amount of any
indebtedness, preferred stock or similar items assumed (or
remaining outstanding).
(c) Any or all of the fees provided for in this
Section 3 may be waived in full or in part by TPG in its sole and
absolute discretion.
4. Reimbursement of Expenses. In addition to the
compensation to be paid pursuant to Section 3 hereof, the Company
agrees to reimburse TPG, promptly following demand therefor,
together with invoices or reasonably detailed descriptions
thereof, for all reasonable disbursements and out-of-pocket
expenses (including fees and disbursements of counsel and
accountants) incurred by TPG (i) as financial advisor to the
Company in connection with the Transaction or (ii) in connection
with the performance by it of the services contemplated by
Section 1(b) hereof.
5. Indemnification. The Company shall indemnify and
hold harmless each of TPG, its affiliates, and their respective
directors, officers, controlling persons (within the meaning of
Section 15 of the Securities Act of 1933 or Section 20(a) of the
Securities Exchange Act of 1934), if any, agents and employees
(TPG, its affiliates, and such other specified persons being
collectively referred to as "Indemnified Persons" and
individually as an "Indemnified Person") from and against any and
all claims, liabilities, losses, damages and expenses incurred by
any Indemnified Person (including those resulting from the
negligence of the Indemnified Person and fees and disbursements
of the respective Indemnified Person's counsel) which (A) are
related to or arise out of (i) actions taken or omitted to be
taken (including any untrue statements made or any statements
omitted to be made) by the Company or (ii) actions taken or
omitted to be taken by an Indemnified Person with the Company's
consent or in conformity with the Company's instructions or the
Company's actions or omissions or (B) are otherwise related to or
arise out of TPG's engagement, and will reimburse each
Indemnified Person for all costs and expenses, including fees of
any Indemnified Person's counsel, as they are incurred, in
connection with investigating, preparing for, defending, or
appealing any action, formal or informal claim, investigation,
inquiry or other proceeding, whether or not in connection with
pending or threatened litigation, caused by or arising out of or
in connection with TPG's acting pursuant to
2
<PAGE>
the engagement, whether or not any Indemnified Person is named as
a party thereto and whether or not any liability results
therefrom. The Company will not however, be responsible for any
claims, liabilities, losses, damages, or expenses pursuant to
clause (B) of the preceding sentence that have resulted primarily
from TPG's gross negligence or willful misconduct. The Company
also agrees that neither TPG nor any other Indemnified Parson
shall have any liability to the Company for or in connection with
such engagement except for any such liability for claims,
liabilities, losses, damages, or expenses incurred by the Company
that have resulted primarily from TPG's gross negligence or
willful misconduct. The Company further agrees that it will not,
without the prior written consent of TPG, settle or compromise or
consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any
Indemnified Person is an actual or potential party to such claim,
action, suit or proceeding) unless such settlement, compromise or
consent includes an unconditional release of TPG and each other
Indemnified Person hereunder from all liability arising out of
such claim, action, suit or proceeding. THE COMPANY HEREBY
ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO
ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES, OR EXPENSES THAT HAVE
RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR
PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF
TPG OR ANY OTHER INDEMNIFIED PERSON.
The foregoing right to indemnity shall be in addition
to any rights that TPG and/or any other Indemnified Person may
have at common law or otherwise and shall remain in full force
and effect following the completion or any termination of the
engagement. The Company hereby consents to personal jurisdiction
and to service and venue in any court in which any claim which is
subject to this agreement is brought against TPG or any other
Indemnified Person.
It is understood that, in connection with TPG's
engagement, TPG may also be engaged to act for the Company in one
or more additional capacities, and that the terms of this
engagement or any such additional engagement may be embodied in
one or more separate written agreements. This indemnification
shall apply to the engagement specified in the first paragraph
hereof as well as to any such additional engagement(s) (whether
written or oral) and any modification of said engagement or such
additional engagement(s) and shall remain in full force and
effect following the completion or termination of said engagement
or such additional engagements.
6. Confidential Information. In connection with the
performance of the services hereunder, TPG agrees not to divulge
any confidential information, secret processes or trade secrets
disclosed by the Company to it solely in its capacity as a
financial advisor, unless the Company consents to the divulging
thereof or such information, secret processes, or trade secrets
are publicly available or otherwise available to TPG without
restriction or breach of any confidentiality agreement or unless
required by any governmental authority or in response to any
valid legal process.
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<PAGE>
7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the
State of New York excluding any choice-of-law provisions thereof.
8. Assignment. This Agreement and all provisions
contained herein shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns, provided, however, neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned
(other than with respect to the rights and obligations of TPG,
which may be assigned to any one or more of its principals or
affiliates) by any of the parties without the prior written
consent of the other parties.
9. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument, and the signature of any party to any counterpart
shall be deemed a signature to, and may be appended to, any other
counterpart.
10. Other Understandings. All discussions,
understandings, and agreements theretofore made between any of
the parties hereto with respect to the subject matter hereof are
merged in this Agreement, which alone fully and completely
expresses the Agreement of the parties hereto. All calculations
of (a) compensation pursuant to Section 3(b) and (b) reimbursable
expenses pursuant to Section 4 of this Agreement shall be made by
TPG and, in the absence of manifest error, shall be final and
conclusive. The Company expressly acknowledges that TPG has been
retained solely as an advisor to the Company, and not as an
advisor to or agent of any other person, and that the Company's
engagement of TPG is not intended to confer any rights upon any
person not a party hereto, including shareholders, employees or
creditors of the Company, as against TPG, TPG's affiliates or
their respective directors, officers, agents and employees.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
TPG PARTNERS, L.P.
By: TPG Genpar, L.P.,
its General Partner
By: TPG Advisors, Inc.,
its General Partner
By: /s/ Carrie Wheeler
Name:
Title:
DEL MONTE CORPORATION
By: /s/ William R. Sawyers
Name:
Title:
5
<PAGE>
Exhibit 10.2
Conformed Copy
MANAGEMENT ADVISORY AGREEMENT
THIS MANAGEMENT ADVISORY AGREEMENT (the "Agreement")
is made and entered into effective as of April 18, 1997, between
Del Monte Corporation, a New York corporation (the "Company") and
TPG Partners, L.P., a Delaware limited partnership (together with
its successors, "TPG").
1. Retention. The Company hereby acknowledges that it
has retained TPG, and TPG acknowledges that, subject to
reasonable advance notice in order to accommodate scheduling, TPG
will provide management advisory services to the Company as
requested by the Board of Directors of the Company during the
term of this Agreement.
2. Term. The term of this Agreement shall continue
until the earlier to occur of (i) the tenth anniversary of the
date hereof, or (ii) the date on which TPG and its affiliates
cease to own beneficially, directly or indirectly, at least
twenty-five percent of the voting power of the securities of Del
Monte Foods Company, a Maryland corporation, or its successors.
3. Compensation.
(a) As compensation for TPG's services under this
Agreement, the Company shall be obligated to pay to TPG an annual
fee (the "Management Advisory Fee") of $500,000 (the "Base Fee"),
subject to adjustment pursuant to paragraphs (b) and (c) below
and prorated on a daily basis for any partial calendar year
during the term of this Agreement. The Management Advisory Fee
shall be payable in equal quarterly installments on each January
1, April 1, July 1, and October 1 during the term of this
Agreement (each a "Payment Date"), beginning with the first
Payment Date following the date hereof. All payments shall be
made by wire transfer of immediately available funds to such
account as TPG may designate from time to time in writing.
(b) On the first day of each fiscal year of the
Company during the term of this Agreement, the Management
Advisory Fee applicable to such fiscal year shall be adjusted to
an annual amount equal to (i) the budgeted consolidated annual
net sales of the Company and its subsidiaries for such fiscal
year, multiplied by (ii) 0.05% (the "Percentage"); provided,
however, that in no event shall the annual Management Advisory
Fee be less than the Base Fee.
(c) On each occasion that the Company or any of
its subsidiaries shall acquire another entity or business during
the term of this Agreement, the annual Management Advisory Fee
for the calendar year in which such acquisition occurs shall be
adjusted prospectively (i.e., for periods subsequent to such
acquisition until the next adjustment pursuant to clause (b)
above), as of the closing of such acquisition, to an annual
amount equal to the product of (i) the pro forma combined
budgeted consolidated annual net sales of the Company and its
subsidiaries for the entire then-current fiscal year of the
Company (including the sales of
<PAGE>
the acquired entity or business for such entire fiscal year, on a
pro forma basis) and (ii) the Percentage; provided, however, that
in no event shall the annual Management Advisory Fee be less than
the Base Fee.
(d) All past due payments in respect of the
Management Advisory Fee shall bear interest at the lesser of the
highest rate of interest which may be charged under applicable
law or the prime commercial lending rate per annum of Bank of
America N.T. and S.A. or its successors (which rate is a
reference rate and is not necessarily its lowest or best rate of
interest actually charged to any customer) (the "Prime Rate") as
in effect from time to time, plus two percent (2%), from the due
date of such payment to and including the date on which payment
is made to TPG in full, including such interest accrued thereon.
(e) Any or all of the fees provided for in this
Section 3 may be waived in full or in part by TPG in its sole and
absolute discretion.
4. Reimbursement of Expenses. In addition to the
compensation to be paid pursuant to Section 3 hereof, the Company
agrees to pay or reimburse TPG for all "Reimbursable Expenses",
which shall consist of all reasonable disbursement and
out-of-pocket expenses (including without limitation, costs of
travel, postage, deliveries, communications, etc. and fees and
expenses of counsel and accountants) incurred by TPG or its
affiliates for the account of the Company or in connection with
the performance by TPG of the services contemplated by Section 1
hereof. Promptly (but not more than 10 days) after request by or
notice from TPG, the Company shall pay TPG, by wire transfer of
immediately available funds to an account designated by TPG, the
Reimbursable Expenses for which TPG has provided the Company
invoices or reasonably detailed descriptions. All past due
payments in respect of the Reimbursable Expenses shall bear
interest at the lesser of the highest rate of interest which may
be charged under applicable law or the Prime Rate plus 2% from
the Payment Date to and including the date on which such
Reimbursable Expenses plus accrued interest thereon, are fully
paid to TPG.
5. Indemnification. The Company shall indemnify and
hold harmless each of TPG, its affiliates and shareholders, and
the respective directors, officers, controlling persons (within
the meaning of Section 15 of the Securities Act of 1933 or
Section 20(a) of the Securities Exchange Act of 1934), if any,
agents and employees of TPG and/or any of its affiliates and
shareholders (TPG, its affiliates and shareholders, and such
other specified persons being collectively referred to as
"Indemnified Persons", and individually as an "Indemnified
Person") from and against any and all claims, liabilities,
losses, damages and expenses incurred by any Indemnified Person
(including those arising out of an Indemnified Person's
negligence and fees and disbursements of the respective
Indemnified Person's counsel) which (A) are related to or arise
out of (i) actions taken or omitted to be taken (including any
untrue statements made or any statements omitted to be made) by
the Company or (ii) actions taken or omitted to be taken by an
Indemnified Person with the Company's consent or in conformity
with the Company's instructions or the Company's actions or
omissions or (B) are otherwise related to or arise out of TPG's
engagement, and will reimburse each Indemnified Person for all
costs and expenses, including fees and disbursements of any
Indemnified Person's counsel, as they are incurred, in
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<PAGE>
connection with investigating, preparing for, defending, or
appealing any action, formal or informal claim, investigation,
inquiry, or other proceeding, whether or not in connection with
pending or threatened litigation, caused by or arising out of or
in connection with TPG's acting pursuant to the engagement,
whether or not any Indemnified Person is named as a party thereto
and whether or not any liability results therefrom. The Company
will not, however, be responsible for any claims, liabilities,
losses, damages, or expenses pursuant to clause (B) of the
preceding sentence that have resulted primarily from TPG's gross
negligence or willful misconduct. The Company also agrees that
neither TPG nor any other Indemnified Person shall have any
liability to the Company for or in connection with such
engagement except for any such liability for claims, liabilities,
losses, damages, or expenses incurred by the Company that have
resulted primarily from TPG's gross negligence or willful
misconduct. The Company further agrees that it will not, without
the prior written consent of TPG, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim,
action, suit, or proceeding in respect of which indemnifications
may be sought hereunder (whether or not any Indemnified Person is
an actual or potential party to such claim, action, suit, or
proceeding) unless such settlement, compromise or consent
includes an unconditional release of TPG and each other
Indemnified Person hereunder from all liability arising out of
such claim, action, suit or proceeding. THE COMPANY HEREBY
ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO
ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES, OR EXPENSES THAT HAVE
RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR
PASSIVE OR THE SOLE, JOINT, OR CONCURRENT ORDINARY NEGLIGENCE OF
TPG OR ANY OTHER INDEMNIFIED PERSON.
The foregoing right to indemnity shall be in addition
to any rights that TPG and/or any other Indemnified Person may
have at common law or otherwise and shall remain in full force
and effect following the completion or any termination of the
engagement. The Company hereby consents to personal jurisdiction
and to service and venue in any court in which any claim, which
is subject to this agreement, is brought against TPG or any other
Indemnified Person.
It is understood that, in connection with TPG's
engagement, TPG may also be engaged to act for the Company in one
or more additional capacities, and that the terms of this
engagement or any such additional engagement(s) may be embodied
in one or more separate written agreements. This indemnification
shall apply to the engagement specified in the first paragraph
hereof as well as to any such additional engagement(s) (whether
written or oral) and any modification of said engagement or such
additional engagement(s) and shall remain in full force and
effect following the completion or termination of said engagement
or such additional engagements.
6. Confidential Information. In connection with the
performance of the services hereunder, TPG agrees not to divulge
any confidential information, secret processes, or trade secrets
disclosed by the Company to it solely in its capacity as a
financial advisor, unless the Company consents to the divulging
thereof or such information, secret processes, or trade secrets
are publicly available or otherwise available to TPG without
restriction or breach of any
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<PAGE>
confidentiality agreement or unless required by any governmental
authority or in response to any valid legal process.
7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the
State of New York, excluding any choice-of-law provisions
thereof.
8. Assignment. This Agreement and all provisions
contained herein shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns; provided, however, neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned
(other than with respect to the rights and obligations of TPG,
which may be assigned to any one or more of its principals or
affiliates) by any of the parties without the prior written
consent of the other parties.
9. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument, and the signature of any party to any counterpart
shall be deemed a signature to, and may be appended to, any other
counterpart.
10. Other Understandings. All discussions,
understandings, and agreements theretofore made between any of
the parties hereto with respect to the subject matter hereof are
merged in this Agreement, which alone fully and completely
expresses the Agreement of the parties hereto. All calculations
of the Management Advisory Fee and Reimbursable Expenses shall be
made by TPG and, in the absence of manifest error, shall be final
and conclusive. The Company expressly acknowledges that TPG has
been retained solely as an advisor to the Company, and not as an
advisor to or agent of any other person, and that the Company's
engagement of TPG is not intended to confer any rights upon any
person not a party hereto, including shareholders, employees or
creditors of the Company, as against TPG, TPG's affiliates or
their respective directors, officers, agents and employees.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date and year first above
written.
TPG PARTNERS, L.P.
By: TPG Genpar, L.P.
its General Partner
By: TPG Advisors, Inc.,
its General Partner
By: /s/ Carrie Wheeler
Name:
Title:
DEL MONTE CORPORATION
By: /s/ William R. Sawyers
Name:
Title:
5
<PAGE>
Exhibit 10.3
Conformed Copy
RETENTION AGREEMENT
THIS AGREEMENT, made as of this 1st day of November
1991 (the "Effective Date"), by and between DEL MONTE
CORPORATION, a New York corporation (the "Company") and DAVID L.
MEYERS (the "Executive").
W I T N E S S E T H;
WHEREAS, in order to provide the Executive continued
incentives to remain in the services of the Company, its
subsidiaries or affiliates, the Company desires to provide the
Executive with compensation security under the conditions set
forth in this Agreement in the event that the Executive's
employment hereunder is terminated by the Company or any such
subsidiary or affiliate without Cause (as hereinafter defined) or
the Executive resigns his employment hereunder for Good Reason
(as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and
covenants herein contained, the parties hereto hereby agree as
follows:
1. Employment. The Executive agrees to devote his
working time, on substantially a full-time basis, to the
performance of such services for the Company, its subsidiaries
and affiliates as may be assigned to him from time to time and to
perform such services faithfully and to the best of his ability.
This Agreement shall commence on the Effective Date and shall
remain in effect so long as the Executive remains employed by the
Company, any of its subsidiaries or any successor organization.
<PAGE>
2. Termination for Cause: Resignation without Good
Reason; Termination by Reason of Death. (a) This Agreement shall
be terminated immediately and neither party shall have any
obligation hereunder if the Executive's employment is terminated
for Cause (as hereinafter defined) or by reason of the
Executive's death or if the Executive resigns his employment
hereunder for other than Good Reason.
(b) The Executive shall be terminated for "Cause" only
if the Executive's employment is terminated as a result of (i)
criminal dishonesty, (ii) deliberate and continual refusal to
perform employment duties on substantially a full-time basis or
to act in accordance with any specific lawful instructions given
to the Executive in connection with the performance of his duties
for the Company or any of its subsidiaries or affiliates, unless,
in either case, (A) the Executive became aware less than ninety
(90) days prior thereto of an event constituting Good Reason or
(B) the Executive is disabled, or (iii) deliberate misconduct
which is reasonably likely to be materially damaging to the
Company without a reasonable good faith belief by the Executive
that such conduct was in the best interests of the Company.
(c) Resignation for "Good Reason" shall mean the
resignation of the Executive after: (i) a reduction without the
Executive's consent in the Executive's salary or the bonus that the
Executive is eligible to earn under the Company's Annual Incentive Award
Plan (or successor plan thereto); provided, however, that nothing
herein shall be construed to guarantee the Executive's bonus for
any year if the applicable performance targets are not met; and
provided, further, that it shall not constitute Good Reason
hereunder if the Company makes an appropriate pro rata adjustment
to the applicable bonus and targets under the Annual Incentive
Award Plan in the event of a change in the Company's fiscal year;
(ii) a material reduction without the Executive's consent in the
aggregate welfare benefits provided to the Executive
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<PAGE>
pursuant to the welfare plans, programs and arrangements in which
the Executive is eligible to participate; or (iii) a material
reduction without the Executive's consent in the Executive's job
responsibilities. Unless the Executive provides written
notification of an event described in clauses (i) through (iii)
above within ninety (90) days after the Executive knows or has
reason to know of the occurrence of any such event, the Executive
shall be deemed to have consented thereto and such event shall no
longer constitute Good Reason for purposes of this Agreement. If
the Executive provides such written notice to the Company, the
Company shall have ten (10) business days from the date of
receipt of such notice to effect a cure of the event described
therein and, upon cure thereof by the Company to the reasonable
satisfaction of the Executive, such event shall no longer
constitute Good Reason for purposes of this Agreement.
3. Termination Without Cause; Resignation for Good
Reason.
(a) Severance Amount. If the Executive's employment
hereunder is terminated by the Company without Cause, or if the
Executive resigns from his employment hereunder for Good Reason,
the Company shall pay to the Executive the Severance Amount (as
hereinafter defined) over a three (3) year period commencing with
the date of such termination or resignation (the "Severance
Period"). The total severance amount (the "Severance Amount") for
the Severance Period shall equal twice the sum of (A) plus (B),
where (A) is the Executive's highest annual rate of Salary in
effect during the twelve (12) month period prior to such
termination or resignation and (B) is the target award under the
Company's Annual Incentive Award Plan (or successor thereto) for
the year in which such termination or resignation occurs (or, if
greater, the amount of the award for the next preceding year of full-
time employment). The Severance Amount shall be paid to the Executive
in thirty-six (36) equal monthly installments over the Severance
Period and each such installment shall be subject to regular
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<PAGE>
payroll deductions. In addition, the Executive will also be paid
an award under the Annual Incentive Award Plan (or successor
thereto, if any) of the Company, based upon the target award for
the year in which the Executive's termination without Cause or
resignation for Good Reason occurs, prorated for the Executive's
active employment during such year and adjusted for performance.
Such pro rata bonus shall be paid within thirty (30) days of the
date of such termination or resignation.
(b) Employee Benefit Plans. In the event of a
termination or resignation of the Executive's employment
described in this Section 3, the Executive will be provided the
welfare benefits afforded by the employee benefit plans and
programs maintained by the Company in which he participated (and
at an equivalent level of participation) immediately prior to
such termination or resignation (or, in the event of any material
reduction in the aggregate benefits provided under such plans and
programs occurring during the twelve (12) month period prior to
such termination or resignation, prior to such reduction in
benefits) until the earlier to occur of (i) the end of the
Severance Period or (ii) such time as the Executive is covered by
comparable programs of a subsequent employer. Subject to the
provisions of applicable law, if the Executive was participating
in a qualified defined benefit retirement plan prior to a
termination or resignation described in this Section 3, he shall
continue to accrue benefits under such plan during the Severance
Period and, in addition, if the Executive was participating in a
qualified defined contribution retirement plan prior to any such
termination or resignation, he shall continue to so participate
(if he so elects) during the Severance Period, as if he were then
still employed hereunder. During the Severance Period, the
Executive shall also participate, if he so elects, in any
nonqualified retirement plan of the Company or any of its
subsidiaries on the same terms and conditions applicable to
the Executive immediately prior to such termination or
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<PAGE>
resignation. Anything herein to the contrary notwithstanding, the
Company shall have no obligation to continue to maintain during
the Severance Period any plan solely as a result of the
provisions of this Agreement. If, during the Severance Period,
the Executive is precluded from participating in a plan by its
terms or applicable law or if the Company for any reason ceases
to maintain such plan, the Company shall provide the Executive
with benefits which are no less favorable in the aggregate to
those which the Executive would have received under such plan had
he been eligible to participate therein or had such plan
continued to be maintained by the Company.
(c) Facilities. During the first six (6) months of the
Severance Period, the Executive will, at his option, be provided
with an office and secretarial services during regular business
hours at a location selected by him subject to the consent of the
Company, which shall not be unreasonably withheld. Except as may
be specifically approved by the Board, the Executive will not be
provided with the use of any other Company facility or services
during the Severance Period or at any time thereafter.
(d) Death. In the event of the Executive's death
subsequent to commencement of the Severance Period, the balance
of the Severance Amount will be paid to his beneficiary in a lump
sum. "Beneficiary" shall mean the person or persons designated by
the Executive in writing to the Company to receive payments under
this Agreement or, if no such person or persons are designated,
the Executive's estate.
(e) Pension Calculations. Notwithstanding any provision
to the contrary herein, pension accruals during the Severance Period
under the cash balance portion of the Company's qualified defined
benefit retirement plan shall be calculated on the actual amounts
paid to the Executive for each applicable plan year of such plan
and calculations under such plan
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<PAGE>
based on "average final compensation" shall be calculated during
the Severance Period based on an annual rate of Salary and bonus
equal to one-half (1/2) of the total Severance Amount.
(f) Outplacement Counseling. During the Severance
Period, the Executive will be provided with outplacement
counseling services at Company expense; provided, however, the
expense for such services in any calendar year shall not exceed
eighteen percent (18%) of the Severance Amount paid to the
Executive for such calendar year. This counseling shall include,
but not be limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques
and negotiating.
(g) Fringe Benefits. The Company will continue
Executive's participation in the Management Program until the
earlier to occur of (i) the first anniversary of such termination
or resignation or (ii) the date the Executive is covered by
comparable fringe benefit programs and perquisites of a
subsequent employer.
4. Disability. The event of Permanent Disability (as
hereinafter defined) shall not entitle the Executive to any of
the payments or benefits described in Section 3 above unless the
Executive is terminated by the Company other than for Cause or
the Executive resigns for Good Reason. "Permanent Disability"
shall mean physical or mental disability as a result of which the
Executive is unable to perform his duties with the Company on
substantially a full-time basis for any period of six (6)
consecutive months. Any dispute as to whether or not the
Executive is so disabled shall be resolved by a physician
reasonably acceptable to the Executive and the Company whose
determination shall be final and binding upon both the Executive
and the Company.
5. Conditions Applicable to Severance Benefits.
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<PAGE>
(a) Confidentiality and Conduct. The Executive warrants
and agrees that he will not disclose to any person, other than the
employees, officers, directors or shareholders of DMPF Holdings
Corporation, a Maryland corporation, or its affiliates and
subsidiaries in connection with the performance of his duties
hereunder, any confidential information or trade secrets
concerning the Company or any of its subsidiaries or affiliates
at any time. Notwithstanding the foregoing, confidential
information and trade secrets shall not be deemed to include,
without limitation, information which (i) is or becomes available
to the public other than as a result of disclosure by the
Executive in violation of this Section 5(a) or (ii) the Executive
is required to disclose under any applicable laws, regulations or
directives of any government agency, tribunal or authority having
jurisdiction in the matter or under subpoena or other process of
law. The Executive will at all times refrain from taking any
action or making any statements, written or oral, which are
intended to and do demonstrably and materially damage the
Company, its subsidiaries and affiliates and their respective
directors, officers or employees. In the event that the Executive
materially violates the terms and conditions of this Section
5(a), the Company may, at its election, upon ten (10) days'
notice, terminate the Severance Period and discontinue payments
of the Severance Amount and cease providing the benefits
described in Section 3 above. The Company may also initiate any
form of legal action it may deem appropriate seeking damages or
injunctive relief with respect to any material violations of this
Section 5(a).
(b) Non-Competition. The Severance Period shall be
terminated and the Company shall have no further obligation to
pay the Severance Amount or to provide the benefits described in
Section 3 above if the Executive, without the Company's written
approval, accepts a position of employment with any other company
conducting a business which is substantially competitive with a
business conducted by the Company.
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<PAGE>
(c) No Other Severance Benefits. Except as specifically
set forth in this Agreement, the Executive covenants and agrees that
he shall not be entitled to any other form of severance benefits
from the Company, including, without limitation, benefits
otherwise payable under any of the Company's regular severance
policies, in the event his employment with the Company ends for
any reason and, except with respect to obligations of the Company
expressly provided for herein, the Executive unconditionally
releases the Company and its subsidiaries and affiliates, their
respective directors, officers, employees and stockholders, or
any of them, from any and all claims, liabilities or obligations
under this Agreement or under any severance or termination
arrangement of the Company or any of its subsidiaries or
affiliates for compensation or benefits in connection with his
employment or the termination thereof.
6. General Provisions.
(a) Notices. Any notice hereunder by either party to
the other shall be given in writing by personal delivery, telex,
telecopy or registered mail, return receipt requested, to the
applicable address set forth below:
(i) To the Company: Del Monte Corporation
One Market Plaza
P.O. Box 3575
San Francisco, CA 94105
Attn.: Secretary of the Board
With a Copy to: Henry C. Blackiston, III
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
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(ii) To the Executive: David L. Meyers
c/o Del Monte Corporation
One Market Plaza
P.O. Box 3575
San Francisco, CA 94105
(b) Limited Waiver. The waiver by the Company or the
Executive of a violation of any of the provisions of this
Agreement, whether express or implied, shall not operate or be
construed as a waiver of any subsequent violation of any such
provision.
(c) No Assignment. No right, benefit or interest
hereunder shall be subject to assignment, encumbrance, charge,
pledge, hypothecation or set off by the Executive in respect of
any claim, debt, obligation or similar process. This Agreement
and all of the Company's rights and obligations hereunder may be
assigned, transferred or delegated to any business entity which,
at the time of any sale, merger, consolidation or other business
combination, acquires all or substantially all of the assets of
the Company or to which the Company transfers all or
substantially all of its assets, but no such assignment, transfer
or delegation shall impair any rights that the Executive may have
hereunder. Upon such assignment, transfer or delegation, any such
business entity shall be deemed to be substituted for all
purposes as the Company hereunder; provided, however, that no
such assignment, transfer or delegation shall relieve the Company
of its obligations under this Agreement in the event that such
obligations are not performed when due by any such successor to
the Company hereunder.
(d) Amendment. This Agreement may not be amended,
modified or cancelled except by written agreement of the parties.
(e) Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this
Agreement shall remain in full force and effect to the fullest
extent permitted by law.
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<PAGE>
(f) Unsecured Promise. Unless otherwise stated herein,
no benefit or promise hereunder shall be secured by any specific
assets of the Company. Unless otherwise stated herein, the
Executive shall have only the rights of an unsecured general
creditor of the Company in seeking satisfaction of such benefits
or promises.
(g) Governing Law. This Agreement has been made in and shall
be governed by and construed in accordance with the laws of the
State of New York.
(h) Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to
the matters covered hereby.
(i) Headings. The headings and captions of the
Sections of this Agreement are included solely for convenience of
reference and shall not control the meaning or interpretation of
any provisions of this Agreement.
(j) Counterparts. This Agreement may be executed by
the parties hereto in counterparts, each of which shall be deemed
an original, but both such counterparts shall together constitute
one and the same document.
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of the day and year first written above.
DEL MONTE CORPORATION
By: /s/ David M. Little
-----------------------
Sr. Vice President,
Administration
/s/ David L. Meyers
-----------------------
David L. Meyers
10
<PAGE>
Exhibit 10.4
Conformed Copy
RETENTION AGREEMENT
THIS AGREEMENT, made as of this 5th day of October,
1994 (the "Effective Date"), by and between DEL MONTE
CORPORATION, a New York corporation (the "Company") and Glynn M.
Phillips (the "Executive").
W I T N E S S E T H:
WHEREAS, in order to provide the Executive continued
incentives to remain in the services of the Company, its
subsidiaries or affiliates, the Company desires to provide the
Executive with compensation security under the conditions set
forth in this Agreement in the event that the Executive's
employment hereunder is terminated by the Company or any such
subsidiary or affiliate without Cause (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and
covenants herein contained, the parties hereby agree as follows:
1. Employment. The Executive agrees to devote his
working time, on substantially a full-time basis, to the
performance of services for the Company, its subsidiaries and
affiliates as may be assigned to him from time to time and to
perform such services faithfully and to the best of his ability.
This Agreement shall commence on the Effective Date and shall
remain in effect so long as the Executive remains employed by the
Company, any of its subsidiaries, or affiliates, or any successor
organization.
2. Termination for Cause: Resignation for Good Reason:
Termination by Reason of Death. (a) This Agreement shall be
terminated immediately and neither party shall have any
obligation hereunder, except as so provided herein, if the
Executive's employment is terminated for Cause (as hereinafter
defined) or by reason of the Executive's death.
(b) The Executive shall be terminated for "Cause" only
if the Executive's employment is terminated as a result of (i)
dishonesty, (ii) deliberate and continual refusal to perform
employment duties on substantially a full-time basis; (iii)
failure to act in accordance with any specific lawful
instructions given to the Executive in connection with the
performance of his duties for the Company or any of its
subsidiaries or affiliates, unless, the Executive is disabled, or
(iv) deliberate misconduct which is reasonably likely to be
materially damaging to the Company without a reasonable good
faith belief by the Executive that such conduct was in the best
interests of the Company.
(c) Resignation for "Good Reason" shall mean the
resignation of the Executive after: (i) a reduction without the
Executive's consent in the Executive's salary or the bonus that
the Executive is eligible to earn under the Company's annual cash
bonus plan (or successor plan thereto); provided, however, that
nothing herein shall be construed to guarantee
<PAGE>
the Executive's bonus for any year if the applicable performance
targets are not met; and provided, further, that it shall not
constitute Good Reason hereunder if the Company makes an
appropriate pro rata adjustment to the applicable bonus and
targets under the annual cash bonus plan in the event of a change
in the Company's fiscal year; (ii) a material reduction without
the Executive's consent in the aggregate welfare benefits
provided to the Executive pursuant to the welfare plans, programs
and arrangements in which the Executive is eligible to
participate; or (iii) a material reduction without the
Executive's consent in the Executive's job title or
responsibilities. Unless the Executive provides written
notification of an event described in clauses (i) through (iii)
above within ninety (90) days after the Executive knows or has
reason to know of the occurrence of any such event, the Executive
shall be deemed to have consented thereto and such event shall no
longer constitute Good Reason for purposes of this Agreement. If
the Executive provides such written notice to the Company, the
Company shall have ten (10) business days from the date of
receipt of such notice to effect a cure of the event described
therein and, upon cure thereof by the Company to the reasonable
satisfaction of the Executive, such event shall no longer
constitute Good Reason for purposes of this Agreement.
(d) The Executive may voluntarily terminate his
employment at any time prior to notice by the Company of
termination under Sections 2(a) or 3(a) of this Agreement by
written notice to the Company. Upon such notice (other than
pursuant to section 2(c)), this Agreement shall be terminated
immediately and the Executive shall have no entitlement to any
compensation other than what has already been earned or accrued
at the time of termination.
3. Termination Without Cause.
(a) Severance Amount. If the Executive's employment is
terminated by the Company without Cause or by the Executive for
Good Reason, the Company shall pay to the Executive the following
Severance Amount. For purposes hereinafter, the Severance Period
shall mean three (3) months unless the Executive becomes entitled
to 18 months as deemed hereunder:
The Executive shall be entitled to three months of
current base pay, to be paid on the Company's regular pay days.
In addition, if the Executive executes and delivers to the
Company, on a timely basis, a written Agreement in the form
furnished by the Company by which the Executive effectively
reaffirms the conditions of Section 5 and releases the Company,
its subsidiaries and affiliates from all types of
employment-related claims, the Company will then provide the
Executive over an eighteen (18) month period commencing on the
date of termination the total severance amount which is the sum
of (A) plus (B), where (A) is the Executive's highest annual rate
of base salary in effect during the twelve (12) month period
prior to such termination and (B) is the target award under the
Company's annual cash bonus plan for the year in which such
termination occurs (or, if greater, the amount of the award for
the next preceding year of employment).
The Executive will also be eligible for an award under
the annual cash bonus plan of the Company, based upon the target
award for the year in which the Executive's termination without
Cause or for Good Reason occurs, prorated for the active
employment period during
2
<PAGE>
such year and adjusted for performance. Such pro rata bonus, if
any, shall be paid following the end of the normal performance
cycle.
(b) Employee Benefit Plans. In the event the Company
terminates the Executive's employment other than for Cause, or
the Executive terminates for Good Reason, the Executive will
continue to be eligible for the welfare benefits (other than
disability benefits) afforded by the employee welfare benefit
plans and programs maintained by the Company in which he
participated (and at an equivalent level of participation)
immediately prior to such termination until the earlier to occur
of (i) the end of the Severance Period or (ii) such time as the
Executive is covered by comparable programs of a subsequent
employer. For all other employee benefit plans of the Company,
the date of termination of employment will be treated as the
Executive's severance date, as of which plan participation will
cease. Anything herein to the contrary notwithstanding, the
Company shall have no obligation to continue to maintain during
the Severance Period any plan or plan provision solely as a
result of the provisions of this Agreement and the Executive will
be subject to all changes in such plans occurring during the
Severance Period generally applicable to all employees, unless
former employees on salary continuation are specifically
excepted.
(c) Facilities. During the Severance Period, or the
first six months thereof if longer, the Executive will, at his
option, be provided with an office and secretarial services
during regular business hours at a location selected by him
subject to the consent of the Company, which shall not be
unreasonably withheld. Except as may be specifically approved,
the Executive will not be provided with the use of any other
Company facility or services during the Severance Period or at
any time thereafter.
(d) Death. In the event of the Executive's death
subsequent to commencement of the Severance Period, the balance
of the Severance Amount will be paid to his beneficiary in a lump
sum. "Beneficiary" shall mean the person or persons designated by
the Executive in writing to the Company to receive payments under
this Agreement or, if no such person or persons are designated,
the Executive's estate.
(e) Outplacement Counseling. During the Severance
Period, the Executive will be provided with outplacement
counseling services at Company expense; provided, however, the
expense for such services in any calendar year shall not exceed
eighteen percent (18%) of the Severance Amount paid to the
Executive for such calendar year. This counseling shall include,
but not be limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques
and negotiating.
(f) Fringe Benefits. During the Severance Period, the
Company will continue the Executive's participation in any
management perquisites applicable to the Executive as of the date
of such termination until the first to occur of (i) the first
anniversary of such termination, or, (ii) the date the Executive
is covered by comparable fringe benefit programs and perquisites
of a subsequent employer, or the end of the Severance Period.
4. Disability. The event of Permanent Disability (as
hereinafter defined) shall not entitle the Executive to any of
the payments or benefits described in Section 3 above
3
<PAGE>
unless the Executive is terminated by the Company other than for
Cause. "Permanent Disability" shall mean physical or mental
disability as a result of which the Executive is unable to
perform his duties with the Company on substantially a full-time
basis for any period of six (6) consecutive months. Any dispute
as to whether or not the Executive is so disabled shall be
resolved by a physician reasonably acceptable to the Executive
and the Company whose determination shall be real and binding
upon both the Executive and the Company.
5. Conditions Applicable to Severance Benefits.
(a) Confidentiality and Conduct. The Executive
warrants and agrees that he will not disclose to any person,
other than the employees, officers, directors or shareholders of
Del Monte Foods Company, a Maryland corporation, or its
affiliates and subsidiaries in connection with the performance of
his duties hereunder, any confidential information or trade
secrets concerning the Company or any of its subsidiaries or
affiliates at any tune. Notwithstanding the foregoing,
confidential information and trade secrets shall not be deemed to
include, without limitation, information which (i) is or becomes
available to the public other than as a result of disclosure by
the Executive in violation of this Section 5(a) or (ii) the
Executive is required to disclose under any applicable laws,
regulations or directives of any government agency, tribunal or
authority having jurisdiction in the matter or under subpoena or
other process of law. The Executive will at all times refrain
from taking any action or making any statements, written or oral,
which are intended to and do demonstrably and materially damage
the Company, its subsidiaries and affiliates and their respective
directors, officers or employees. In the event that the Executive
materially violates the terms and conditions of this Section
5(a), the Company may, at its election, upon ten (10) days'
notice, terminate the Severance Period and discontinue payments
of the Severance Amount and cease providing the benefits
described in Section 3 above. The Company may also initiate any
form of legal action it may deem appropriate seeking damages or
injunctive relief with respect to any material violations of this
Section 5(a).
(b) Non-Competition. The Severance Period shall be
terminated and the Company shall have no further obligation to
pay the Severance Amount or to provide the benefits described in
Section 3 above if the Executive, without the Company's written
approval, accepts a position of employment with any other company
conducting a business which is substantially competitive with a
business conducted by the Company.
(c) No Other Severance Benefits. Except as
specifically set forth in this Agreement, the Executive covenants
and agrees that he shall not be entitled to any other form of
severance benefits from the Company, including, without
limitation, benefits otherwise payable under any of the Company's
regular severance policies, (including any benefits under the
existing separation program referenced in Section 3(a)(i) above)
in the event his employment with the Company ends for any reason
and, except with respect to obligations of the Company expressly
provided for herein, the Executive unconditionally releases the
Company and its subsidiaries and affiliates, their respective
directors, officers, employees and stockholders, or any of them,
from any and all claims, liabilities or obligations under this
Agreement or under any severance or termination arrangement of
the Company or any of its subsidiaries or affiliates for
compensation or benefits in connection with his employment or the
termination thereof.
4
<PAGE>
6. General Provisions.
(a) Notices. Any notice hereunder by either party to
the other shall be given in writing by personal delivery, telex,
telecopy or registered mail, return receipt requested, to the
applicable address set forth below:
(i) To the Company: Del Monte Corporation
One Market Plaza
P.O. Box 193575
San Francisco, CA 94119-3575
Attn: Secretary of the Board
(ii) To the Executive: Glynn M. Phillips
c/o Del Monte Corporation
P.O. Box 193575
San Francisco, CA 94119-3575
(b) Limited Waiver. The waiver by the Company or the
Executive of a violation of any of the provisions of this
Agreement, whether express or implied, shall not operate or be
construed as a waiver of any subsequent violation of any such
provision.
(c) No Assignment. No right, benefit or interest
hereunder shall be subject to assignment, encumbrance, charge,
pledge, hypothecation or set off by the Executive in respect of
any claim, debt, obligation or similar process. This Agreement
and all of the Company's rights and obligations hereunder may be
assigned, transferred or delegated to any business entity which,
at the time of any sale, merger, consolidation or other business
combination, acquires all or substantially all of the assets of
the Company or to which the Company transfers all or
substantially all of its assets, but no such assignment, transfer
or delegation shall impair any rights that the Executive may have
hereunder against the Company. Upon such assignment, transfer or
delegation, any such business entity shall be deemed to be
substituted for all purposes as the Company hereunder; provided,
however, that no such assignment, transfer or delegation shall
relieve the Company of its obligations under this Agreement in
the event that such obligations are not performed when due by any
such successor to the Company hereunder.
(d) Amendment. This Agreement may not be amended,
modified or canceled except by written agreement of the parties.
(e) Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this
Agreement shall remain in full force and effect to the fullest
extent permitted by law.
(f) Unsecured Promise. Unless otherwise stated herein,
no benefit or promise hereunder shall be secured by any specific
assets of the Company. Unless otherwise stated herein, the
Executive shall have only the rights of an unsecured general
creditor of the Company in seeking satisfaction of such benefits
or promises.
5
<PAGE>
(g) Governing Law. This Agreement has been made by and
construed in accordance with the laws of the State of New York.
(h) Entire Agreement. This Agreement sets forth the
entire understanding of the parties hereto with respect to the
matters covered hereby.
(i) Headings. The headings and captions of the
Sections of this Agreement are included solely for convenience of
reference and shall not control the meaning or interpretation of
any provisions of this Agreement.
(j) Counterparts. This Agreement may be executed by
the parties hereto in counterparts, each of which shall be deemed
an original, but both such counterparts shall together constitute
one and the same document.
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of the day and year first written above.
DEL MONTE CORPORATION
By: /s/ Phyllis Kay Dryden
----------------------
Title: Senior Vice President
Executive: /s/ Glynn M. Phillips
---------------------
Glynn M. Phillips
6
<PAGE>
Exhibit 10.5
Conformed Copy
RETENTION AGREEMENT
THIS AGREEMENT, made as of this 1st day of January,
1992 (the "Effective Date"), by and between DEL MONTE
CORPORATION, a New York corporation (the "Company") and THOMAS E.
GIBBONS (the "Executive").
W I T N E S S E T H:
WHEREAS, in order to provide the Executive continued
incentives to remain in the services of the Company, its
subsidiaries or affiliates, the Company desires to provide the
Executive with compensation security under the conditions set
forth in this Agreement in the event that the Executive's
employment hereunder is terminated by the Company or any such
subsidiary or affiliate without Cause (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and
covenants herein contained, the parties hereto hereby agree as
follows:
1. Employment. The Executive agrees to devote his
working time, on substantially a full-time basis, to the
performance of such services for the Company, its subsidiaries
and affiliates as may be assigned to him from time to time and to
perform such services faithfully and to the best of his ability.
This Agreement shall commence on the Effective Date and shall
remain in effect so long as the Executive remains employed by the
Company, any of its subsidiaries or any successor organization.
<PAGE>
2. Termination for Cause; Termination by Reason of
Death. (a) This Agreement shall be terminated immediately and
neither party shall have any obligation hereunder if the
Executive's employment is terminated for Cause (as hereinafter
defined) or by reason of the Executive's death. (b) The Executive
shall be terminated for "Cause" only if the Executive's
employment is terminated as a result of (i) criminal dishonesty,
(ii) deliberate and continual refusal to perform employment
duties on substantially a full-time basis or to act in accordance
with any specific lawful instructions given to the Executive in
connection with the performance of his duties for the Company or
any of its subsidiaries or affiliates, unless, the Executive is
disabled, or (iii) deliberate misconduct which is reasonably
likely to be materially damaging to the Company without a
reasonable good faith belief by the Executive that such conduct
was in the best interests of the Company. (c) The Executive may
voluntarily terminate his employment at any time prior to notice
by the Company of termination under Sections 2(a) or 3(a) of this
Agreement by written notice to the Company. Upon such notice,
this Agreement shall be terminated immediately and Executive
shall have no entitlement to any compensation provided under
Section 3 of this Agreement. 3. Termination Without Cause. (a)
Severance Amount. If the Executive's employment hereunder is
terminated by the Company without Cause, the Company shall pay to
the Executive the Severance Amount (as hereinafter defined) over
an eighteen (18) month period commencing with the date of such
termination (the "Severance Period"). The total severance amount
(the "Severance Amount") for the Severance Period shall equal the
greater of (i) the total dollar amount payable to the
-2-
<PAGE>
Executive under the formula for separation pay as
determined by the then existing separation program applicable to
the Executive as of the date of such termination or (ii) the sum
of (A) plus (B), where (A) is the Executive's highest annual rate
of salary in effect during the twelve (12) month period prior to
such termination and (B) is the target award under the Company's
Annual Incentive Award Plan (or successor thereto) for the year
in which such termination occurs (or, if greater, the amount of
the award for the next preceding year of full-time employment).
The Severance Amount shall be paid to the Executive in eighteen
(18) equal monthly installments over the Severance Period and
each such installment shall be subject to regular payroll
deductions. Payment of the Severance Amount and continuation of
benefits under Section 3(b), below, is conditioned upon the
Executive executing and delivering to the Company a written
agreement in the form furnished by the Company by which the
Executive effectively reaffirms the conditions of Section 5 and
releases the Company from employment termination-related claims.
In addition, the Executive will also be paid an award under the
Annual Incentive Award Plan (or successor thereto, if any) of the
Company, based upon the target award for the year in which the
Executive's termination without Cause occurs, prorated for the
active employment during such year and adjusted for performance.
Such pro rata bonus shall be paid within thirty (30) days of the
date of such termination. (b) Employee Benefit Plans. In the
event the Company terminates the Executive's employment other
than for Cause, the Executive will continue to be eligible for
the welfare benefits (other than disability benefits) afforded by
the employee welfare benefit plans and programs maintained by the
Company in which he participated (and at an equivalent level of
participation) immediately prior to such termination until the
earlier to occur of (i) the end of the Severance Period or (ii)
such time as the Executive is covered by comparable programs of a
-3-
<PAGE>
subsequent employer. For all other employee benefit plans of the
Company, the date of termination of employment will be treated as
the Executive's severance date, as of which plan participation
will cease. Anything herein to the contrary notwithstanding, the
Company shall have no obligation to continue to maintain during
the Severance Period any plan or plan provision solely as a
result of the provisions of this Agreement and Executive will be
subject to all changes in such plans occurring during the
Severance Period, unless former employees on salary continuation
are specifically excepted.
(c) Death. In the event of the Executive's death
subsequent to commencement of the Severance Period, the balance
of the Severance Amount will be paid to his beneficiary in a lump
sum. "Beneficiary" shall mean the person or persons designated by
the Executive in writing to the Company to receive payments under
this Agreement or, if no such person or persons are designated,
the Executive's estate.
(d) Outplacement Counseling. During the Severance
Period, the Executive will be provided with outplacement
counseling services at Company expense; provided, however. the
expense for such services in any calendar year shall not exceed
eighteen percent (18%) of the Severance Amount paid to the
Executive for such calendar year. This counseling shall include,
but not be limited to, skill assessment, job market analysis,
resume preparation, interviewing skills, job search techniques
and negotiating.
(e) Fringe Benefits. The Company will continue the
Executive's participation in the Management Perquisite Program
applicable to the Executive as of the date of such termination
until the earlier to occur of (i) the first anniversary of such
termination or (ii) the date the Executive is covered by
comparable fringe benefit programs and perquisites of a
subsequent employer.
-4-
<PAGE>
4. Disability. The event of Permanent Disability (as
hereinafter defined) shall not entitle the Executive to any of
the payments or benefits described in Section 3 above unless the
Executive is terminated by the Company other than for Cause.
"Permanent Disability" shall mean physical or mental disability
as a result of which the Executive is unable to perform his
duties with the Company on substantially a full-time basis for
any period of six (6) consecutive months. Any dispute as to
whether or not the Executive is so disabled shall be resolved by
a physician reasonably acceptable to the Executive and the
Company whose determination shall be final and binding upon both
the Executive and the Company.
5. Conditions Applicable to Severance Benefits.
(a) Confidentiality and Conduct. The Executive warrants
and agrees that he will not disclose to any person, other than
the employees, officers, directors or shareholders of DMPF
Holdings Corporation, a Maryland corporation, or its affiliates
and subsidiaries in connection with the performance of his duties
hereunder, any confidential information or trade secrets
concerning the Company or any of its subsidiaries or affiliates
at any time. Notwithstanding the foregoing, confidential
information and trade secrets shall not be deemed to include,
without limitation, information which (i) is or becomes available
to the public other than as a result of disclosure by the
Executive in violation of this Section 5(a) or (ii) the Executive
is required to disclose under any applicable laws, regulations or
directives of any government agency, tribunal or authority having
jurisdiction in the matter or under subpoena or other process of
law. The Executive will at all times refrain from taking any
action or making any statements, written or oral, which are
intended to and do demonstrably and materially damage the
Company, its subsidiaries and affiliates and their respective
directors, officers or employees. In the event that the Executive
materially violates the terms and conditions of this Section
5(a), the Company
-5-
<PAGE>
may, at its election, upon ten (10) days' notice, terminate the
Severance Period and discontinue payments of the Severance Amount
and cease providing the benefits described in Section 3 above.
The Company may also initiate any form of legal action it may
deem appropriate seeking damages or injunctive relief with
respect to any material violations of this Section 5(a).
(b) Non-Competition. The Severance Period shall be
terminated and the Company shall have no further obligation to
pay the Severance Amount or to provide the benefits described in
Section 3 above if the Executive, without the Company's written
approval, accepts a position of employment with any other company
conducting a business which is substantially competitive with a
business conducted by the Company.
(c) No Other Severance Benefits. Except as
specifically set forth in this Agreement, the Executive covenants
and agrees that he shall not be entitled to any other form of
severance benefits from the Company, including, without
limitation, benefits otherwise payable under any of the Company's
regular severance policies, (including any benefits under the
existing separation program referenced in Section 3(a)(i) above)
in the event his employment with the Company ends for any reason
and, except with respect to obligations of the Company expressly
provided for herein, the Executive unconditionally releases the
Company and its subsidiaries and affiliates, their respective
directors, officers, employees and stockholders, or any of them,
from any and all claims, liabilities or obligations under this
Agreement or under any severance or termination arrangement of
the Company or any of its subsidiaries or affiliates for
compensation or benefits in connection with his employment or the
termination thereof.
-6-
<PAGE>
6. General Provisions.
(a) Notices. Any noticehereunder by either party to the
other shall be given in writing by personal delivery, telex,
telecopy or registered mail, return receipt requested, to the
applicable address set forth below:
(i) To the Company: Del Monte Corporation
One Market Plaza P.O.
Box 193575
San Francisco, CA 94119-3575
Attn: Secretary of the Board
(ii) To the Executive: Thomas E. Gibbons
c/o Del Monte Corporation
P.O. Box 193575
San Francisco, CA 94119-3575
(b) Limited Waiver. The waiver by the Company or the
Executive of a violation of any of the provisions of this
Agreement, whether express or implied, shall not operate or be
construed as a waiver of any subsequent violation of any such
provision.
(c) No Assignment. No right, benefit or interest
hereunder shall be subject to assignment, encumbrance, charge,
pledge, hypothecation or set off by the Executive in respect of
any claim, debt, obligation or similar process. This Agreement
and all of the Company's rights and obligations hereunder may be
assigned, transferred or delegated to any business entity which,
at the time of any sale, merger, consolidation or other business
combination, acquires all or substantially all of the assets of
the Company or to which the Company transfers all or
substantially all of its assets, but no such assignment, transfer
or delegation shall impair any rights that the Executive may have
hereunder. Upon such assignment, transfer or delegation, any such
business entity shall be deemed to be substituted for all
purposes as the Company hereunder; provided, however, that no
such assignment, transfer or delegation shall relieve the
-7-
<PAGE>
Company of its obligations under this Agreement in the event that
such obligations are not performed when due by any such successor
to the Company hereunder.
(d) Amendment. This Agreement may not be amended,
modified or canceled except by written agreement of the parties.
(e) Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this
Agreement shall remain in full force and effect to the fullest
extent permitted by law.
(f) Unsecured Promise. Unless otherwise stated herein,
no benefit or promise hereunder shall be secured by any specific
assets of the Company. Unless otherwise stated herein, the
Executive shall have only the rights of an unsecured general
creditor of the Company in seeking satisfaction of such benefits
or promises.
(g) Governing Law. This Agreement has been made in and
shall be governed by and construed in accordance with the laws of
the State of New York.
(h) Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties hereto with
respect to the matters covered hereby.
(i) Headings. The headingsand captions of the Sections
of this Agreement are included solely for convenience of
reference and shall not control the meaning or interpretation of
any provisions of this Agreement.
(j) Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed an
original, but both such counterparts shall together constitute
one and the same document.
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of the day and year first written above.
-8-
<PAGE>
DEL MONTE CORPORATION
By: /s/ David M. Little
---------------------
Title: Sr. Vice President
/s/ Thomas E. Gibbons
-----------------------
Thomas E. Gibbons
-9-
<PAGE>
Exhibit 10.6
Conformed Copy
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of December 11, 1995, by
and between DEL MONTE CORPORATION, a New York corporation (the
"Company"), and BRIAN E. HAYCOX (hereinafter called the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive
and the Executive is willing to serve as an employee of the
Company, subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the
parties hereto agree as follows:
Section 1. Employment
During the Term of Employment, as defined in Section 3
hereof, the Company shall employ the Executive, and the Executive
shall perform services for the Company, as the Co-Chairman and
Co-Chief Executive Officer of the Company on the terms and
conditions set forth in this Agreement.
Section 2. Duties
During the Term of Employment, the Executive shall,
together with the other Co-Chairman and Co-Chief Executive
Officer of the Company, be responsible for the general management
of the affairs of the Company, with such duties and
responsibilities as are assigned to him by the Board of Directors
of the Company (the "Board") that are appropriate for the
Co-Chairman and Co-Chief Executive Officer of the Company. All
determinations or actions by the
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Executive in the capacity of Co-Chairman and Co-Chief Executive
Officer that are material to the operations, financial condition
or prospects of the Company shall require the concurrence of the
other Co-Chairman and Co-Chief Executive Officer of the Company.
It is also the intention of the parties that the Executive serve
as a director of the Company. The Executive shall also serve, if
requested, as an officer or director of any subsidiary or
affiliate of the Company.
The Executive shall devote his full business time,
attention and efforts to the performance of services for the Company,
its affiliates and subsidiaries; provided, however, that nothing in
this Agreement shall preclude the Executive from engaging in
charitable and community affairs, managing his personal
investments, and serving as a member of boards of directors of
other business companies or in other business capacities as the
Board may from time to time agree to, to the extent that such
activities do not inhibit or prohibit the performance of the
Executive's duties under this Agreement, or conflict in any
material way with the business of the Company, its subsidiaries
and affiliates.
Section 3. Term of Employment
The Term of Employment of this Agreement shall commence
on December 11, 1995 and end on December 31, 1997, unless terminated
earlier as set forth herein.
Section 4. Cash Compensation
(a) Base Salary. The Executive shall receive, as
compensation for his duties and obligations to the Company, a
salary at an annual rate of $750,000 (the "Base Salary"). The
Base Salary shall be payable in substantially equal installments
in accordance with the Company's standard payroll practices.
(b) New Management Equity Plan. The Executive shall be
eligible to participate in the Company's New Management Equity
Plan (the "LTIP") on the terms set forth
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therein; provided, however, that the Executive shall be entitled
to a minimum payment of $500,000 under the LTIP, payable on the
earlier of (i) the date that he would otherwise receive payment
under the LTIP (in which event the Executive shall receive the
greater of (x) $500,000 or (y) the amount the Executive would
otherwise receive under the LTIP); or (ii) December 31, 1997 (in
which event the Executive shall, provided he has not previously
received payment under the LTIP or clause (i) above, receive
$500,000); provided, further, that in the event the Executive
receives payment under clause (ii) above, the amount of such
payment shall be offset against and reduce any subsequent payment
to Executive under the LTIP. Notwithstanding the foregoing, the
Executive shall not be entitled to receive such $500,000 payment
if the Company has terminated his employment for Cause (as
defined herein) or if (on or before the earlier of (A) December
31, 1997 or (B) the date the Executive shall otherwise receive
payment under the LTIP) the Executive has terminated his
employment without Good Reason (also as defined herein);
provided, however, that no termination of the Executive's
employment for any reason (including without limitation as a
result of expiration of this Agreement without renewal at the end
of the Term of Employment) other than as set forth in this
sentence above shall be deemed in any way to limit the
Executive's right to such $500,000 payment.
Section 5. Other Benefit and Compensation Programs and Plans
(a) Employee Benefit Programs. During the Term of
Employment, the Executive shall be entitled to participate in all
employee benefit and perquisite programs of the Company in effect
from time to time for senior executive officers, including
without limitation, pension and other retirement plans, profit
sharing plans, group life insurance, hospitalization, medical and
dental coverage and long-term disability insurance. On and after
the date hereof, the
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Executive shall be 100% vested in the amounts accrued on his
behalf under the non-qualified portion of the Company's Personal
Retirement Account (the "PRA").
(b) Vacations and Sick Leave. The Executive shall be
entitled to vacation and sick leave each year, in accordance with
the Company's policies in effect from time to time, provided,
however, that the Executive shall be entitled to a four (4) weeks
vacation per year.
(c) Expenses. The Executive is authorized to incur
reasonable expense in carrying out his duties and
responsibilities under this Agreement, including expenses for
travel and similar items related to such duties and
responsibilities, in accordance with the Company's established
policies. The Company will reimburse the Executive for all such
expenses upon presentation by the Executive from time to time of
an appropriate itemized account of such expenditures.
(d) Relocation. The Executive shall be entitled to
relocation benefits as set forth on Exhibit A hereto.
(e) No Other Compensation. The payments, benefits and
perquisites provided to the Executive under Section 4 and this
Section 5 shall be the sole compensation, benefits and
perquisites to which the Executive is entitled from the Company,
its subsidiaries and affiliates, and, without limiting the
foregoing, the parties agree that the Executive shall not
participate in the Company's Annual Incentive Award Plan (or any
successor thereto).
Section 6. Directors' and Officers' Liability
The Company shall indemnify the Executive and provide
the Executive with directors' and officers' liability coverage
and shall maintain the indemnification and directors' and
officers' liability insurance coverage at levels of coverage and
protection no less favorable than that provided by the Company
for any director or officer of the Company, as applicable.
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The directors' and officers' coverage and indemnification
provided herein shall continue, as to the Executive, throughout
the period of any applicable statute of limitations.
Section 7. Termination
(a) Termination for Cause. In order to terminate the
employment of the Executive for Cause, the Company must deliver
to the Executive a Notice of Termination given within ninety (90)
days after the Board both (i) has or should have had knowledge of
conduct or an event allegedly constituting Cause, and (ii) has
reason to believe that such conduct or event could be grounds for
Cause. For purposes of this Agreement a "Notice of Termination"
shall mean a copy of a resolution duly adopted by the affirmative
vote of not less than three-fourths (3/4) of the membership of
the Board, excluding members who are employees of the Company, at
a meeting called for the purpose of determining that the
Executive has engaged in conduct which constitutes Cause (and at
which the Executive had a reasonable opportunity, together with
his counsel, to be heard before the Board prior to such vote).
For purposes of this Agreement "Cause" shall mean (A)
the Executive is convicted of, or has plead guilty or nolo
contendere to, a felony; (B) the willful and continued failure by
the Executive to perform substantially his duties with the
Company (other than any such failure resulting from incapacity
due to physical or mental illness) after a demand for substantial
performance is delivered to the Executive by the Company which
specifically identities the manner in which the Company believes
the Executive has not substantially performed his duties; (C) the
Executive engaging in conduct that constitutes gross neglect or
willful misconduct in carrying out his duties under this
Agreement involving material economic harm to the Company or any
of its subsidiaries; or (D) the Executive having engaged in a
material breach of Sections 9 or 10 of this Agreement. The
Executive shall have ten (10) days
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following receipt of the Notice of Termination to cure his
conduct, to the extent such cure is possible. If the Executive
does not cure within the ten (10) day period, his termination of
employment in accordance with the Notice of Termination shall be
deemed to be for Cause.
In the event of termination of the Executive's
employment by the Company for Cause, the Executive shall only be
entitled to:
(A) any accrued but unpaid salary through his date of
termination;
(B) reimbursement for business expenses incurred prior
to the date of termination; and
(C) other or additional benefits in accordance with
the applicable employee benefit programs of the Company
referred to in Section 5(a).
(b) Death or Disability. In the event of the death or
Disability of the Executive, the Executive's employment shall be
terminated as of the date of such death or Disability, and the
Executive, or the Executive's estate or legal representative, as
appropriate, shall be entitled to the amounts referred to in
paragraph (a) of this Section, together with any applicable
amounts under the LTIP.
In the event of a termination for Disability, the
Executive shall also be entitled to (i) an amount equal to the
sum of 100% of his Base Salary, for a period of 12 months from
the date of his termination of employment, less the amount of any
salary replacement benefits provided to the Executive by the
Company (other than benefits attributable to the Executive's own
contributions) under any disability plan and (ii) continued
participation for a period of 12 months in the medical, dental,
hospitalization and group life insurance programs of the
Executive in which he was participating on the date of
termination of his employment due to Disability; provided,
however, that nothing herein shall be deemed to limit any amounts
or benefits to which
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the Executive is otherwise entitled under the terms of the
Company's disability or other plans (as in effect from time to
time).
For purposes of this Agreement, "Disability" shall
mean (A) "total and permanent disability", as defined in the
Company's long-term disability plan for senior executives (or
such other Company-provided long-term disability benefit plan
sponsored by the Company in which the Executive participates at
the time the determination of Disability is made) (the
"Disability Plan"), or (B) such other condition which permits the
Executive to qualify for salary replacement benefits under the
Disability Plan; provided, however, that no termination of the
employment of the Executive for Disability shall become effective
(x) prior to the expiration of six (6) months after the date the
Executive first incurs the condition giving rise to the
Disability or (y) while the Executive is substantially performing
the regular duties associated with his employment hereunder.
(c) Sale. The Term of Employment shall automatically
terminate upon consummation of a "Sale", or, at the option of the
Company (if mutually agreed by Company and the purchaser(s) in
such Sale), on a date specified by the Company that is no later
than 150 days following consummation of such "Sale" (any such
period following consummation of a Sale being the "Transition
Period", which shall in no event extend beyond December 31,
1997); provided that the Executive's duties and authority during
any Transition Period shall be limited to providing the
purchaser(s) in such Sale with such consultation and assistance
in transition to new ownership as such purchaser(s) may
reasonably request on a basis consistent with the senior
executive duties previously carried out by the Executive. For
purposes of this Agreement, a "Sale" shall mean a sale or
transfer, other than as a result of an initial public offering of
shares of any class of stock of the Company or of its parent, Del
Monte Foods Company ("DMFC"), of all
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or substantially all of the capital stock or assets of the
Company or DMFC (whether carried out by means of a sale of stock,
sale of assets, merger, consolidation or otherwise), to one or
more purchasers unaffiliated with the Company or DMFC.
(d) Termination Without Cause, for Good Reason or upon
a Sale. If the Company terminates the Executive's employment
prior to the end of the Term of Employment without Cause, or in
the event the Executive terminates employment prior to the end of
the Term of Employment for Good Reason, or in the event the
Executive's employment terminates prior to the end of the Term of
Employment under paragraph (c) of this Section as a result of a
Sale, the Company shall pay the Executive, in a lump sum within
ten (10) days following his termination of employment, an amount
equal to the Executive's Base Salary that would have been earned
through December 31, 1997. The Executive shall also be entitled
to:
(1) the amounts referred to in paragraph (a) of this
Section;
(2) any applicable amounts under the LTIP; and
(3) continued participation in the medical, dental,
hospitalization and group life insurance coverage in which
he was participating on the date of the termination of his
employment, until the earlier of:
(A) December 31, 1997; and
(B) the date, or dates, he receives equivalent
coverage and benefits under the plans and programs of
a subsequent employer (such as coverage and benefits
to be determined on a coverage-by-coverage, or
benefit-by-benefit, basis).
The Executive must, within ninety (90) days after the
Executive knows or should have known of the occurrence of an
event or circumstances which would give him reason to
8
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believe constitutes Good Reason, give thirty (30) days prior
written notice of his intent to terminate employment for Good
Reason which notice sets forth the event or circumstances
believed to constitute Good Reason. Upon receipt of such notice,
the Company shall have ten (10) days to cure its conduct, to the
extent such cure is possible. If the Company does not cure within
the ten (10) day period, the Executive's termination of
employment in accordance with his written notice shall be deemed
to be for Good Reason.
For purposes of this Agreement, "Good Reason" shall
mean any of the following (without the Executive's express
written consent):
(i) the removal of or failure to elect or reelect
the Executive, during the Term of Employment, as Co-Chief
Executive Officer and Co-Chairman of the Board;
(ii) a material diminution in the Executive's duties
or responsibilities or the assignment to the Executive of
duties or responsibilities which are materially
inconsistent with his then current duties and
responsibilities; or
(iii any material breach by the Company of any
provision of this Agreement.
(e) Termination Without Good Reason. In the event of a
termination of employment by the Executive without Good Reason
(other than a termination due to death or Disability), the
Executive shall have the same entitlements as provided in
paragraph (a) of this Section for termination for Cause.
Section 8. Mitigation
The Executive shall not be required to mitigate the
amount of any payments or benefits provided for in Section 7(d)
hereof by seeking other employment or otherwise, and no amounts
earned by the Executive shall be used to reduce or offset the
amounts payable hereunder, expect as otherwise provided in
Section 7(d).
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<PAGE>
Section 9. Agreement Not to Compete
(a) The Executive hereby covenants and agrees that at
no time during the period of his employment with the Company will
he for himself or on behalf of any other person, partnership,
company or corporation, directly or indirectly, acquire any
financial or beneficial interest in (except as provided in the
next sentence), provide consulting services to, be employed by,
or own, manage, operate or control any business which is in
competition with any business engaged in by the Company or any of
its subsidiaries or affiliates in any state of the United States
or other jurisdiction in which any of them are engaged in
business. Notwithstanding the preceding sentence, the Executive
shall not be prohibited from owning less than five (5%) percent
of any publicly traded corporation, whether or not such
corporation is in competition with the Company.
(b) The Executive hereby covenants and agrees that at
all times during the period of his employment with the Company
the Executive shall not employ or seek to employ any person
employed at that time by the Company or any of its subsidiaries,
or otherwise encourage or entice such person or entity to leave
such employment.
(c) It is the intention of the parties hereto that the
restrictions contained in this Section be enforceable to the
fullest extent permitted by applicable law. Therefore, to the
extent any court of competent jurisdiction shall determine that
any portion of the foregoing restrictions is excessive, such
provision shall not be entirely void, but rather shall be limited
or revised only to the extent necessary to make it enforceable.
Specifically, if any court of competent jurisdiction should hold
that any portion of the foregoing description is overly broad as
to one or more states of the United States or other
jurisdictions, then such state(s) or other jurisdiction(s) shall
be eliminated from the territory to which the restrictions of
paragraph (a) of this Section
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apply and the restrictions shall remain applicable in all
other states of the United States and other jurisdictions.
Section 10. Confidential Information
The Executive agrees to keep secret and retain in the
strictest confidence all confidential matters which relate to the
Company, its subsidiaries and affiliates, including, without
limitation, customer lists, client lists, trade secrets, pricing
policies and other business affairs of the Company, its
subsidiaries and affiliates learned by him from the Company or
any such subsidiary or affiliate or otherwise before or after the
date of this Agreement, and not to disclose any such confidential
matter to anyone outside the Company or any of its subsidiaries
or affiliates, whether during or after his period of service with
the Company, except (i) as such disclosure may be required or
appropriate in connection with his work as an employee of the
Company or (ii) when required to do so by a court of law, by any
governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative
body (including a committee thereof) with apparent jurisdiction
to order him to divulge, disclose or make accessible such
information. The Executive agrees to give the Company advance
written notice of any disclosure pursuant to clause (ii) of the
preceding sentence and to cooperate with any efforts by the
Company to limit the extent of such disclosure. Upon request by
the Company, the Executive agrees to deliver promptly to the
Company upon termination of his services for the Company, or at
any time thereafter as the Company may request, all Company,
subsidiary or affiliate memoranda, notes, records, reports,
manuals, drawings, designs, computer files in any media and other
documents (and all copies thereof) relating to the Company's or
any subsidiary's or affiliate's business and all property of the
Company or any subsidiary or affiliate
11
<PAGE>
associated therewith, which he may then possess or have
under his direct control, other than personal notes, diaries,
rolodexes and correspondence.
Section 11. Remedy
Should the Executive engage in or perform, either
directly or indirectly, any of the acts prohibited by Sections 9
or 10 hereof, it is agreed that the Company shall be entitled to
full injunctive relief, to be issued by any competent court of
equity, enjoining and restricting the Executive and each and
every other person, firm, organization, association, or
corporation concerned therein, from the continuance of such
violative acts. The foregoing remedy available to the Company
shall not be deemed to limit or prevent the exercise by the
Company of any or all further rights and remedies which may be
available to the Company hereunder or at law or in equity.
Section 12. Successors and Assigns
This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the
assigns and successors of the Company, but neither this Agreement
nor any rights hereunder shall be assignable or otherwise subject
to hypothecation by the Executive (except by will or by operation
of the laws of interstate succession) or by the Company.
Section 13. Representations
The Company represents and warrants that it is fully
authorized and empowered to enter into this Agreement and that
the performance of its obligations under this Agreement will not
violate any material agreement to which it is a party or by which
it is bound. The Executive represents that he knows of no
agreement to which he is a party or by which he is bound that
would be violated by the performance of his obligations under
this Agreement.
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Section 14. Governing Law
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California,
without reference to rules relating to conflicts of law.
Section 15. Entire Agreement
This Agreement constitutes the full and complete
understanding and agreement of the parties with respect to the
subject matter hereof and supersedes all prior understandings and
agreements as to employment of the Executive by the Company. This
Agreement cannot be amended, changed or modified without the
written consent of the parties hereto.
Section 16. Waiver of Breach
The waiver by either party of a breach of any term of this
Agreement shall not operate nor be construed as a waiver of any
subsequent breach thereof. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company,
as the case may be.
Section 17. Survivorship
The respective rights and obligations of the parties
hereunder shall survive any termination of the Executive's
employment to the extent necessary to the intended preservation
of such rights and obligations.
Section 18. Beneficiaries/References
The Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a
beneficiary or beneficiaries to receive any compensation or
benefit payable hereunder following the Executive's death by
giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his
incompetence, reference in this Agreement to the Executive shall
be deemed, where appropriate, to refer to his beneficiary, estate
or other legal representative.
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Section 19. Notice
Any notice, report, request or other communication
given under this Agreement shall be written and shall be
effective upon delivery personally or when sent by certified or
registered mail, postage prepaid, return receipt requested.
Unless otherwise notified by any of the parties,
notices shall be sent to the parties as follows:
To the Company:
Del Monte Corporation
One Market Plaza
San Francisco, CA 94105
Attn: General Counsel
To the Executive:
c/o Del Monte Corporation
One Market Plaza
San Francisco, CA 94105
Section 20. Severability
If any one or more of the provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
Section 21. Headings
The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any provision of
this Agreement.
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Section 22. Counterparts
This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
DEL MONTE CORPORATION
By: /s/ David L. Meyers
---------------------------
Name:
Title:
/s/ Brian E. Haycox
---------------------------
BRIAN E. HAYCOX
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EXHIBIT A
Executive shall be eligible to participate in the Del
Monte Foods Relocation Policy -- New Hire with Experience --
Level III (Homeowner) or the Del Monte Relocation --Transferee
Policy (Homeowner), whichever of such policies taken as a whole
is more favorable to Executive (such more favorable policy being
sometimes herein referred to as the "Policy"), supplemented as
follows:
1. Guaranteed value of existing home(s) for purposes
of the Policy shall be the greater of (i) the value determined in
accordance with the Policy's appraisal procedure (including any
increase therein based on a third party offer) or (ii) the
original cost including improvements to the Executive of the
home(s).
2. The program shall cover two homes of Paul Mullan
located in Medford, New Jersey and one home (including boat slip)
of Brian Haycox located in Miami, Florida.
3. The program shall cover relocation from San
Francisco area to any destination within the continental United
States upon termination or expiration of the Executive's
Employment Agreement on the same basis as the relocation to the
San Francisco area upon commencement of employment.
4. Executive shall receive one month's salary upon
each of the relocation to San Francisco and the relocation from
San Francisco to cover incidental relocation expenses.
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Exhibit 10. 7
Conformed Copy
RETENTION AGREEMENT
THIS AGREEMENT, made as of this NINTH day of January,
1990 (the "Effective Date") by and between DEL MONTE CORPORATION,
a New York corporation (the "Company") and David M. Little (the
"Executive").
W I T N E S S E T H:
WHEREAS, in order to provide the Executive continued
incentives to remain in the services of the Company, its
subsidiaries or affiliates, the Company desires to provide the
Executive with compensation security under the conditions set
forth in this Agreement in the event that the Executive's
employment hereunder is terminated by the Company or any such
subsidiary or affiliate without Cause (as hereinafter defined) or
the Executive resigns his employment hereunder for Good Reason
(as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and
covenants herein contained, the parties hereto hereby agree as
follows:
1. Employment. The Executive agrees to devote his
working time, on substantially a full-time basis, to the
performance of such services for the Company, its subsidiaries
and affiliates as may be assigned to him from time to time and to
perform such services faithfully and to the best of his ability.
This Agreement shall commence on the Effective Date and shall
remain in effect so long as the Executive remains employed by the
Company, any of its subsidiaries or any successor organization.
2. Termination for Cause; Resignation without Good
Reason; Termination by Reason of Death. (a) This Agreement shall
be terminated immediately and neither party shall have any
obligation hereunder if the Executive's employment is terminated
for Cause (as hereinafter defined) or by reason of the
Executive's death or if the Executive resigns his employment
hereunder for other than Good Reason.
(b) The Executive shall be terminated for "Cause" only
if the Executive's employment is terminated as a result of (i)
criminal dishonesty, (ii) deliberate and continual refusal to
perform employment duties on substantially a full-time basis or
to act in accordance with any specific lawful instructions given
to the Executive in connection with the performance of his duties
for the Company or any of its subsidiaries or affiliates, unless,
in either case, (A) the Executive became aware less than ninety
(90) days prior thereto of an event constituting Good Reason or
(B) the Executive is disabled, or (iii) deliberate misconduct
which is reasonably likely to be materially damaging to the
Company without a reasonable good faith belief by the Executive
that such conduct was in the best interests of the Company.
<PAGE>
(c) Resignation for "Good Reason" shall mean the resignation of the
Executive after: (i) a reduction without the Executive's consent
in the Executive's salary or the bonus that the Executive is
eligible to earn under the Company's Annual Incentive Award Plan
(or successor plan thereto); provided, however, that nothing
herein shall be construed to guarantee the Executive's bonus for
any year if the applicable performance targets are not met; and
provided, further, that it shall not constitute Good Reason
hereunder if the Company makes an appropriate pro rata adjustment
to the applicable bonus and targets under the Annual Incentive
Award Plan in the event of a change in the Company's fiscal year;
(ii) a material reduction without the Executive's consent in the
aggregate welfare benefits provided to the Executive pursuant to
the welfare plans, programs and arrangements in which the
Executive participated at any time during the three (3) month
period immediately prior to the Effective Date; or (iii) a
material reduction without the Executive's consent in the
Executive's job responsibilities. Unless the Executive provides
written notification of an event described in clauses (i) through
(iii) above within ninety (90) days after the Executive knows or
has reason to know of the occurrence of any such event, the
Executive shall be deemed to have consented thereto and such
event shall no longer constitute Good Reason for purposes of this
Agreement. If the Executive provides such written notice to the
Company, the Company shall have ten (10) business days from the
date of receipt of such notice to effect a cure of the event
described therein and, upon cure thereof by the Company to the
reasonable satisfaction of the Executive, such event shall no
longer constitute Good Reason for purposes of this Agreement.
3. Termination Without Cause; Resignation for Good Reason.
(a) Severance Amount. If the Executive's employment
hereunder is terminated by the Company without Cause, or if the
Executive resigns from his employment hereunder for Good Reason,
the Company shall pay to the Executive the Severance Amount (as
hereinafter defined) over a three (3) year period commencing with
the date of such termination or resignation (the "Severance
Period"). The total severance amount (the "Severance Amount") for
the Severance Period shall equal twice the sum of (A) plus (B),
where (A) is the Executive's highest annual rate of Salary in
effect during the twelve (12) month period prior to such
termination or resignation and (B) is the target award under the
Company's Annual Incentive Award Plan (or successor thereto) for
the year in which such termination or resignation occurs (or, if
greater, the amount of the award for the next preceding year of
full-time employment). The Severance Amount shall be paid to the
Executive in thirty-six (36) equal monthly installments over the
Severance Period and each such installment shall be subject to
regular payroll deductions. In addition, the Executive will also
be paid an award under the Annual Incentive Award Plan (or
successor thereto, if any) of the Company, based upon the target
award for the year in which the Executive's termination without
Cause or resignation for Good Reason occurs, prorated for the
Executive's active employment during such year and adjusted for
performance. Such pro rata bonus shall be paid within thirty (30)
days of the date of such termination or resignation.
(b) Employee Benefit Plans. In the event of a
termination or resignation of the Executive's employment
described in this Section 3, the Executive will be provided the
welfare benefits afforded by the employee benefit plans and
programs maintained by the
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Company in which he participated (and at an equivalent level of
participation) immediately prior to such termination or
resignation (or, in the event of any material reduction in the
aggregate benefits provided under such plans and programs
occurring during the twelve (12) month period prior to such
termination or resignation, prior to such reduction in benefits)
until the earlier to occur of (i) the end of the Severance Period
or (ii) such time as the Executive is covered by comparable
programs of a subsequent employer. Subject to the provisions of
applicable law, if the Executive was participating in a qualified
defined benefit retirement plan prior to a termination or
resignation described in this Section 3, he shall continue to
accrue benefits under such plan during the Severance Period and,
in addition, if the Executive was participating in a qualified
defined contribution retirement plan prior to any such
termination or resignation, he shall continue to so participate
(if he so elects) during the Severance Period, as if he were then
still employed hereunder. During the Severance Period, the
Executive shall also participate, if he so elects, in any
nonqualified retirement plan of the Company or any of its
subsidiaries on the same terms and conditions applicable to the
Executive immediately prior to such termination or resignation.
Anything herein to the contrary notwithstanding, the Company
shall have no obligation to continue to maintain during the
Severance Period any plan solely as a result of the provisions of
this Agreement. If, during the Severance Period, the Executive is
precluded from participating in a plan by its terms or applicable
law or if the Company for any reason ceases to maintain such
plan, the Company shall provide the Executive with benefits which
are no less favorable in the aggregate to those which the
Executive would have received under such plan had he been
eligible to participate therein or had such plan continued to be
maintained by the Company.
(c) Facilities. During the first six (6) months of the
Severance Period, the Executive will, at his option, be provided
with an office and secretarial services during regular business
hours at a location selected by him subject to the consent of the
Company, which shall not be unreasonably withheld. Except as may
be specifically approved by the Board, the Executive will not be
provided with the use of any other Company facility or services
during the Severance Period or at any time thereafter.
(d) Death. In the event of the Executive's death
subsequent to commencement of the Severance Period, the balance
of the Severance Amount will be paid to his beneficiary in a lump
sum. "Beneficiary" shall mean the person or persons designated by
the Executive in writing to the Company to receive payments under
this Agreement or, if no such person or persons are designated,
the Executive's estate.
(e) Pension Calculations. Notwithstanding any
provision to the contrary herein, pension accruals during the
Severance Period under the cash balance portion of the Company's
qualified defined benefit retirement plan shall be calculated on
the actual amounts paid to the Executive for each applicable plan
year of such plan and calculations under such plan based on
"average final compensation" shall be calculated during the
Severance Period based on an annual rate of Salary and bonus
equal to one-half (1/2) of the total Severance Amount.
(f) Outplacement Counseling. During the Severance
Period, the Executive will be provided with Outplacement
counseling services at Company expense; provided,
3
<PAGE>
however, the expense for such services in any calendar year shall
not exceed eighteen percent (18%) of the Severance Amount paid to
the Executive for such calendar year. This counseling shall
include, but not be limited to, skill assessment, job market
analysis, resume preparation, interviewing skills, job search
techniques and negotiating.
(g) Fringe Benefits. The Company will continue the
Executive's participation in the Management Program until the
earlier to occur of (i) the first anniversary of such termination
or resignation or (ii) the date the Executive is covered by
comparable fringe benefit programs and perquisites of a
subsequent employer.
4. Disability. The event of Permanent Disability (as
hereinafter defined) shall not entitle the Executive to any of
the payments or benefits described in Section 3 above unless the
Executive is terminated by the Company other than for Cause or
the Executive resigns for Good Reason. "Permanent Disability"
shall mean physical or mental disability as a result of which the
Executive is unable to perform his duties with the Company on
substantially a full-time basis for any period of six (6)
consecutive months. Any dispute as to whether or not the
Executive is so disabled shall be resolved by a physician
reasonably acceptable to the Executive and the Company whose
determination shall be final and binding upon both the Executive
and the Company.
5. Conditions Applicable to Severance Benefits.
(a) Confidentiality and Conduct. The Executive
warrants and agrees that he will not disclose to any person,
other than the employees, officers, directors or shareholders of
DMPF Holdings Corporation, a Maryland corporation, or its
affiliates and subsidiaries in connection with the performance of
his duties hereunder, any confidential information or trade
secrets concerning the Company or any of its subsidiaries or
affiliates at any time. Notwithstanding the foregoing,
confidential information and trade secrets shall not be deemed to
include, without limitation, information which (i) is or becomes
available to the public other than as a result of disclosure by
the Executive in violation of this Section 5(a) or (ii) the
Executive is required to disclose under any applicable laws,
regulations or directives of any government agency, tribunal or
authority having jurisdiction in the matter or under subpoena or
other process of law. The Executive will at all times refrain
from taking any action or making any statements, written or oral,
which are intended to and do demonstrably and materially damage
the Company, its subsidiaries and affiliates and their respective
directors, officers or employees. In the event that the Executive
materially violates the terms and conditions of this Section
5(a), the Company may, at its election, upon ten (10) days'
notice, terminate the Severance Period and discontinue payments
of the Severance Amount and cease providing the benefits
described in Section 3 above. The Company may also initiate any
form of legal action it may deem appropriate seeking damages or
injunctive relief with respect to any material violations of this
Section 5(a).
(b) Non-Competition. The Severance Period shall be
terminated and the Company shall have no further obligation to
pay the Severance Amount or to provide the benefits described in
Section 3 above if the Executive, without the Company's written
approval,
4
<PAGE>
accepts a position of employment with any other company
conducting a business which is substantially competitive with a
business conducted by the Company.
(c) No Other Severance Benefits. Except as
specifically set forth in this Agreement, the Executive covenants
and agrees that he shall not be entitled to any other form of
severance benefits from the Company, including, without
limitation, benefits otherwise payable under any of the Company's
regular severance policies, in the event his employment with the
Company ends for any reason and, except with respect to
obligations of the Company expressly provided for herein, the
Executive unconditionally releases the Company and its
subsidiaries and affiliates, their respective directors,
officers, employees and stockholders, or any of them, from any
and all claims, liabilities or obligations under this Agreement
or under any severance or termination arrangement of the Company
or any of its subsidiaries or affiliates for compensation or
benefits in connection with his employment or the termination
thereof.
6. General Provisions.
(a) Notices. Any notice hereunder by either party to
the other shall be given in writing by personal delivery, telex,
telecopy or registered mail, return receipt requested, to the
applicable address set forth below:
(i) To the Company:Del Monte Corporation
One Market Plaza
P.O. Box 3575
San Francisco, CA 94105
Attn.: Secretary of the Board
With a Copy to:Henry C. Blackiston, III
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
(ii) To the Executive:Avid M. Little
1969 Fair Ridge Ct.
Walnut Creek, CA 94596
(b) Limited Waiver. The waiver by the Company or the
Executive of a violation of any of the provisions of this
Agreement, whether express or implied, shall not operate or be
construed as a waiver of any subsequent violation of any such
provision.
(c) No Assignment. No right, benefit or interest
hereunder shall be subject to assignment, encumbrance, charge,
pledge, hypothecation or set off by the Executive in respect of
any claim, debt, obligation or similar process. This Agreement
and all of the Company's rights and obligations hereunder may be
assigned, transferred or delegated to any business entity which,
at the time of any sale, merger, consolidation or other business
combination, acquires all or substantially all of the assets of
the Company or to which the Company transfers all or
substantially all of its assets, but no such assignment, transfer
or delegation shall impair any
5
<PAGE>
rights that the Executive may have hereunder. Upon such
assignment, transfer or delegation, any such business entity
shall be deemed to be substituted for all purposes as the Company
hereunder; provided, however, that no such assignment, transfer
or delegation shall relieve the Company of its obligations under
this Agreement in the event that such obligations are not
performed when due by any such successor to the Company
hereunder.
(d) Amendment. This Agreement may not be amended,
modified or cancelled except by written agreement of the parties.
(e) Severability. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this
Agreement shall remain in full force and effect to the fullest
extent permitted by law.
(f) Unsecured Promise. Unless otherwise stated herein,
no benefit or promise hereunder shall be secured by any specific
assets of the Company. Unless otherwise stated herein, the
Executive shall have only the rights of an unsecured general
creditor of the Company in seeking satisfaction of such benefits
or promises
(g) Governing Law. This Agreement has been made in and
shall be governed by and construed in accordance with the laws of
the State of New York.
(h) Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties hereto with
respect to the matters covered hereby. As of the Effective Date,
this Agreement supersedes and replaces any prior agreement with
respect to employment, compensation continuation and the matters
contained in this Agreement which the Executive may have had with
the Company or any prior or contemporary affiliate or subsidiary
thereof, including, without limitation, any prior employment
agreement between RJR Nabisco, Inc., a Delaware corporation
("RJR"), and the Executive; provided, however, that nothing in
this Agreement shall be construed in any manner as a release or
waiver of RJR's obligations with respect to any bonus the
Executive is due for the period ending on the Effective Date or
the Executive's salary or retirement benefits with RJR accrued
prior to the Effective Date.
(i) Headings. The headings and captions of the
Sections of this Agreement are included solely for convenience of
reference and shall not control the meaning or interpretation of
any provisions of this Agreement.
(j) Counterparts. This Agreement may be executed by
the parties hereto in counterparts, each of which shall be deemed
an original, but both such counterparts shall together constitute
one and the same document.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of the day and year first written above.
DEL MONTE CORPORATION
By: /s/ A. Ewan Macdonald
Title:
/s/ David M. Little
David M. Little
7
<PAGE>
Exhibit 10.8
DEL MONTE FOODS
ANNUAL INCENTIVE AWARD PLAN (AIAP)
PLAN DESCRIPTION
Purpose
The Del Monte Annual Incentive Award Plan (AIAP) has been
designed to accomplish three major objectives.
_ To link corporate and business priorities with individual and group
performance objectives,
_ To improve company and individual performance by
rewarding key employees based on their achievement of
financial and program targets and for unique
contributions accomplished during the Plan Year, and
_ To provide key employees with the potential for
additional compensation in order to be competitive in
attracting, motivating, and retaining key executives and
managers.
Eligibility
To be eligible for participation in the Annual Incentive Award
Plan, (the "Plan") an employee must normally be in Salary Grade
13 or above and not be a participant in a sales incentive
program. To be eligible for an award in any given Plan Year,
participants are required to be in a bonus eligible position on
or before April 1 of that Plan Year, and must be on the active
payroll at the time of award distribution. In certain cases, a
prorated award may be considered for employees who are
involuntarily terminated or who retire if approved by the
functional area Executive Vice President and the Executive Vice
President, Administration. Voluntary terminations will not be
considered for an award if the participant is not on the active
payroll on the date of the award distribution. In the case of the
death of a Plan participant, a prorated award at target based on
the number of months worked during the Plan year will be paid.
Loss of eligibility may occur if the employee's salary grade is
changed to a grade below 13 as a result of a reclassification or
demotion.
A participant on any leave of absence for longer than 30
consecutive days will be eligible for a prorated bonus award
based on the number of months of active participation in the
Plan.
<PAGE>
Performance Period
The AIAP is a cash based incentive program which provides for
potential award payments at the end of the July 1 through June 30
fiscal year performance period.
Target Incentive Awards
Each participant has a target annual incentive award opportunity
expressed as a percent of annual base salary. This award
opportunity is determined by salary grade level.
Target Incentive
Salary as a % of
Grade Base Salary
----- ----------
20 30.0
19 27.5
18 25.0
17 22.5
16 20.0
15 17.5
14 15.0
13 10.0
Employees who become eligible during the Plan Year (on or before
April 1) will be eligible to receive a prorated incentive based
on the number of months of participation in the Plan.
Management By Objectives (MBOs)
Individual award payments are based upon overall Company
performance, individual performance against Management By
Objectives (MBOs), and exceptional unplanned unique contributions
accomplished by a participant during the Plan Year.
Prior to the beginning of each Plan Year, specific financial,
market share, and key program objectives for Del Monte will be
established. Functional area and staff executives supplement
these as appropriate and Plan participants develop individual
target objectives, or Management By Objectives (MBOs) for the
Plan Year which ultimately support those established by the Del
Monte Foods President and Chief Executive Officer.
<PAGE>
The document on which objectives are recorded is the Management
By Objectives Form ("MBOs"). It provides managers with a
planning, communication and decision making tool to be used in
managing performance.
The MBOs identify the Financial, Program and Unique objectives
and results used in the AIAP calculation. MBOs must be completed
by every incentive eligible employee in order to participate in
the program.
- Incumbent Financial Objectives:
This measure is based on the established business
financial targets for which an incumbent is
responsible. Weighting and scoring of this measure
will vary by function. If an incumbent financial
measure does not exist, weighting will be based
solely on overall Corporate Financial results.
Financial objectives will be appropriately
weighted to reflect the relative importance of the
measurement. Financial results will be evaluated
against the financial targets which were
established at the beginning of the Plan Year.
- Program Objectives (Nonfinancial):
To assist each Plan participant in focusing upon
critical priorities, there should be no more than 4
to 6 key objectives which are based on business
activities in one or more of the following areas:
marketing, sales, distribution, manufacturing,
organization, technology/research and development.
Every effort should be made to identify objectives
that will reflect the individual contributions to
be made by the Plan participant.
If the participant is responsible for Incumbent
Financial measures, there may be 3 to 4 Program
objectives...if no Incumbent Financials, then 5 or
6 Program objectives may be appropriate.
Program objectives should be:
- Short and concise: no more than a few
descriptive lines which should be
expressed as an action to be taken, i.e.,
"Design", "Implement", "Conduct",
"Deliver", "Achieve"....
- Measurable: All objectives should be
measurable reflecting the strategic
thrust of the business and specific needs
in their respective functional areas.
- Challenging: Objectives should be
realistic and provide for additional
effort above normal routine
activities.
- Time Oriented: Objectives should be
targeted to a specific completion date.
<PAGE>
Unique:
Unique contributions are innovative events or
accomplishments that are unplanned in nature
and can not be scheduled. Individual Unique
activities during the Fiscal Year will be
reviewed at year-end. The Company reserves the
right to alter the weighting in the combined
Program/Unique measure at year-end to reflect
the magnitude and impact of the Unique
contribution(s).
Target objectives are to be reviewed a minimum of 6 months into
the Plan Year for progress or for recommended minimal revision
based on the Company's ongoing performance during the Plan Year.
Any revisions to the originally established goals must be
approved by a member of Executive Management.
At the end of the Plan Year, overall Company, Business Unit, and
Individual performance will be evaluated comparing actual results
against targets. Incentive awards will then be calculated based
on the performance measurement values determined from this
evaluation process.
AIAP Aggregate Bonus Pool
At the end of each Plan Year, Del Monte's worldwide financial
performance will be reviewed (actual performance vs. target) and
used to determine a Company Performance Index which will be
applied to the aggregate bonus fund to establish the incentive
award pool for that Plan Year. Functional area bonus pools will
then be calculated by multiplying the overall Company Performance
Index times each functional area's targeted bonus fund.
Determining Individual Awards
The key principle behind determining an individual bonus award is "Pay for
Performance."
Individual awards are based upon how well the participant met
each objective established on the MBO form, the overall
performance of the Company, and any unique contributions
accomplished during the Plan Year.
<PAGE>
Individual awards may range from 0% to 200% of the target amount,
depending on the participant's level of achievement of each MBO.
However, it is important to note that the sum of all individual
awards cannot exceed the incentive award pool established for the
Plan Year.
After managers have evaluated the performance of their direct
reports, completed MBO forms will be reviewed by the Personnel
Generalists for functional area consistency.
After the recommended awards are consolidated for each functional
area, a budget pool factor will be applied to each award
calculation to ensure that the actual award amounts for each
functional area do not exceed the approved pool.
Example of annual incentive award calculation:
Eligible base salary earnings = $100,000
Target award percentage = 20%
Individual performance of MBOs = 120%
Company financial performance index = 125%
Recommended Award = $100,000 x .20 x 1.20 x 1.25 = $30,000
For this example, after the consolidation of recommended
awards, the established award pool for this functional
area has been exceeded. A bonus pool factor of .95 is
applied to each award calculation to adjust the
aggregate awards to the pool amount.
Recommended award = $30,000
Budget pool factor = .95
Final Award Calculation = $30,000 x .95 = $28,500
Final approval for incentive award payment will be made by the
President and CEO.
Payment of awards will be made as soon as practicable and can
generally be expected during the first quarter of the following
Plan Year.
The Del Monte Annual Incentive Award Plan is intended to be
directly responsive to individual performance with the
flexibility to measure, score, and reward each participant's
contribution to the Company's overall business results.
The Company reserves the right to amend, modify or cancel the
program at any time.
<PAGE>
ANNUAL INCENTIVE AWARD PLAN
(AIAP)
F1997 PLAN YEAR AMENDMENTS
The following modifications to the Annual Incentive Award Plan
(AIAP) will be implemented beginning fiscal 1997:
- - The Corporate financial objective will be based on the Annual
Operating Plan ("AOP") MAPE objective.
- - Program objectives will be limited to no more than two (2) for
each participant. They should be SMART:
]
- Specific
- Measurable
- Attainable
- Relevant
- Time oriented
and have a positive impact on overall Corporate objectives.
No objective should mimic the elements of a participant's job
description.
- - Weighted scoring for plan participants will vary by job level:
Program/
Title AOP Unique Objectives
Vice President 50% 50%
Director 40% 60%
Manager 30% 70%
<PAGE>
Exhibit 10.9
Conformed Copy
ADDITIONAL BENEFITS PLAN OF
DEL MONTE CORPORATION
[As Amended and Restated Effective January 1, 1996]
<PAGE>
ADDITIONAL BENEFITS PLAN OF
DEL MONTE CORPORATION
INDEX
SECTION PAGE
SECTION 1. PURPOSE OF PLAN..............................................1
SECTION 2. DEFINITIONS..................................................1
SECTION 3. PROVISIONS APPLICABLE TO DEFINED BENEFIT PLANS (A)...........3
3.1 Eligibility....................................................3
3.2 Amount of Benefits.............................................3
3.3 Form of Benefit Payments.......................................4
3.4 Timing of Benefit Payments.....................................5
3.5 Benefits Unfunded..............................................5
SECTION 4. PROVISIONS APPLICABLE TO DEFINED BENEFIT PLANS (B)...........5
4.1 Eligibility....................................................5
4.2 Amount of Benefits.............................................5
4.3 Form of Benefit Payments.......................................7
4.4 Timing of Benefit Payment......................................8
4.5 Benefits Unfunded..............................................8
SECTION 5. PROVISIONS APPLICABLE TO INDIVIDUAL ACCOUNT PLANS............8
5.1 Eligibility....................................................8
5.2 Amount of Additional Benefits..................................8
5.3 Form of Additional Benefits....................................9
5.4 Additional Benefits Election...................................9
5.5 No Withdrawals................................................10
5.6 Benefits Unfunded: Accounting.................................10
SECTION 6. AMENDMENT AND TERMINATION..................................10
SECTION 7. ADMINISTRATION.............................................10
SECTION 8. MISCELLANEOUS..............................................11
8.1 Assignment....................................................11
8.2 Governing Law.................................................11
8.3 Plan Independent of Employment Relationship...................11
SECTION 9. COORDINATION WITH RJR NABISCO, INC. PLAN...................12
<PAGE>
ADDITIONAL BENEFITS PLAN OF
DEL MONTE CORPORATION
[Effective as of January 1, 1996]
SECTION 1. PURPOSE OF PLAN
This Plan is adopted principally for the purpose of
restoring benefit payments to those Covered Individuals under
each Defined Benefit Plan and those Eligible Individuals under
each Individual Account Plan whose benefits would otherwise by
reduced by the limitations imposed by Section 401(a)(17) or any
other applicable section of the Code, and any annual incentive
award or salary deferred until Termination of Employment or who
has an annual incentive award or bonus payment excluded under
Defined Benefit Plan B. The Plan was first effective as of
January 1, 1990. This restated plan document is a continuation of
the Plan effective as of January 1, 1996. The benefits of Covered
Individuals and Eligible Individuals who commenced Plan benefits
or who terminated employment with the Company prior to January 1,
1996 are provided under the terms of the Plan prior to January 1,
1996.
SECTION 2. DEFINITIONS
When used herein, the words and phrases defined
hereinafter shall have the following meaning unless a different
meaning is clearly required by the context. Terms used but not
defined herein which are defined in a Defined Benefit Plan or in
an Individual Account Plan, as applicable, shall have the
meanings assigned to them in such Defined Benefit or Individual
Account Plan.
2.1 "AIAP" means the Del Monte Annual Incentive Award or
any successor bonus plan providing annual bonus awards, or any
predecessor incentive award plan of the Company or any
predecessor or annual incentive award plan of RJR Nabisco, Inc.
or its subsidiaries (but only with respect to amounts accrued
thereunder prior to January 1, 1990).
2.2 "Additional Benefit" means the benefit or benefits
payable under Section 5 of this Plan.
2.3 "Board of Directors" means the Board of Directors of Del
Monte Corporation.
2.4 "Code" means the Internal Revenue Code of 1986, as amended,
or as it may be amended from time to time.
2.5 "Committee" means the Del Monte Employee Benefits
Administrative Committee.
2.6 "Company" means Del Monte Corporation in respect of
its employees, each Participating Company in respect of its
employees, and any successor to any of said companies if such
successor be the Company or an Affiliated Company.
<PAGE>
2.7 "Covered Individual" means each individual who
becomes entitled to payment of a benefit under a Defined Benefit
Plan by reason of death, retirement or termination of employment
of an Employee, including a Participant, his or her Surviving
Spouse or Beneficiary which benefit is subject to reductions that
can be restored under Sections 3 and 4 of this Plan and which
benefit is not provided or replaced under the terms of a written
agreement between the Employee and the Company providing such
benefits in lieu of this Plan.
2.8 "Defined Benefit Plan" means either or both Defined
Benefit Plan (A) and (B), as the context requires.
2.9 "Defined Benefit Plan (A)" means the Retirement Plan
for Employees of Del Monte Corporation and any other defined
benefit retirement plan using a final compensation formula
intended to qualify under Section 401(a) of the Code and adopted
by the Company or a Participating Company which adopts this Plan
2.10 "Defined Benefit Plan (B)" means the Retirement
Plan for Salaried Employees of Del Monte Corporation and any
other defined benefit retirement plan which principally uses a
career compensation formula based on a personal retirement
account and intended to qualify under Section 401(a) of the Code
and adopted by the Company or a Participating Company which
adopts this Plan.
2.11 "Effective Date" means January 1, 1996 with respect
to the provisions set forth in this Plan.
2.12 "Eligible Individual" means a participant in an
Individual Account Plan, or any individual who is eligible to be
a participant in an Individual Account Plan, who is compensated
at a rate that is expected to exceed the annual limitations
imposed by Section 401(a)(17) of the Code and whose benefit in
addition to that provided by the Individual Account Plan is not
provided under the terms of a written agreement between the
Employee and the Company providing such benefits in lieu of this
Plan.
2.13 "Employee" means a participant in a Defined Benefit Plan.
2.14 "Individual Account Plan" means the Del Monte
Savings Plan, the Del Monte Certain Hourly Savings Plan, and any
other individual account savings plan intended to qualify under
Section 401(a) of the Code and adopted by the Company or a
Participating Company which adopts this Plan.
2.15 "Participating Company" means any domestic company
more than 50% of the voting stock of which is directly or
indirectly owned by Del Monte Corporation which adopts this Plan
by action of its own Board of Directors or its duly authorized
designee.
2.16 "Plan" means the Additional Benefits Plan of Del
Monte Corporation, as set forth herein or as may be hereafter
amended.
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<PAGE>
2.17 "RJR Nabisco Trust" means the trust under the restated
Master Trust Agreement dated October 12, 1988, as amended, by and between
RJR Nabisco, Inc. and Wachovia Bank and Trust Company, N.A.
2.18 "Stock Purchase Agreement" means the Stock Purchase Agreement
between DMPF Corp. and RJR Nabisco Investments, Inc. and joined in by
RJR Nabisco, Inc. and DMPF Holdings Corp. dated as of September 24, 1989.
SECTION 3. PROVISIONS APPLICABLE TO DEFINED BENEFIT PLANS (A)
3.1 Eligibility
All Covered Individuals from and after the Effective
Date who participate in a Defined Benefit Plan (A) are eligible
to receive benefits under this Plan computed in accordance with
Section 3.2 upon commencement of benefits under such Defined
Benefit Plan (A); provided, that no benefit is payable under this
Plan unless the Covered Individual is fully vested in his benefit
under such Defined Benefit Plan (A).
3.2 Amount of Benefits
(a) The amount of the monthly benefit payable under
the Plan to a Covered Individual shall be the
difference of (1) the monthly benefit that
would be provided to such Covered Individual
under Defined Benefit Plan (A) if such benefit
were calculated as set forth in subsection (b)
below; minus (2) the monthly benefit actually
payable to such Covered Individual from such
Defined Benefit Plan (A); minus (3) the monthly
benefit payable to such Covered Individual
under the Supplemental Benefits Plan of Del
Monte Corporation.
(b) For purposes of determining the amount in (a)(1) above,
the following shall apply:
(1) For purposes of determining Average
Final Compensation ("AFC") under such
Defined Benefit Plan (A), compensation
shall include, as applicable, (i) the
amount of any deferred annual bonus
under the AIAP earned during the
period for which AFC is determined;
and (ii) the amount of any deferred
base salary that is deferred with
respect to a year that is included in
the period for which AFC is
determined.
(2) Compensation shall be determined without regard
to the limits imposed to Section 401(a)(17) of
the Code.
(3) The limitations imposed by Section 415 of the
Code shall be disregarded.
-3-
<PAGE>
(c) The monthly benefit amounts calculated in
accordance with subsection (a) above shall be
calculated in the form of a single life
annuity, using the same actuarial assumptions
as are used by the applicable Defined Benefit
Plan (A).
(d) To the extent that the benefit under this Plan,
or any portion thereof, is provided to the
Employee or Covered Individual or his
beneficiary by funds from the RJR Nabisco
Trust, such benefit, or portion thereof, shall
be forfeited and the Employee or Covered
Individual or his beneficiary shall have no
further right or claim under this Plan but
shall only look to the funds from said RJR
Nabisco Trust for said benefit or portion
thereof. The benefit under this Section will be
correspondingly reduced before application of
Sections 3.3 and 3.4.
3.3 Form of Benefit Payments
After the benefit has been determined under Section 3.2,
it will be paid to an Employee as follows:
(a) to a married Employee, in the form of a Joint and 50%
Survivor (Spouse) Annuity which is the Actuarial
Equivalent of a Single Life Annuity; or
(b) to a single Employee, in the form of a Single
Life Annuity but if a beneficiary has been
designated under this Plan by the Employee, in
the form of a Joint and 50% Survivor Annuity
which is the Actuarial Equivalent of a Single
Life Annuity;
(c) provided, however, whenever the present value
of the benefit determined under Section 3.2 or
payable under this Plan is $10,000 or less, the
benefit will be paid in the form of a lump sum
cash payment.
The form paid to any Covered Individual who is not an
Employee is based on the form payable to the Employee.
Notwithstanding the foregoing, the Committee in its sole
discretion may alter the form of the monthly benefit under this
Plan to a form of annuity payment substantially the same form as
that elected by the Covered Individual under the Defined Benefit
Plan (A) on an actuarial equivalent basis.
Where the Retired Employee is receiving a Joint and
Survivor Annuity, he shall have the option, exercisable by a
writing filed with the Committee at any time and from time to
time after his Annuity Starting Date and prior to his death, to
redesignate the Contingent Annuitant designated or deemed
designated on his Annuity Starting Date. Such option may be
exercised without the consent of the previous Contingent
Annuitant. If a Retired Employee exercises such option to
redesignate, the survivor's annuity payable after his death shall
be paid to the Contingent Annuitant (which term includes the
estate of such Contingent Annuitant) last redesignated prior to
his death; however, such survivor's annuity shall be payable only
if the individual designated as his Contingent Annuitant on his
-4-
<PAGE>
Annuity Starting Date survives him, and shall be paid only for the
remaining lifetime of the individual designated as his Contingent
Annuitant on his Annuity Starting Date.
3.4 Timing of Benefit Payments
The monthly benefit under this Plan is payable at the
later of (i) attainment of the earliest retirement date under the
Defined Benefit Plan (A) or (ii) the first of the month next
following the Employee's date of termination of employment with
the Company or any subsidiary.
To the extent that the Defined Benefit Plan (A) benefit
commences prior to Normal Retirement Date under such plan, the
benefit under this Plan will be subject to the same reductions
for early commencement of benefit, if any, as applicable to the
Defined Benefit Plan (A) benefit.
Notwithstanding the foregoing, the Committee in its sole
discretion may alter the commencement of the benefit payment
under this Plan to coincide with the commencement of benefit
payments under the Defined Benefit Plan (A) for the Covered
Individual.
3.5 Benefits Unfunded
The benefits payable under this Plan to or on account of
a Covered Individual shall be paid out of the general assets of
the Company maintaining the retirement plan for which benefits
have been reduced, and shall not be funded in any manner.
SECTION 4. PROVISIONS APPLICABLE TO DEFINED BENEFIT PLANS (B)
4.1 Eligibility
All Covered Individuals from and after the Effective
Date who participate in a Defined Benefit Plan (B) are eligible
to receive benefits under this Plan computed in accordance with
Section 4.2 upon commencement of benefits under such Defined
Benefit Plan (B); provided that no benefit is payable under this
Plan unless the Covered Individual is fully vested in his benefit
under such Defined Benefit Plan (B).
4.2 Amount of Benefits
(a) The amount of the monthly benefit payable under
the Plan to a Covered Individual shall be the
difference of (1) the monthly benefit that
would be provided to such Covered Individual
under Defined Benefit Plan (B) if such benefit
were calculated as set forth in subsection (b)
below; minus (2) the monthly benefit actually
payable to such Covered Individual from such
Defined Benefit Plan (B); minus (3) the monthly
benefit payable to
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<PAGE>
such Covered Individual under the Supplemental of Del Monte
Corporation.
(b) For purposes of determining the amount in (a)(1) above,
the following shall apply:
(1) Compensation under such Defined
Benefit Plan (B) shall include, as
applicable, (i) the amount of any
deferred annual bonus under the AIAP
that would have been received during
the period for which Compensation is
determined if such bonus had not been
deferred; and (ii) the amount of any
deferred base salary that would have
been received during the period for
which compensation is determined if
such base salary had not been
deferred.
(2) Compensation under such Defined
Benefit Plan (B) shall be determined
without regard to the limits imposed
by Section 401(a)(17) of the Code.
(3) The limitations imposed by Section 415 of the
Code shall be disregarded.
(c) The monthly benefit amounts calculated in
accordance with subsection (a) above shall be
calculated in the form of a single life
annuity, using the same actuarial assumptions
as are used by the applicable Defined Benefit
Plan (B).
(d) In addition to the monthly benefit payable pursuant
to this Section 4.2, a lump sum benefit shall be
paid to an Employee, or to a Covered Individual on
his behalf, equal to the amount of the Accruing Benefit
that would be credited to such Employee under the
Defined Benefit Plan (B) with respect to any awards
paid to the Employee under the AIAP or a sales incentive
compensation plan of the Company received more than one
month after the first Valuation Date coincident with or
immediately following the Employee's Severance Date if
the Defined Benefit Plan (B) credited such amounts. No
Interest Credits will be paid on such amount. The lump
sum benefit shall be paid in a single sum distribution
notwithstanding Section 4.3, and shall not be included
in the present value of the benefit determined under
Section 4.3(c).
(e) If the retirement benefit payable to a Covered
Individual under the Defined Benefit Plan (B) is
based upon such Plan's "alternate," "transitional" or
"Preserved" form of benefit which is derived from an
Average Final Compensation formula of a Defined Benefit
Plan (A) or similar such plan, the provisions of
Section 3.2 of this Plan shall be applicable in
determining the benefit payable under this Plan if such
provisions provide agreater benefit and, if so, the terms
of this Section 4.2 [including Section 4.2(d)] shall
not apply; provided, however, that the benefit calculated
under Section 3.2 of this Plan shall be limited to the
benefit calculated through April 30, 1992, consistent
with the provisions to freeze the benefit accrual of the
Preserved Benefit under the Company's Retirement Plan
for Salaried Employees.
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<PAGE>
(f) To the extent that the benefit under this
Plan, or any portion thereof, is provided to
the Covered Individual or his beneficiary by
funds from the RJR Nabisco Trust, as amended
from time to time, such benefit, or portion
thereof, shall be forfeited and the Covered
Individual or his beneficiary shall have no
further right or claim under this Plan but
shall only look to the funds from said RJR
Trust for said benefit or portion thereof. The
benefit under this Section will be
correspondingly reduced before application of
Sections 4.3 and 4.4.
4.3 Form of Benefit Payments
After the benefit has been determined under Section 4.2,
it will be paid to an Employee as follows:
(a) to a married Employee, in the form of a Joint and
50% Survivor (Spouse) Annuity which is the
Actuarial Equivalent of a Single Life Annuity; or
(b) to a single Employee, in the form of a Single
Life Annuity but if a beneficiary has been
designated under this Plan by the Employee,
then in the form of a Joint and 50% Survivor
Annuity which is the Actuarial Equivalent of a
Single Life Annuity;
(c) provided, however, whenever the present value
of the benefit determined under Section 4.2 or
payable under this Plan is $10,000 or less, the
benefit will be paid in the form of a lump sum
cash payment.
The form paid to any Covered Individual who is not an
Employee is based on the form payable to the Employee.
Notwithstanding the foregoing, the Committee in its sole
discretion may alter the form of the monthly benefit under this
Plan to a form of payment substantially the same form as that
elected by the Employee under the Defined Benefit Plan (B) on an
actuarial equivalent basis.
Where the Employee is receiving a Joint and Survivor
Annuity, he shall have the option, exercisable by a writing filed
with the Committee at any time and from time to time after his
Annuity Starting Date and prior to his death, to redesignate the
Contingent Annuitant designated or deemed designated on his
Annuity Starting Date. Such option may be exercised without the
consent of the previous Contingent Annuitant. If an Employee
exercised such option to redesignate, the survivor's annuity
payable after his death shall be paid to the Contingent Annuitant
(which term includes the estate of such Contingent Annuitant)
last redesignated prior to his death; however, such survivor's
annuity shall be payable only if the individual designated as his
Contingent Annuitant on his Annuity Starting Date survives him,
and shall be paid only for the remaining lifetime of the
individual designated as his Contingent Annuitant on his Annuity
Starting Date.
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<PAGE>
4.4 Timing of Benefit Payment
The monthly benefit under this Plan is payable at the
later of (i) attainment of the earliest retirement date under the
Defined Benefit Plan (B) or (ii) the first of the month
coincident with or next following the Employee's Severance Date.
To the extent that the Defined Benefit Plan (B) benefit
commences prior to Normal Retirement Date under such plan, the
benefit under this Plan will be subject to the same reductions
for early commencement of benefit, if any, as applicable to the
Defined Benefit Plan (B) benefit.
Notwithstanding the foregoing, the Committee in its sole
discretion may alter the commencement of the benefit payment
under this Plan to coincide with the commencement of benefit
payments under the Defined Benefit Plan (B) for the Covered
Individual.
4.5 Benefits Unfunded
The benefits payable under this Plan to or on account of
a Covered Individual shall be paid out of the general assets of
the Company maintaining the retirement plan for which benefits
have been reduced, and shall not be funded in any manner.
SECTION 5. PROVISIONS APPLICABLE TO INDIVIDUAL ACCOUNT PLANS
5.1 Eligibility
All Eligible Individuals on or after the Effective Date
are eligible to receive Additional Benefits under this Plan
computed in accordance with Section 5.2; provided, that no
benefit may be paid unless the Eligible Individual is fully
vested in the Company Matching Contributions in the Individual
Account Plan or would be fully vested if participating in the
Individual Account Plan.
5.2 Amount of Additional Benefits
(a) The amount of the Additional Benefit, if any, shall
be equal to (1) the amount by which the compensation of the
Eligible Individual which would be recognized for purposes of
determining benefits under the Individual Account Plan exceeds
the limitations imposed by Section 401(a) (17) of the Code,
multiplied by (2) the maximum percentage of compensation which is
subject to Company matching contributions upon the deferral or
contribution to the underlying Individual Account Plan by a
participant in such plan and multiplied by (3) the maximum
percentage of Company matching contributions in the underlying
Individual Account Plan plus (4) an amount equal to interest as
calculated under Section 5.6(c) applied to the foregoing amount
for the period when the Eligible Individual's compensation
recognized under the Individual Account Plan exceeds the
limitations under Section 401(a) (17) of the Code. The amount
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<PAGE>
of the Additional Benefit is determined and awarded as of December
31 of each year for that calendar year; provided, that (i) no
amount is determined for a calendar year during which the Eligible
Individual is not fully vested, or would not be fully vested if
participating in the Individual Account Plan, in the Company
Matching Contributions in the underlying Individual Account Plan
(such full vesting being referred to herein as "Vested"),
(ii) the amount of the Additional Benefit for an Eligible Individual
who first becomes Vested during a calendar year shall be determined
as of December 31 of that calendar year for that calendar year and
any preceding calendar year which the person was an Eligible Individual
and was not Vested, and (iii) the amount of the Additional Benefit for
an Eligible Individual who dies, retires, or separates from
employment with the Company ("Termination") shall be determined
as soon as practicable following such Termination and, if
determined prior to December 31, shall be paid in the calendar
year of Termination.
(b) In addition, if any Eligible Individual had an
Additional Benefit deferred under the Prior Plan (as defined in
Section 9) as of December 31, 1989, such Additional Benefit shall
be credited to an account maintained solely on the books of the
Company for such purpose and shall be treated as if such
Additional Benefit had been deferred under Section 5.6(c) of this
Plan from and after the Effective Date.
5.3 Form of Additional Benefits
Subject to earlier payment under Section 5.4, any
benefit payable under Section 5.2 of this Plan shall be
distributed in the form of a lump sum cash payment in the January
of the calendar year immediately following the calendar year in
which an Eligible Individual dies, retires, separates from
employment with the Company or is eligible for a distribution
under the Individual Account Plan on account of disability.
5.4 Additional Benefits Election
(a) Every year for which it is determined that an
Eligible Individual is entitled to an Additional Benefit
described in Section 5.2, such Eligible Individual shall elect
the manner in which such benefits are to be treated.
(b) An Eligible Individual shall elect either to receive
such Additional Benefit in cash in the calendar year following
the year in which an Additional Benefit is determined and awarded
under Section 5.2(a) or to have such Additional Benefit deferred
and become payable under this Plan upon termination of
employment, retirement, death or disability as provided in
Section 5.3.
(c) If an Eligible Individual entitled to make such an
election fails to make such election, receipt of the Additional
Benefit shall become payable under this Plan in cash after the
end of the calendar year in which an Additional Benefit is
determined and awarded under Section 5.2(a).
(d) Any election made pursuant to 5.4(b) shall be made
in writing and filed with the Committee no later than the end of
the calendar year preceding the calendar year in which an
Additional Benefit is determined and awarded under Section
5.2(a); provided, that for an individual who becomes
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<PAGE>
an Eligible Individual during a calendar year, such election
shall be made not later than thirty (30) days after he becomes
eligible to participate in the Individual Account Plan or, if
later, after an increase in compensation which first qualifies
him as an Eligible Individual.
5.5 No Withdrawals
Any credited amounts, as specified in paragraph 5.6(b),
which have not been designated by a prior Eligible Individual
election to be distributed in the following year, may not be
withdrawn from this Plan while the Eligible Individual is
actively employed by the Company or any affiliated company.
5.6 Benefits Unfunded: Accounting
(a) The Additional Benefits payable under this Plan to
an Eligible Individual shall be paid out of the general assets of
the Company maintaining the underlying Individual Account Plan
and shall not be funded in any manner.
(b) An amount equal to the Additional Benefit as
determined under Section 5.2 will be credited to an account
maintained for such purpose on the books of the Company.
(c) Interest will be credited at a monthly rate equal to
the rate of return reported by the Individual Account Plan for
the Interest Income Fund (or its equivalent if fund options under
the Individual Account Plan change) for the calendar month for
which interest is to be credited or for the calendar month for
which the most recent rate is available if the current month's
rate is not available at the date interest is determined. If the
Eligible Individual has elected to defer receipt of the
Additional Benefit, the account will be credited annually as of
December 31 for the year ended December 31 with interest using
the balance of the account as of January 1 of such calendar year.
For the Additional Benefit, if any, of any Eligible Individual
for a calendar year, interest will be credited by applying
interest to the portion of the Additional Benefit that would have
been allocated to an account in the Individual Account Plan if
the applicable limitations did not apply. If the Eligible
Individual has elected to receive the Additional Benefit in cash
in the following year, interest shall be credited on the
Additional Benefit through the calendar year for which such
Additional Benefit is awarded.
SECTION 6. AMENDMENT AND TERMINATION
The Company reserves the right to amend or terminate
this Plan at any time for any reason or for no reason. Such
amendment or termination shall not adversely affect the rights of
any Covered Individual or any Eligible Individual then receiving
benefits under this Plan. The Board of Directors has delegated
its authority to amend this Plan to the Committee which may act
by majority in a meeting or by written consent.
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<PAGE>
SECTION 7. ADMINISTRATION
7.1 The Committee shall have the duty to administer this
Plan in respect of Covered Individuals and Eligible Individuals
who become entitled to benefits under this Plan by reason of
their participation in the underlying Defined Benefit Plan or
Individual Account Plan.
7.2 The Committee or the designated representative
thereof shall have exclusive authority to interpret the Plan. The
decision of the Committee with respect to any interpretation or
question as to the Plan, including, without limitation, any
questions as to eligibility, entitlement, the amount of any
benefit, the distribution of any benefit or any other matter,
shall be final, conclusive and binding on the Company, and
Participating Company, any participant, beneficiary or employee.
7.3 To the extent appropriate and not inconsistent with
the intent and terms of this Plan, the terms and provisions of
the underlying Defined Benefit Plan or Individual Account Plan
shall be applied to the determination of benefits under this
Plan.
7.4 Pursuant to the discretionary authority set forth in
Section 7.2, the Committee may deny, in whole or in part, any
written claim for a benefit under this Plan by providing the
claimant written notice within 90 days of receipt of such claim
setting forth (a) the specific reasons(s) for such denial, (b)
specific reference to pertinent Plan provisions on which the
denial is based, (c) a description of any additional material or
information necessary to perfect such claim and an explanation of
why such material or information is necessary, and (d) a
description of the Plan's claim review procedure. A claimant may
request review of any such denial within 60 days after receipt of
the written denial by making a written request to the Committee.
The decision on review shall be made within 60 days after receipt
of the request to review, unless circumstances warrant an
extension of time not to exceed an additional 60 days and shall
be written in a manner calculated to be understood by the
claimant and include specific reasons for the decision, with
references to specific Plan provisions upon which the decision is
based.
SECTION 8. MISCELLANEOUS
8.1 Assignment
The benefits payable under this Plan may not be assigned
or alienated, except as required by law.
8.2 Governing Law
This Plan shall be governed by the laws of the State of
California.
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<PAGE>
8.3 Plan Independent of Employment Relationship
The establishment and maintenance of the Plan, as well
as the eligibility for and payment of benefits thereunder shall
not be construed as conferring on any Covered Individual or
Eligible Individual any right to or contract for continued
employment or employment for any duration or in any position. The
eligibility for or payment of any benefit under this Plan shall
not in any way interfere with the rights of either the Company or
Covered Individual or Eligible Individual employed by the Company
to terminate the employment of such Covered Individual or
Eligible Individual employed by the Company at any time, without
notice, for any reason or for no reason, except as otherwise
required by law.
SECTION 9. COORDINATION WITH RJR NABISCO, INC. PLAN
Under the Stock Purchase Agreement, the Company has
agreed through December 31, 1991 to carry on programs that were
in effect prior to January 1, 1990. This Plan is intended as a
successor plan to the Additional Benefits Plan of RJR Nabisco,
Inc. and Participating Companies (the "Prior Plan"). To the
extent that the underlying Defined Benefit Plan recognizes
service and compensation prior to January 1, 1990, this Plan does
also. To the extent that Eligible Individuals made elections
under the Prior Plan prior to January 1, 1990, such elections
will be honored as if made under Section 5.4 of this Plan. To the
extent that Transferred Employees (as defined in the Stock
Purchase Agreement) are not active employees of the Company on
January 1, 1990 and are receiving benefits or entitled to receive
benefits under the Prior Plan, such benefits will be provided
under this Plan.
IN WITNESS WHEREOF, the Company has caused this Plan to
be executed by its duly authorized member of the Del Monte
Employee Benefits Administrative Committee as of December 16,
1996.
DEL MONTE CORPORATION
By: /s/ Mark J. Buxton
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<PAGE>
APPENDIX A
ADDITIONAL BENEFITS PLAN
This Appendix A is made a part of the Additional
Benefits Plan of Del Monte Corporation (the "Plan") and sets
forth the provisions for certain benefits to be paid to Robert J.
Allen upon his termination of employment with the Company. Unless
otherwise provided in this Appendix A, the terms of the Plan
apply.
A.1. Eligible Individual This Appendix A applies to Robert J.
Allen ("Allen"), an individual who was employed by Canadian
Canners, Ltd., as of May 1, 1960, transferred to Del Monte
Corporation in 1983 and thereafter continued as an employee of
the Company.
A.2 Additional Defined Benefit Plan (B) Benefit Allen is a
participant in the Retirement Plan for Salaried Employees, a
Defined Benefit Plan (B) of the Company. When he becomes a
Covered Individual, the amount of any benefit to which he is
otherwise entitled under Section 4 of the Plan shall be modified
as follows:
(a) the benefit under the Defined Benefit Plan (B) shall
be determined as if, for purposes of computing years of
vesting, eligibility and credited service, Allen had been
hired by the Company on May 1, 1960 and had commenced
participation in the Retirement Plan for Employees of Del
Monte Corporation as of May 1, 1960.
(b) the benefit under Section 4 and this Appendix A
shall be offset by the actuarial equivalent of all
retirement benefits for which Allen is or becomes eligible
to receive from Canadian Canners, Ltd.
A.3 Additional Defined Benefit Plan (A) Benefit For purposes of
this Plan, Allen shall be deemed by virtue of the imputed service
described in Section A.2(a) above to have qualified for the
"preserved" form of benefit under a Defined Benefit Plan (A)
formula contained in the Defined Benefit Plan (B). As an
alternative to the benefit calculated under this Plan and
Appendix A, Section A.2, Allen may elect to have a benefit
determined under Section 3.2 of this Plan modified as follows:
(a) the benefit shall be determined as if Allen had
contributed to the Applicable Prior Plan when necessary to
obtain credited service but no additional benefit by
reason of employee contributions shall be deemed to have
been accrued.
(b) the benefit shall be determined as if Allen had
participated in the Retirement Plan for Employees of Del
Monte Corporation prior to January 1, 1982 and such
pre-1982 service shall be calculated without regard to any
special provisions governing such matters as eligibility
for early retirement, reduction factors for early
commencement of benefits, or adjustment for change in plan
year.
(c) the benefit shall be determined as if Allen's
compensation had all been earned as an Employee of the
Company but expressed in U.S. dollars.
<PAGE>
(d) the benefit under Section 3 and this Appendix A shall
be offset by the actuarial equivalent of all retirement
benefits for which Allen is or becomes eligible to receive
from Canadian Canners, Ltd.
A.4 Right to Withhold Payment Payment of any benefit determined
under this Appendix A to Allen is conditioned upon Allen
furnishing all appropriate information to determine the offset
under Sections A.2(b) and A.3(d) above. Unless and until such
information is furnished, no payment need be made in accordance
with this Appendix A.
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<PAGE>
APPENDIX B
ADDITIONAL BENEFITS PLAN
This Appendix B is made a part of the Additional
Benefits Plan of Del Monte Corporation (the "Plan"). The Second
Amendment to the Plan, dated July 28, 1992 and effective as of
January 1, 1992 ("Second Amendment"), applied to all Employees
and Eligible Individuals from and after that date except for the
certain named individuals for whom the provisions of the Plan
immediately prior to the Second Amendment (except as clarified to
further express the scope and intent of the Plan by (x) below)
apply. Employees and Eligible Individuals not subject to the
Second Amendment who were active employees as of January 1, 1996
were:
David M. Little
David L. Meyers
(x) In the event that the employment of an
individual named above is terminated under the
provisions of a written contract with the Company,
pursuant to which such individual is paid a severance
amount in installments over a period of time for which
such contract also provides for accrual of benefits
under a defined benefit or non-qualified plan during
such period, the benefit calculated under Section 3 or
4, as applicable, for such individual shall include such
period during which severance is paid and the amount of
severance payments as if such period were active
employment with the Company and such payments were
compensation under the applicable Defined Benefit Plan;
provided, however, that any benefit calculated under
Section 3.2 of the Plan based on the Preserved Benefit
under the Retirement Plan for Salaried Employees shall
be limited to the Accrued Benefit as of April 30, 1992,
consistent with the provisions to freeze such Preserved
Benefit under such plan.
<PAGE>
Exhibit 10.10
Conformed Copy
SUPPLEMENTAL BENEFITS PLAN OF
DEL MONTE CORPORATION
[Effective as of January 1, 1990]
<PAGE>
SUPPLEMENTAL BENEFITS PLAN OF
DEL MONTE CORPORATION
[Effective as of January 1, 1990]
INDEX
Section Page
1. PURPOSE OF PLAN...............................................1
2. DEFINITIONS...................................................1
3. PROVISIONS APPLICABLE TO DEFINED BENEFIT PLANS (A)............2
3.1 Eligibility................................................2
3.2 Amount of Benefits.........................................3
3.3 Form of Benefit Payments...................................3
3.4 Timing of Benefit Payments.................................4
3.5 Benefits Unfunded..........................................4
4.1 Eligibility................................................4
4.2 Amount of Benefits.........................................4
4.3 Form of Benefit Payments...................................5
4.4 Timing of Benefit Payments.................................6
4.5 Benefits Unfunded..........................................6
5. PROVISIONS APPLICABLE TO INDIVIDUAL ACCOUNT PLANS..............6
5.1 Eligibility................................................6
5.2 Amount of Supplemental Benefits............................6
5.3 Form of Supplemental Benefits..............................7
5.4 Supplemental Benefits Election.............................7
5.5 No Withdrawals.............................................7
5.6 Benefits Unfunded; Accounting..............................7
6. AMENDMENT AND TERMINATION.....................................8
7. ADMINISTRATION................................................8
8. MISCELLANEOUS.................................................8
8.1 Assignment.................................................8
8.2 Governing Law..............................................8
8.3 Plan Independent of Employment Relationship................9
-------------------------------------------
9. COORDINATION WITH RJR NABISCO, INC. PLAN......................9
<PAGE>
SUPPLEMENTAL BENEFITS PLAN OF
DEL MONTE CORPORATION
[Effective as of January 1, 1990]
SECTION 1. PURPOSE OF PLAN
This Plan is adopted solely for the purpose of
restoring benefit payments to those Covered Individuals under
each Defined Benefit Plan and those Eligible Individuals under
each Individual Account Plan whose benefits would otherwise be
reduced by the limitations imposed by Section 415 of the Code.
This Plan is intended to be an excess benefit plan as defined by
Section 3(36) of the Employee Retirement Income Security Act of
1974, as amended (ERISA).
SECTION 2. DEFINITIONS
When used herein, the words and phrases defined
hereinafter shall have the following meaning unless a different
meaning is clearly required by the context. Terms used but not
defined herein which are defined in a Defined Benefit Plan or in
an Individual Account Plan, as applicable, shall have the
meanings assigned to them in such Defined Benefit or Individual
Account Plan.
2.1 "Board of Directors" means the Board of Directors of Del Monte
Corporation.
2.2 "Code" means the Internal Revenue Code of 1986, as
amended, or as it may be amended from time to time.
2.3 "Committee" means the Del Monte Employee Benefits
Administrative Committee.
2.4 "Company" means Del Monte Corporation in respect
of its employees, each Participating Company in respect of its
employees, and any successor to any of said companies if such
successor be the Company or an Affiliated Company.
2.5 "Covered Individual" means each individual who
becomes entitled to payment of a benefit under a Defined Benefit
Plan by reason of death, retirement or termination of employment
of an Employee, including a Participant, his or her Surviving
Spouse or Beneficiary.
2.6 "Defined Benefit Plan" means either or both
Defined Benefit Plan (A) and (B), as the context requires.
2.7 Defined Benefit Plan (A)" means the Retirement
Plan for Employees of Del Monte Corporation and any other defined
benefit retirement plan using a final compensation formula
intended to qualify under Section 401(a) of the Code and adopted
by the Company or a Participating Company which adopts this Plan.
<PAGE>
2.8 "Defined Benefit Plan (B)" means the Retirement
Plan for Salaried Employees of Del Monte Corporation and any
other defined benefit retirement plan which principally uses a
career compensation formula based on a personal retirement
account and is intended to qualify under Section 401(a) of the
Code and is adopted by the Company or a Participating Company
which adopts this Plan.
2.9 "Effective Date" means January 1, 1990 with
respect to the provisions set forth in this Plan.
2.10 "Eligible Individual" means a participant in an
Individual Account Plan who is eligible to participate in this
Plan.
2.11 "Employee" means a participant in a Defined Benefit Plan.
2.12 "Individual Account Plan" means the Del Monte
Savings Plan and the Del Monte Certain Hourly Savings Plan, and
any other individual account savings plan intended to qualify
under Section 401(a) of the Code and adopted by the Company or a
Participating Company which adopts this Plan.
2.13 "Participating Company" means any domestic
company more than 50% of the voting stock of which is directly or
indirectly owned by Del Monte Corporation which adopts this Plan
by action of its own Board of Directors or its duly authorized
designee.
2.14 "Plan" means the Supplemental Benefits Plan of
Del Monte Corporation, as set forth herein or as may be hereafter
amended.
2.15 "RJR Nabisco Trust" means the trust under the
restated Master Trust Agreement dated October 12, 1988, as
amended, by and between RJR Nabisco, Inc. and Wachovia Bank and
Trust Company, N.A.
2.16 "Stock Purchase Agreement" means the Stock
Purchase Agreement between DMPF Corp. and RJR Nabisco
Investments, Inc. and joined in by RJR Nabisco, Inc. and DMPF
Holdings Corp. dated as of September 24, 1989.
2.17 "Supplemental Benefit" means the benefit or
benefits payable under Section 5 of this Plan.
SECTION 3. PROVISIONS APPLICABLE TO DEFINED BENEFIT PLANS (A)
3.1 Eligibility
All Covered Individuals from and after the Effective
Date who participate in a Defined Benefit Plan (A) are eligible
to receive benefits under this Plan computed in accordance with
Section 3.2 upon commencement of benefits under such Defined
Benefit Plan (A).
2
<PAGE>
3.2 Amount of Benefits
(a) The amount of the monthly benefit payable under
this Plan to a Covered Individual shall be equal to the amount,
if any, by which the monthly benefit provided by a Defined
Benefit Plan (A), computed without regard to any provision of
such Defined Benefit Plan (A) designed to comply with the maximum
pension requirements of Section 415 of the Code, is reduced by
reason of the application of such provision. In addition, from
and after January 1, 1989, Compensation shall be determined in
accordance with such Defined Benefit Plan (A) as if there were no
limit on Compensation under Section 401(a)(17) of the Code. In
the event a Covered Individual's benefits payable from a Defined
Benefit Plan (A) are increased subsequent to retirement due to an
increase in the maximum benefits payable under Section 415 of the
Code, the benefits payable hereunder will be appropriately
reduced.
(b) To the extent that the benefit under this Plan, or
any portion thereof, is provided to the Covered Individual or his
beneficiary by funds from the RJR Nabisco Trust, such benefit, or
portion thereof, shall be forfeited and the Covered Individual or
his beneficiary shall have no further right or claim under this
Plan but shall only look to the funds from said RJR Nabisco Trust
for said benefit or portion thereof. The benefit under this Plan
will be correspondingly reduced before provision under Sections
3.3 and 3.4.
3.3 Form of Benefit Payments
After the benefit has been determined under Section
3.2, it will be paid to an Employee as follows:
(a) to a married Employee, in the form of a Joint and
50% Survivor (Spouse) Annuity which is the Actuarial Equivalent
of a Single Life Annuity; or
(b) to a single Employee, in the form of a Single Life
Annuity but if a beneficiary has been designated under this Plan
by the Employee, in the form of a Joint and 50% Survivor Annuity
which is the Actuarial Equivalent of a Single Life Annuity;
(c) provided, however, whenever the present value of
the benefit determined under Section 3.2 or payable under this
Plan is $10,000 or less, the benefit will be paid in the form of
a lump sum cash payment.
The form paid to any Covered Individual who is not an
Employee is based on the form payable to the Employee.
Notwithstanding the foregoing, the Committee in its
sole discretion may alter the form of the monthly benefit under
this Plan to a form of annuity payment substantially the same
form as that elected by the Covered Individual under the Defined
Benefit Plan (A) on an actuarial equivalent basis.
Where the Retired Employee is receiving a Joint and
Survivor Annuity, he shall have the option, exercisable by a
writing filed with the Committee at any time and from time to
3
<PAGE>
time after his Annuity Starting Date and prior to his death, to
redesignate the Contingent Annuitant designated or deemed
designated on his Annuity Starting Date. Such option may be
exercised without the consent of the previous Contingent
Annuitant. If a Retired Employee exercised such option to
redesignate, the survivor's annuity payable after his death shall
be paid to the Contingent Annuitant (which term includes the
estate of such Contingent Annuitant) last redesignated prior to
his death; however, such survivor's annuity shall be payable only
if the individual designated as his Contingent Annuitant on his
Annuity Starting Date survives him, and shall be paid only for
the remaining lifetime of the individual designated as his
Contingent Annuitant on his Annuity Starting Date.
3.4 Timing of Benefit Payments
The monthly benefit under this Plan is payable at the
later of (i) attainment of the earliest retirement date under the
Defined Benefit Plan (A) or (ii) the first of the month next
following the Employee's date of termination of employment with
the Company or any subsidiary.
To the extent that the Defined Benefit Plan (A)
benefit commences prior to Normal Retirement Date under such
plan, the benefit under this Plan will be subject to the same
reductions for early commencement of benefit, if any, as
applicable to the Defined Benefit Plan (A) benefit.
Notwithstanding the foregoing, the Committee in its
sole discretion may alter the commencement of the benefit payment
under this Plan to coincide with the commencement of benefit
payments under the Defined Benefit Plan (A) for the Covered
Individual.
3.5 Benefits Unfunded
The benefits payable under this Plan to or on account
of a Covered Individual shall be paid out of the general assets
of the Company maintaining the retirement plan whose benefits
have been reduced, and shall not be funded in any manner.
SECTION 4. PROVISIONS APPLICABLE TO DEFINED BENEFIT PLANS (B)
4.1 Eligibility
All Covered Individuals from and after the Effective
Date who participate in a Defined Benefit Plan (B) are eligible
to receive benefits under this Plan computed in accordance with
Section 4.2 upon commencement of benefits under such Defined
Benefit Plan (B).
4.2 Amount of Benefits
(a) The amount of the monthly benefit payable under
this Plan to a Covered Individual shall be equal to the amount,
if any, by which the monthly benefit provided by a Defined
Benefit Plan (B), computed without regard to any provision
designed to comply with the maximum pension requirement of
Section 415 of the Code, is reduced by reason of the
4
<PAGE>
application of such provision. In addition, from and after
January 1, 1989, Compensation shall be determined in accordance
with such Defined Benefit Plan (B) as if there were no limit on
Compensation under Section 401(a)(17) of the Code. In the event a
Covered Individual's benefits payable from a Defined Benefit Plan
(B) are increased subsequent to retirement due to an increase in
the maximum benefits payable under Section 415 of the Code, the
benefits payable hereunder will be appropriately reduced.
If the retirement benefit payable to a Covered
Individual under the Defined Benefit Plan (B) is based upon such
Plan's "alternate," "transitional" or "preserved" form of
benefit which is derived from an Average Final Compensation
formula of a Defined Benefit Plan (A) or similar such plan, the
provisions of Section 3.2 of this Plan shall be applicable in
determining the benefit payable under this Plan.
To the extent that the benefit under this Plan, or any
portion thereof, is provided to the Covered Individual or his
beneficiary by funds from the RJR Nabisco Trust, as amended from
time to time, such benefit, or portion thereof, shall be
forfeited and the Covered Individual or his beneficiary shall
have no further right or claim under this Plan but shall only
look to the funds from said RJR Nabisco Trust for said benefit or
portion thereof. The benefit under this Plan will be
correspondingly reduced before provision of Sections 4.3 and 4.4.
4.3 Form of Benefit Payments
After the benefit has been determined under Section
4.2, it will be paid to an Employee as follows:
(a) to a married Employee, in the form of a Joint and
50% Survivor (Spouse) Annuity which is the Actuarial Equivalent
of a Single Life Annuity; or
(b) to a single Employee, in the form of a Single Life
Annuity but if a beneficiary has been designated under this Plan
by the Employee, then in the form of a Joint and 50% Survivor
Annuity which is the Actuarial Equivalent of a Single Life
Annuity;
(c) provided, however, whenever the present value of
the benefit determined under Section 4.2 or payable under this
Plan is $10,000 or less, the benefit will be paid in the form of
a lump sum cash payment.
The form paid to any Covered Individual who is not an
Employee is based on the form payable to the Employee.
Notwithstanding the foregoing, the Committee in its
sole discretion may alter the form of the monthly benefit under
this Plan to a form of annuity payment substantially the same
form as that elected by the Employee under the Defined Benefit
Plan (B) on an actuarial equivalent basis.
Where the Employee is receiving a Joint and Survivor
Annuity, he shall have the option, exercisable by a writing filed
with the Committee at any time and from time to time after
5
<PAGE>
his Annuity Starting Date and prior to his death, to redesignate
the Contingent Annuitant designated or deemed designated on his
Annuity Starting Date. Such option may be exercised without the
consent of the previous Contingent Annuitant. If an Employee
exercised such option to redesignate, the survivor's annuity
payable after his death shall be paid to the Contingent Annuitant
(which term includes the estate of such Contingent Annuitant)
last redesignated prior to his death; however, such survivor's
annuity shall be payable only if the individual designated as his
Contingent Annuitant on his Annuity Starting Date survives him,
and shall be paid only for the remaining lifetime of the
individual designated as his Contingent Annuitant on his Annuity
Starting Date.
4.4 Timing of Benefit Payments
The monthly benefit under this Plan is payable at the
later of (i) attainment of the earliest retirement date under the
Defined Benefit Plan (B) or (ii) the first of the month
coincident with or next following the Employee's Severance Date.
To the extent that the Defined Benefit Plan (B)
benefit commences prior to Normal Retirement Date under such
plan, the benefit under this Plan will be subject to the same
reductions for early commencement of benefit, if any, as
applicable to the Defined Benefit Plan (B) benefit.
Notwithstanding the foregoing, the Committee in its
sole discretion may alter the commencement of the benefit payment
under this Plan to coincide with the commencement of benefit
payments under the Defined Benefit Plan (B) for the Covered
Individual.
4.5 Benefits Unfunded
The benefits payable under this Plan to or on account
of a Covered Individual shall be paid out of the general assets
of the Company maintaining the retirement plan whose benefits
have been reduced, and shall not be funded in any manner.
SECTION 5. PROVISIONS APPLICABLE TO INDIVIDUAL ACCOUNT PLANS
5.1 Eligibility
All Eligible Individuals on or after the Effective
Date are eligible to receive Supplemental Benefits under this
Plan computed in accordance with Section 5.2.
5.2 Amount of Supplemental Benefits
(a) The amount of the Supplemental Benefit, if any,
shall be equal to the Company Matching Contributions plus any
interest credited pursuant to Section 5.6 which would have been
made to the Eligible Individual's account in the underlying
Individual Account Plan, but for the limitations imposed by
Section 415 or Section 401(a)(17) of the Code.
(b) In addition, if any Eligible Individual had a
Supplemental Benefit deferred under the Prior Plan (as defined in
Section 9) as of December 31, 1989, such Supplemental
6
<PAGE>
Benefit shall be credited to an account maintained solely on the
books of the Company for such purpose and shall be treated as if
such Supplemental Benefit had been deferred under Section 5.6(c)
of this Plan from and after the Effective Date.
5.3 Form of Supplemental Benefits
Subject to earlier payment under Section 5.4, any
benefit payable under Section 5.2 of this Plan shall be
distributed in the form of a lump sum cash payment in the January
of the calendar year immediately following the calendar year in
which an Eligible Individual dies, retires, separates from
employment with the Company or is eligible for a distribution
under the Individual Account Plan on account of disability.
5.4 Supplemental Benefits Election
(a) Every year for which it is determined that an
Eligible Individual is entitled to a Supplemental Benefit
described in Section 5.2, such Eligible Individual shall elect
the manner in which such benefits are to be treated.
(b) An Eligible Individual shall elect either to
receive such Supplemental Benefit in cash in the following year
or to have such Supplemental Benefit deferred and become payable
under this Plan upon termination of employment, retirement, death
or disability as provided in Section 5.3.
(c) If an Eligible Individual entitled to make such an
election fails to make such election, receipt of the Supplemental
Benefit shall become payable under this Plan in cash after the
close of the Plan Year for which the contribution is made.
(d) Any election made pursuant to paragraph (b) of
this Section 5.4 shall be made in writing and filed with the
Committee no later than the end of the Eligible Individual's tax
year prior to the tax year in which such distribution will become
payable. Any such election shall be irrevocable.
5.5 No Withdrawals
Any credited amounts, as specified in paragraph
5.6(b), which have not been designated by a prior Eligible
Individual election to be distributed in the following year, may
not be withdrawn from this Plan while the Eligible Individual is
actively employed by the Company.
5.6 Benefits Unfunded; Accounting
(a) The Supplemental Benefits payable under this Plan
to an Eligible Individual shall be paid out of the general assets
of the Company maintaining the underlying Individual Account Plan
and shall not be funded in any manner.
(b) An amount equal to the Supplemental Benefit as
determined under Section 5.2 will be credited to an account
maintained for such purpose on the books of the Company.
7
<PAGE>
(c) If the Eligible Individual has elected to defer
receipt of the Supplemental Benefit, the account will be credited
annually with interest in the amount which would have been earned
had the account been invested in the Assured Interest Fund under
the underlying Individual Account Plan or, in the absence of such
fund in the underlying plan, in such comparable fund of any other
Individual Account Plan of the Company.
(d) If the Eligible Individual has elected to receive
the Supplemental Benefit in cash in the following year, the
account shall be deemed to have been invested in the Assured
Interest Fund of the underlying Individual Account Plan or, in
the absence of such fund in the underlying plan, in such
comparable fund of any other Individual Account Plan of the
Company and shall be revalued in accordance with the earnings of
such fund from the time of the election until the end of the year
in which the election is made.
SECTION 6. AMENDMENT AND TERMINATION
The Board of Directors reserves the right to amend or
terminate this Plan at any time for any reason or for no reason.
Such amendment or termination shall not adversely affect the
rights of any Covered Individual or any Eligible Individual then
receiving benefits under this Plan.
SECTION 7. ADMINISTRATION
(a) The Committee shall have the duty to administer
this Plan in respect of Covered Individuals and Eligible
Individuals who become entitled to benefits under this Plan by
reason of their participation in the underlying Defined Benefit
Plan or Individual Account Plan.
(b) The Committee or the designated representative
thereof shall have exclusive authority to interpret the Plan. The
decision of the Committee with respect to any interpretation or
question as to the Plan, including, without limitation, any
questions as to eligibility, entitlement, the amount of any
benefit, the distribution of any benefit or any other matter,
shall be final, conclusive and binding on the Company, and
Participating Company, any participant, beneficiary or employee.
(c) To the extent appropriate and not inconsistent
with the intent and terms of this Plan, the terms and provisions
of the underlying Defined Benefit Plan or Individual Account Plan
shall be applied to the determination of benefits under this
Plan.
SECTION 8. MISCELLANEOUS
8.1 Assignment
The benefits payable under this Plan may not be
assigned or alienated, except as required by law.
8.2 Governing Law
This Plan shall be governed by the laws of the State
of California.
8
<PAGE>
8.3 Plan Independent of Employment Relationship
The establishment and maintenance of the Plan, as well
as the eligibility for and payment of benefits thereunder shall
not be construed as conferring on any Covered Individual or
Eligible Individual any right to or contract for continued
employment or employment for any duration or in any position. The
eligibility for or payment of any benefit under this Plan shall
not in any way interfere with the rights of either the Company or
Covered Individual or Eligible Individual employed by the Company
to terminate the employment of such Covered Individual or
Eligible Individual employed by the Company at any time, without
notice, for any reason or for no reason, except as otherwise
required by law.
SECTION 9. COORDINATION WITH RJR NABISCO, INC. PLAN
Under the Stock Purchase Agreement, the Company has
agreed through December 31, 1991 to carry on programs that were
in effect prior to the Effective Date. This Plan is intended as a
successor plan to the Supplemental Benefits Plan of RJR Nabisco,
Inc. and Participating Companies (the "Prior Plan"). To the
extent that the underlying Defined Benefit Plan recognizes
service and compensation prior to the Effective Date, this Plan
does also. To the extent that Eligible Individuals made elections
under the Prior Plan prior to the Effective Date, such elections
will be honored as if made under Section 5.4 of this Plan. To the
extent that Transferred Employees (as defined in the Stock
Purchase Agreement) are not active employees of the Company on
the Effective Date and are receiving benefits or entitled to
receive benefits under the Prior Plan, such benefits will be
provided under this Plan.
IN WITNESS WHEREOF, the Company has caused this Plan
to be executed by its duly authorized members of the Employee
Benefits Administrative Committee as of May 15, 1990.
/s/ David M. Little
Committee Member
/s/ Annette Tham
Committee Member
9
<PAGE>
FIRST AMENDMENT TO THE
SUPPLEMENTAL BENEFITS PLAN OF
DEL MONTE CORPORATION
THIS FIRST AMENDMENT TO THE SUPPLEMENTAL BENEFITS PLAN
OF DEL MONTE CORPORATION (the "Plan") is made and entered into
this 28th day of July, 1992, by the Del Monte Employee Benefits
Administrative Committee (the "Committee") on behalf of Del Monte
Corporation (the "Company").
WHEREAS, Section 6 of the Plan reserves the right to
amend the Plan at any time by action of the Board of Directors of
the Company; and
WHEREAS, the Board of Directors of the Company has
delegated to the Committee the authority to amend nonqualified
plans, including the Plan, so long as such amendment is not a
material change in plan design or does not increase the cost of
providing benefits under the Plan by more than 2% from the
average cost of the prior two years ("material cost increase");
and
WHEREAS, the Committee desires to amend the Plan to
eliminate any supplemental benefit due to the imposition of
limitations under Internal Revenue Code Section 415 with respect
to any individual account plan of the Company; and
WHEREAS, the Committee desires to amend the Plan to
clarify that benefits under the Plan are not affected by the
limitations on compensation imposed by Internal Revenue Code
Section 401(a) (17); and
WHEREAS, the Committee believes such amendments do not
result in a material change in plan design because very few, if
any, employees were eligible in any year for the benefit
eliminated;
NOW, THEREFORE, the Plan is hereby amended effective
as of January 1, 1992 as follows:
1. Section 2 of the Plan is hereby amended by deleting
Sections 2.10, 2.12 and 2.17 in their entirety and renumbering
the remaining sections accordingly.
2. Section 3.2 is amended by deleting subsection (a)
thereof in its entirety, replacing it with the following and
redesignating subsection 3.2(b) as 3.2(d).
(a) The amount of the monthly benefit
payable under this Plan to a Participant or to a
Covered Individual on his behalf shall be equal
to the difference between (1) the monthly benefit
that would be provided to or on behalf of the
Participant under Defined Benefit Plan (A) if
such benefit were calculated without regard to
the limitations imposed by Section 415 of the
Code, and (2) the monthly benefit actually
payable to or on behalf of the Participant from
such Defined Benefit Plan (A).
<PAGE>
(b) The monthly benefit amounts calculated in
accordance with subsection (a) shall be
calculated in the form of a single life annuity,
using the same actuarial assumptions as are used
by the applicable Defined Benefit Plan (A).
(c) In the event a Covered Individual's
benefits payable from a Defined Benefit Plan (A)
are increased subsequent to retirement due to an
increase in the maximum benefits payable under
Section 415 of the Code, the benefits payable
hereunder will be appropriately reduced.
3. Section 4.2 of the Plan is amended by deleting the
first paragraph of subsection (a) in its entirety, replacing it
with the following and redesignating the second and third
paragraphs of subsection (a) as subsections (d) and (e),
respectively.
(a) The amount of the monthly benefit
payable under this Plan to a Participant or to a
Covered Individual on his behalf shall be equal
to the difference between (1) the monthly benefit
that would be provided to or on behalf of the
Participant under Defined Benefit Plan (B) if
such benefit were calculated without regard to
the limitations imposed by Section 415 of the
Code, and (2) the monthly benefit actually
payable to or on behalf of the Participant from
such Defined Benefit Plan (B).
(b) The monthly benefit amounts calculated
in accordance with subsection (a) shall be
calculated in the form of a single life annuity,
using the same actuarial assumptions as are used
by the applicable Defined Benefit Plan (B).
(c) In the event a Covered Individual's
benefits payable from a Defined Benefit Plan (B)
are increased subsequent to retirement due to an
increase in the maximum benefits payable under
Section 415 of the Code, the benefits payable
hereunder will be appropriately reduced.
4. Section 5 of the Plan is hereby amended by deleting
such Section in its entirety.
5. Section 9 of the Plan is hereby amended by adding
the phrase "as it provided prior to the First Amendment to the
Plan" at the end of the fourth sentence of such section.
6. The Plan is hereby amended by deleting all
references to "Eligible Individual", "Individual Account Plan"
and "Supplemental Benefit" wherever occurring in the Plan.
2
<PAGE>
7. The foregoing amendments shall not reduce or
eliminate any Supplemental Benefit accrued or payable from the
Plan prior to January 1, 1992. Any Supplemental Benefit the
payment of which was deferred by an Eligible Individual prior to
January 1, 1992 shall continue to be maintained under the terms
of the Plan as such terms existed prior to January 1, 1992.
IN WITNESS WHEREOF, the Committee has caused this
First Amendment to the Plan to be executed by not less than a
majority of its duly authorized members as of the date first
written above.
EMPLOYEE BENEFITS ADMINISTRATIVE COMMITTEE
/s/ Phyllis Kay Dryden _________________
Phyllis Kay Dryden David M. Little
/s/ Richard French /s/ Annette Tham
Richard French Annette Tham
/s/ Thomas E. Gibbons
Thomas E. Gibbons
4
<PAGE>
SECOND AMENDMENT TO THE
SUPPLEMENTAL BENEFITS PLAN OF
DEL MONTE CORPORATION
THIS SECOND AMENDMENT TO THE SUPPLEMENTAL BENEFITS PLAN OF
DEL MONTE CORPORATION (the "Plan") is made and entered into this
30th day of May, 1996, by the Del Monte Employee Benefits
Administrative Committee (the "Committee") on behalf of Del Monte
Corporation (the "Company").
WHEREAS, Section 6 of the Plan reserves the right to amend
the Plan at any time by action of the Board of Directors of the
Company; and
WHEREAS, The Board of Directors of the Company has
delegated to the Committee the Authority to amend nonqualified
plans, including this Plan; and
WHEREAS, the Committee desires to amend the Plan to clarify
that eligible employees are not entitled to benefits under this
Plan if not vested in the underlying qualified plan or plans of
the Company;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 2.5 of the Plan is hereby amended by adding at
the end thereof "which benefit is subject to reductions that can
be restored under Sections 3 and 4 of this Plan and which benefit
is not provided or replaced under the terms of a written
agreement between the Employee and the Company providing such
benefits in lieu of this Plan."
2. Section 3.1 of the Plan is hereby amended by adding at
the end thereof ";provided, that no benefit is payable under this
Plan unless the Covered Individual is fully vested in his benefit
under such Defined Benefit Plan (A)."
3. Section 4.1 of the Plan is hereby amended by adding at
the end thereof ";provided, that no benefit is payable under this
Plan unless the Covered Individual is fully vested in his benefit
under such Defined Benefit Plan (B)."
4. The foregoing amendments to the Plan are effective as of
January 1, 1996. These amendments are intended to clarify
existing administration of the Plan with respect to payment of
benefits and do not vest any person in benefits at any earlier
point in time than vesting would have occurred under the Plan as
interpreted and administered by the Committee prior to these
amendments.
5. Except as otherwise specifically set forth above,
the terms of the Plan shall continue in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the Committee has caused this Second
Amendment to the Plan to be executed by at least a majority of
its duly authorized members as of the date first above written.
DEL MONTE EMPLOYEE BENEFITS ADMINISTRATIVE COMMITTEE
/s/ Mark J. Buxton /s/ Richard L. French
Mark J. Buxton Richard L. French
/s/ Thomas E. Gibbons ______________________
Thomas E. Gibbons David M. Little
/s/ William R. Sawyers
William R. Sawyers
2
<PAGE>
Exhibit 10.11
Conformed Copy
AGREEMENT
FOR
INFORMATION TECHNOLOGY SERVICES
between
DEL MONTE CORPORATION
and
ELECTRONIC DATA SYSTEMS CORPORATION
<PAGE>
TABLE OF CONTENTS
ARTICLE I. AGREEMENT, TERMS AND SOFTWARE
1.1 Agreement............................................. 6
1.2 Term of Agreement..................................... 7
1.3 Defined Terms......................................... 7
(a) Access............................................ 7
(b) Additional Services............................... 7
(c) Consortium Services............................... 7
(d) Del Monte Software................................ 7
(e) EDS Software...................................... 7
(f) IT Services....................................... 7
(g) Services.......................................... 7
(h) Software.......................................... 8
(i) Telecommunications Services....................... 8
(j) Vendor Software................................... 8
ARTICLE II. SERVICES TO BE PERFORMED BY EDS
2.1 EDS Personnel and Management.......................... 8
(a) EDS Account Director.............................. 8
(b) Transition of Personnel........................... 8
(c) Financial Resoonsibility for EDS Personnel........11
2.2 EDS Services..........................................11
2.3 Additional Services...................................11
2.4 Compliance with Laws..................................11
2.5 EDS Financial Obligations.............................12
2.6 Reviews and Inspections...............................12
2.7 Insurance.............................................12
ARTICLE III. FOODS INDUSTRY CONSORTIUM
3.1 Goal of Consortium....................................12
3.2 Initial Formation.....................................12
(a) Recruitment of Consortium members.................12
(b) Development of Charter............................13
(c) Initial Projects..................................13
3.3 Consortium Advisory Board.............................13
3.4 Schedule and Compensation.............................13
3.5 Royalties.............................................14
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<PAGE>
ARTICLE IV. INFORMATION TECHNOLOGY ASSETS AND
RELATED AGREEMENTS
4.1 Purchase of Information Technology Assets by EDS......15
4.2 Related Agreements....................................16
4.3 Del Monte-Leased Equipment............................16
4.4 Third Party Approvals.................................16
4.5 Return of Equipment...................................17
4.6 Further Assurances....................................17
ARTICLE V. DEL MONTE OBLIGATIONS
5.1 Del Monte Personnel and Management....................17
(a) Del Monte Representative..........................17
(b) Transitioned Employees............................17
(c) Bonuses...........................................17
5.2 Del Monte Obligations.................................18
5.3 Del Monte Financial Obligations.......................18
ARTICLE VI. PAYMENTS TO EDS
6.1 Charges...............................................18
(a) Migration Charge..................................18
(b) Monthly Base Charge...............................18
(c) Adjustments to Monthly Base Charge................18
(d) Out-of-Pocket Expenses............................19
(e) Extension Period Charges..........................19
6.2 Cost of Living Adustment..............................19
(a) Adjustment........................................19
(b) Change of Index...................................19
6.3 Time of Payment.......................................20
6.4 Taxes.................................................20
6.5 Verification of Costs.................................21
6.6 Supporting Documentation..............................21
ARTICLE VII. PROPRIETARY RIGHTS AND SOFTWARE
7.1 Vendor Software.......................................21
7.2 EDS Software..........................................22
(a) Operators.........................................22
(b) Del Monte Work....................................22
(c) Confidentiality...................................22
(d) Irreparable Harm..................................23
7.3 EDS Development Tools.................................23
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<PAGE>
ARTICLE VIII. DATA, CONFIDENTIALITY AND AUDIT RIGHTS
8.1 Del Monte's Data......................................23
8.2 Confidentiality.......................................24
8.3 Security..............................................24
8.4 Audit Rights..........................................24
ARTICLE IX. DISPUTE RESOLUTION
9.1 Status Reviews........................................25
9.2 Annual Quality Review.................................25
9.3 Performance Review....................................25
9.4 Dispute Resolution....................................25
(a) Generally.........................................25
(b) Mini-Trial........................................25
(c) Final Offers......................................26
(d) Arbitration.......................................27
(e) Principal.........................................28
ARTICLE X. TERMINATION
10.1 Termination for Cause.................................28
10.2 Termination for Nonpayment............................28
10.3 Termination for Insolvency............................29
10.4 Termination Without Cause.............................29
10.5 Transition Services upon Termination..................30
(a) Services..........................................30
(b) Charges...........................................31
10.6 Survival of Provisions................................31
ARTICLE XI. WARRANTIES, INDEMNITIES AND LIABILITY
11.1 Warranties............................................32
(a) EDS Warranties....................................32
(b) General Disclaimer................................32
(c) Telecommunications Services Disclaimer............33
11.2 Cross Indemnification.................................33
11.3 Intellectual Property Indemnification.................34
11.4 Indemnification by EDS................................34
11.5 Indemnification of EDS for Certain Third
Party Claims .........................................35
11.6 Equipment and Related Agreement Indemnification.......35
11.7 Telecommunications Indemnification....................35
11.8 Indemnification of Del Monte for Certain
Employee Benefits ....................................35
11.9 Indemnification Procedures............................36
iii
<PAGE>
(a) Notice and Control...............................36
(b) Settlement.......................................36
11.10 Limitation of Liability .............................36
(a) Of EDS...........................................36
(b) Of Del Monte.....................................37
(c) Survival.........................................37
11.11 Contractual Statute of Limitations ..................37
11.12 Acknowledgement .....................................37
ARTICLE XII. MISCELLANEOUS
12.1 Right of EDS to Engage in Other Activities............38
12.2 Binding Nature and Assignment.........................38
(a) Generally.........................................38
(b) EDS Subcontracts..................................38
(c) Permitted Transactions............................38
12.3 Notices...............................................38
12.4 Counterparts..........................................40
12.5 Headings..............................................40
12.6 Relationship of Parties...............................40
12.7 Approvals and Similar Actions.........................40
12.8 Force Majeure.........................................40
12.9 Severability..........................................41
12.10 Regulatory Requirements ..............................41
12.11 Waiver ...............................................41
12.12 Attorneys' Fees ......................................41
12.13 Media Releases .......................................41
12.14 No Third Party Beneficiary ...........................41
12.15 Entire Agreement .....................................41
12.16 Governing Law ........................................42
SCHEDULES
Schedules 1.3-Section 1A - Del Monte-Owned Equipment
Schedule 1.3-Section 1B - Del Monte-Owned Software
Schedule 1.3-Section 2 - Del Monte-Leased Equipment
Schedule 1.3-Section 3 - Vendor Software Licensed to Del Monte
Schedule 2.1(b) - Transitioned Employees
Schedule 2.2-Section 1 - Data Center Services
Schedule 2.2-Section 2 - Telecommunications Services
Schedule 2.2-Section 3 - Personal Computing Services
Schedule 2.2-Section 4 - Applications Maintenance Services
Schedule 2.2-Section 5 - Applications Development Services
Schedule 2.8 - Insurance Requirements
Schedule 3.4 - Plan for Initial Consortium Formation
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Schedule 4.2 - Hardware Maintenance Agreements List
Schedule 5.2 - Del Monte Obligations
Schedule 6.1-Section 1 - Monthly Base Charge
Schedule 6.1-Section 2 - EDS Fee Credits to Del Monte
Schedule 7.1-Section 1 - Vendor Software to be Converted
Before Migration
Schedule 7.1-Section 2 - Vendor Software Not to be Converted
Schedule 10.4 - Termination Fee Schedule
Exhibit A
Exhibit A - Form Bill of Sale
Exhibit B - Form of Assignment and Assumption Agreement
Exhibit C - Service Level Agreements
v
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AGREEMENT
FOR
INFORMATION TECHNOLOGY SERVICES
THIS AGREEMENT, effective as of November 1, 1992 (the "Effective
Date"), is between Del Monte Corporation, a New York corporation
("Del Monte"), and Electronic Data Systems Corporation, a Texas
corporation ("EDS")
RECITALS
A. Del Monte issued a Request for Proposal dated July 31,
1992 (the "RFP") to provide services and administration to Del
Monte in support of its information services functions, including
(i) the operation and maintenance of data center operations with
respect to Del Monte's San Francisco office, Walnut Creek
research center, and all domestic field locations and (ii)
various aspects of its telecommunications operations. As part of
the transaction outlined in the RFP, it was contemplated that
substantially all of the Del Monte employees engaged in
information services activities would be afforded the opportunity
to assume comparable employment positions with the selected
vendor. The RFP also contemplated that the vendor would provide
certain services in connection with the formation and operation
of a foods industry consortium, and that certain Del Monte
hardware and software assets would be acquired by the vendor for
subsequent use in providing services to Del Monte.
B. EDS submitted to Del Monte its response to the RFP dated
August 14, 1992 (the "Response"), which represented that
EDS had the capacity and willingness to provide the
services required by Del Monte in accordance with the RFP
specifications as modified by the Response, to transition
the Del Monte employees, and to acquire the specified Del
Monte hardware and software assets.
C. Del Monte has selected EDS as the vendor for the services
and administration described in the Response and this
Agreement and EDS has agreed to provide such services and
administration, in accordance with the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained in this Agreement, the parties agree:
ARTICLE I. AGREEMENT, TERMS AND SOFTWARE
1.1 Agreement. During the term of this Agreement, EDS will
supply to Del Monte, and Del Monte will purchase from
EDS, Del Monte's requirements for those information
technology services described in this Agreement all
upon and subject to the terms and conditions specified
in this Agreement.
<PAGE>
1.2 Term of Agreement. The term of this Agreement will
begin on the Effective Date, and will end on the 10th
year anniversary of the Effective Date. Thereafter,
the term of this Agreement will automatically extend
for successive one-year periods unless ether of the
parties notifies the other party in writing at least
six months prior to such anniversary date or the end
of any such one-year extension
period, as the case may be, that this Agreement will
not be so extended. The date which this Agreement
expires is referred to herein as the "Expiration
Date". This Agreement may be terminated prior to the
Expiration Date in accordance with Article X.
1.3 Defined Terms. As used in this Agreement, the following
terms have the meanings set forth below.
(a) Access. The term "Access" means the enjoyment of
physical and legal use and operation of Software
in order for EDS to provide Services.
(b) Additional Services. The term "Additional
Services" means any services outside of the scope
of those Services expressly provided for by this
Agreement and which Del Monte expressly
authorizes in advance in writing. Del Monte shall
have no obligation to make any payments for any
Additional Services except to the extent it so
agrees in advance in writing.
(c) Consortium Services. The term "Consortium
Services" means those services to be provided by
EDS under Article III which are included in the
Monthly Base Charge as specified in Article III.
(d) Del Monte Software. The term "Del Monte Software"
means any Software which is owned by Del Monte
(and not proprietary to any other party) and is
to be operated by or on behalf of Del Monte and
which is identified in Section 1(b) of Schedule
1.3.
(e) EDS Software. The term "EDS Software" means any
Software which is owned by EDS (and not
proprietary to any other party) and operated by
EDS in connection with the performance of
Services. After the date of the purchase of the
Del Monte Software by EDS under this Agreement,
the Del Monte Software will be EDS Software.
(f) IT Services. The term "IT Services" means the
information technology services provided by EDS
under Article II, including without limitation
the services specified in Schedule 2.2 to this
Agreement and Sections III, IV, VII and X of the
Response, which Sections are incorporated in this
Agreement by reference.
(g) Services. The term "Services" means the Consortium
Services, the IT Services and the Telecommunications
Services.
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<PAGE>
(h) Software. The term "Software" means computer
programs together with input and output formats,
program listings, narrative descriptions,
operating instructions, and supporting
documentation and shall include the tangible
media upon which such programs and documentation
are recorded. Except as otherwise provided in
this agreement, Software includes any
enhancements, translations, modifications,
updates, new releases, and other changes.
(i) Telecommunications Services. The term
"Telecommunications Services" means the data
and voice telecommunications services provided or
managed by EDS under this Agreement.
(j) Vendor Software. The term "Vendor Software" means
any Software which is proprietary to any party
other than Del Monte or EDS. Vendor Software
initially obtained by Del Monte by means of third
party licenses which the parties anticipate will
be assigned to EDS by Del Monte pursuant to this
Agreement is identified in Section 3 of Schedule
1.3.
Other capitalized terms used in this Agreement are defined herein
from time to time.
ARTICLE II. SERVICES TO BE PERFORMED BY EDS
2.1 EDS Personnel and Management.
(a) EDS Account Director. During the term of
this Agreement, EDS will provide an EDS
Account Director (the "EDS Account Director")
who will maintain an office in Del Monte's
facilities in San Francisco, California,
who will have overall responsibility
for managing and coordinating the
delivery of the Services and who will
be responsible to the Del Monte
Representative and will coordinate
and consult with the Del Monte
Representative (as defined in
Section 5.1) and the Del Monte
Representative's direct staff (the
"Del Monte Management Cadre"). EDS'
assignment of the initial EDS Account
Director will be subject to Del
Monte's prior approval, as will any
subsequent replacement of that person,
all in accordance with Section XI-4 of
the Response, which is incorporated
by this reference.
(b) Transition of Personnel. Within one week
after the Effective Date, EDS
will offer employment to the data
processing employees of Del Monte
identified in Schedule 2.1(b) (the
"Transitioned Employees") in
accordance with EDS' normal employment
policies as stated in Section
IX-3 of the Response, except as
modified by the special considerations
listed below, which employment will
be effective with respect to each
Transitioned Employee on the date
specified on Schedule 2.1(b) for such
Transitioned Employee. EDS will
offer employment to the members of
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<PAGE>
the Del Monte Management Cadre in
accordance with EDS' normal
employment policies as stated in
Section IX-3 of the Response except as
modified by the special considerations
listed below, at such time, if any,
that Del Monte discontinues the
Management Cadre. Until such time, if
any, that Del Monte discontinues
the Management Cadre, EDS will not
seek to employ or otherwise disrupt
the employment relationship between
Del Monte and the staff of the Del
Monte Management Cadre or between
Del Monte and any other employee of
Del Monte. The following special
considerations will apply to the
offer of employment of Transitioned
Employees and the offer of employment,
if any, to the Del Monte Management
Cadre:
(i) Each of the Transitioned Employees will be
offered employment with EDS at his or her
salary (including any applicable shift
differentials) as of the Effective Date.
Each member of the Del Monte Management
Cadre will be offered employment with EDS at
his or her salary as of the date of the
offer of employment by EDS.
(ii) EDS will waive its normal pre-employment
drug testing requirement with respect to the
Transitioned Employees and the Del Monte
Management Cadre.
(iii)Each Transitioned Employee and each member
of the Del Monte Management Cadre will be
given credit for his or her previous years
of service with Del Monte for purposes of
vesting (but not accrual) of EDS' normal
retirement plan benefits.
(iv) EDS will waive its two-year waiting period
regarding dependent health coverage for the
Transitioned Employees and the Del Monte
Management Cadre.
(v) EDS will waive all waiting periods under
EDS' health plan for any pre-existing
conditions which are normally covered by
such health plan.
(vi) EDS will credit 1992 year-to-date
medical deductibles of the Transitioned
Employees toward 1992 deductibles under EDS'
health plan. EDS will credit the
year-to-date medical deductibles of each
member of the Del Monte Management Cadre for
the calendar year in which such member
accepts employment with EDS toward that
calendar year's deductibles under EDS'
health plan.
(vii) EDS will waive the annual dental maximum
benefits payable under EDS' dental plan for
each Transitioned Employee and each member
9
<PAGE>
of the Del Monte Management Cadre if he or
she is enrolled at the time he or she
accepts employment with EDS.
(viii) EDS will recognize the vacation level
under Del Monte's vacation schedule in
effect as of the Effective Date attained by
a Transitioned Employee, or in effect as of
the date of EDS' offer of employment
attained by a member of the Del Monte
Management Cadre, if that vacation level is
higher than the vacation allowance under
EDS' normal vacation schedule then in
effect. Transitioned Employees and each
member of the Del Monte Management Cadre
will be given the option of carrying over
accrued vacation to their EDS employment or,
alternatively, having such accrued vacation
cashed out at the time of transition. For
each Transitioned Employee or member of the
Del Monte Management Cadre who elects to
cash out his or her accrued vacation, EDS
and Del Monte agree each to pay 50% of the
accrued vacation pay at the time of
transition.
(ix) EDS will permit the Transitioned Employees
to use their remaining Del Monte floating
holidays or 1992.
(x) EDS will allow the Transitioned Employees
to maintain their respective FY 1993 AIAP
objectives and target award levels. For
each Transitioned Employee who achieves his
or her defined AIAP objectives with Del Monte's
FY 1993, EDS will pay appropriate compensation
to that individual according to the AIAP target
award levels. Subsequent to Del Monte's FY 1993,
Transitioned Employees will participate in EDS'
performance compensation plan, and will not
participate in the AIAP program.
(xi) Del Monte and EDS acknowledge and agree that
Transitioned Employees and members of the
Del Monte Management Cadre who accept
employment with EDS will not be entitled to
receive severance pay from Del Monte. Such
acknowledgment and agreement by EDS shall
not be construed to impose any additional
responsibility or liability on EDS with
respect to the Transitioned Employees and
members of the Del Monte Management Cadre
except as expressly assumed under this
Agreement.
(xii) EDS agrees to provide a separation package,
consisting of a lump sum payment and
outplacement assistance, in an amount or
level identical to that provided in the Del
Monte Severance and Outplacement Assistance
Plan dated October 6, 1992, to any
Transitioned Employee as to whom ED
initiates termination within 180 days after
transition. However, such separation package
10
<PAGE>
will not be provided if the termination
results from a violation by the Transitioned
Employee of EDS' rules, policies,
guidelines, or standards of conducts.
(xiii) EDS further agrees to provide a separation
package, consisting of a lump sum payment
and outplacement assistance, in an amount or
level identical to that provided in the Del
Monte Severance and Outplacement Assistance
Plan dated October 6, 1992, to any
Transitioned Employee who, within 90 days
after EDS' offer of employment, declines to
accept EDS' offer of employment for a
position which is located at least 35 miles
greater than the distance between the
employee's former job location and his or
her then-residence.
(xiv) Del Monte and EDS agree and acknowledge
that the transition of any Del Monte
employees pursuant to this Agreement shall
be without any intervening cessation or
termination of employment. Such
acknowledgment and agreement by EDS shall
not be construed to impose any additional
responsibility or liability on EDS with
respect to any Del Monte employees except as
expressly assumed under this Agreement.
(c) Financial Responsibility for EDS Personnel. EDS
will pay for all personnel expenses, including
wages, required travel and travel related
expenses, of its employees performing the
Services. Any request in writing by Del Monte for
travel by any EDS employee which EDS in good
faith judgment considers outside the scope of
Services will be considered and treated as a
request for Additional Services.
2.2 EDS Services. During the term of this Agreement, and
in accordance with the provisions of this Agreement,
EDS will provide the Services (except Consortium
Services for which separate or additional compensation
is expressly contemplated under Article III) to Del
Monte in consideration of payment of the Monthly Base
Charge, as adjusted pursuant to this Agreement.
2.3 Additional Services. Upon the reasonable written
request of Del Monte, EDS will provide Del Monte such
Additional Services as Del Monte and EDS agree on
terms mutually agreed upon by EDS and Del Monte. Any
services rendered by EDS in addition to the Services
will not be subject to any charges or payment
obligation except to the extent such charges or
payment obligations are agreed to in advance in
writing by Del Monte.
2.4 Compliance with Laws. During the term of this Agreement,
EDS will, on a timely basis, perform the Services and
discharge the obligations set forth in this Agreement
in material compliance with all applicable laws,
regulations, and ordinances, including without
limitation the Americans with Disabilities Act, the
11
<PAGE>
requirements of S.B. 198, and Cal/OSHA. As of the
Effective Date, EDS has obtained all necessary and
material approvals from regulatory or other authorities
with jurisdiction over its business, facilities, and
assets to enter into and perform its obligations
under this Agreement.
2.5 EDS Financial Obligations. In addition to any other
financial responsibilities of EDS expressly provided
herein, EDS will pay all costs and expenses related to
each item which is to be provided by EDS pursuant
hereto, unless with respect to Additional Services the
parties agree otherwise in writing in advance.
2.6 Reviews and Inspections. In connection with Del
Monte's review of documentation supporting EDS'
charges and expenses as provided in Section 6.6 and
Del Monte's audits and inspections of Del Monte's
business as provided in Section 8.4, EDS agrees to
cooperate and provide assistance as reasonably
requested by Del Monte and that such cooperation and
assistance is included in the Monthly Base Charge.
2.7 Insurance. EDS and Del Monte each agree to comply with
the insurance requirements set forth in Schedule 2.8.
ARTICLE III. FOODS INDUSTRY CONSORTIUM
3.1 Goal of Consortium. EDS acknowledges that a material
consideration in Del Monte's selection of EDS to perform
the Services was EDS' representations set forth in
Section XV of the EDS Response with respect to its
experience in developing industrywide consortia and
its commitment to establishing a foods industry consortium
(the "Consortium") in which Del Monte will serve as a
founding member. Del Monte's goals in establishing
the Consortium are generally to use information technology
to make Positive business impact across the supply
chain and reduce Systems development costs while
enhancing systems delivery capabilities and gaining
additional leverage from the Del Monte Transitioned
Employees. EDS represents that it will exercise its
best good faith efforts to further Del Monte's goals.
Del Monte represents that it will exercise its best
good faith efforts to cooperate with and assist EDS
at EDS' request in facilitating the establishment of
the Consortium and the fulfillment of its and Del
Monte's goals.
3.2 Initial Formation. EDS will be responsible for the
initial formation of the Consortium. Del Monte will
provide one executive level employee on a half-time
basis to participate in the initial recruitment of
Consortium members and other Consortium formation
activities. Within 30 days after the Effective Date,
designated representatives of EDS and Del Monte will
meet at Del Monte's offices to address the following
issues (the "Initial Meeting").
(a) Recruitment of Consortium members. The parties
will identify potential members with common
interests, determine who will be responsible for
12
<PAGE>
presenting the Consortium concept to potential
members and the date by which such presentations
will take place, which will be not later than 90
days following the Initial Meeting. Each member
will appoint one executive level employee to
serve on the Consortium Advisory Board (the
"Board"), which shall convene no later than June
30, 1993.
(b) Development of Charter. At the initial meeting,
EDS will present its proposal for a formal written
charter for the Consortium (the "Charter") .
The Charter will address, at a minimum, the topics
set forth at Page 144 of the Response, under the
heading, "Charter". Within 30 days after receipt
of the draft Charter, Del Monte will provide EDS
with its written comments and EDS will revise the
charter accordingly, or promptly notify Del Monte
of any modifications or exceptions to Del Monte's
comments and schedule a meeting for the resolution
of any remaining open points. The revised Charter,
reflecting the resolution of any such open points,
will be presented to the Board at its first meeting.
(c) Initial Projects. Before the Initial Meeting, EDS
and Del Monte will each develop a list of potential
Consortium projects. At the Initial Meeting, the
parties will compile and expand the list of potential
projects. Within 60 days after the Initial Meeting,
Del Monte will provide EDS with a preliminary analysis
of the relative priority of the potential projects
from Del Monte's perspective and EDS will provide Del
Monte with a preliminary estimate of the time and the
costs associated with each potential project including
identification of variable factors and the impact
of various assumptions regarding the membership of
the Consortium on such factors. The parties will
prepare a revised list of potential projects
and time and costs estimates for such projects
for presentation at the first meeting of the Board.
The Board will request further information
regarding the potential projects, as the Board
deems necessary and will select the initial project(s)
and establish the timing for commencement and
completion of such projects.
3.3 Consortium Advisory Board. The initial task of the Board
will be to institute the Charter. The rights and duties
of the Board will be specified in the Charter. Each
meeting of the Board will be attended by an attorney,
retained by the Consortium, who is experienced in antitrust
law to advise the Board in avoiding antitrust violations
during such meetings, in the selection of projects, and
in all other matters pertaining to the Consortium. The
fees and expenses of such attorney for attending meetings
of the Board will be shared by the members of the Board.
3.4 Schedule and Compensation.
(a) During the period beginning with the Effective
Date and ending June 30, 1993, the Consortium
will engage only in formation and project
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<PAGE>
planning activities and other administration
functions necessary to permit projects to begin
July 1, 1993. Such functions shall be performed
substantially in accordance with Schedule 3.4.
All formation, project planning and
administrative activities performed by EDS
including such activities performed after June
30, 1993, will be performed as part of the
Services.
(b) If EDS performs services with respect to the
Consortium other than services included in the
Services, EDS shall be compensated only for such
service by Del Monte only to the extent that Del
Monte has expressly agreed in advance in writing.
Such services shall be deemed Additional Services
and subject to the written terms and conditions
agreed to by the parties.
3.5 Royalties. EDS shall pay Del Monte royalties as follows:
(a) Royalties on Software developed for and owned by
Del Monte, or which incorporates the Del Monte
Software purchased by EDS under this Agreement or
functional elements of its code, which is sold, leased,
licensed or distributed by EDS or any subsidiary
or affiliate of EDS to third parties, or used by
EDS or any subsidiary or affiliate of EDS in the
course of providing services to third parties
shall be in amounts and payable as mutually agreed
by EDS and Del Monte; but in any event the
amount of royalties due shall be no less than
5% of the base value of the Software established (i)
at the time of the development with respect to new
Software developed for and owned by Del Monte, or
(ii) in connection with the transfer of the Del
Monte Software purchased by EDS under this
Agreement based upon an allocation of the
consideration for such Del Monte Software among
the modules thereof. The allocation of the
consideration for the Del Monte Software
purchased by EDS under this Agreement will be
completed no later than 60 days after the
Effective Date, and the allocation will be made
by EDS, subject to the review and approval of Del
Monte, which shall not be unreasonably withheld.
(b) Royalties on Consortium developed software which
is sold, leased, licensed or distributed by EDS
or any subsidiary or affiliate of EDS to third
parties, or used by EDS or any subsidiary or
affiliate of EDS in the course of providing
services to third parties shall be determined in
writing on a project by project basis, but in any
event the amount of royalties shall be no less
than 5% of the base value of the Software
established at the time of its development.
(c) For each project, the parties will specify:
(i) the base value on which the royalty will be
calculated;
(ii) what event(s) will trigger the obligation to
pay a royalty;
14
<PAGE>
(iii) how advances, guarantees, and nonmonetary
consideration received by EDS will be handled;
(iv) how discounts, sales concessions, and the
like will be handled, as well as deals in
which Consortium developed Software and
Software developed for and owned by Del
Monte or which incorporates the Del Monte
Software purchased by EDS under this
Agreement is bundled by EDS with other
products and services;
(v) how often accountings will be rendered and
payments made; and
(vi) whether EDS can credit royalties due against
services fees.
ARTICLE IV. INFORMATION TECHNOLOGY ASSETS AND
RELATED AGREEMENTS
4.1 Purchase of Information Technology Assets by EDS. On
the terms and subject to the conditions set forth in
this Article, EDS agrees to purchase from Del Monte,
and Del Monte agrees to sell, transfer and deliver to
EDS, as of the completion of the Migration to the EDS
Data Center, the equipment listed in Section 1(a) of
Schedule 1.3 (the "Del Monte-Owned Equipment") and Del
Monte Software listed in Section 1(b) of Schedule 1.3
(the "Purchased Assets"), free and clear of any liens,
pledges, mortgages, security interests, options, charges,
adverse claims or other encumbrances. Del Monte
represents and warrants to EDS that, as of the
Effective Date, each item of Purchased Assets is in
good operating condition and repair (reasonable wear
and tear excepted) and to the best of Del Monte's
knowledge conforms in all material respects to all
applicable laws, ordinances, statutes, rules and
regulations relating to its use and operation at the
Del Monte facilities at which it is being operated as
of the Effective Date. Del Monte agrees that the
representations and warranties contained in this
Section will be true and correct as of the completion
of the Migration. On the terms and subject to the
conditions set forth in this Article and in addition
to any royalties payable to Del Monte pursuant to
Section 3.5(a) with respect to the Del Monte Software,
EDS agrees to pay to Del Monte $6,000,000.00 as
consideration for the sale of the Purchased Assets
($2,000,000 for the Del Monte-Owned Equipment and
$4,000,000 for the Del Monte Software), payable within
240 days after the Effective Date, but in no event
later than June 30, 1993. Upon receipt of payment of
the consideration for the purchase of the Purchased
Assets, Del Monte agrees to execute and deliver to EDS
a bill of sale in substantially the form of Exhibit A
evidencing the purchase and sale of the Purchased
Assets. Commencing on the Effective Date and until the
completion of the Migration, Del Monte will furnish
and provide Access to the Purchased Assets to EDS, for
EDS' use at no charge, in connection with providing
the Services under this Agreement.
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<PAGE>
4.2 Related Agreements. On the terms and subject to the
conditions set forth in this Article, Del Monte agrees
to assign to EDS, as of the completion of the Migration
to the EDS Data Center, all of Del Monte's right, title
and interest in and to the agreements listed in Schedule
4.2 (the "Maintenance Agreements") relating to the
maintenance of the Purchased Equipment, and EDS agrees
to assume as of the Effective Date Del Monte's financial
obligations arising under the Maintenance Agreements and
as of the completion of the Migration all of Del Monte's
obligations arising under the Maintenance Agreements
subsequent to the assignment thereof to EDS. Del Monte
and EDS will each perform its obligations with respect
to the transfer of the Maintenance Agreements as specified
in Section IX-2 of the Response. Del Monte represents
and warrants to EDS that, as of the Effective Date, (i)
to the best of its knowledge, neither Del Monte nor the
providerof the maintenance services is in default in any
material respect under any of the Maintenance Agreements,
and (ii) Del Monte has delivered to EDS full and
complete copies of the Maintenance Agreements (including
any amendments thereto). Del Monte agrees that the
representations and warranties contained in
this Section will be true and correct as of the date
of the assignment of the Maintenance Agreements to EDS.
Del Monte agrees that it will not amend any of
the Maintenance Agreements between the Effective Date
and the date of the assignment of the Maintenance
Agreements to EDS without the prior written
consent of EDS. Del Monte and EDS agree to execute
and deliver an assignment and assumption agreement in
substantially the form of Exhibit B evidencing the
assignment and assumption of the Maintenance Agreements
contemplated by this Section.
4.3 Del Monte-Leased Equipment. During the term of this
Agreement, Del Monte will furnish to EDS, for EDS' use
at no charge, the equipment leased by Del Monte that is
listed in Section 2 of Schedule 1.3 (the "Del Monte-Leased
Equipment"). Commencing on the Effective Date through
the Migration, Del Monte will pay, and EDS will reimburse
Del Monte for, all costs and expenses with respect to the
Del Monte-Leased Equipment including without limitation
lease payments, insurance and taxes. After the Migration,
EDS will pay all costs and expenses with respect to the
Del Monte-Leased Equipment including, without limitation
lease payments, insurance and taxes. Upon the request of
EDS from time to time and as mutually agreed upon by EDS
and Del Monte, Del Monte will, to the extent permitted by
such lease agreements, terminate or assign to EDS
any such lease agreements or purchase any such Del
Monte-Leased Equipment and will immediately transfer it
to EDS. EDS will at Del Monte's option pay, or
reimburse Del Monte for, any amounts incurred in
terminating or assigning any such lease or in purchasing
any such Del Monte-Leased Equipment.
4.4 Third Party Approvals. Del Monte and EDS will each perform
its obligations as set forth in Section IX-2 of the Response
with respect to obtaining any consents, approvals or
authorizations from third parties necessary for EDS to
access, operate and use (at or from any location where
Services are to be provided) the Del Monte-Leased Equipment,
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including without limitation the payment of all costs and
expenses associated therewith. Del Monte hereby appoints
EDS as its sole agent for all matters pertaining to the
Del Monte-Leased Equipment and will promptly notify all
appropriate third parties of such appointment.
4.5 Return of Equipment. Subject to the second to last
sentence of Section 4.3, upon the expiration or
termination of this Agreement, EDS will return each
item of the Del Monte-Leased Equipment to Del Monte in
substantially the same condition it was in when
initially provided to EDS, reasonable wear and tear
excepted.
4.6 Further Assurances. Del Monte and EDS agree to execute
and deliver such other instruments and documents as
either party reasonably requests to evidence or effect
the transactions contemplated by this Article.
ARTICLE V. DEL MONTE OBLIGATIONS
5.1 Del Monte Personnel and Management.
(a) Del Monte Representative. During the term of
this Agreement, Del Monte will maintain a
designated representative (the "Del Monte
Representative") who will be the Chief
Information Officer of Del Monte and who will be
authorized to act as the primary point of contact
for EDS in dealing with Del Monte with respect to
each party's obligations under this Agreement.
(b) Transitioned Employees. Del Monte will cooperate
with EDS in the performance by EDS of its obligations
to offer employment to and hire the Transitioned
Employees. Del Monte has not and will not make any
representation, promise, or other communication,
whether written or oral, to the Transitioned Employees
regarding employment with EDS, or the employment
benefits, plans, or practices of EDS and Del Monte
will direct any questions Del Monte receives on such
issues to designated EDS representatives. Should EDS
request that Del Monte continue to make payments to
such employees after they are hired by EDS, Del Monte
will do so as an administrative convenience until
such personnel can be integrated into the EDS payroll
system. In such event, Del Monte will be acting solely
as an accommodation to EDS and EDS will reimburse Del
Monte for all wages paid and employer's contributions
made by Del Monte in connection therewith.
(c) Bonuses. Del Monte will pay to EDS an amount equal to
one month's salary as of the Effective Date of each
Transitioned Employee which amount will be payable
as bonuses to such Transitioned Employee who accepts
EDS' offer of employment and who remains an employee
of EDS 180 days after the Transitioned Employee'
employment date with EDS. EDS will provide the payment
17
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of such bonus to the individuals with payment to be made
within a mutually agreed upon period following the
completion of 180 days of EDS employment and Del Monte
will pay such amount to EDS immediately prior to the
payment by EDS to the individuals.
5.2 Del Monte Obligations. During the term of this Agreement,
to enable EDS to perform the Services, Del Monte will, on
a timely basis and at no charge to EDS, perform the support
services and discharge the obligations described in Schedule
5.2. Del Monte will, on a timely basis, comply with its
material obligations under all laws, regulations, and
ordinances governing Del Monte's business, facilities
and assets directly related to material obligations
under this Agreement. As of the Effective Date, Del
Monte has obtained all necessary and material approvals
from regulatory or other authorities with jurisdiction
over its business, facilities, and assets to enter into
and perform its obligations under this Agreement.
5.3 Del Monte Financial Obligations. In addition to
any other financial responsibilities of Del Monte
expressly provided herein, Del Monte will pay all
costs and expenses related to each item which is to be
provided by Del Monte pursuant hereto and for without
the financial responsibility has not been expressly
assumed by EDS under this Agreement including, without
limitation, the items set forth in Section 5.1 and
5.2.
ARTICLE VI. PAYMENTS TO EDS
6.1 Charges. In consideration for the performance by EDS
of the Services (except Consortium Services for which
separate or additional compensation is expressly
contemplated under Article III), Del Monte will make
payments to EDS as set forth below.
(a) Migration Charge. The Monthly Base Charge
(as defined below) includes the migration charges
set forth in Schedule 6.1 (the "Migration Charge").
(b) Monthly Base Charge. For each month following the
Effective Date, Del Monte will pay EDS the
monthly base charge set forth in Section 1 of
Schedule 6.1 (the "Monthly Base Charge"), subject
to the credits specified in Section 2 of Schedule
6.1. Each such Monthly Base Charge will be
invoiced on the fifteenth calendar day of the
month to which it relates, and the Monthly Base
Charge for any partial month will be prorated on
a per diem basis.
(c) Adjustments to Monthly Base Charge. In the event
that the processing levels rise above or fall
below Del Monte's average processing levels as of
June, 1992 as previously provided to EDS by Del
Monte in connection with the RFP (the "Baseline
Processing Levels") by more than ten percent
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(10%) over any six-month period, then EDS and Del
Monte will negotiate in good faith an appropriate
adjustment to the Monthly Base Charge to reflect
such increased or decreased processing levels.
(d) Out-of-Pocket Expenses. Del Monte will pay, or
reimburse EDS for, the reasonable out-of-pocket
expenses, including, but not limited to, travel and
travel-related expenses, incurred by EDS in
connection with the performance of its obligations
hereunder or incurred by EDS at the request
or with the approval of Del Monte. Such payments
and reimbursements will be limited to expenses
which are expressly approved by Del Monte in
advance in writing and conditioned upon the
provision of such documentation as Del Monte may
reasonably require substantiating payment by EDS.
(e) Extension Period Charges. In the event this Agreement
is extended for any period pursuant to Section 1.2,
the charges for the Services for such period
will be such charges as will be mutually
agreed upon by the parties for such period;
provided, however, that in the absence of such an
agreement the charges will be the charges in
effect during the period immediately prior to
such extension period as adjusted pursuant to
Section 6.2.
6.2 Cost of Living Adjustment.
(a) Adjustment. If the Consumer Price Index for all
Urban Consumers, U.S. City Average, for All Items
(1982-84 = 100), as published in the Bureau
of Labor Statistics of the Department of Labor
(the "CPI"), shall at any anniversary of the Effective
Date (the "Current Index") be higher or lower
than the CPI at the previous anniversary of
the Effective Date or, with respect to the first
anniversary of the Effective Date, at the Effective
Date (the "Base Index"), then, effective as of such
anniversary, all charges under this Agreement
attributable to the period following such anniversary
date (other than charges based upon then current
EDS rates), as previously adjusted pursuant to
this Section, shall be increased or decreased, as the
case may be, by the percentage that the Current
Index increased or decreased, as the case may be,
from the Base Index.
(b) Change of Index. In the event that the Bureau of
Labor Statistics should stop publishing the CPI or
should substantially change the content of
format thereof, the parties hereto shall substitute
therefor another comparable measure published by a
mutually acceptable source; provided, however, that
is such change is merely to redefine the base year
for the CPI from 1982-84 to some other year, the
parties shall continue to use the CPI but shall,
if necessary, convert either the Base Index or the
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Current Index to the same basis as the other by
multiplying such index by the appropriate conversion
factor.
6.3 Time of Payment. Any sum due EDS hereunder for which a
time for payment is not otherwise specified will be due and
payable 10 days after receipt by Del Monte of an invoice from
EDS. Any sum due Del Monte hereunder for which a time for payment
is not otherwise specified will be due and payable 30 days after
receipt by EDS of an invoice from Del Monte. Any sum due one
party hereunder that is not paid when due by the other party
shall thereafter bear interest until paid at the lesser of (i)
two percent per annum more than the prime rate established from
time to time by Citibank N.A., New York, or (ii) the maximum rate
of interest allowed by applicable law.
6.4 Taxes. Del Monte shall be responsible for the
payment of sales or use tax, if any, attributable to
the consideration for the purchase by EDS of Del
Monte-Owned Equipment and the Del Monte Software.
The parties acknowledge that as of the Effective Date, the
charges for the Services are not subject to any sales, use,
ad valorem or similar tax in California and certain other
jurisdictions. If during the term or any extension period
the charges for the rendering of the Services or any
Additional Services become subject to sales, ad valorem, or
use tax, or any tax of a similar nature in California or in
any other jurisdiction in which no such tax was in effect
as of the Effective Date, then until the fifth anniversary
of the Effective Date, Del Monte shall be responsible for
the payment of any such tax and after the fifth anniversary
of the Effective Date, Del Monte shall be responsible for
the payment of any such tax and after the fifth anniversary
of the Effective Date, Del Monte and EDS will each bear
financial responsibility for 50% of such tax. Del Monte
shall be responsible for the payment of any such tax in
effect as of the Effective Date.
In no event shall Del Monte pay or be responsible or
otherwise obligated for EDS' federal, state, or local
income taxes or any taxes in lieu of income taxes, nor
shall Del
Monte pay or be responsible or otherwise obligated (except
as specified above in this Section 6.4) for any other
federal, state, or local taxes, levies, or other exactions
of to which EDS or its property is subject, including but
not limited to, property or ad valorem, franchise,
transfer, value added, privilege, excise, occupation, or
gross receipts taxes.
In no event shall Del Monte or EDS seek from one another
tax payment or reimbursement, except as to amounts actually
remitted in accordance with the terms of this Article, and
the parties shall fully credit one another for all taxes
paid or reimbursed in excess of amounts actually due under
applicable law. In the event that one party shall obtain or
receive a refund of tax which was reimbursed by the other
party, the receiving party shall promptly forward such
refund amount to the reimbursing party. Del Monte and EDS
shall fully credit one another for all applicable
exclusions and exemptions from tax for which one party is
liable but as to which the other party is obligated to make
reimbursement, including but, not limited to, charges for
(i) the sales or transfer of tangible personal property
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used to transmit Del Monte-furnished information; (ii) the
sale or transfer of custom computer programs, including Del
Monte Software; (iii) the processing of Del Monte-furnished
information; (iv) training and other nontaxable services;
(v) pick-ups and deliveries; (vi) computer rentals; (vii)
transportation; (viii) installation; and (ix) testing.
6.5 Verification of Costs. The terms set forth in this
Agreement are based upon information furnished by Del
Monte to EDS in the RFP and this Agreement. Del Monte
believes that such information is accurate and
complete. If any such information should prove to be
inaccurate or incomplete in any material respect, the
parties may exercise the procedures established in
Section 9.3 and 9.4 for appropriate adjustments to the
provisions hereof.
6.6 Supporting Documentation. Upon the reasonable
request of Del Monte, EDS shall make available to Del
Monte for review the documentation which supports EDS'
charges and expenses hereunder. Such supporting
documentation may include, without limitation,
computer resource usage report, time sheets and
receipts. EDS shall make such supporting documentation
available for review by Del Monte and/or Del Monte's
independent auditors, provided that such independent
auditors execute an agreement with EDS which restricts
the independent auditors from disclosing such
information to third parties or using such information
in any manner other than in connection with their
review on behalf of Del Monte.
ARTICLE VII. PROPRIETARY RIGHTS AND SOFTWARE
7.1 Vendor Software. As of the Effective Date, subject to
the terms and conditions of this Agreement, Del Monte will
transfer to EDS all of its rights to Access the Vendor Software
licensed to Del Monte, except the Vendor Software identified in
Schedule 7.1, to which EDS will not have access. Prior to
completion of the Migration, Del Monte will operate and maintain
the Vendor Software identified in Section 1 of Schedule 7.1 and
provide to EDS the Del Monte data being processed by such Vendor
Software for conversion of such data for processing on substitute
Software products and Del Monte will deinstall such Vendor
Software prior to the completion of the Migration. Until the
completion of the Migration, Del Monte will continue to operate
and maintain the Vendor Software identified in Section 2 of
Schedule 7.1, which Vendor Software will not be migrated to the
EDS Data Center. Del Monte and EDS will each perform its
obligations as specified in Section IX-2 of the Response to
obtain any consents from third parties necessary for the transfer
of all of Del Monte's rights to access the Vendor Software except
the Vendor Software identified in Schedule 7.1. The Vendor
Software licensed to Del Monte so transferred to EDS will be made
available to EDS in such form and on such media as it exists on
the Effective Date, together with appropriate documentation and
other materials. Nothing contained in this Agreement will require
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EDS or Del Monte to violate the proprietary rights of any third
party in any Software. In the event that Del Monte is unable to
transfer to EDS such rights to Access the Vendor Software
licensed to Del Monte, except the Vendor Software identified in
Schedule 7.1, then Del Monte and EDS will negotiate in good faith
to agree upon the terms of mutually agreeable alternatives to
enable EDS to provide the Services hereunder. Until the parties
have agreed upon the terms of such alternatives, EDS will not be
required to perform any of the Services which require EDS to
Access such Vendor Software the rights to which Del Monte is
unable to transfer to EDS.
7.2 EDS Software. EDS will remain EDS' property, except that
EDS shall grant to Del Monte a perpetual, nontransferable (except
for Permitted Transactions or Change of Control in accordance
with Section 12.2), nonexclusive, royalty-free license to use,
effective as of the Expiration Date or the date of termination as
the case may be, the application software programs (including
existing documentation) of any EDS Software, including any Del
Monte Software acquired by EDS under this Agreement, then being
used by EDS in rendering services to Del Monte (the "Licensed
Programs"), subject to Del Monte and EDS entering into an
agreement, in form and substance reasonably satisfactory to EDS
and Del Monte, containing such terms and conditions as may be
appropriate including, without limitation, the following terms
and conditions to protect the confidentiality of the Licensed
Programs:
(a) Operators. Except With the prior written consent of
EDS or to the extent required by natural disaster or
similar emergency, the Licensed Programs will not be
operated, directly or indirectly, (i) by persons other
than bona fide employees of Del Monte or independent
contractors of Del Monte under its direct supervision
and control (and who are not outsourcing competitors
of EDS) with whom Del Monte has written confidentiality
agreements protecting the confidentiality of the
Licensed Programs or (ii) on equipment that is not
under the control of Del Monte.
(b) Del Monte Work. Except with the prior written consent
of EDS, the Licensed Programs will only be used for
processing activities within the scope of Del Monte's
normal course of business as of the Expiration Date.
Del Monte will not use the Licensed Programs to
perform data processing operations on behalf of any
Del Monte customers or make the Licensed Programs
available for any Del Monte customers' use. As used
in this Section 7.1(b), the term "Del Monte work"
includes the data of Del Monte and its subsidiaries.
(c) Confidentiality. Except as otherwise provided in this
Agreement, Del Monte will keep the Licensed Programs
confidential, will not at any time allow the Licensed
Programs, or any of their various components or any
modifications, to be disclosed to any party, or sold,
licensed, assigned, leased or commercially exploited
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or marketed in any way, with or without charge, by
Del Monte or its employees or agents and, except to
the extent required for normal operation of the
Licensed Programs as permitted in this Agreement in
the day to day business operations of Del Monte, Del
Monte will not permit the Licensed Programs to be copied
or reproduced, in whole or in part, by any party at
any time. Notwithstanding the foregoing, the exception
in Section 8.2(a) will not apply with respect to
any Del Monte Software which is included in the Licensed
Programs.
(d) Irreparable Harm. Del Monte acknowledges that
the Licensed Programs are the valuable property
of EDS, that violation in any material respect of
any provision of this Section may cause EDS
irreparable injury for which it would have no
adequate remedy at law and that EDS shall be
entitled to seek preliminary and other injunctive
relief against any such violation. Such
injunctive relief shall be in addition to, and in
no way in limitation of, any and all other
remedies or rights which EDS shall have at law or
in equity.
If the parties fail to enter into an agreement by the Expiration
Date or the effective date of termination (as the case may be),
the terms and conditions in this Section 7.2 shall be deemed the
terms and conditions of the license of the Licensed Programs.
7.3 EDS Development Tools. EDS retains all right, title and
interest in and to any and all Software, software development
tools, know how, methodologies, processes, technologies or
algorithms used in providing the Services and the Additional
Services which are based upon trade secrets or proprietary
information of EDS or otherwise owned or licensed by EDS.
Notwithstanding the foregoing, the rights of Del Monte will be no
less than those of any member of the general public with respect
to any such Software, software development tools, know how,
methodologies, processes, technologies or algorithms used by EDS
which are or become part of the public domain.
ARTICLE VIII. DATA, CONFIDENTIALITY AND AUDIT RIGHTS
8.1 Del Monte's Data. Information relating to Del Monte or
its customers contained in Del Monte's data files ("Del Monte's
Data") is the exclusive property of Del Monte. EDS is authorized
to have access to and make use of Del Monte's Data as appropriate
for the performance by EDS of its obligations under this
Agreement. Upon the termination or expiration of this Agreement,
EDS will, at Del Monte's written request within a reasonable time
and expense which will be limited to reimbursement of direct,
out-of-pocket expenses reasonably incurred by EDS, return to Del
Monte all of Del Monte's Data in EDS' then existing machine-
readable format and media. EDS will not use Del Monte's Data for
any purpose other than providing the Services or Additional
Services.
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8.2 Confidentiality. Except as otherwise provided Agreement,
EDS and Del Monte each agree that all information communicated to
it by the other or the other's affiliates, whether before or
after the Effective Date, including without limitation the terms
of this Agreement, will be received in strict confidence, will be
used only for purposes of this Agreement, and will not be
disclosed by the recipient party, its agents, subcontractors or
employees without the prior written consent of the other party.
Each party agrees to use the same means it uses to protect its
own confidential information, but in any event not less than
reasonable means, to prevent the disclosure of such information
to outside parties. However, neither party shall be prevented
from disclosing information which belongs to such party or is (a)
already known by the recipient party without an obligation of
confidentiality other than pursuant to this Agreement; (b)
publicly known or becomes publicly known through no unauthorized
act of the recipient party; (c) rightfully received from a third
party; (d) independently developed without use of the other
party's confidential information; (e) disclosed without similar
restrictions to a third party by the party owning the
confidential information; (f) approved by the other party for
disclosure; or (g) required to be disclosed pursuant to a
requirement of a governmental agency or law if the disclosing
party provides the other party with written notice of this
requirement prior to disclosure. The provisions of this Section
will survive the expiration or termination of this Agreement for
any reason.
8.3 Security. EDS will comply with the written security
procedures that are in effect at the Del Monte Data Center on the
Effective Date as reasonably required by Del Monte. EDS will also
institute such additional security procedures at the Del Monte
Data Center as Del Monte reasonably requests as an Additional
Service. Del Monte will provide all necessary security personnel
and related equipment at the Del Monte Data Center. Except as
provided in Sections 8.2 and 8.4, without the prior consent of
EDS, no employee, agent, contractor or invitee of Del Monte will
operate or assist in operating equipment or Software to be used
by EDS under this Agreement.
8.4 Audit Rights. EDS will provide auditors and inspectors
that Del Monte designates in writing with reasonable access to
the EDS Data Center for the limited purpose of performing audits
or inspections of Del Monte's business. EDS will provide
reasonable assistance of a routine nature to such auditors and
inspectors. EDS will not be required to provide such auditors and
inspectors access to data of EDS customers other than Del Monte.
Del Monte will cause any auditors or inspectors which are not Del
Monte employees to comply with the confidentiality obligations of
Del Monte under this Agreement with respect to confidential
information of EDS in connection with any such audit or
inspection.
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ARTICLE IX. DISPUTE RESOLUTION
9.1 Status Reviews. EDS will provide regular status
reports to Del Monte on system operations that include
production system availability and performance and
resource utilization. The EDS Account Director will
meet on a mutually agreeable schedule with the Del
Monte Representative to review such status reports and
to discuss service level performance, to identify and
attempt to resolve problems and to determine user
satisfaction.
9.2 Annual Quality Review. At least annually, EDS and Del Monte
will meet to review the performance of their obligations under
this Agreement.
9.3 Performance Review. During the course of the long-term
relationship provided for in this Agreement, disputes,
controversies or claims may arise between the parties. To
minimize the expense to and impact on each party of formally
resolving such disputes, controversies and claims, the parties
will meet regularly to review the performance of each party of
its obligations under this Agreement. If the parties are unable
to resolve a dispute controversy or claim through this
performance review process, upon the written request of either
party, each party will appoint a representative whose task it
will be to meet for the purpose of resolving the dispute,
controversy or claim. Such officers will discuss the dispute,
controversy or claim and negotiate a resolution in good faith,
without the necessity of any formal proceeding relating thereto.
If such officers do not achieve a mutually satisfactory
resolution of the dispute, controversy or claim within 30 days
after appointment of the representatives, either party may, by
giving notice to the other, elect to proceed with the disputes
resolution procedures set forth in Section 9.4 below.
9.4 Dispute Resolution.
(a) Generally. All disputes that arise between Del Monte
and EDS that cannot be settled through negotiation
pursuant to Section 9.3 shall be resolved in
the following manner: First, through
participation in a non-binding mini-
trial, as more fully described in Section
9.4(b), below, and, if such mini-
trial is unsuccessful in resolving
the dispute, then; Second, by the
mandatory, simultaneous exchange of
written Final Offers followed by a
final pre-arbitration meeting of
Principals, as more fully set forth in
Section 9.4(c), below, and if such Final
Offers and pre-arbitration meeting
is unsuccessful in resolving the dispute,
then; Third, by arbitration in
accordance with Section 9.4(d).
(b) Mini-Trial Within thirty (30) days of a written
demand by Del Monte or EDS, a mini-trial
will be held at an agreed-upon location.
The mini-trial shall take place in accordance
with such rules and procedures as the parties
agree upon in advance. While non-binding,
the purpose of this mini-trial
will be to inform the senior business
management of Del Monte and EDS
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(referred to in this Article as
"Principals" and more fully described in
Section 9.4(e), below) of the positions
of each of the parties and to require
each such party to endeavor to fully
set forth its position regarding
entitlement and quantum. In addition,
a neutral advisor, agreed to in
advance by the parties, may attend the
mini-trial, not as an active
participant, but solely for the
purpose of commenting privately to the
Principals regarding the relative
strengths and weaknesses of each party's
position. Failure to agree upon a
neutral advisor shall not delay
commencement of the mini-trial.
Presentations at the mini-trial will be
informal; rules of evidence will not
apply. Attorneys may or may not
participate on behalf of a party, at
such party's option. Principals and the
attorneys for the Principals may
question witnesses. Unless otherwise
agreed by the Principals, the mini-trial
proceedings shall take no longer
than two (2) days, held consecutively.
At the conclusion of the
proceedings, the Principals shall meet
and attempt to resolve the dispute.
Each Principal may meet separately
with the neutral advisor or the
Principals may invite the neutral advisor
to confer with them jointly. If
the Principals cannot resolve the
dispute within seven (7) days following
conclusion of the proceedings, the
mini-trial process shall be deemed
terminated. No transcript or recording
shall be made of the mini-trial
proceedings, and all statements, materials,
and presentations in connection
therewith shall be treated as confidential
and inadmissible as evidence,
even for purposes of impeachment, in
any pending or future court action
directly or indirectly involving these
parties or this dispute, provided,
however, that evidence which would
otherwise be admissible in such court
action shall not be rendered inadmissible
as a result of its use at the mini-
trial. The neutral advisor, if any,
shall be disqualified as a witness,
consultant, or expert for either party in
this or any other dispute arising out
of or relating to this Agreement.
(c) Final Offers Within thirty (30) days
after a written demand for Final
Offer by Del Monte or EDS, Del Monte
and EDS shall each present to an
escrow agent a written Final Offer.
Promptly after receipt of all Final
Offers, the escrow agent shall
simultaneously deliver a copy of each Final
Offer to the other party (the escrow
agent will retain the original of each
Final Offer) at which time the Principals
will meet in an attempt to resolve
the dispute. Unless the Principals
agree otherwise, if the matter is not
resolved within ten (10) days of the
exchange of Final Offers, the Final
Offer procedure shall be deemed
terminated. The written Final Offers and
all negotiations relating to them shall
be treated as confidential, and,
except as provided below, shall be
inadmissible as evidence, even for
purposes of impeachment, in any pending
or future court action directly or
indirectly involving these parties
or this dispute, provided, however, that
evidence which would otherwise be
admissible as a result of its use during
negotiations. At any time after
termination of the Final Offer procedure,
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Del Monte or EDS may commence an
arbitration action in accordance
with Section 9.4(d).
(d) Arbitration
(i) Procedures. Any dispute, controversy or
claim arising out of or related to this
Agreement, or the creation, validity,
interpretation, breach or termination of
this Agreement, that the parties are unable
to resolve through informal discussions or
negotiations pursuant to Section 9.2 or
pursuant to Sections 9.3(b) or (c), will be
submitted to binding arbitration using the
following procedure:
(A) The arbitration will be held in San
Francisco, California, before a panel
of three arbitrators. Either party may
demand arbitration in writing, by
serving on the other party a statement
of the dispute, controversy or claim,
and the facts relating or giving rise
thereto, in reasonable detail, and the
name of the arbitrator selected by it.
(B) Within 30 days after such demand, the
other party will name its arbitrator,
and the two arbitrators named by the
parties will, within 60 days after such
demand, select the third arbitrator.
(C) The arbitration will be governed by the
Commercial Arbitration Rules of the American
Arbitration Association (the "AAA" except as
expressly provided in this Section. However,
the arbitration will be administered by any
organization mutually agreed upon by the parties.
If the parties are unable to agree upon the
organization to administer the arbitration,
it will be administered by the AAA. The
arbitrators may not amend or disregard any
provision of this Section.
(D) The arbitrators will allow such
discovery as is appropriate to the
purposes or arbitration in
accomplishing fair, speedy and cost
effective resolution of disputes. The
arbitrators will reference the rules of
evidence of the Federal Rules of Civil
Procedure then in effect in setting the
scope and direction of such discovery.
The arbitrators will not be required to
make findings of fact or render
opinions of law.
(E) The decision of and award rendered by
the arbitrators will be final and
binding on the parties. Judgment on the
award may be entered in and enforced by
any court of competent jurisdiction.
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(ii) Enforcement. Other than those matters
involving injunctive relief as a remedy, or
any action necessary to enforce the award of the
arbitrators, the provisions of this Section
are a complete defense to any suit, action
or other proceeding instituted in any court
or before any administrative tribunal with
respect to any dispute, controversy or claim
arising out of or related to this Agreement
or the creation, validity, interpretation,
breach or termination of this Agreement. The
provisions of this Section will survive the
expiration or termination of this Agreement
for any reason. Nothing in this Section
prevents the parties from exercising the
termination rights set forth in this
Agreement.
(iii) Services during Arbitration. Unless EDS is
bringing an action under this Section for
nonpayment of undisputed amounts by Del
Monte for failure of Del Monte to pay any
disputed amount into escrow as provided in
Section 10.2, EDS will continue to provide
the Services, and Del Monte shall continue
to make payments to EDS, in accordance with
this Agreement during the arbitration
proceedings.
(e) Principal. For purposes of this Article, the term
"Principal" shall have the following meanings: (i) as
to EDS, "Principal" shall mean the President of
the Manufacturing & Distribution Services Division
of EDS of his successor or anyone of senior rank
within EDS' organization), who shall be fully vested
by EDS with the authority to resolve the dispute in
question, (ii) as to Del Monte, "Principal" shall mean
the Chief Financial Officer of Del Monte or his successor
for anyone of senior rank within Del Monte's organization),
who shall be fully vested by Del Monte with the
authority to resolve the dispute in question.
ARTICLE X. TERMINATION
10.1 Termination for Cause. If either party materially
defaults in the performance of any of its obligations
(except for a default by Del Monte in its obligation
to pay undisputed amount to EDS, which will be subject
to Section 10.2) under this Agreement, which default
shall not be substantially cured within 60 days after
written notice is given to the defaulting party
specifying the default, or, with respect to any
default which cannot reasonably be cured within 60
days, if the defaulting party fails to proceed within
60 days to commence curing said default and thereafter
to proceed with all due diligence to substantially
cure that default, then the party not in default, by
giving written notice to the defaulting party, may
terminate this Agreement as of a date specified in the
notice of termination.
10.2 Termination for Nonpayment. If Del Monte defaults in
the payment when due of any undisputed amount due to
EDS or fails to pay any disputed amount into escrow as
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provided below and does not cure such default within
ten days after being given written notice of such
default, then EDS, by giving written notice thereof to
Del Monte, may terminate this Agreement as of a date
specified in such notice of termination. Del Monte
will pay any disputed amounts into an interest-bearing
escrow account, structured by agreement of the
parties, until the dispute with respect to such amount
is resolved pursuant to Section 9.3 or 9.4 or by
arbitration.
10.3 Termination for Insolvency. Subject to the provisions
of Title II, United States Code, if either party
becomes or is declared insolvent or bankrupt, is the
subject of any proceedings relating to its
liquidation, insolvency or for the appointment of a
receiver or similar officer for it and any such
proceeding continues undismissed for a period of (60)
days, then the other party, by giving written notice
to such party, may terminate this Agreement as of a
date specified in such notice of termination.
10.4 Termination Without Cause. Del Monte may terminate
this Agreement effective as of the second or any
subsequent anniversary of the Effective Date by
notifying EDS in writing of its intention to terminate
this Agreement at least twelve months prior to the
third or such subsequent anniversary of the Effective
Date, as long as Del Monte is not then and does not
become in default under any of the terms of this
Agreement prior to the termination date specified;
provided, however, that Del Monte pays to EDS the
termination fee set forth in Schedule 10.4 (the
"Termination Fee") on or before such specified
termination date. The parties intend that the charges
payable to EDS for such a termination will be limited
to the Termination Fee and any amounts otherwise
payable to EDS under this Agreement for Services
performed through the specified termination date. The
Termination Fee will be prorated in the event of
termination noticed on any date other than the second
or any subsequent anniversary of the Effective Date.
Payment of the Termination Fee by Del Monte as
provided in this Article is not intended as a
fortfeiture or penalty, but instead is intended to
compensate EDS for the damages it will suffer as a
result of such termination without cause by Del Monte.
In agreeing to such termination fee, Del Monte
acknowledges that the amount of EDS' actual damages by
reason of Del Monte's termination will be substantial
but would be extremely difficult to ascertain, and the
amount provided for herein is a reasonable estimate of
such damages. In addition, Del Monte and EDS desire to
have a limitation put on the liability of Del Monte to
EDS in the event of termination without cause.
Accordingly, the parties have examined and negotiated
the concept of the termination fee set forth herein,
with the amount thereof having been the subject of
specific agreement between the parties. By their
initials hereto, EDS and Del Monte specifically
acknowledge their acceptance and approval of the
foregoing termination fee provision.
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ACKNOWLEDGMENT AS TO ACCEPTANCE OF THE
IMMEDIATELY PRECEDING TERMINATION FEE
PROVISION
/s/ David L. Meyers /s/ Doug Hoover
- ----------------------- ----------------------
Del Monte EDS
10.5 Transition Services upon Termination.
(a) Services. In connection with the termination of this
Agreement, EDS will comply with Del Monte's reasonable
directions to cause the orderly transition and migration
to Del Monte from EDS of all Services and Additional
Services then being performed by EDS (the "Termination
Transition"). Del Monte, its employees, and agents will
cooperate in good faith with EDS in connection with EDS'
obligations under this Section and Del Monte will perform
its obligations under the Transition Plan (as defined in
this Section). By no later than the Expiration Date or
the effective date of termination, as the case may be,
EDS will perform the following obligations and in addition
such other obligations as may be contained in the
Transition Plan. In the event of a termination of this
Agreement, the party giving notice to the other party of
termination will take into account the following
obligations in order to determine a reasonable period
of time between the date of the notice of termination and
the effective date of such termination in which such
obligations may be reasonably performed.
(i) EDS and Del Monte will work together to
develop a transition plan (the "Transition
Plan") setting forth the respective tasks to
be accomplished by each party in connection
with the orderly transition and a schedule
pursuant to which the tasks are to be
completed.
(ii) EDS will, upon Del Monte's request, provide
Del Monte with reasonably detailed
specifications for hardware or other
equipment which Del Monte will require to
properly perform the services and procedures
previously performed by EDS.
(iii) EDS will reasonably assist Del Monte in the
installation of any such hardware or
equipment procured by Del Monte in
connection with the transition.
(iv) EDS will deliver to Del Monte and
install on Del Monte's hardware and
equipment the Licensed Programs which are
subject to a mutually agreeable license
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agreement and will assist in the loading of
Del Monte's data in connection with the
installation of such Licensed Programs.
(v) EDS will reasonably assist Del Monte, at Del
Monte's expense, in Del Monte's acquisition
of any necessary rights to access and use
any Vendor Software and documentation then
being used by EDS in connection with the
processing of Del Monte's information
pursuant to this Agreement.
(vi) EDS will deliver to Del Monte (a) copies of
existing documentation relating to any Del
Monte Software delivered or Licensed Program
licensed to Del Monte pursuant to paragraphs
(iv) and (v) of this Section, and (b) such
documentation for Vendor Software used at
the time of termination of this Agreement by
EDS to provide the Services which is
available to EDS and which EDS is permitted
to furnish to Del Monte.
(vii) EDS will provide appropriate training for
the Del Monte employees who will be assuming
responsibility for operation of the Software
following the Transition Termination.
(b) Charges. For so long as this Agreement remains in effect
and during the Termination Transition, Del Monte will pay
EDS the charges set forth in Article VI. If consistent
with the Transition Plan, Del Monte requires and
authorizes in advance in writing EDS resource in excess
of resources otherwise provided by EDS, Del Monte will
pay EDS for such additional resources at EDS then
current standard commercial rates at such times as
the parties agree. If this Agreement is terminated
by EDS pursuant to Section 10.2 or 10.3, then Del Monte
will pay EDS on this first day of each month and as a
condition to EDS' obligation to provide termination
assistance to Del Monte during that month, an amount
equal to the charges set forth in Article VI and EDS'
reasonable estimate of the total of any charges for
EDS resources in excess of the resources otherwise
provided by EDS which Del Monte has authorized in advance
in writing.
10.6 Survival of Provisions. Notwithstanding any provisions
of this Agreement to the contrary and without limiting
the survivability of any other provision of this
Agreement that, by its terms or operation of law,
survives the expiration or earlier termination of this
Agreement, the provisions of Articles IX and XI
(except Section 10.1), Sections 3.5, 4.5, 6.1, 6.3,
6.4, 7.2 (if the parties fail to enter into an
agreement thereunder for the license of the Licensed
Programs), 7.3, 8.1, 8.2, 10.2, 10.4, 10.5, 12.9,
12.12, 12.14 and this Section 10.6 will survive the
expiration or earlier termination of this Agreement.
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ARTICLE XI. WARRANTIES, INDEMNITIES AND LIABILITY
11.1 Warranties.
(a) EDS Warranties. EDS represents and warrants that:
(i) To the extent that any third party owns or
controls any rights in or to information, data,
software, material or any other tangible or
intangible property or elements used or
incorporated in any works created, published or
delivered by EDS or otherwise resulting from
EDS' performance of its obligations under this
Agreement, EDS has obtained and will maintain
throughout the term (and any renewal) consents,
licenses, and permissions sufficient to enable
Del Monte to fully exercise and utilize all rights,
results and proceeds to which it is entitled under
this Agreement.
(ii) EDS will perform the Services and meet the
specifications and service level objectives
set forth in this Agreement including
without limitation the Schedules and
Sections III, V and VIII of the Response.
(iii) In all cases where EDS has not committed to
specific performance standard, EDS will use
reasonable care in providing the Services.
(iv) EDS shall comply with the terms of all
agreements assigned to it in connection with
the Agreement, including without limitation,
the Maintenance Agreements, license
agreements for Vendor Software, and any
equipment leases for Del Monte Leased
Equipment actually assigned to EDS.
ARTICLE XI. WARRANTIES, INDEMNITIES AND LIABILITY
(b) General Disclaimer. While EDS is primarily providing
services to Del Monte under this Agreement, EDS may
from time to time provide certain hardware, Software
and other items as an incidental part of the Services.
With the exception of manufacturers' or licensors'
Warranties which EDS is able to pass through for
Del Monte's benefit, such hardware, Software
and other items are provided on an "AS IS" basis
without warranty. EXCEPT AS SPECIFICALLY STATED IN
THIS AGREEMENT, EDS MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY MATTER,
INCLUDING THE MERCHANTABILITY, SUITABILITY,
ORIGINALITY, FITNESS FOR A PARTICULAR USE OR
PURPOSE, OR RESULTS TO BE DERIVED FROM THE USE OF
ANY HARDWARE, SOFTWARE OR OTHER ITEMS PROVIDED
UNDER THIS AGREEMENT.
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(c) Telecommunications Services Disclaimer. EDS
is acting only as Del Monte's agent in procuring
and managing any Telecommunications Services
supplied by or through any third party vendor. All
Telecommunications Services supplied by or through
any third party vendor are supplied "AS IS" by EDS.
EDS MAKES NO REPRESENTATIONS OR WARRANTIES, EITHER
EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, FITNESS
FOR A PARTICULAR USE OR PURPOSE, DESIGN, ONDITION,
QUALITY, CAPACITY, MATERIAL, OR WORKMANSHIP, OF
ANY OF THE TELECOMMUNICATIONS SERVICES OR AS TO
ANY PATENT OR COPYRIGHT INFRINGEMENT OR THE
LIKE, OR AS TO ANY OF THE RESULTS TO BE DERIVED
FROM THE USE OF ANY OF THE TELECOMMUNICATIONS
SERVICES. EDS disclaims any and all liability
resulting from or arising out of any of the
Telecommunications Services supplied by or through any
third party vendor or any acts or omissions of
the applicable third party vendor. In the event of
any outage, interruption, failure, cable out, degradation
or other loss of the Telecommunications Services
supplied by or through any third party vendor ("Service
Interruption"), Del Monte shall notify EDS. EDS shall
then notify the applicable third party vendor
of the Service Interruption. Resolution of the
Service Interruption shall be handled in accordance
with the applicable tariff or agreement respecting
the Telecommunications Service which is the subject
of such Service Interruption.
11.2 Cross Indemnification. EDS and Del Monte each agree to
indemnify, defend and hold harmless the other from any
and all damages, liabilities, costs and expenses,
including reasonable attorneys' fees and expenses,
arising out of, under or in connection with any claim,
demand, charge, action, cause of action, or other
proceeding:
(a) for rent or utilities at any location where the
indemnitor is financially responsible under this
Agreement for such rent utilities; or
(b) resulting from an act or omission of the
indemnitor in its capacity as an employer of a
person and arising out of or relating to (a)
federal, state or other laws or regulations for
the protection of persons who are members of a
protected class or category of persons, (b)
sexual discrimination or harassment, (c) work
related injury or death, (d) accrued employee
benefits not expressly assumed by the indemnitee,
and (e) any other aspect of the employment
relationship or its termination (including claims
for breach of an express or implied contract of
employment) and which, in all such cases, arose
when the person asserting the claim, demand,
charge, action, cause of action or other
proceeding was an employee of the indemnitor.
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EDS and Del Monte each agree to insure its own real
and personal property, including equipment for which
it is the lessee; and each agree to waive its
insurer's rights of subrogation with regard to such
property except with respect to (i) equipment for
which it is the lessee but which equipment is in the
care, custody and control of the other party, and (ii)
personal property owned by it but which is in the
care, custody and control of the other party and the
damage or loss of which equipment or personal property
is caused by the acts or omissions of the other party.
In those cases specified in the immediately preceding
sentence in which the property insurer's rights of
subrogation have not been waived, EDS and Del Monte
each agree to indemnify, defend and hold harmless the
other from any and all damages, liabilities, costs and
expenses, including reasonable attorneys' fees and
expenses, arising out of, under or in connection with
any claim, demand, charge, action, cause of action, or
other proceeding arising out of the damage, loss or
destruction of any such equipment or personal property
of the indemnitor which is caused by the acts or
omissions of the indemnitor.
11.3 Intellectual Property Indemnification. EDS and Del
Monte each agree to defend the other against any
action to the extent that such action is based on a
claim that Software or Confidential Information
provided or sold by the indemnitor under this
Agreement, or any part thereof, (i) infringes a
copyright perfected under United States statute, (ii)
infringes a patent granted under United States law or
(iii) constitutes an unlawful disclosure, use, or
misappropriation of another party's trade secret. The
indemnitor will bear the expense of such defense and
pay any damages and attorneys' fees which are
attributable to such claim finally awarded by a court
of competent jurisdiction. Neither EDS nor Del Monte
shall be liable to the other for claims of indirect or
contributory infringement. If the Software or
Confidential Information becomes the subject of a
claim under this Section, or in the indemnitor's
opinion is likely to become the subject of such a
claim, then the indemnitor may, at its option, (a)
replace or modify the Software or Confidential
Information to make it noninfringing or cure any
claimed misuse of another's trade secret, or (b)
procure for the indemnitee the right to continue using
the Software or Confidential Information pursuant to
this Agreement, or (c) replace the Software with
reasonably equivalent Software which is noninfringing
or which is free of claimed misuse of another's trade
secret. Any costs associated with implementing any of
the above alternatives shall be borne by the
indemnitor.
11.4 Indemnification by EDS. EDS agrees to defend,
indemnify, and hold Del Monte harmless from any and
all claims, losses, damages, liabilities, costs and
expenses (including without limitation attorneys'
fees) of any kind and character suffered or incurred
by Del Monte (i) by reason of, arising from, or in any
manner connected with EDS' failure to comply with any
third party agreement assigned to EDS under this
Agreement, including, without limitation, any license
agreement, equipment lease, or Maintenance Agreement,
and (ii) by reason of any violation of law by EDS
arising from performance of the Services.
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11.5 Indemnification of EDS for Certain Third Party Claims.
Without limiting EDS' liability to Del Monte for
nonperformance under this Agreement, each of the
parties acknowledge and agree that by entering into
and performing its obligations under this Agreement,
EDS will not assume and should not be exposed to the
business and operational risks associated with Del
Monte's business. Therefore Del Monte agrees to
indemnify, defend and hold EDS harmless, from any and
all damages, liabilities, costs, and expenses,
including without limitation, reasonable attorneys'
fees and expenses, arising out of, under or in
connection with any claim, demand, charge, action,
cause of action or other proceeding relating to the
conduct of Del Monte's business, including without
limitation, the acquisition and use by Del Monte of
the products, Services and Additional Services to be
provided by EDS under this Agreement.
11.6 Equipment and Related Agreement Indemnification. EDS
and Del Monte each agree to indemnify, defend and hold
harmless the other from any and all damages,
liabilities, costs and expenses, including reasonable
attorneys' fees and expenses, arising out of, under,
or in connection with any claim, demand, charge,
action, or other proceeding resulting from any breach
by the indemnitor of its obligations, representations
or warranties set forth in Article IV.
11.7 Telecommunications Indemnification. EDS shall not be
responsible for protection of transmission facilities
except those located on EDS' premises and equipment
located on Del Monte's premises from unauthorized
access. Del Monte agrees to indemnify, defend and hold
harmless EDS from any and all damages, liabilities,
costs and expenses, including reasonable attorneys'
fees and expenses, arising out of, under, or in
connection with any claim, demand, charge, action,
cause of action or other proceeding asserting that (i)
any information, data or message transmitted by Del
Monte or its users over the network which is managed
or provided by EDS as part of the Telecommunications
Services constitutes libel, slander, invasion of
privacy, infringement of copyright, (ii) use of the
Telecommunications Services other than as permitted
hereunder, whether caused by the negligence or willful
acts of the officers, employees, agents or contractors
of Del Monte or its users in the use of the
Telecommunications Services or (iii) the abuse or
unauthorized or fraudulent use of the
Telecommunications Services.
11.8 Indemnification of Del Monte for Certain Employee
Benefits. EDS agrees to indemnify, defend and hold
harmless Del Monte from any and all damages,
liabilities, costs and expenses, including reasonable
attorneys' fees and costs arising out of, under or in
connection with any claim, demand, charge, action,
cause of action or other proceeding related to the
provision of employee benefits to any Transitioned
Employee subsequent to the employment effective date
specified on Schedule 2.1(b) for each such Employee or
such other date upon which such Transitioned Employee
accepts employment and becomes an employee of EDS. EDS
further agrees to indemnify, defend and hold harmless
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Del Monte from any and all damages, liabilities, costs
and expenses, including reasonable attorneys' fees and
costs arising out of, under or in connection with any
claim, demand, charge, action, cause of action or
other proceeding related to the provision of employee
benefits to any member of the Del Monte Management
Cadre, if any, who accepts employment with EDS. The
claims for which EDS agrees to provide indemnification
pursuant to this Section include, but are not limited
to, all claims for separation package, vacation pay,
health care benefits and any other employment benefit
claimed by any Transitioned Employee or member of the
Del Monte Management Cadre resulting from this
Agreement or arising out of any act or representation
by EDS to such Transcribed Employee or member of the
Del Monte Management Cadre with respect to transition
from employment with Del Monte to employment with EDS
under this Agreement.
11.9 Indemnification Procedures.
(a) Notice and Control. The indemnification
obligations set forth in this Article shall not
apply unless the party claiming indemnification:
(i) notifies the other promptly in writing of
any matters in respect of which the
indemnity may apply and of which the
notifying party has knowledge, in order to
allow the indemnitor the opportunity to
investigate and defend the matter; provided,
however, that the failure to so notify shall
only relieve the indemnitor of its
obligations under this Article XI if and to
the extent that the indemnitor is prejudiced
thereby; and
(ii) gives the other party full opportunity to
control the response thereto and the defense
thereof, including, without limitation, any
agreement relating to the settlement
thereof; provided, however, that the
indemnitee will have the right to
participate in any legal proceeding to
contest and defend a claim for indemnification
involving a third party and to be
represented by legal counsel of its
choosing, all at the indemnitee's cost and
expense.
(b) Settlement. The indemnitor shall not be
responsible for any settlement or compromise made
without its consent provided that the indemnitor
is not in material breach of its indemnity
obligations hereunder. The indemnitee agrees to
cooperate in good faith with the indemnitor at
the request and expense of the indemnitor.
11.10 Limitation of Liability.
(a) Of EDS. In the event EDS shall be held liable
to Del Monte for any matter arising out of, under,
or in connection with this Agreement, whether based
on an action or claim in contract, equity, negligence,
intended conduct, tort or otherwise, the amount of
damages recoverable against EDS for all events, acts
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or omissions shall not exceed in the aggregate an
amount equal to the lesser of (i) the total amount of
the Monthly Base Charges paid by Del Monte to EDS
under this Agreement during the six (6) month period
immediately preceding the date that such claim is
brought or (ii) $6,000,000. In no event will the
measure of damages payable by EDS include, nor will
EDS be liable for, any amounts for loss of income,
profit or savings or indirect, incidental, consequential,
or punitive damages or any party, including third parties.
(b) Of Del Monte. In the event EDS suffers any damages
or losses as a result of Del Monte's acts or omissions
in connection with this Agreement, whether such damages
or losses are caused by breach of contract, negligence,
fault or other breach of duty, or by any other cause
whatever, and regardless of the form or action, whether
in equity, contract, tort or otherwise, EDS may recover
the amount of damages that are proven and allowed by law,
up to a maximum equal to the lesser of (i) the total
charges paid by Del Monte to EDS for the six (6) months
preceding the date that such claim is brought, or (ii)
$6,000,000; provided, however, that in calculating such
limit applicable to Del Monte's obligations to EDS,
amounts related to the following shall not be included
and applied toward such limit: (i) Del Monte's
obligations to make payments to EDS for Services or
Additional Services and payments otherwise required under
this Agreement and (ii) any claim by EDS for costs and
expenses incurred and which are reimbursable under this
Agreement for which EDS has not been compensated
(collectively, the "Excepted Components"). Notwithstanding
the preceding sentence, except for the Excepted
Components, Del Monte shall have no liability for any
indirect or consequential damages.
(c) Survival. The provisions of this Section will survive
the term or termination of this Agreement for any reason.
11.11 Contractual Statute of Limitations. No claim or cause
of action which arose out of an event or events which
occurred more than two years prior to the filing of a
demand for arbitration or suit alleging a claim or
cause of action may be asserted by either party
against the other party.
11.12 Acknowledgement. EDS and Del Monte each acknowledge
that the limitations and exclusions contained in this
Article have been the subject of active and complete
negotiation between the parties and represent the
parties' agreement based upon the level of risk to EDS
and Del Monte associated with their respective
obligations under this Agreement and the payments to
be made to EDS under this Agreement.
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ARTICLE XII. MISCELLANEOUS
12.1 Right of EDS to Engage in Other Activities. Del Monte
understands and agrees that EDS may perform data
processing services for third parties at any EDS data
center which EDS may utilize for processing Del
Monte's Data. Nothing in this Agreement will impair
EDS' right to acquire, license, market, distribute,
develop for itself or others or have others develop
for EDS similar technology performing the same or
similar functions as the technology, Services and
Additional Services contemplated by this Agreement.
12.2 Binding Nature and Assignment.
(a) Generally. This Agreement shall be binding on the
parties hereto and their respective successors
and assigns. Neither party may, nor shall have
the power to, assign this Agreement without the
prior written consent of the other party, which
consent shall not be unreasonably withheld. Any
purported assignment not made in accordance with
this Section shall be null and void.
(b) EDS Subcontracts. Notwithstanding Section
12.2(a), EDS will have the right to subcontract
all or any portion of the services or the
Additional Services; provided that such
subcontract relationships between EDS and
subcontractors are clearly delineated in EDS'
reasonable judgment and Del Monte is required to
deal only with EDS; and provided further,
however, that no such subcontract will relieve
EDS of any of its obligations hereunder.
(c) Permitted Transactions. Notwithstanding
Section 12.2(a), Del Monte shall have the right
to assign this Agreement or any interest therein
to a Related party without EDS' consent. Any such
transfer is referred to as a "Permitted
Transaction". "Related Party" means the following
persons or entities: (a) an "Affiliate" of Del
Monte, which term is defined as a subsidiary,
parent, or subsidiary of a parent of Del Monte as
long as the Related Entity has a net worth or at
least Five Million Dollars ($5,000,000); (b) a
successor to Del Monte; (c) an Affiliate of any
of the entities described in clause (b) of this
sentence. For the purposes of this definition, a
"subsidiary" is a corporate fifty percent (50%)
or more of whose voting stock is owned by another
corporation, which latter corporation is referred
to as a "parent".
12.3 Notices. Wherever under this Agreement one party is
required or permitted to give written notice to the
other, such notice shall be deemed given upon receipt
by the other party. Such written notices shall be
addressed as follows:
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In the case of EDS:
Electronic Data System Corporation
7171 Forest Lane
Dallas, Texas 75230
Attention: President, Manufacturing & Distribution
Services Division
Telecopy Number: (214) 392-8116
Phone Confirmation Number: (214) 490-2112
with a copy to:
Electronic Data Systems Corporation
7171 Forest Lane
Dallas, Texas 75230
Attention: General Counsel
Telecopy Number: (214) 448-1185
Phone Confirmation Number: (214) 448-1002
In case of Del Monte:
Del Monte Corporation
One Market Plaza
P.O. Box 103575
San Francisco, California 94119
Attention: Chief Information Officer
Telecopy Number: (415) 442-5023
Phone Confirmation Number: (415) 442-5351
with a copy to:
Del Monte Corporation
One Market Plaza
P.O. Box 193575
San Francisco, California 94119
Attention: General Counsel
Telecopy Number: (415) 442-4256
Phone Confirmation Number: (415) 442-4949
Any writing which may be mailed pursuant to the
foregoing may also be delivered by hand or transmitted
by telegraph, telex or telecopier and shall be
effective when received by the addressee. Either party
may from time to time specify as its address or
telecopy number for purposes of this Agreement any
other address or telecopy number upon giving ten days
prior written notice thereof to the other party.
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12.4 Counterparts. This Agreement may be executed in
several counterparts, all of which taken together
shall constitute one single agreement between the
parties thereto.
12.5 Headings. The Article and Section headings and the
table of contents used herein are for reference and
convenience only and shall not enter into the
interpretation hereof.
12.6 Relationship of Parties. FDS, in furnishing Services
and Additional Services to Del Monte hereunder, is
acting only as an independent contractor and under no
circumstances will EDS be deemed to be in any
relationship with Del Monte carrying with it fiduciary
or trust responsibilities, whether through partnership
or otherwise. EDS does not undertake by this Agreement
or otherwise perform any obligation of Del Monte,
whether regulatory or contractual, or to assume any
responsibility for Del Monte's business or operations.
EDS has the sole right and obligation to supervise,
manage, contract, direct, procure, perform or cause to
be performed, all work to be performed by EDS
hereunder unless otherwise provided herein.
12.7 Approvals and Similar Actions. Where agreement,
approval, acceptance, consent or similar action by
either party is required by any provision of this
Agreement, such action shall not be unreasonably
delayed or withheld.
12.8 Force Majeure. Each party shall be excused from
performance hereunder (other than performance of
obligations to make payment) for any period and to the
extent that it is prevented from performing pursuant
hereto, in whole or in part, as a result of delays
causes by the other or third parties or an act of God,
war, civil disturbance, court order, labor dispute, or
other cause beyond its reasonable control, including
failures or fluctuations in electrical power, heat,
light, air conditioning or telecommunications
equipment, and such nonperformance shall not be a
default hereunder or a ground for termination hereof.
If (i) any of the above-described circumstances
prevent, hinder, or delay performance of EDS'
operational obligations hereunder, (ii) as a result
hereof, EDS is unable to support Del Monte's critical
business functions, and (iii) EDS is unable, within
five (5) business days thereafter, to resume
performance of such critical business functions or
arrange alternative performance of such critical
business functions, then, at anytime thereafter and
until such time as EDS is able to resume or so arrange
for alternative performance of such critical business
functions, Del Monte may seek to arrange for
alternative performance by a third party, and EDS will
credit the cost thereof incurred by Del Monte for any
month up to the amount of the Monthly Base Charge for
such month. If any of the above enumerated
circumstances prevent, hinder, or delay performance of
EDS' support of Del Monte's critical business
functions for more than thirty (30) days, Del Monte
may at its option terminate this Agreement without
penalty as of a date specified by Del Monte in a
written notice of termination to EDS.
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12.9 Severability. If any term or provision (other than a
term or provision relating to any payment obligation)
of this Agreement or the application thereof to any
person or circumstances shall, to any extent, be held
invalid or unenforceable, the remainder of this
Agreement or the application of such term or provision
to persons or circumstances other than those as to
which it is invalid or unenforceable shall not be
affected thereby, and each term and provision of this
Agreement shall be valid and enforceable to the extent
permitted by law.
12.10 Regulatory Requirements. Del Monte and EDS agree that
if any Telecommunications Services are required by a
specific decision of applicable regulatory or judicial
authority to be provided under tariff, or if a
decision by a regulatory authority at the federal,
state or local level materially alters this Agreement,
or any material provisions hereof, or if third party
vendor, in its sole discretion, files a tariff for the
Telecommunications Services, then EDS and Del Monte
will negotiate modifications to this Agreement,
including the charges payable to EDS under this
Agreement.
12.11 Waiver. No delay or omission by either party hereto
to exercise any rights or power hereunder shall impair
such right or power or to be construed to be a waiver
thereof. A waiver by either of the parties hereto of
any of the convenants to be performed by the other or
any breach thereof shall not be construed to be a
waiver of any succeeding breach thereof or of any
other covenants herein contained. All remedies
provided for in this Agreement shall be cumulative and
in addition to and not in lieu of any other remedies
available to either party at law, an equity or
otherwise.
12.12 Attorneys' Fees. If any legal action or other
proceeding is brought for the enforcement of an award
under Schedule 9.4, the prevailing party shall be
entitled to recover reasonable attorneys' fees and
expenses and other costs incurred in that action or
proceeding, in addition to any other relief to which
it may be entitled.
12.13 Media Releases. All media releases, public
announcements and public disclosures by Del Monte or
EDS relating to this Agreement or its subject matter,
including without limitation promotional or marketing
material (but not including any announcement intended
solely for internal distribution at Del Monte or EDS,
as the case may be, or any disclosure required by
legal, accounting or regulatory requirements beyond
the reasonable control of Del Monte or EDS, as the
case may be) shall be coordinated with and approved by
Del Monte and EDS prior to the release thereof.
12.14 No Third Party Beneficiary. Nothing in this Agreement
may be relied upon or shall benefit any party other than
the parties hereto.
12.15 Entire Agreement. This Agreement, including any
Schedules or Exhibits referred to herein and attached
hereto, each of which is incorporated in this
Agreement for all purposes, and any sections or
portions of the RFP or the Response specifically
41
<PAGE>
referenced in this Agreement, constitutes the entire
agreement between the parties with respect to the
subject matter of this Agreement and there are no
representations, understandings or agreements relating
to this Agreement which are not fully expressed
herein. In the event of any inconsistency or conflict
between the terms of those portions of the RFP or the
Response referenced in this Agreement and the terms of
this Agreement, including any Schedules or Exhibits
referred to herein, the terms of this Agreement,
including such Schedules or Exhibits, will control
such inconsistent or conflicting term in the RFP or
the Response. No amendment, modification, waiver or
discharge hereof shall be valid unless in writing and
signed by an authorized representative of the party
against which such amendment, modification, waiver or
discharge is sought to be enforced.
12.16 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
California, without giving effect to principles of conflict
of laws.
IN WITNESS WHEREOF, EDS and Del Monte have each caused
this Agreement to be signed and delivered by its duly
authorized officer, all as of the Effective Date.
ELECTRONIC DATA SYSTEM DEL MONTE CORPORATION
CORPORATION
By: /s/ Doug Hoover By: /s/ David L. Meyers
------------------------------ ------------------------------
Name: Doug Hoover Name: David L. Meyers
--------------------------- ----------------------------
Title: Regional Vice President Title: CFO
-------------------------- ---------------------------
42
<PAGE>
SCHEDULE 5.2
DEL MONTE OBLIGATIONS
In connection with the services provided by EDS hereunder, Del
Monte will on a timely basis:
a) Establish appropriate data processing priorities for
Del Monte and communicate the same to EDS, including
the revalidation and prioritization of requests for
maintenance, enhancements, and development existing on
the Effective Date and continuing for those identified
after the Effective Date.
b) Supply to EDS for processing, required source data and
machine readable data with applicable controls in the
form supplied to the Del Monte IS organization prior
to the Effective Date or in such other form as may be
mutually agreed upon from time to time.
c) Inspect and review all reports prepared by EDS and
reject all incorrect reports within one (1) business
day after receipt thereof for daily and weekly reports
and within three (3) business days after receipt
thereof for monthly or other reports.
d) Maintain user procedure manuals and documentation used
by Del Monte personnel in connection with the Software
operated by EDS hereunder.
e) Train applicable Del Monte personnel to properly
prepare input for and to effectively utilize output
from the Software operated by EDS hereunder.
f) Provide all storage space, in excess of the space
provided by EDS for operations in accordance with
Section 1 of Schedule 2.2, as required for backup data
files and any additional storage space required by any
regulatory authority with jurisdiction over Del Monte.
g) Provide report distribution for output printed by EDS
and submitted to Del Monte's central location (see
Schedule 2.2, Section 1, part (o)), to all necessary
Del Monte locations.
h) Assist EDS by making available, as reasonably
requested by EDS, management decisions, information,
approvals and acceptances in order that the work of
EDS contemplated hereby may be properly accomplished.
i) Assist EDS in connection with the development of the
Migration and Implementation Plan and implementation
of the Migration to the EDS Data Center. Del Monte
agrees to perform its obligations mutually agreed upon
as set forth in the Migration and Implementation Plan.
j) Analyze, and communicate to EDS its needs for disaster
recovery services and otherwise cooperate with and
assist EDS in connection with the development of the
disaster recovery plan.
<PAGE>
SCHEDULE 5.2
k) Assist EDS in the development of a long term
strategy for Information Systems based on the goals
and objectives of Del Monte executive management.
1) Working with EDS, define Del Monte user security access
rules, procedures, and processes.
m) Assist EDS in troubleshooting remote data communications
network control problems.
n) Provide EDS such space, office furnishings, janitorial
service, telephone service, utilities (including
air-conditioning), office-related equipment, supplies,
duplicating services, and premises security services
in Del Monte's corporate headquarters facility in San
Francisco as EDS requires in connection with the
performance of the Services. EDS will comply with the
reasonable guidelines of Del Monte which are generally
applicable to Del Monte's employees with respect to
access to Del Monte's facilities.
o) Provide EDS access to and use of Del Monte's data
telecommunications equipment at Del Monte's domestic
U.S. facilities and transmission lines including, but
not limited to, printers, terminals, controllers,
required to enable EDS to perform the
Telecommunications Services.
p) Make payments to the appropriate third party vendor or
vendors of voice telecommunications services managed
by EDS hereunder and will provide maintenance of voice
telecommunications equipment and lines. Del Monte will
pay all costs and expenses of the acquisition
installation, maintenance, taxes, insurance and other
expenses related to such voice telecommunications
equipment and lines.
44
<PAGE>
SCHEDULE 6.1
SECTION l
MONTHLY BASE CHARGE
Month Fee
----- ---
- - Months l-9 $ 917,000 / Month
- - Months 10 - 15 $1,198,000 / Month
- - Months 16 - 21 $1,285,000 / Month
- - Months 22-27 $1,120,000 / Month
- - Months 28-33 $1,275,000 / Month
- - Months 34-39 $1,100,000 / Month
- - Months 40-45 $1,190,000 / Month
- - Months 46-51 $1,125,000 / Month
- - Months 52-57 $1,250,000 / Month
- - Months 58-117 $1,141,000 / Month
- - Months 118 - 120 $1,128,000 / Month
<PAGE>
SCHEDULE 6.1
SECTION 2
EDS FEE CREDITS TO DEL MONTE
For each month during the term of this Agreement that Del Monte
furnishes EDS space on Del Monte premises as required by this
Agreement, EDS will grant to Del Monte the credit shown below for
such month against the Monthly Base Charge payable for such
month:
Months 1-6 $37,408/month
Months 7-9 $ 7,482/month
Months 10-21 $ 7,602/month
Months 22-33 $ 7,754/month
Months 34-45 $ 7,910/month
Months 46-57 $ 8,068/month
Months 58-69 $ 8,228/month
Months 70-81 $ 8,394/month
Months 82-93 $ 8,562/month
Months 94-105 $ 8,732/month
Months 106-117 $ 8,906/month
Months 118-120 $ 9,086/month
In addition to the credit above, EDS will grant a credit equal to
$115,000 (credited in equal amounts of $19,166.67 per month from
the first month through the sixth month) against the Monthly Base
Charge for data center utilities costs.
EDS will also credit against the EDS Monthly Base Charge the
salaries and employee-related expenses incurred by Del Monte for
the Transitioned Employees (identified in Schedule 2.1(b)), the
transition for whom will be deferred until either 60 days or 180
days, as the case may be, after November 7, 1992.
DS will also credit against the EDS Monthly Base Charge an amount
representing one-twelfth of the additional annual premium paid by
Del Monte for covering EDS employees under Del Monte's
Crime/Employee Dishonesty Policy. In addition, EDS will reimburse
Del Monte for any deductible up to $100,000 per occurrence paid
by Del Monte under its Crime/Employee Dishonsty Policy for acts
by EDS employees.
<PAGE>
SCHEDULE 10.4
TERMINATION FEE SCHEDULE
Termination
Year Fee
---- ---
1 Year 2 $16,000,000
1 Year 3 $14,000,000
1 Year 4 $12,500,000
1 Year 5 $8,000,000
1 Year 6 $4,000,000
1 Year 7 $3,000,000
1 Year 8 $2,750,000
1 Year 9 $2,600,000
<PAGE>
AMENDMENT
to
AGREEMENT
for
INFORMATION TECHNOLOGY SERVICES
between
DEL MONTE CORPORATION
and
ELECTRONIC DATA SYSTEMS CORPORATION
THIS AMENDMENT, dated as of September 1, 1993, is between Del
Monte Corporation, a New York corporation ("Del Monte"), and
Electronic Data Systems Corporation, a Texas corporation ("EDS")
and is an amendment to that certain Agreement for Information
Technology Services, effective as of November 1, 1992, between
Del Monte and EDS.
In consideration of the mutual covenants and obligations
contained in this Amendment, Del Monte and EDS agree as follows:
1. EDS Fee Credits to Del Monte. The table included after the
first paragraph of Schedule 6.1, Section 2, of the Agreement
is hereby replaced in its entirety by the following table
and sentences:
Months 1-6 $37,408.00/month
Month 7 $13,144.67/month
Months 8-67 $18,565.98/month
The monthly credit amount shown for months 8 - 67 is the
Minimum Rent payable by EDS to Del Monte under that certain
Sublease between Del Monte and EDS, dated April 5, 1993,
(the "Sublease"). To the extent that the Minimum Rate (as
defined in the Sublease) payable to Del Monte by EDS
pursuant to the Sublease for any calendar month is
increased in accordance with Section 5b of the Sublease,
the monthly credit amount to be credited to Del Monte by
EDS under this Agreement for such month shall be adjusted
by the same amount. The monthly credit amount for month 68
through month 120 shall be the amount, if any, payable to
Del Monte by EDS under any agreement under which Del Monte
furnishes EDS space on Del Monte premises as required under
this Agreement.
2. Agreement. Except as expressly amended by this Amendment,
the Agreement shall remain in full force and effect in
accordance with its terms. Terms used as defined terms in
this Amendment which are defined in the Agreement shall
have the same meaning ascribed thereto in the Agreement.
<PAGE>
IN WITNESS WHEREOF, EDS and Del Monte have each caused this
Amendment to be signed and delivered by its duly authorized
officer, all as of the date first written above.
ELECTRONIC DATA SYSTEMS DEL MONTE CORPORATION
CORPORATION
By: /s/ James H. Presley By: /s/ David A. Mac Pherson
--------------------------- -------------------------------
Title: James H. Presley Title: David A. Mac Pherson
------------------------ ----------------------------
Date: Account Director Date: Vice President
------------------------- -----------------------------
<PAGE>
AMENDMENT TO AGREEMENT FOR
INFORMATION TECHNOLOGY SERVICES
BETWEEN
ELECTRONIC DATA SYSTEMS CORPORATION
AND
DEL MONTE CORPORATION
THIS AMENDMENT, dated as of April 8, 1993, is between
Electronic Data Systems Corporation ("EDS") and Del Monte
Corporation ("Del Monte") and is in amendment of that certain
Agreement for Information Technology Services between EDS and Del
Monte effective as of November 1, 1992 (the "Agreement").
For and in consideration of the mutual agreements of
the parties herein contained and other good and sufficient
consideration the receipt of which is hereby acknowledged, EDS
and Del Monte agree as follows:
1. Section 1A of Schedule 1.3 of the Agreement is amended by
the deletion of the Del Monte Owned Equipment itemized
below:
Item Quantity Item Description
------------- ----------------
2 Fenwal Halon 1301 Fire Suppresion System
3 TraceTeck 1000 Longline system
3 Liebert 75 KVA 208 Output Voltage Model
Type-PPA75C
1 UPS/Exide 413 KVA Model 3330 - 188
EEX15B Batteries
1 Backup Generator 480V Power
11 A/C Pomona Air
12 3480 Cartridge Library Racks - Holds 1200
Cartridges per Unit
1 A/C UPS Room
2. Except as expressly amended by this Amendment the Agreement
remains in full force and effect and unchanged.
<PAGE>
IN WITNESS WHEREOF, EDS and Company have executed and delivered
this Amendment as of the date first set forth above.
ELECTRONIC DATA SYSTEMS DEL MONTE CORPORATION
CORPORATION
By: /s/ James H. Presley By: /s/ David A. Mac Pherson
--------------------------- -------------------------------
Title: James H. Presley Title: David A. Mac Pherson
------------------------ ----------------------------
Date: Account Director Date: Vice President
------------------------- -----------------------------
<PAGE>
Exhibit 10.12
Conformed Copy
SUPPLY AGREEMENT
BETWEEN
SILGAN CONTAINERS CORPORATION
AND
DEL MONTE CORPORATION
September 3, 1993
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I EFFECTIVENESS..........................................1
ARTICLE II PURCHASE AND SALE OF CONTAINERS.......................1
2.1 Commitment for Purchase and Sale.......................1
2.2 Right of First Negotiation.............................2
2.3 Pacific Coast Producers................................2
2.4 Other Agreements.......................................3
2.5 Schedule 2.1...........................................3
2.6 Additional Commitments of DM and Seller................4
2.7 Close of Oakland Facility..............................6
ARTICLE III SHIPMENT QUANTITIES..................................6
3.1 DM Estimates; Purchase Obligations.....................6
3.2 Shipping Arrangements..................................7
3.3 Manufacture; Transfer of Ownership; Payment Terms......7
3.4 Working Capital........................................7
3.5 DM Transportation......................................8
3.6 Unexpected Increase in Requirements....................8
3.7 Return of Nonconforming Containers.....................9
3.8 Recycling..............................................9
3.9 Class I Plate..........................................9
3.10 Warehouse Space......................................10
ARTICLE IV DELIVERY AND FREIGHT TERMS...........................10
4.1 Freight Charges.......................................10
4.2 Container Loading.....................................10
ARTICLE V PRICES AND PRICE CHANGES FOR CONTAINERS...............11
5.1 Price Changes.........................................11
5.2 Sharing of Cost Savings...............................12
5.3 Operating Reviews.....................................13
5.4 Review of Information.................................13
ARTICLE VI MEETING COMPETITION..................................13
ARTICLE VII SPECIFICATION CHANGE, NEW CONTAINERS................14
7.1 Procedure for Identification..........................14
7.2 Prices for Spec Changes and New Containers............14
7.3 Investment; Usage Percentage and Investment Cost......15
7.4 Review................................................15
7.5 Effect of Seller's Failure to Supply Spec Changes
and New Containers....................................15
ARTICLE VIII TERM OF AGREEMENT..................................16
ARTICLE IX FORCE MAJEURE........................................16
9.1 Seller's Obligations..................................16
9.2 DM's Obligations......................................16
9.3 Notice of Force Majeure...............................16
ARTICLE X DM'S RIGHT TO COVER...................................17
ARTICLE XI QUALIFICATION OF CONTAINERS; TECHNICAL SUPPORT.......17
11.1 Qualification of Containers..........................17
11.2 Inspection...........................................18
11.3 Technical Support....................................18
11.4 Research and Development Cooperation.................18
ARTICLE XII RETURNABLE PACKAGING MATERIALS......................19
12.1 Packaging Specifications.............................19
12.2 Coding...............................................19
12.3 Title to Packaging Materials.........................19
12.4 Annual Settlement of Packaging Materials.............19
12.5 Transition of 45 x 50 Two-Way Pallets................19
ARTICLE XIII CLAIMS, WARRANTIES AND LIMITATIONS OF
LIABILITY........................................................20
13.1 Container Specifications.............................20
13.2 Compliance with Laws and Regulations.................20
13.3 Title to Containers..................................20
13.4 Infringement Claims..................................20
13.5 Shelf Life Warranty..................................20
13.6 Limitations on Warranties............................21
ARTICLE XIV INSURANCE...........................................21
ARTICLE XV SALE OF REJECTED CONTAINERS..........................22
ARTICLE XVI LABOR DISPUTES......................................22
ARTICLE XVII TITLE TO DRAWINGS..................................22
ARTICLE XVIII BREACH AND WAIVER.................................22
18.1 Event of Default.....................................22
18.2 Effect of Default....................................22
18.3 Nonwaiver............................................23
ARTICLE XIX MISCELLANEOUS.......................................23
19.1 Notices..............................................23
19.2 Assignment...........................................24
19.3 Modifications........................................24
19.4 Confidentiality......................................24
19.5 Independent Contractors..............................24
19.6 Corporate Authority..................................24
19.7 Further Documentation................................25
19.8 Severability.........................................25
19.9 Dispute Resolution...................................25
19.10 Governing Law.......................................25
19.11 Entire Agreement....................................25
* * * *
SCHEDULES
2.1 Facilities Other Cost Components
5.1A Examples of Price Adjustments
7.1 Spec Change
13.1 Acceptance Criteria
<PAGE>
SUPPLY AGREEMENT
THIS IS AN AGREEMENT (the "Agreement") made and
entered into as of September 3, 1993 by and between DEL MONTE
CORPORATION, a New York corporation ("DM"), and SILGAN CONTAINERS
CORPORATION, a Delaware corporation ("Seller").
B A C K G R O U N D
Seller has agreed to purchase certain assets and
assume certain liabilities of DM's container manufacturing
business pursuant to the terms and conditions of a Purchase
Agreement dated the date hereof between DM and Seller (the
"Purchase Agreement"). As a condition to the closing under the
Purchase Agreement and to induce the other party to consummate
the transactions contemplated by the Purchase Agreement, Seller
and DM desire to enter into a ten-year supply agreement under
which Seller will supply DM's metal container requirements for
foods and beverages in the United States and certain of DM's
metal container requirements for foods and beverages in Mexico,
subject to the terms and conditions of this Agreement.
ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:
ARTICLE I
EFFECTIVENESS
The parties have executed this Agreement as of the
date that appears in the first paragraph of this Agreement, and
this Agreement will become effective upon the closing of the
Purchase Agreement (the "Effective Date"). This Agreement will
terminate without any obligation or liability upon the
termination of the Purchase Agreement.
ARTICLE II
PURCHASE AND SALE OF CONTAINERS
2.1 Commitment for Purchase and Sale. During the term
of this Agreement specified in Article VIII of this Agreement
(the "Term"), Seller shall sell and deliver to DM, and DM shall
purchase and accept from Seller, at DM's food processing plants
identified on Schedule 2.1 to this Agreement (the "Facilities")
or as otherwise provided in this Agreement, the ready-to-fill
sanitary cans comprised of the can bodies which are enclosed at
one end by affixing a separately manufactured end onto a welded
or tin soldered or a one piece continuously formed metal cylinder
closed at one end ("Cans") and ends which are covers to be
affixed after the Cans are filled ("Ends") (each Can and End
together constituting a "Container") described on Schedule 2.1 to
this Agreement. The annual quantities of Containers to be
purchased and sold during the Term and pursuant to the terms of
this Agreement shall be (a) 100 percent of DM's annual
requirements for such Containers to be used for the packaging of
foods and beverages in the United States and (b) not less than 65
<PAGE>
percent of DM's annual requirements of those Containers to be
used for the packaging of foods and beverages at the Mexican
Facilities identified on Schedule 2.1 (with the actual percentage
to be determined in DM's sole discretion in connection with DM's
estimates provided pursuant to Section 3.1), subject to reduction
only in accordance with the terms of this Agreement. This
Agreement shall not apply to DM's purchase of metal containers
for pineapples, mandarin oranges, sardines and any other products
which are not packed in the United States or Mexico. In addition,
DM shall provide Seller all Polystar lids necessary for DM
Containers, which lids shall be provided by Seller to DM at the
same cost, if any, charged by DM to Seller for such lids adjusted
for actual spoilage exceeding the higher of 2% or the average
spoilage incurred by DM during the six-month period prior to the
Effective Date (based on DM's records).
2.2 Right of First Negotiation. DM hereby grants
Seller a right of first negotiation during the Term to provide
the Container requirements of any new DM food processing facility
in Mexico and Central America. If during the Term DM builds,
acquires or leases a food processing facility in Mexico or
Central America, DM shall notify Seller and shall negotiate
exclusively with Seller for a period of 60 days for the supply of
Containers for such facility. If the parties do not reach
agreement on the supply of Containers during such period, DM
shall provide Seller a written summary of the supply terms
requested by DM (the "Proposal"). Thereafter, DM shall be free to
negotiate with and enter into agreements for the supply of
Containers for such facilities with other parties; provided that
if in the aggregate the terms and conditions offered to DM by
another party are less favorable to DM than the terms set forth
in the Proposal, DM shall notify Seller prior to DM's acceptance
of such terms and Seller shall have 30 days after receipt of such
notice to accept such terms, and if Seller timely accepts such
terms, DM and Seller shall promptly enter into an agreement on
such terms. For purposes of this Agreement, the term "Central
America" shall mean Belize, Guatemala, El Salvador, Honduras,
Nicaragua, Costa Rica and Panama.
2.3 Pacific Coast Producers. The parties acknowledge
that DM purchases certain containers from, and sells certain
containers to, Pacific Coast Producers, Inc. ("PCP") and
purchases certain filled containers from PCP for resale on a
"private label basis." In any Supply Year (as defined below), DM
shall not purchase from PCP or any of PCP's affiliates more than
100 million unfilled containers, subject to adjustment as set
forth in this Agreement, for use at any of the Facilities or any
other facility or plant of DM or any other facilities or
locations in respect of any toll pack, co-pack or similar
agreements of DM. The annual requirements referred to in (a) in
the last sentence of Section 2.1 shall be exclusive of (i) any
unfilled containers purchased by DM from PCP (subject to the
limitation provided in the immediately preceding sentence) and
(ii) any filled containers purchased by DM from PCP for resale on
a private label basis, but shall be inclusive of all unfilled
containers sold by DM to PCP. Seller and DM agree to cooperate
reasonably and use reasonable efforts to identify and achieve
cost reductions for DM with respect to containers produced by PCP
and Seller for sale to DM.
2.4 Other Agreements. The parties acknowledge that it
is their intent that Seller supply all metal food containers to
DM pursuant to
-2-
<PAGE>
the terms of this Agreement for any food or beverage
product packed in the United States or Mexico which DM
requires pursuant to any toll-pack, co-pack or similar agreements
other than (a) such agreements with PCP (subject to Section 2.3
above), and (b) up to 50 million (subject to adjustment as set
forth below) filled containers in any Supply Year (plus that
number of filled containers which may be purchased from any party
which purchases DM's Crystal City facility as described at
Section 2.6). DM's purchases from Faribault Foods and Friday
Canning during the current packing season are examples of the
types of purchases allowed by clause (b) of the preceding
sentence. The 50 million filled containers referenced at clause
(b) above shall be adjusted for the second and each subsequent
Supply Year to such number equal to 2-1/2% of the number of
containers estimated in good faith by DM to be purchased by DM in
such Supply Year from all manufacturers. The parties further
acknowledge that any unfilled metal food containers not supplied
by Seller to DM for products pursuant to such agreements with PCP
shall apply toward DM's obligation to purchase from PCP or any of
PCP's affiliates not more than 100 million unfilled containers as
set forth in Section 2.3 above. Any such containers required for
such toll-pack, co-pack or similar agreements entered into after
the date of this Agreement ("Product Sourcing Containers") shall
be considered New Containers, and the prices for such Product
Sourcing Containers shall be established in accordance with the
terms of Section 7.2 of this Agreement; provided that if the
volume of Product Sourcing Containers in any Supply Year (as
defined below) exceeds 15% of the aggregate Containers required
in the Supply Year in which such agreement is entered into, the
parties shall negotiate in good faith the pricing for that
portion of such Product Sourcing Containers that exceeds said 15%
for that Supply Year.
2.5 Schedule 2.1. Schedule 2.1 sets forth the
following information, certain items of which may be established
(only for New Containers as defined below) or amended from time
to time in accordance with the terms of this Agreement:
(a) Container sizes;
(b) specifications (including special features and the
finished product ("Product") with which DM will fill each type of
Container) for each type of Container which
shall serve as a basis for DM's acceptance or rejection of
Containers and for determining cost savings resulting from
specification changes effected under Article VII of this
Agreement;
(c) the pallet-can configuration requirement and
packaging specification for each type of Container;
(d) DM's estimate, by type of Container and the
location to which the Containers are expected to be delivered, of
DM's annual requirements of Containers for DM's fiscal year
ending June 30, 1994 estimated as of June 18, 1993;
(e) the selling price to be charged to DM by Seller
for each thousand Cans and Ends by type of Container and delivery
location (indicating metal, labor and other costs consistent with
the format applicable to Section 5.1).
The price F.O.B. Pittsburgh, California to be charged to DM for
tin plate to be provided by DM to PCP shall be provided to DM by
Seller prior to the Effective Date. Prior to the Effective Date,
Seller will reduce the selling prices for Containers pursuant to
(e) above for the first 12 months
-3-
<PAGE>
after the Effective Date (and effect savings in PCP tin
plate cost for the first 12 months after the Effective Date,
based on 790,000 base boxes) in an aggregate amount of $10.9
million (holding all other items on Schedule 2.1 constant). The
packaging specifications required at (c) above shall be provided
by DM prior to the Effective Date and shall be consistent with
DM's current packaging specifications.
2.6 Additional Commitments of DM and Seller.
(a) New Facility. For purposes of this Agreement,
except as set forth in Section 2.6(d) below, (i) DM's agreement
to purchase its annual requirements of Containers to be used for
the packaging of foods and beverages by or for the account of DM
in the United States as set forth in Section 1.1 of this
Agreement shall include all Containers to be so used by or for
the account of DM at any of DM's plants or facilities in the
United States (including those plants and facilities hereafter
built, acquired, operated or leased (a "New Facility")) or any
other plant, facility or location in the United States where any
food or beverage product is packed for the account of DM at any
time during the Term of this Agreement, including, without
limitation, pursuant to any toll pack, co-pack or similar
arrangements as provided for in Section 1.3 of this Agreement,
and (ii) DM's agreement to purchase not less than 65 percent of
its annual requirements of Containers to be used for the
packaging of foods and beverages at the Mexican Facilities as set
forth in Section 1.1 of this Agreement shall include not less
than 65 percent of the aggregate of (A) all Containers to be so
used by DM at any of its plants or facilities in Mexico (owned,
leased or otherwise used) (the "Mexico Facilities") where DM
packages any food or beverage product at any time during the Term
of this Agreement and (B) if DM transfers any food processing
business from a Mexico Facility to a plant, facility or location
or another person or entity in Mexico, all Containers to be used
for the packaging of any food or beverage product for the account
of DM, the packaging for which has been transferred by DM from a
Mexico Facility to any such plant, facility or other location in
Mexico, including, without limitation, pursuant to any toll pack,
co-pack or similar arrangements as provided for in Section 1.3 of
this Agreement. Notwithstanding the above provisions, if DM packs
food or beverage products for the account of another person or
entity, (a) DM shall be required to purchase Containers from
Seller pursuant to the terms of this Agreement for such food or
beverage product if such other person or entity is not subject to
a contractual obligation to purchase containers from a person or
entity other than Seller; however, DM and Seller shall negotiate
in good faith for the supply of Containers by Seller for such
food or beverage products which may be at prices more
advantageous to Seller than those set forth in the Agreement (it
being understood that Seller is not obligated to supply such
Containers except on the terms and conditions of this Agreement)
and (b) DM shall not be required to purchase Containers from
Seller for such food or beverages if such other person or entity
is subject to a prior contractual obligation to purchase
containers from a person or entity other than Seller. In
connection with all such obligations of DM, DM shall permit
Seller's accountants reasonable access during normal business
hours to DM's books, records, plants and facilities so that
Seller may verify compliance with this Agreement.
-4-
<PAGE>
DM agrees to provide Seller with reasonable notice of
any New Facility and any plans to transfer DM's food processing
business from a Facility or New Facility to a facility owned or
operated by another person or entity and to take all steps
reasonably necessary and to cooperate with Seller to carry out
the intent of this Agreement.
(b) Sale of DM Business; Crystal City. Notwithstanding
anything herein to the contrary, DM shall not enter into any
transaction with any other person or entity providing for the
merger, consolidation or other similar business combination of DM
with such other person or entity or for the sale, transfer,
disposition or lease of all or substantially all of the assets of
DM to such other person or entity or for the sale, transfer,
disposition or lease of all or substantially all of the assets of
DM's vegetable, fruit or tomato business without first obtaining
the written agreement of such other person or entity to enter
into a written agreement with Seller on the same terms and
conditions contained in this Agreement and for the remainder of
the Term hereof for the purchase by such other person or entity
of its Container requirements from Seller for use with the former
DM Products and any extensions of any Product. In addition, if DM
sells its Crystal City, Texas cannery, as a condition to
consummation by DM of such sale (which condition may not be
waived without Seller's consent), DM shall purchase its Container
requirements from Seller pursuant to the terms of this Agreement
for use with any Product and any extensions of any Product
produced for DM at such cannery.
(c) Trademark License. With respect to any of the
Products or any extensions of any of the Products, DM shall not
sell, transfer or license the brand name "Del Monte" or any
derivative thereof or any other brand name or trade name used by
DM without first obtaining the written agreement of such
purchaser, transferee or licensee to enter into a written
agreement with Seller on the same terms and conditions contained
in this Agreement and for the remainder of the Term hereof for
the purchase by such other person or entity of its Container
requirements from Seller to be used to package any of the
Products and any extension of any Products using the brand name
"Del Monte" or any derivative thereof of any such other brand
name or trade name used by DM.
(d) Further DM Acquisitions. This subsection shall not
apply to acquisition by DM of PCP pursuant to the PCP Option (as
defined at Section 6.2 of the Purchase Agreement) which is
subject to the terms of Section 6.2 of the Purchase Agreement.
Notwithstanding anything herein to the contrary, DM's agreement
to purchase its requirements of Containers as set forth in this
Agreement shall not include the requirements of any company or
other entity acquired by DM subsequent to the date hereof (the
"Acquired Entity") (i) where, in such acquisition, DM is required
to assume the obligations of such Acquired Entity under a written
agreement requiring such Acquired Entity to purchase containers
to be used by such Acquired Entity or (ii) where, in such
acquisition, the Acquired Entity is a captive manufacturer of a
material portion of its containers. In the case of (i) above,
upon expiration or termination of such written agreement to
purchase containers, Seller shall have the right for the
remainder of the Term to supply the Container requirements of
such Acquired Entity on the same terms and conditions contained
in this Agreement. In the case of (ii) above, DM shall notify
Seller in writing of any such acquisition five business days
after the consummation thereof. Seller shall have the right,
exercisable no later than 45 days after receipt by Seller of such
notice from DM, to purchase the can manufacturing assets of
such Acquired Entityat a purchase price equal to the fair
market value of such assets determined on the assumption that
Seller shall obtain a supply contract as set forth in the next sentence.
Additionally, in connection with any such purchase of can
manufacturing assets by Seller, DM (or the Acquired Entity)
shall enter into a supply agreement with Seller on the same
terms and conditions contained in this Agreement and for the
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remainder of the Term hereof for the supply by Seller
of all of the container requirements of such Acquired Entity. If
the purchase by Seller of such can manufacturing assets is not
consummated within 120 days after delivery by Seller of notice of
its intent to exercise this right, then DM (or the Acquired
Entity) may sell or otherwise transfer or dispose of all or
substantially all of such can manufacturing assets of such
Acquired Entity to any other party and to enter into a supply
agreement for the requirements of such Acquired Entity; provided
that if in the aggregate the terms and conditions offered to DM
by another party are less favorable to DM than those offered by
DM to Seller, DM shall notify Seller prior to DM's acceptance of
such terms and Seller shall have 30 days after receipt of such
notice to accept such terms and if Seller timely accepts such
term, DM and Seller shall promptly enter into an agreement on
such terms.
(e) Expiration of Transferee Obligations. The
obligations of DM and any other person or entity, purchaser,
transferee or licensee or Acquired Entity set forth in
subsections (b), (c) and (d) above shall terminate upon the
expiration of the initial Term unless specifically extended by
written agreement of DM, Seller and such other person or entity,
purchaser, transferee or licensee or Acquired Entity, as the case
may be.
(f) Extension of a Product. For purposes of this
Section 2.6, determination of whether a food or beverage
constitutes an extension of a Product shall be made in accordance
with DM's good faith marketing determination. By way of example,
(a) soup would not be an extension of a Product and (b) spaghetti
sauce would be an extension of DM tomato Products.
2.7 Close of Oakland Facility. Seller will have as of
the closing a lease to operate the former DM facility in Oakland,
California which will terminate on the earlier of April 30, 1995
and 12 months after notice by DM. Seller will transfer the
production of Ends currently produced at the Oakland facility to
other locations without any supply interruption or cost increase
to DM.
ARTICLE III
SHIPMENT QUANTITIES
3.1 DM Estimates; Purchase Obligations. On the date of
effectiveness of this Agreement and on October 1 of each year of
the Term thereafter, DM shall furnish Seller with DM's good faith
written estimate, by type of Container and delivery location, of
DM's proposed monthly requirements for Containers under this
Agreement for the ensuing Supply Year. "Supply Year" shall mean
the 12 month period from November 1 to October 31 of each year
during the Term of this Agreement. The annual estimate shall be
updated as follows: no later than the 20th calendar day of each
month, DM shall furnish Seller with DM's good faith written
estimate, by type of Container and delivery location, of any
revisions to DM's estimated Container requirements for the
following four months; during the packing season (which is the
period from July 1 to October 31 of each year), DM shall furnish
any such revisions as soon as practical but at least once per
calendar month. Such estimates shall supersede the Container
quantities specified in Section 2.5(d) of this Agreement. In any
Supply Year, DM shall be obligated to purchase no less than, and
Seller shall be obligated to sell no more than, that number and
type of Containers as shall equal the sum of the periodic monthly
estimates (as revised in
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accordance with this Section) for each type of
Container for that Supply Year. The parties agree to cooperate
and use their reasonable best efforts to resell any excess Cans
or Ends which DM has purchased.
3.2 Shipping Arrangements. As of the date of
effectiveness of this Agreement and on November 1 of each year of
the Term thereafter, Seller shall furnish DM with Seller's 12-
month Container Production Forecast which shall be developed in
accordance with DM's past practice. Such 12-month Container
Production Forecast will be revised monthly by Seller in
accordance with DM's requirements and shall serve DM as the basis
for DM's arrangement of shipments and space planning. Seller will
notify DM immediately if Seller anticipates that it will be
unable to provide Containers to DM in accordance with DM's most
recent estimate. Seller shall advise DM's transportation
department of transit requirements from Seller's location to the
DM delivery location for Containers manufactured by Seller as
required by Section 3.1 of this Agreement and the applicable
Container Production Forecast referred to above. DM's
transportation department will arrange for transportation of such
Containers using either DM trucks, trucks of an alternate carrier
or rail.
3.3 Manufacture; Transfer of Ownership; Payment Terms.
Seller will use reasonable efforts and cooperate with DM to
follow DM's prior practices of manufacturing smaller size Cans
after the end of the packing season and large Cans as close as
practicable to the time of their use by DM with a view to
lowering DM's working capital requirements and minimizing DM's
storage space requirements. Ownership of, title to and risk of
loss for Cans and Ends will transfer on the date that such Cans
or Ends are placed on DM trucks or other carriers (or rail) for
transit as arranged by DM or (in case of the same location for
manufacture by Seller and DM delivery location) upon Seller
placing such Cans at the palletizer exit; provided Ends will be
shipped or delivered to DM only in accordance with DM's
instructions. DM will be responsible for pickup and delivery and
storage of Cans placed at any such palletizer exit. In the case
of direct cable delivery, ownership of, title to and risk of loss
for Cans will transfer at the point at which the Cans leave
Seller's facility and enter DM's facilities. All Cans and Ends
shall be sold F.O.B. Seller's facility, and Seller will send
invoices to the DM Facility to which Cans or Ends are shipped (as
indicated by DM). DM will be responsible for all freight charges
for all Containers. Payment for Cans and Ends for which DM has
received invoices as of the close of business on Monday in any
given week shall be due on the Friday of the week following the
transfer of ownership and title for such Containers.
3.4 Working Capital. Notwithstanding the provisions of
Section 3.3, DM will not be required to make payment of invoices
(beginning with the most current invoices) for Containers on the
payment terms set forth in Section 3.3 if and to the extent that
during any period in which Average Net Working Capital relating
to Containers for the previous 9 months (or the number of
completed months during the first 9 months of the Term) plus
forecast net working capital for the next three months as
determined using DM estimates provided in Section 3.1 exceeds
$18,000,000 indexed after the first Supply Year to changes in
DM's Container Cost as calculated below (the "Cap"'). Any such
invoices not so paid by DM shall be paid upon and to the extent
that Average Net Working Capital of DM is less than $18,000,000
(with the oldest of such invoices being paid first). The Average
Net Working Capital shall be calculated by
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totaling all Container inventories of DM at the end of
each accounting month (excluding in the first Supply Year the DM
Container inventories at Closing of the Purchase Agreement) in
the previous 9 months (or the number of completed months during
the first 9 months of the Term) and the forecasted Container
inventories of DM for the next three months as determined using
DM estimates, and subtracting therefrom the accrued and unpaid
payables to Seller for such Containers at the end of such months
and the forecast accrued and unpaid payables for the next three
months assuming compliance with the payment terms in Section 3.3,
and dividing this total by 12 (or the number of completed months
during the first 9 months of the Term plus the three forecasted
months). For purposes of this Section 3.4, "month" shall mean
DM's accounting month which in any calendar quarter shall be
four, four and five weeks, respectively.
The Cap for the second and succeeding Supply Years
will be calculated on the first business day of January of each
year by DM (as reasonably agreed by Seller) at the end of each
such Supply Year by multiplying the Cap for the most recently
completed Supply Year by a fraction, the numerator of which will
be DM's estimated Container Costs from Seller for such Supply
Year as set forth on Schedule 2.1 as of the commencement of such
Supply Year and the denominator of which will be DM's Container
Costs actually incurred by DM from Seller for the most recently
completed Supply Year. The term Container Costs shall mean the
selling price for all Containers sold by Seller to DM plus
applicable freight for the applicable Supply Year.
3.5 DM Transportation. It is acknowledged that DM has
transportation capability and has established very good traffic
rates using both its own equipment and equipment of outside
carriers. It is also acknowledged that Seller has established
very good contracts for both incoming and outgoing delivery.
Seller and DM agree that the transportation departments of each
will work closely in all areas and allow, to the extent possible,
the other to make use of existing and future contract rates. Such
cooperation will ensure that both parties enjoy well controlled
freight costs.
3.6 Unexpected Increase in Requirements. If DM
experiences an unexpected increase in its production needs at any
Facility whereby (a) a calendar month's requirements at such
Facility exceed 125 percent of that month's estimate for any
Container as set forth in that month's estimate provided two
months before (e.g. estimate for month of June dated April 20) or
(b) the requirements in a 24-hour period at such Facility exceed
10 percent of that month's estimate for any Container as set
forth in that month's estimate provided two months before (e.g.,
estimate for month of June dated April 20), Seller shall use its
best efforts to fulfill those needs but shall not be considered
to have breached this Agreement if it fails to deliver any
Containers in excess of either percentage described above during
that period. In such cases, Seller shall have the option of
obtaining an alternate supply of Containers for DM at no cost
increase to DM (including freight), and DM shall be obligated to
purchase such Containers pursuant to the terms hereof. If Seller
cannot fulfill those needs, DM may purchase during the applicable
period only such Containers, Cans or Ends, as the case may be, in
excess of such applicable percentages described above and any Containers,
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Cans or Ends in excess of such percentages which DM
purchases from third parties during such applicable period as a
result of Seller's inability to
deliver such quantity shall reduce accordingly the minimum
requirements that DM must purchase from Seller under this
Agreement during the applicable Supply Year. Any Containers, Cans
or Ends in excess of such percentages which DM purchases from PCP
or its affiliates during such applicable period as a result of
Seller's inability to deliver such quantity shall increase
accordingly the 100 million Containers which DM can purchase from
PCP and its affiliates in such Supply Year only.
3.7 Return of Nonconforming Containers. If, after
application of the sampling and acceptance plan (the "AQL Plan")
referred to in Section 13.1 of this Agreement, any of the
Containers delivered to DM fails to meet the specifications for
that type of Container set out in Schedule 2.1, as that schedule
may be amended by the parties from time to time, DM shall be
entitled to refuse to use those nonconforming Containers and upon
notice of rejection to Seller, DM shall be entitled to return the
nonconforming Containers to Seller. Upon receipt of a notice of
rejection, Seller shall either (i) replace the nonconforming
Containers if such replacement can be made in a timely manner or
(ii) credit DM for the cost of such Containers. In addition,
Seller shall reimburse DM: (a) for DM's reasonable transportation
and handling costs, if any, incurred in returning those
Containers, (b) any freight cost incurred by DM for the shipment
of the Containers to DM and (c) any and all other amounts
required to be paid by Seller to DM under Section 13.6 of this
Agreement. Title and risk of loss or damage to nonconforming
Containers shall pass to Seller upon receipt by Seller of a
notice of rejection, and upon delivery of a notice of rejection
DM shall act in a commercially reasonable manner in storing and
returning to Seller such nonconforming Containers. Seller shall
provide monthly to DM a "Conformance to Specification Report" in
substantially the form used by DM as of the date immediately
preceding the date of this Agreement.
3.8 Recycling. Seller acknowledges that DM derives a
marketing benefit from the fact that as of the date immediately
preceding the date of this Agreement DM used recycled metal in
its containers and engaged in an active can recycling effort.
Seller agrees to notify DM of the approximate percentage of
recycled metal incorporated in Containers provided pursuant to
this Agreement so that DM may, at its election, make consumers
aware of such information. In addition, Seller agrees to use its
reasonable efforts to maintain DM's can recycling effort.
3.9 Class I Plate. Seller acknowledges that DM has
engaged in a Class I plate program, and Seller agrees to use its
reasonable efforts to continue such program to the extent it is
consistent with the terms and conditions of this Agreement.
3.10 Warehouse Space. Seller agrees to provide DM
storage space during the Term at the Toppenish and Rochelle can
manufacturing facilities and the Smithfield cannery, and DM
agrees to provide Seller storage space during the Term at DM's
Crystal City, Stockton, Modesto, Kingsburg and Plover canneries,
in each case (other than Smithfield) consistent with DM's past
practice and at prevailing market rates and so long as such
facilities are owned by the respective party (or its affiliates).
DM storage at Smithfield shall be provided at no cost to DM. The
parties shall invoice each other monthly for any charges for use
of any such storage space and shall make any required net payment
for any Supply Year within 60 days after the end of such Supply
Year.
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ARTICLE IV
DELIVERY AND FREIGHT TERMS
4.1 Freight Charges. All Containers shall be sold and
delivered by Seller F.O.B. Seller's facility. DM will be
responsible for and pay all freight charges for all Containers
sold by Seller to DM: provided that if Seller moves or relocates
the manufacture of Containers to facilities (an "Other Facility")
other than those former DM container manufacturing facilities
sold or leased to Seller pursuant to the Purchase Agreement at
which such Containers were manufactured by DM or if Seller ceases
to manufacture Containers at the Plover, Modesto, Stockton,
Kingsburg or Crystal City container manufacturing facilities
leased to Seller pursuant to the Purchase Agreement (the "Shared
Facilities"), Seller shall credit DM for the difference between
the freight charge incurred by DM for delivery from Seller's
Other Facilities to DM's delivery location and the freight charge
DM would have incurred for delivery from the applicable former DM
manufacturing facility where such Containers were manufactured by
DM prior to the Effective Date to DM's delivery location and, in
the case of the Shared Facilities, shall credit DM for all
handling, warehousing and spoilage charges incurred by DM as a
result of the absence of direct cabling of Containers to DM's
food processing plant. If Seller manufactures Containers at
Seller's Other Facilities and this results in reduced freight
charges incurred by DM for delivery from such Seller's Other
Facilities to DM's delivery locations as compared to the freight
charges DM would have incurred for delivery from the applicable
former DM manufacturing facilities (where such Containers were
manufactured by DM prior to the Effective Date) to DM's delivery
locations, the sum of all such reductions shall be credited to
Seller in calculating, and shall reduce, the credit to DM
provided for in the preceding sentence for increased freight
and/or handling, warehousing and spoilage charges. The parties
shall reconcile these amounts annually within 60 days after the
end of each Supply Year.
4.2 Container Loading. Seller shall be responsible for
the proper loading of Containers onto the appropriate DM pallets
and onto shipping vehicles in accordance with DM's reasonable
shipping instructions.
ARTICLE V
PRICES AND PRICE CHANGES FOR CONTAINERS
5.1 Price Changes. Seller's selling prices for
Containers are specified in Schedule 2.1 attached hereto. The
aggregate base Monthly Rent (as defined in the leases for the
Shared Facilities and the former DM Can manufacturing plant in
Oakland) incurred by Seller pursuant to the leases at the Shared
Facilities and the former DM Can manufacturing plant in Oakland
will be separately billed to DM and shall be paid by DM. In
addition, as set forth in Schedule 2.1, the selling price for a
Container shall consist of the total of the following:
(a) Metal Costs;
(b) Labor Costs (composed of all direct and facility
indirect compensation and benefits); and
(c) Other Costs (composed of those items set forth on Schedule 5.lA).
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Seller's selling prices for Containers shall be subject
to change based on the following criteria:
(a) Metal Costs
The metal cost component of selling price for each
Container as set forth in Schedule 2.1 shall be adjusted
(increased or decreased) to reflect changes in costs of
metal actually incurred by Seller. Such metal price
adjustment (increase or decrease) shall take place 30 days
after the date Seller actually incurs a price change in the
cost of metal. Metal prices shall not be increased prior to
June 30, 1994.
(b) Labor Costs
The labor cost component selling price for each
Container as set forth in Schedule 2.1 shall be adjusted
(increased or decreased) as of July 1 of each year during
the Term (beginning July 1, 1994) based on the percentage
change during the twelve (12) month period ending the
previous March 31 of the Employee Cost Index - Private
Industry Workers, Blue Collar Workers, using a base date of
June 1989, published by the United States Department of
Labor, Bureau of Labor Statistics.
(c) Other Costs
The other cost component selling price for each
Container as set forth in Schedule 2.1 shall be adjusted
(increased or decreased) as of July 1 of each year during
the Term
(beginning July 1, 1994) based on the percentage change
during the twelve (12) month period ending the previous March 31
of the Producer Price Index (PPI) for Finished Goods (Base year - 1982)
as published by the United States Department of Labor, Bureau
of Labor Statistics.
Examples of such price adjustments are shown on Schedule 5.1B
hereto. For any price adjustment pursuant to this Section 5.1,
Seller shall notify DM and set forth with reasonable specificity
the reasons for the change in costs (a "Cost Notice"). DM shall
have 30 business days to verify any change in costs. Seller shall
provide DM with reasonable information and cost accounting
records to support any asserted increase or decrease in costs.
If, at the end of the applicable review period, DM agrees with
the price change set forth in the Cost Notice, that change will
be deemed effective from and after the dates set forth above. If
DM disagrees with the price change set forth in the Cost Notice,
the parties will negotiate in good faith to resolve the matter.
If they do not reach agreement on all disputed issues within 30
days after expiration of the applicable review period, the price
change will not go into effect until the dispute is resolved in
accordance with Section 19.9, and such price change as determined
by AA (as defined in Section 19.9) shall be deemed effective from
and after the dates set forth above. Each party shall bear
one-half of the fees and reimbursable costs of that accounting
firm.
5.2 Sharing of Cost Savings. The parties intend to
actively pursue efficiencies and cost savings in connection with
the transactions contemplated by this Agreement. For each
mutually agreed upon cost savings attempt, the parties shall
share the cost savings associated
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therewith as set forth in this Section 5.2. Any
Investment (as defined in Section 7.3) required to effect such
mutually agreed upon cost savings attempt shall be made by
Seller, and for a period of six years following such Investment
Seller shall charge DM for such Investment by subtracting from
the cost savings allocated to DM for each such year in respect of
such Investment (a) 16.7% of such Investment plus Financing Costs
(as defined in Section 7.3) multiplied by (b) the ratio of sales
to DM to total sales of Seller affected by such cost savings
attempt (such amount being herein called the "Section 5.2
Investment"). Cost savings actually resulting from a cost savings
attempt shall be shared 90% of the Allocated Cost Savings to DM
and 10% of the Allocated Cost Savings to Seller. "Allocated Cost
Savings" means the cost savings resulting from a cost savings
attempt multiplied by the ratio of sales to DM to total sales of
Seller affected by such cost savings attempt. To the extent that
the Section 5.2 Investment in respect of a cost savings attempt
is less than the cost savings allocated to DM for such cost
savings attempt for a particular Supply Year, Seller shall reduce
the selling price of Containers (per thousand) affected by such
cost savings attempt by such difference. Notwithstanding anything
to the contrary set forth in this Section 5.2, this Section 5.2
shall not apply to any cost savings affected by a Spec Change (as
defined in Section 7.1) or a New Container (as defined in Section
7.1) or to any freight, handling, warehousing or spoilage charges
as a result of any relocation of the manufacture and production
of a Container. DM shall reasonably cooperate with Seller to
achieve cost savings identified by Seller to DM prior to the
Effective Date. Notwithstanding anything in this Agreement to the
contrary, with respect to the 303 x 406 to 300 x 407 can
conversion which will be effected by Seller for DM, Seller shall
provide and pay for (with no charge to or reimbursement from DM)
all capital necessary for such conversion and DM shall be
entitled to a cost savings of $2 million (when DM is fully
converted) based on DM's volume as set forth on Schedule 2.1 for
the fiscal year ended June 30, 1994. Accordingly, the provisions
of this Section 5.2 shall not apply to the 303 x 406 to 300 x 407
can conversion to be effected by Seller for DM.
5.3 Operating Reviews. The parties shall meet
periodically during the Term and at least once in every Supply
Year to consider suggestions for efficiencies and cost savings
and to review the results of previously implemented cost savings
attempts.
5.4 Review of Information. DM and its representatives
shall have the right during normal business hours and upon at
least five business days notice to review the books and records
of Seller necessary to verify any price change set forth in a
Cost Notice and to verify the results of cost savings attempts,
Section 5.2 Investments and Allocated Cost Savings.
ARTICLE VI
MEETING COMPETITION
If, at any time after the fifth anniversary of this
Agreement, DM receives a bona fide written proposal from an
independent commercial can manufacturer (an "Offeror") having the
capability to manufacture and sell containers to DM of a type and
quality similar to the Containers that Seller is required to
furnish DM under this Agreement for the remainder of the Term for
one or more Facilities, which written proposal provides selling
prices and terms that are in DM's good faith opinion more
favorable than the selling prices and terms for Containers then
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provided by Seller and is based on not less than one hundred
percent of the annual volume of all such Containers as DM is then
purchasing from Seller hereunder for one or more Facilities for
the remainder of the Term, DM shall notify Seller of such
proposal and shall furnish Seller with a summary of all terms of
the offer with reasonable specificity, including the identity of
the Offeror. At Seller's request, such summary shall be reviewed
and confirmed in writing by DM's independent certified public
accountants as an accurate summary of terms of such offer. Seller
shall have 30 days from the date of receipt of DM's notice within
which to submit a counterproposal to such bona fide competitive
proposal. Notwithstanding anything herein to the contrary, PCP
and its affiliates shall be excluded from making any competitive
proposal during any period in which PCP is receiving metal for
cans through DM and/or Seller. If Seller's counterproposal would
result in DM paying the same net selling price for Containers
that would be paid if the competitive proposal were accepted and
if Seller meets all the other terms and conditions, including
warranties but excluding any provisions providing for meeting
competitive bidding, of the competitive proposal, then DM shall
accept Seller's counterproposal and the provisions of this
Article VI (and any meeting competitive bidding provisions
contained in the competitive proposal) will not be applicable
during the term of Seller's counterproposal for those Containers
supplied to the Facilities subject to the counterproposal. If
Seller declines to meet the competitive proposal, DM shall be
free to purchase Containers from the Offeror pursuant to the
competitive proposal commencing 60 days after the expiration of
the 30-day period; provided that, if prior to acceptance of the
competitive proposal in the aggregate the terms and conditions of
the competitive proposal are changed to be less favorable to DM,
DM shall resubmit such changed proposal to Seller for Seller's
counterproposal in accordance with this Article VI.
Notwithstanding anything herein to the contrary, the Containers
purchased from all Offerors shall not exceed, in any Supply Year,
one-half of the aggregate number of Containers to be furnished to
DM during that Supply Year from Seller and all Offerors. Subject
to the preceding sentence, any Containers purchased from the
Offerors shall reduce accordingly the minimum requirements which
DM must purchase from Seller under this Agreement.
ARTICLE VII
SPECIFICATION CHANGE; NEW CONTAINERS
7.1 Procedure for Identification. DM and Seller
acknowledge that it may be appropriate, from time to time, for
Seller to supply DM with Containers under this Agreement with a
change in specification from the version on Schedule 2.1 in
effect from time to time ("Spec Change") or of a type which were
not identified on Schedule 2.1 as of the date of this Agreement
("New Containers"). Schedule 7.1 sets forth the changes in
specification which constitute a Spec Change. If DM or Seller
desires to make a Spec Change or purchase or sell any New
Container under this Agreement, it shall submit to the other a
proposed new Schedule 2.1 identifying the Spec Change proposed to
be made or the New Container proposed to be supplied under this
Agreement (a "Proposal"). If the parties agree on the Proposal,
they shall initial the new Schedule 2.1 for that Spec Change only
and that new Schedule 2.1, as so initialed, shall thereafter
become a part of this Agreement for all purposes including, but
not limited to, the calculation of minimum volume requirements
referred to in Section 2 of this Agreement.
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7.2 Prices for Spec Changes and New Containers. The
selling price for a Container with a Spec Change shall be set so
that any decrease in Seller's manufacturing cost for such
Container resulting from such Spec Change shall be allocated 10%
plus Investment Cost as determined pursuant to Section 7.3 to
Seller and the remainder to DM. If the Spec Change results in an
increase in Seller's manufacturing cost for the Container, Seller
shall increase the price of such Container by such manufacturing
cost increase plus Investment Cost as determined pursuant to
Section 7.3. For any proposed Spec Change, Seller shall provide
DM as promptly as practical and with reasonable specificity, the
impact of such proposed Spec Change on Seller's costs. The
selling price for any New Container shall become effective upon
delivery of such New Containers and be set so that Seller's gross
profit margin on sales by Seller to DM of the New Container shall
be the same as that realized by Seller on sales to DM during the
six-month period immediately preceding the effectiveness of the
new Schedule 2.1 (the "Measurement Period") of the most nearly
comparable Container already being supplied by Seller to DM plus
Investment Cost as determined pursuant to Section 7.3. However,
if no reasonably comparable Container is then being supplied by
Seller to DM, then the gross profit margin on such New Container
shall be the same as the average gross profit margin on all
Containers being supplied by Seller to DM under this Agreement
during the Measurement Period plus Investment Cost as determined
pursuant to Section 7.3. The parties shall negotiate in good
faith to resolve any issues relating to the pricing of Spec
Changes and New Containers. If they do not reach agreement within
60 days after agreement on the Proposal, the dispute shall be
resolved in accordance with Section 19.9. For purposes of this
Agreement "gross profit margin" shall mean a fraction the
numerator of which shall be revenue recognized by Seller for the
sale of the Container to DM during the Measurement Period less
Seller's cost of goods sold for such Container during the
Measurement Period and the denominator of which shall be revenue
recognized by Seller for sale of the Container to DM during the
Measurement Period. Revenue and cost of goods sold shall be
determined in accordance with generally accepted accounting and
cost accounting principles used by Seller and consistently
applied.
7.3 Investment; Usage Percentage and Investment Cost.
In conjunction with any proposed Spec Change or New
Container Seller shall promptly provide DM with a statement of
any required Investment and Usage Percentage for each of the six
Supply Years following the required Investment. The "Investment"
shall be Seller's required investment in machinery and equipment,
inclusive of installation, delivery and implementation costs.
Investment Charge shall be 16.7% of any required Investment.
Financing Costs shall be the product of LIBOR plus 1% multiplied
by the Unamortized Investment. Unamortized Investment shall be
determined based on a six-year useful life and straight-line
amortization. For each of the six years following such required
Investment, Seller shall include in the computation of the
selling price the product of (a) Investment Charge plus Financing
Costs multiplied by (b) the Usage Percentage. which shall equal a
fraction, the numerator of which shall be the amount of
Containers manufactured for DM using such machinery and equipment
and the denominator of which shall be the amount of all
containers (including DM Containers) manufactured using such
machinery and equipment for the current Supply Year. Investment
Cost shall mean the amount calculated in the preceding sentence.
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7.4 Review. Gross profit margin calculations,
manufacturing cost savings or increases due to Spec Changes,
required Investments and Usage Percentage as described in this
Article VII shall be reviewed and confirmed in writing by
Seller's independent certified public accountants upon DM's or
Seller's request, as the case may be.
7.5 Effect of Seller's Failure to Supply Spec Changes
and New Containers. If, within 60 days after DM furnishes Seller
with a Proposal, Seller does not agree to and initial any new
Schedule 2.1 proposed by DM in good faith, DM shall be entitled
to purchase the Containers specified in the Proposal from any
third party; provided that if DM purchases the Containers
specified in the Proposal from PCP, if Seller notifies DM that it
accepts such Proposal and that Seller will supply any Containers
required by such Proposal in a timely manner and within 12 months
after DM furnished Seller with such Proposal, DM will purchase
such Containers from Seller pursuant to the terms of this
Agreement if, in fact, Seller delivers such Containers within
such 12-month period and, in such case, DM will cease purchasing
such Containers from PCP. Any such Containers DM purchases from
PCP or any other party shall reduce accordingly the minimum
requirements DM must purchase from Seller under this Agreement.
Any such Containers DM purchases from PCP or its affiliates shall
increase accordingly the 100 million Containers which DM can purchase from
PCP and its affiliates in such Supply Year.
ARTICLE VIII
TERM OF AGREEMENT
The term of this Agreement ("Term") shall commence on
the Effective Date and shall continue for a period of ten years.
The parties shall negotiate in good faith during the six-month
period commencing 18 months prior to the end of the Term (or any
extension) for an extension of the Term (or any extension), and
the Term (and any extension) shall automatically be extended for
additional five-year periods unless on or before 12 months prior
to the end of the Term (or any extension) either party notifies
the other of its intent to terminate this Agreement.
ARTICLE IX
FORCE MAJEURE
9.1 Seller's Obligations. Seller shall not be liable
to DM for any failure or delay by Seller in the performance of
any of Seller's obligations under this Agreement due to events
beyond Seller's reasonable control, including, but not limited
to, fire, storm, flood, earthquake, explosion, accident, acts of
a public enemy, wars, riots, public disorders, sabotage, strikes,
lock-outs, labor disputes, failures or delays of energy,
transportation embargoes or delays, inability to obtain materials
(except where such inability results from Seller's failure to
order sufficient quantities of materials or comply with delivery
lead times specified by suppliers), acts of God, acts or
regulations of government or inability of Seller to perform its
obligations as a result of any breach by DM of its obligations
under any of the lease agreements between DM and Seller relating
to the former DM container manufacturing facilities (the
"Leases"). However, if Seller is unable to supply the required
quantity of Containers because of any such circumstance, Seller
shall grant DM a priority over all of Seller's other customers
and needs with
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respect to Containers made from the DM facilities
purchased or leased by Seller referred to in the background
Section of this Agreement.
9.2 DM's Obligations. DM shall not be liable to Seller
for any failure or delay by DM in the performance of any of DM's
obligations under this Agreement (excluding, however, the payment
of monies otherwise due under this Agreement for Containers for
which ownership has been transferred to DM), including any delay
or failure by DM to accept or use conforming Containers as
ordered, if such failure or delay is due to any event beyond DM's
reasonable control, including, but not limited to, those force
majeure events identified in Section 9.1.
9.3 Notice of Force Majeure. Either party unable to
perform due to force majeure conditions shall promptly advise the
other party of the probable extent of its inability to perform
and shall take all reasonable actions to lessen the impact on the
other party's business (including, in Seller's case, the building
of inventories in anticipation of, in Seller's reasonable belief,
labor disputes). When any force majeure event operating to excuse
performance by either party shall cease, this Agreement shall
continue in full force and effect until all deliveries have been
completed or until the earlier expiration or termination of this
Agreement in accordance with its terms.
ARTICLE X
DM'S RIGHT TO COVER
If Seller, for any reason (other than DM's breach
under this Agreement or under the Leases or as otherwise
permitted in this Agreement), including, but not limited to, a
force majeure event as described in Article 1X, fails to deliver
conforming Containers to DM at the required location by the
delivery date specified by DM to Seller, Seller will use its best
efforts to obtain an alternate supply of Containers for DM at no
cost increase to DM. If Seller cannot obtain such an alternate
supply, DM may, in addition to any other rights or remedies
available to DM under applicable law, purchase from other
sources, only during any such period of failure or delay in
performance by Seller, the type and volume of Containers that
were scheduled for delivery to DM during the period of failure or
delay in performance. Such purchases shall reduce accordingly the
minimum requirements which DM must purchase from Seller under
this Agreement. Any such Containers DM purchases from PCP or its
affiliates shall increase accordingly the 100 million Containers
which DM can purchase from PCP and its affiliates in such Supply
Year only. In addition, DM shall notify Seller of any increased
cost (including freight and handling) incurred by DM in acquiring
such Containers from other sources, and, except for any failure
by Seller due to a force majeure event described in Article IX or
due to a breach by DM under this Agreement or the Leases, Seller
shall immediately credit or reimburse DM for any such cost
increase incurred.
ARTICLE XI
QUALIFICATION OF CONTAINERS; TECHNICAL SUPPORT
11.1 Qualification of Containers. DM reserves the
right to qualify Seller's production capabilities according to
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DM's quality assurance standards. DM hereby represents and
warrants to Seller that the container production facilities of DM
immediately prior to the closing under the Purchase Agreement are
qualified according to DM'S quality assurance standards for those
Containers produced at each such Facility. DM shall have the
right to make reasonable changes to its quality assurance
standards, and if DM changes any of its quality assurance
standards, it shall notify Seller in writing of any change in
detail and shall give Seller adequate opportunity to conform its
production capabilities accordingly. DM shall not unreasonably
withhold qualification of Seller's production capabilities in
accordance with DM's quality assurance standards and shall
exercise its best efforts to qualify Seller's production
capabilities in accordance with customary industry practice.
Seller shall not change any specifications for Containers without
the prior written consent of DM. Seller shall reimburse DM for
any costs reasonably incurred by DM in performing qualifying runs
for Containers if and to the extent that such qualifying runs
result in unsalable Product.
11.2 Inspection. DM shall have the right periodically
to inspect Seller's facilities at which Containers are
manufactured. Such inspection shall be during normal business
hours and upon at least three business days' notice to Seller.
11.3 Technical Support. Upon DM's reasonable request,
Seller shall provide technical support to those canneries at
which Containers are filled in accordance with industry standards
and at no cost to DM. Upon DM's reasonable request, Seller shall
provide technical support for DM's Philippine container
manufacturing operations, PCP and any Product Sourcing Container
arrangements to which DM is a party; provided that Seller's
personnel shall not be required to visit DM's Philippine
facilities more than twice in any calendar year. DM and Seller
shall cooperate to provide technical assistance relating to
Polystar lids. Technical support shall consist of advice on
engineering reviews of new equipment, advice on line
productivity, use of laboratory facilities to research container
failures, development of container specifications and similar
matters. DM shall reimburse Seller for all of Seller's reasonable
costs, including without limitation, out-of-pocket costs, for
such support within 30 days after submission of invoices from
Seller. At DM's request, Seller will also supply DM with metal
for PCP's container manufacturing, at Seller's cost (with
freight) and on customary terms for purchases of this type.
11.4 Research and Development Cooperation. The parties
intend to cooperate in research and development relating to the
manufacture and coating of containers. In connection with such
cooperation, each party shall maintain in confidence and shall
not disclose or otherwise use for a period of five years after
disclosure any information of a confidential or business
sensitive nature disclosed by the other party. This obligation of
confidentiality shall not apply to material which
(a) is in or later enters the public domain by public
use, publication, general or public knowledge or the like,
through no fault of the receiving party;
(b) is obtained from a third party which has the legal
right to use and disclose the same to receiving party;
(c) either party already possesses, as evidenced by its
written records, predating receipt thereof from the other party;
or
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(d) is developed by either party independently of the
information disclosed.
The parties agree that ownership of all right, title and interest
to information disclosed in connection with such research and
development cooperation and the inventions and trade secrets
related thereto or based thereon shall remain the property of
the-disclosing party and that the receiving party shall not
obtain any rights to such information or related inventions or
trade secrets by way of license, shop right or otherwise. Seller
will make available to DM Seller's manufacturing facilities for a
reasonable number of test runs of containers, coatings, seals or
other items relating to containers. Such test runs shall take
place at the manufacturing facility selected by Seller and shall
be scheduled to minimize any disruption to Seller's commercial
operations. The cost to DM for such test runs shall be Seller's
labor and materials cost, including a reasonable charge for set
up and change over of any manufacturing line.
ARTICLE XII
RETURNABLE PACKAGING MATERIALS
12.1 Packaging Specifications. DM's current packaging
specifications are set forth on Schedule 2.1 to this Agreement.
DM will consider in good faith any proposed changes to these
specifications if DM's functional performance criteria (set forth
on Schedule 2.1) are satisfied.
12.2 Coding. Can identification coding and cook check
standards used by Seller must comply with DM's product
certification program as currently in effect and as that program
may be changed in the future. DM shall notify Seller at least 45
days before any change in DM's certification program.
12.3 Title to Packaging Materials. All packaging
materials for Containers supplied by Seller, including, but not
limited to, pallets, top frames and separators, shall remain the
property of Seller. All packaging materials for Containers
supplied by DM, including but not limited to pallets and top
frames, shall remain the property of DM. The parties shall return
all such other party's materials to the other party's closest
plant, except to the extent, if any, that such other party wishes
to exclude certain items from the provisions of this Section
12.3. Each party shall pay the transportation costs for return of
its own packaging materials.
12.4 Annual Settlement of Packaging Materials. Seller
shall maintain a daily inventory record of pallets and top frames
shipped to, and returned by, DM. DM shall maintain inventory
records of pallets and top frames shipped to, and returned by,
Seller. As of the end of each three-month period in each Supply
Year, Seller shall determine from such records the quantity (if
any) of pallets and top frames: (a) shipped by Seller or DM to
the other party during such three-month period and (b) not
returned during that period. If those records show in any Supply
Year that either party owes the other more than 10,000 pallets or
top frames (other than those excluded pursuant to Section 11.3),
such party shall pay the other $12.00 per pallet and $3.00 per
top frame for such excess shortage within 90 days after the end
of such Supply Year. The parties shall furnish a copy of such
inventory records to the other as often as such other party may
reasonably request and shall cooperate with each other to
reconcile such inventory records.
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12.5 Transition of 45 x 50 Two-Way Pallets. DM will
cooperate with Seller in the orderly transition from 45 x 50
Two-Way pallets and top frames to 44 x 56 Four-Way pallets and
top frames, with all transition costs to be paid by Seller.
ARTICLE XIII
CLAIMS, WARRANTIES AND LIMITATIONS OF LIABILITY
13.1 Container Specifications. Seller warrants that
all Containers delivered to DM will conform to the Container
specifications set forth in Schedule 2.1 to this Agreement as
that Schedule may be amended from time to time in accordance with
this Agreement. The acceptance criteria relating to Container
quality and the AQL Plan to determine quality compliance are set
forth on Schedule 13.1. If Seller supplies any Containers to DM
which fail to conform to Schedule 2.1, as determined by those
acceptance criteria and the AQL Plan, unless Seller can supply
conforming Containers in a timely manner, DM shall be entitled to
purchase substitute Containers from a third party. Such purchases
shall reduce accordingly the minimum requirements which DM must
purchase from Seller under this Agreement.
13.2 Compliance with Laws and Regulations. Seller
warrants that all Containers will be produced in accordance with
and will satisfy all applicable federal, state and local laws,
regulations and orders.
13.3 Title to Containers. Seller warrants that it will
convey to DM good title to all Containers delivered under this
Agreement, free and clear of any and all security interests and
other liens and encumbrances.
13.4 Infringement Claims. Seller shall indemnify and
hold DM harmless from and against any and all claims of patent
and other "intellectual property" infringement or misuse relating
to Containers and shall bear all costs and expenses, including
reasonable attorneys' fees, arising from or related to any such
claim, unless the claim arises from events which occurred before
the date of this Agreement or from DM's request for a Spec Change
or New Container. The term "claim" as used in the preceding
sentence includes, but is not limited to, any claim for temporary
or permanent injunctive relief. DM represents and warrants to
Seller that none of the specifications set forth on Schedule 2.1
delivered on the date hereof infringe the intellectual property
rights of any third party.
13.5 Shelf Life Warranty. DM warrants to Seller that
each container manufactured by DM prior to the effective date of
this Agreement for the Product or Products designated by DM and
listed on Schedule 2.1 to this Agreement provides the Product
packed in such container a shelf life of at least 24 months (and
at least 36 months for vegetables) at a mean temperature of
72(degree) F from time of use by DM. In reliance upon the
preceding sentence, Seller warrants that each Container delivered
by Seller to DM for the Product or Products designated by DM and
listed on Schedule 2.1 to this Agreement, as it may be modified
from time to time in accordance with this Agreement, shall assure
that the Product packed in the Container will have a shelf life
of at least 24 months (and at least 36 months for vegetables) at
a mean temperature of 72(degree) F from time of use by DM, except
for those Containers for which DM insists on a Spec Change or New
Container with which Seller reasonably disagrees in good faith in
writing before
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it manufactures the Container in question.
Seller's warranty under this Section 13.5 assumes that the
Product identified on Schedule 2.1 shall remain substantially
unchanged as to formulation and content during the Term. If DM
elects to make changes to the formulation or content of the
Product which, to DM's knowledge after due inquiry, might cause
the Container to be used for that Product to be inadequate or
inappropriate to assure the required 24-month (or 36-month for
vegetables) shelf life at a mean temperature of 72(degree) F, DM
shall notify Seller at least 60 days before the change and Seller
shall confirm the continued appropriateness of the Container for
use with the Product or to request changes in the specifications
for the Container if required in Seller's opinion by changes to
the Product. Such changes in specifications shall be in
accordance with the procedures set forth in Article VII of this
Agreement. The parties agree that tomatoes are fruits and not
vegetables.
13.6 Limitations on Warranties. Except as set forth in
this Article XIII:
SELLER EXTENDS NO WARRANTIES, EXPRESS OR
IMPLIED, AND NO WARRANTY WITH RESPECT TO
MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
Seller's liability for Containers which do not conform
with the warranties provided in this Agreement shall be limited
(a) with respect to personal injury, to the coverage available
under the insurance policy referred to in Article XIV of this
Agreement and (b) with respect to all other damage, loss or
injury, to the sum of DM's cost of the defective Containers, DM's
cost of the contents of the Containers lost as a result of the
defects, DM's cost of recovery and disposition of the defective
Containers and DM's incremental labor and overhead cost of lost
production time caused by the Containers. DM shall exercise
reasonable diligence to discover any defects in Containers before
filling them with Products.
ARTICLE XIV
INSURANCE
Seller, at its cost, shall maintain broad form
comprehensive general liability insurance, including product
liability insurance with limits in an amount not less than
$30,000,000 in the aggregate which shall include DM as an
additional named insured and shall require the insurer to give DM
at least 30-days' advance notice of any cancellation or
expiration of the policy, or of any significant change in the
coverage, scope or amount of the policy. On or before 30 days
after the Effective Date, Seller will provide DM with a
certificate of insurance evidencing the above coverage,
additional insured endorsement, and thereafter Seller shall
promptly provide DM notice of cancellation or change in policy
conditions.
ARTICLE XV
SALE OF REJECTED CONTAINERS
Seller shall not resell, except for scrap, any
Containers rejected or not purchased by DM which bear any
trademarks or trade names of DM or DM's customers.
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ARTICLE XVI
LABOR DISPUTES
Seller agrees that, whenever an actual or potential
labor dispute delays or could be reasonably expected to delay the
timely performance of this Agreement, Seller shall promptly give
notice of such actual or potential dispute to DM.
ARTICLE XVII
TITLE TO DRAWINGS
Seller shall at all times have title to all drawings
and specifications used in connection with this Agreement
provided that DM shall at all times be entitled to retain and use
(without any further consideration) copies of all such drawings
and specifications.
ARTICLE XVIII
BREACH AND WAIVER
18.1 Event of Default. Each of the following shall
constitute an Event of
Default:
(a) the making by a party of any general assignment
for the benefit of creditors; or the filing by or against a
party of a petition to have such party adjudged a bankrupt
or a petition for reorganization or arrangement under any
bankruptcy law which, in the case of a petition filed
against a party, is not dismissed within 60 days of filing;
and
(b) the material breach of any obligation pursuant
to this Agreement.
18.2 Effect of Default. If either party commits an
Event of Default, the other party may immediately in the case of
Section 18.1(a) and 30 days after notice and failure to cure (or
such longer period if such failure cannot be reasonably cured
within 30 days of notice, so long as such defaulting party
diligently takes all steps necessary to cure such failure) in the
case of Section 18.1(b), in addition to and without prejudice to
its other lawful rights and remedies, terminate this Agreement at
any time upon notice to the other party. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL OR
PUNITIVE DAMAGES.
18.3 Nonwaiver. No course of conduct or delay on the
part of either party in exercising any of its rights under this
Agreement shall waive any rights of that party or modify this
Agreement.
ARTICLE XIX
MISCELLANEOUS
19.1 Notices. All notices, demands and requests
required or permitted to be given under this Agreement shall be
in writing and shall be deemed duly given three business
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days after mailing if mailed by certified or registered mail, postage
prepaid, or on the date of delivery if delivered personally or
one business day after deposit with a nationally recognized
overnight courier, in all cases subject to the subsequent
designation of another address in accordance with this Section
18.1, if addressed as follows:
If to Seller:
Silgan Containers Corporation
3800 W. Alameda Avenue
Suite 900
Burbank, CA 91505
Attention: Mr. James D. Beam
With a copy to:
Silgan Corporation
4 Landmark Square, Suite 301
Stamford, CT 06901
Attention: D. Greg Horrigan
and
Winthrop, Stimson, Putnam & Roberts
Financial Centre
695 East Main Street
P.O. Box 6760
Stamford, CT 06904-6760
Attention: G. William Sisley, Esq.
If to DM:
Del Monte Corporation
One Market
P.O. Box 193575
San Francisco, California 94119-3585
Attention: Phyllis Kay Dryden
With a copy to:
Heller, Ehrman, White & McAuliffe
525 University Avenue, Suite 1100
Palo Alto, California 94301
Attention: August J. Moretti
19.2 Assignment. This Agreement shall not be assigned
by any party without the prior written consent of the other
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party, except that either party may transfer or assign this
Agreement to any Affiliate (as defined in the Purchase Agreement)
of such party upon any merger, consolidation, sale of all or
substantially all of the assets of such party (or, in the case of
Seller only, all or substantially all of the Assets (as defined
in the Purchase Agreement) of the Business (as defined in the
Purchase Agreement) or, in the case of DM only, all or
substantially all of the assets of all of the Facilities) or
other similar business combination with or to such Affiliate of
such party without the prior written consent of the other party.
This Agreement shall be binding upon and shall inure to the
benefit of the successors and permitted assigns of both parties
and upon all persons or corporations succeeding to their
respective businesses.
19.3 Modifications. This Agreement may not be modified
and no provision of this Agreement may be waived unless the
modification or waiver is in writing and is signed by an
authorized representative of each party.
19.4 Confidentiality. Each party to this Agreement
shall hold in confidence and use only for its benefit in
performing this Agreement, any confidential technical information
(including, without limitation, specifications, drawings, designs
and samples), pricing information, raw material sources, the data
on Schedule 2.1 and any other information, whether conveyed
orally or in writing, furnished by one to the other in connection
with this Agreement. No party to this Agreement shall have
liability for disclosures of information made in accordance with
requirements imposed by any applicable law, rule or regulation or
by any court or regulatory agency with proper jurisdiction if the
party of whom disclosure is required reasonably assists and
cooperates with the other party in attempting to preserve the
confidentiality of the information, including, without
limitation, notifying the other party upon learning of any such
disclosure requirement and not disclosing the information earlier
than is required.
19.5 Independent Contractors. The parties acknowledge
that the relationship established under this Agreement shall be
that of independent contractors. Seller and DM shall not be
deemed partners, joint venturers or agents for one another for
any purpose whatsoever.
19.6 Corporate Authority. Each party warrants to the
other that it has the corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated by
this Agreement and that this Agreement has been duly executed and
delivered on its behalf.
19.7 Further Documentation. Each of the parties agrees
to furnish to the other such additional documents and instruments
as shall be reasonably requested to effectuate the purposes of
this Agreement.
19.8 Severability. If any provision of this Agreement
is determined by a court of competent jurisdiction to be null and
void or unenforceable, that provision shall be deemed to be
severed, and the remaining provisions of this Agreement shall
remain in full force and effect.
19.9 Dispute Resolution. Any disputes arising pursuant
to this Agreement and relating to cost, Cost Notices, Investment,
Allocated Cost Savings, manufacturing cost, gross profit margin
or similar matters shall be submitted to the accounting firm of
Arthur Andersen & Co. ("AA"), and its determinations shall be
final and binding on all parties. Determinations of such matters
shall be made in accordance with United States Generally Accepted
Accounting Principles and, United States Generally Accepted Cost
Accounting Principles, in each case, consistently applied, in
each case as modified by the specific provisions of this
Agreement. All costs of AA shall be shared equally by the
parties. All other disputes arising pursuant to this Agreement
shall be submitted to binding arbitration in San Francisco,
California pursuant to the then applicable rules of the American
Arbitration Association.
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19.10 Governing Law. This Agreement shall be governed
by the laws of the State of California applicable to contracts
between California residents and wholly to be performed in
California.
19.11 Entire Agreement. This Agreement, including its
Schedules as they may be modified from time to time in accordance
with this Agreement, contains all the terms agreed upon by the
parties with respect to its subject matter and supersedes any and
all prior and contemporaneous agreements, representations and
warranties of the parties regarding that subject matter.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date that appears in the first paragraph of
this Agreement.
DEL MONTE CORPORATION
By /s/ David L. Meyers
Title Executive Vice President & CFO
SILGAN CONTAINERS CORPORATION
By /s/ D. Greg Horrigan
Title /s/ Chairman of the Board
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AMENDMENT TO SUPPLY AGREEMENT
THIS AMENDMENT TO SUPPLY AGREEMENT (this "Amendment")
is made and entered into as of December 21, 1993 by and between
DEL MONTE CORPORATION, a New York corporation ("DM"), and SILGAN
CONTAINERS CORPORATION, a Delaware corporation ("Seller").
B A C K G R O U N D
DM and Seller are parties to that Supply Agreement
made and entered into as of September 3, 1993 (the "Supply
Agreement"). DM and Seller desire to amend the Supply Agreement
as set forth in this Amendment. Accordingly, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Any terms used in this Amendment without definition
shall have the meanings set forth in the Supply Agreement.
ARTICLE II
MEXICAN FACILITIES
Schedule 2.1 to the Supply Agreement is hereby amended
to clarify that the Mexican Facility referred to in such Schedule
2.1(a) is the DM cannery located in Irapuato, Mexico.
ARTICLE III
SCHEDULE 2.1(e)
Schedule 2.1(e) to the Supply Agreement is hereby
amended by deleting such Schedule 2.1(e) in its entirety and
replacing it with Schedule 2.1(e) set forth in Exhibit 2 hereto.
By January 15, 1994, Seller shall revise and reissue
to DM Schedule 2.1(e) to the Supply Agreement (which shall
replace the Schedule 2.1(e) attached hereto). Such revised
Schedule 2.1(e) shall effect the following: (i) the Metal Cost
component of selling price and the Labor Cost component of
selling price for each Container will be reduced by the amount of
margin contained in those components, and (ii) the Other Cost
component of selling price of each Container will be increased by
such amount of price reduction in the Metal Cost and Labor Cost
components. The result, therefore, will be no change in the
individual or aggregate selling price for all Containers as set
forth in Schedule 2.1(e) attached hereto.
<PAGE>
ARTICLE IV
AMENDMENT TO SECTION 2.3
The phrase "the last sentence in Section 2.1" that is
contained in the third sentence of Section 2.3 of the Supply
Agreement is hereby amended by deleting such phrase in its
entirety and inserting in place therefor "the second sentence in
Section 2.1."
ARTICLE V
CONTAINER REQUIREMENTS PLAN; SUPPLY SCHEDULE; WORKING CAPITAL
1. Sections 3.1 and 3.2 of the Supply Agreement are
hereby amended by deleting such Sections 3.1 and 3.2 in their
entirety and inserting in place therefor the following:
3.1 Container Requirements Plan. On the date of
effectiveness of this Agreement (for the 1994 Supply Year)
and prior to November 15 before each subsequent Supply Year
thereafter, DM shall furnish Seller with a "Container
Requirements Plan" for such Supply Year, which Container
Requirements Plan shall set forth DM's good faith written
estimate, by type of Container and delivery location, of
the quantity of Cans estimated to be needed for such Supply
Year and the Quantity of Ends to be affixed to such Cans.
"Supply Year" shall mean a calendar year during the Term of
this Agreement (based on DM's accounting month). The
Container Requirements Plan for a Supply Year shall be
adjusted by DM as follows: no later than the 20th calendar
day of each month during such Supply Year, DM shall furnish
Seller with DM's good faith written estimate of the revised
Container Requirements Plan, by type of Container and
delivery location, for the remaining months of such Supply
Year, provided that during the packing season (which is the
period from July 1 to October 31 of each year) DM shall
revise such Container Requirements Plan as soon as
practical but at least no later than the 20th calendar day
of each such month.
3.2 Supply Schedule. On the date of effectiveness of
this Agreement (for the 1994 Supply Year) and prior to
December 15 before each subsequent Supply Year thereafter,
Seller shall furnish DM with a "Supply Schedule" for such
Supply Year, which Supply Schedule shall indicate the
estimated quantity and type of Cans and Ends to be supplied
by Seller by DM accounting month for each DM Facility and
which shall satisfy the Container Requirements Plan for
such Supply Year. Such Supply Schedule shall be revised
monthly on or before the 30th calendar day of each month in
which Seller receives a revised Container Requirements Plan
and shall serve as the basis for DM's arrangement of
shipments and space planning. In any Supply Year, DM shall
be obligated to purchase no less than, and Seller shall be
obligated to sell no more than, that number and type of
Containers as shall equal the sum of the periodic monthly
estimates set forth in the Supply Schedule (as revised in
accordance with this Section) for each type of Container
for that Supply Year. The parties agree to cooperate and
use their reasonable best efforts to resell any excess Cans
or Ends which DM has purchased.
-2-
<PAGE>
Seller will notify DM immediately if Seller anticipates
that it will be unable to provide Containers to DM in
accordance with DM's most recent Container Requirements
Plan. Seller shall advise DM's transportation department of
transit requirements from Seller's location to the DM
delivery location for Containers supplied by Seller as
required by this Section 3.2 and the most recent Supply
Schedule for the current Supply Year. DM's transportation
department will arrange for transportation of such
Containers.
2. Section 3.4 of the Supply Agreement is hereby
amended by deleting such Section 3.4 in its entirety and
inserting in place therefor the following:
On the date of effectiveness of this Agreement (for
the 1994 Supply Year) and prior to December 15 before each
subsequent Supply Year thereafter, Seller shall formulate
and deliver to DM a Working Capital Plan for such Supply
Year (a sample of which is attached hereto as Schedule
3.4(a)) which shall be based on the Containers Requirements
Plan and Supply Schedule for such Supply Year and shall
indicate the estimated Container Costs for Cans and Ends to
be supplied by Seller and purchased by DM (resulting in
inventory of DM) in accordance with this Agreement for all
Container Requirements Plan requirements for each month of
such Supply Year. Such amount of inventory for each such
month (revised as provided below), less the estimated
amount of accrued and unpaid payables owing to Seller for
such Cans and Ends at the end of each such month (as set
forth in the Working Capital Plan), shall equal DM's
working capital for each such month. The monthly average of
such amount of inventory for such Supply Year less the
monthly average of such payables for such Supply Year
(excluding the average amount of Payables Extension Memos
outstanding at each such month end) shall equal DM's
"Average Working Capital" for such Supply Year. If DM's
Average Working Capital for such Supply Year exceeds the
"Cap" for such Supply Year, then Seller shall issue to DM a
Payables Extension Memo in such amount, which Payables
Extension Memo shall entitle DM to maintain (beyond the
terms provided in Section 3.3 hereof) an outstanding
payable to Seller in such amount. Each month (within ten
days after DM's month end (the "Delivery Date")) the
Container Requirements Plan, Supply Schedule and Working
Capital Plan for the current Supply Year shall be updated
and adjusted by the parties, respectively, for actual
information for the prior month (which actual information
shall include Container Costs for Containers filled, ending
DM Inventory (as hereinafter defined), ending inventory of
unfilled Containers supplied by Seller, purchases of Cans
and Ends from Seller, and ending payables balance of DM)
and, if necessary, as the Container Requirements Plan and
Supply Schedule for such Supply Year are adjusted. Each
time the Working Capital Plan for a Supply Year is adjusted
as provided above: (i) if DM's Average Working Capital for
such Supply Year (calculated as provided above) is
increased from the amount last calculated for such Supply
Year, then, one business day after the Delivery Data,
Seller shall issue a new Payables Extension Memo which
shall replace the Payables Extension Memo last previously
issued for such Supply Year and DM shall be entitled to
maintain (beyond the terms provided in Section 3.3 hereof)
an outstanding payable to Seller in such new amount or (ii)
if DM's Average Working Capital for such Supply Year
(calculated as provided above) is decreased from the amount
last calculated for such Supply Year, then, one
-3-
<PAGE>
business day after the Delivery Date, Seller shall issue a
new Payables Extension Memo which shall replace the
Payables Extension Memo last previously issued for such
Supply Year and DM (A) shall pay to Seller (such payment to
be made with the next payment by DM of payables to Seller
in accordance with Section 3.3 hereof) an amount equal to
such decrease and (B) shall be entitled to maintain (beyond
the terms provided in Section 3.3 hereof) an outstanding
payable to Seller in the amount set forth in such new
Payables Extension Memo. Examples of adjustments to the
sample Working Capital Plan attached hereto as Schedule
3.4(a) and, accordingly, adjustments to DM's Average
Working Capital are attached hereto as Schedule 3.4(b).
At the end of the Term or this Agreement, the
aggregate amount of all outstanding Payable Extension Memos
shall be paid by DM to Seller.
At the end of each Supply Year during the Term of this
Agreement, (i) Seller shall pay to DM an interest charge in
an amount equal to the Interest Factor multiplied by the
amount by which DM's actual Average Net Working Capital for
such Supply Year exceeded the Cap for such Supply Year, or
(ii) if DM's actual Average Working Capital for such Supply
Year exceeded the Cap and DM's Average Net Working Capital
for such Supply Year was less than the Cap, then DM shall
pay to Seller an interest charge in an amount equal to the
Interest Factor multiplied by the amount by which DM's
actual Average Net Working Capital for such Supply Year was
less than the Cap for such Supply Year. For purposes
hereof, the term "Average Net Working Capital" for a Supply
Year shall mean the Average Working Capital for such Supply
Year less the average amount of Payables Extension Memos
outstanding for such Supply Year and the term "Interest
Factor" shall mean LIBOR (or any successor interest rate)
at December 31 of the applicable Supply Year plus 2 1/2%.
For the 1994 Supply Year, the "Cap" shall be
$18,000,000.
The Working Capital Plan for the 1994 Supply Year is
attached hereto as Schedule 3.4(c). For the 1994 Supply
Year, the parties acknowledge that DM will have an
inventory of cans not supplied by Seller. DM shall provide
Seller with an estimate (to be adjusted for actual and
updated monthly) of such inventory as soon as possible
(such cans being the "DM Inventory"). For purposes of
calculating DM's Average Working Capital, DM Inventory
shall not be used in the inventory of Cans used to
calculate DM's Average Working Capital. However, the
Working Capital Plan shall assume that DM Inventory by
Container specification will be used to meet fill
requirements before any such Container specification
supplied by Seller is used. For all Supply Years other than
the 1994 Supply Year, the Working Capital Plan shall assume
the following: if all containers purchased by DM other than
from Seller (as provided for herein) are expected to be
used for a certain percent of the total fill requirements
for such Supply Year, then each month's fill requirements
for such Supply Year will be assumed to be met using such
certain percent of such containers and the remaining
percent using Cans supplied by Seller, unless DM can
account for such container usage (excluding any containers
purchased from PCP which shall be accounted for as provided
above) to the reasonable
-4-
<PAGE>
satisfaction of Seller, in which case each month's fill
requirements for such Supply Year will be assumed to be met
in accordance with such accounting method.
For purposes of this Section 3, "month" shall mean
DM's accounting month, which in any calendar quarter shall
be four, four and five weeks, respectively.
The Cap for the second and succeeding Supply Years
will be calculated on the last business day of January of
each Supply Year by DM (as reasonably agreed to by Seller)
by multiplying the Cap for the most recently completed
Supply Year by a fraction, the numerator of which will be
DM's estimated Container Costs from Seller for such Supply
Year as set forth on Schedule 2.1 as of the commencement of
such Supply Year and the denominator of which will be
Container Costs actually incurred by DM from Seller for the
most recently completed Supply Year Plus the DM Inventory
used in such recently completed Supply Year. Until the Cap
for each of the second and succeeding Supply
Years is calculated as provided above, the parties shall
use a Cap for each such Supply for purposes hereof which is
DM's good faith estimate of the Cap for such Supply Year.
The term Container Costs shall mean the aggregate of the
selling price for each Container as set forth in Schedule
2.1 multiplied by the number of units of such Container
Supplied by Seller to DM plus applicable freight for the
applicable Supply Year.
ARTICLE VI
METAL COSTS
Subparagraph (a) of Section 5.1 of the Supply
Agreement (which subparagraph begins "The metal cost component of
selling price . . .") is hereby amended by deleting such
subparagraph in its entirety and inserting in place therefor the
following:
At July 1, 1994, the metal cost component of selling
price for each Container as set forth in Schedule 2.1 shall
be adjusted (increased or decreased) to Seller's actual
cost of metal as of that date from the "Base Cost" (as set
forth in the letter dated December 16, 1993 from James Beam
of Seller to Kevin McKee of DM). Thereafter, the metal cost
component of selling price for each Container as set forth
in Schedule 2.1 shall be adjusted (increased or decreased)
to reflect changes in costs of metal actually incurred by
Seller. Such metal price adjustment (increase or decrease)
referred to in the immediately preceding sentence shall
take place thirty (30) days after the date Seller actually
incurs a price change in the cost of metal. Metal prices
shall not be increased prior to July 1, 1994.
ARTICLE VII
PROCTOR & GAMBLE
The Supply Agreement is hereby amended by adding the
following new Section to the Supply Agreement immediately
following Section 2.7 and immediately before Article III:
-5-
<PAGE>
2.8 Procter & Gamble. DM hereby agrees that it will not
cancel or terminate that certain Containers Purchase
Agreement dated as of March 2, 1990 (the "Container
Purchase Agreement") between DM and The Procter & Gamble
Company ("P & G") prior to March 2, 1995 and that it will
purchase from Seller in accordance with this Agreement all
Containers (as defined in such Containers Purchase
Agreement) that it is required to sell to P & G under the
Containers Purchase Agreement.
ARTICLE VIII
COST SAVINGS
The Supply Agreement is hereby amended by adding the
following to Section 5.2 immediately before the penultimate
sentence of Section 5.2:
Attached hereto as Schedule 5.2 is a list of cost
savings items (from which DM and Seller agree to reasonably
cooperate to achieve and to work together to test and approve as
quickly as possible), it being understood that the cost savings
associated with all such items which accrue to Seller are
included in the selling prices for Containers set forth in
Schedule 2.1(e) and shall not be shared or allocated pursuant to
this Section 5.2 or Article VII.
ARTICLE IX
REAFFIRMATION
The parties hereby reaffirm all of the other terms and
conditions of the Supply Agreement. This Amendment amends the
Supply Agreement only to the extent specified herein and shall
not constitute an amendment to any other provision of the Supply
Agreement. From and after the date hereof, all references to the
Supply Agreement in the Supply Agreement and other documents
referred to therein shall be references to the Supply Agreement
as amended hereby.
-6-
IN WITNESS WHEREOF, the parties have caused this
Amendment to be duly signed and delivered as of the date that
appears in the first paragraph of this Amendment.
DEL MONTE CORPORATION
By /s/ Thomas E. Gibbons
Its Vice President
SILGAN CONTAINERS CORPORATION
By /s/ [signature illegible]
Its Vice President
-7-
<PAGE>
Exhibit 12.1
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Year Year Year Year Year
Ended Ended Ended Ended Ended
June 30, June 30, June 30, June 30, June 30,
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
Consolildated
pre-tax
income (loss) $ (4) $(142) $11 $15 $119
Interest
expense 74 68 61 76 67
Interest
portion of
rent expense 9 9 9 11 9
-- --- --- --- ---
Earnings $ 79 $(65) $81 $102 $195
==== ==== === ==== ====
Interest
expense $ 74 $68 $61 $76 $67
Interest
portion of
rent
expense(a) 9 9 9 11 9
-- --- --- --- ---
Fixed
charges $ 83 $77 $70 $87 $76
==== === === === ===
Ratio of
earnings to
fixed charges N/A N/A 1.2x 1.2x 2.6x
Surplus
(deficiency)
of earnings
available to
cover fixed
charges $ (4) $(142) $11 $15 $119
Pro Forma
Pro Forma Nine Months Nine Months
Year Ended Ended Ended
June 30, March 31, March 31,
1996 1997 1997
---- ---- ----
Consolildated
pre-tax
income (loss) $(9) $27 $18
Interest
expense 68 37 51
Interest
portion of
rent expense 9 8 8
-- -- --
Earnings $68 $72 $77
=== === ===
Interest
expense $68 $37 $51
Interest
portion of
rent
expense(a) 9 8 8
-- -- --
Fixed
charges $77 $45 $59
=== === ===
Ratio of
earnings to
fixed charges N/A 1.6x 1.3x
Surplus
(deficiency)
of earnings
available to
cover fixed
charges $(9) $27 $18
(a) Interest portion of rent expense is assumed equal to 33% of
operating lease and rental expense for the period.
<PAGE>
Exhibit 16.1
Conformed Copy
June 11, 1997
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Gentlemen:
We have read Item 19 of the Registration Statement on Form S-4
for $150,000,000 of the Senior Subordinated Notes due 2007, to be
filed with the Securities and Exchange Commission on or about
June 11, 1997, and are in agreement with the Statements contained
in the Change in Accountants paragraphs therein. We have no bases
to agree or disagree with other statements of the registrant
therein.
/s/ ERNST & YOUNG LLP
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF DEL MONTE CORPORATION
Subsidiary Jurisdiction
Mike Mac IHC, Inc. Delaware
Hi Continental Corporation California
Oak Grove Trucking Company California
All Subsidiaries are 100% owned by Del Monte Corporation.
SUBSIDIARY OF DEL MONTE FOODS COMPANY
Subsidiary Jurisdiction
Del Monte Corporation New York
Del Monte Corporation is 100% owned by Del Monte Foods Company.
<PAGE>
Exhibit 23.1
Conformed Copy
Consent of Independent Auditors
We consent to the reference of our firm under the caption
"Experts" and to the use of our report dated August 26, 1996,
with respect to the consolidated financial statements of Del
Monte Foods Company included in the Registration Statement (Form
S-4) and related Prospectus of Del Monte Foods Company for the
registration of $150,000,000 of Senior Subordinated Notes due
2007.
/s/ ERNST & YOUNG LLP
San Francisco, California
June 6, 1997
<PAGE>
Exhibit 25.1
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM T-l
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
------------
Marine Midland Bank
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Charles E. Bauer
Vice President
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-1792
(Name, address and telephone number of agent for service)
Del Monte Corporation
(Exact name of obligor as specified in its charter)
New York 56-1221479
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization)Identification No.)
One Market 94105
San Francisco, California (Zip Code)
(415) 247-3000
(Address of principal executive offices)
Series B 12 1/4% Senior Subordinated Notes due 2007
(Title of Indenture Securities)
<PAGE>
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory
authority to which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor
If the obligor is an affiliate of the trustee,
describe each such affiliation.
None
<PAGE>
Item 16. List of Exhibits.
Exhibit
T1A(i) * - Copy of the Organization
Certificate of Marine Midland Bank.
T1A(ii) * - Certificate of the State of New York
Banking Department dated December 31,
1993 as to the authority of Marine
Midland Bank to commence business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-Laws of Marine
Midland Bank as adopted on January 20,
1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland Bank
required by Section 321(b) of
the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report of condition
of the
trustee (March 31, 1997), published
pursuant to law or the requirement
of its supervisory or examining
authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
* Exhibits previously filed with the Securities and Exchange
Commission with Registration No. 33-53693 and incorporated
herein by reference thereto.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
the Trustee, Marine Midland Bank, a banking corporation and trust
company organized under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the
City of New York and State of New York on the 30th day of May,
1997.
MARINE MIDLAND BANK
By: /s/ Metin Caner
-------------------
Metin Caner
Vice President
<PAGE>
Exhibit T1 A (vii)
Board of Governors of the
Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance
Corporation
OMB Number: 3064-0052
Office of the Comptroller
of the Currency
OMB Number: 1557-0081
Federal Financial Institutions Examination Council Expires March 31, 1999
- --------------------------------------------------------------------------------
This financial information has not been reviewed,
or confirmed for accuracy or relevance,
by the Federal Reserve System.
Please refer to
page i, Table of
Contents, for the
required
disclosure of
estimated burden.
- --------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices -- FFIEC 031
Report at the close of business March 31, 1997 (950630)
This report is required by law; 12 U.S.C. ss. 324 (RCRI 9999)
(State member banks) 12 U.S.C. ss. 1817 (State This report is to be
nonmember banks)12 U.S.C. ss.161 (National banks). filed by banks with
branches and consolidated
subsidiaries in
U.S. territories and
possessions, Edge or
Agreement subsidiaries,
foreign branches,
consolidated foriegn
subsidiaries, or
International Banking
Facilities.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income The Reports of Condition and
must be signed by an authorized officer Income are to be prepared in
and the Report of Condition must be attested accordance with Federal
to by not less than two directors (trustees) regulatory authority
for State nonmember banks and three directors instructions.
for State member and National Banks. NOTE: These instructions may
in some cases differ from
generally accepted accounting
principles.
I, Gerald A. Ronning. Executive VP & Controller We, the undersigned directors
- ----------------------------------------------- (trustees), attest to the
Name and Title of Officer Authorized to Sign correctness of this Report of
Report Condition (including the
supporting schedules) and
of the named bank do hereby declare that these declare that it has been
Reports of Condition and Income (including examined by us and to the
the supporting schedules) have been prepared best of our knowledge and
in conformance with the instructions belief has been prepared in
issued by the appropriate Federal regulatory conformance with the
authority and are true to the best of my instructions issued by the
knowldege and believe. Federal regulatory authority
and is true and correct.
/s/ James H. Cleave
------------------------
Director (Trustee)
/s/ Gerald A. Ronning /s/ Bernard J. Kennedy
- --------------------------- ------------------------
Signature of Officer Authorized to Director (Trustee)
Sign Report
4/28/97 /s/ Malcom Burnett
- ---------- ------------------------
Date of Signature Director (Trustee)
- --------------------------------------------------------------------------------
For Banks Submitting Hard Copy Report Forms:
State Member Bank: Return the original and National Banks: Return the
one copy to the appropriate Federal Reserve original only in the special
District Bank. return address envelope provided.
If express mail is used in lieu
State Nonmember Banks: Return the original of the special return address
only in the special return envelope provided. envelope, return the original
If express mail is used in lieu of the only the FDIC, c/o Quality Data
special return address envelope, return Systems, 2127 Espey Court, Suite
the original only to the FDIC, c/o Quality 204, Crofton , MD 21114
Data Systems, 2127 Espey Court, Suite 204,
Crofton, MD 21114
- --------------------------------------------------------------------------------
FDIC Certificate Number 00589
- --------------------------------------------------------------------------------
(RCRI 9030)
<PAGE>
NOTICE
This form is intended to assist institutions with
state publication requirements. It has not been approved by any
state banking authorities. Refer to your appropriate state
banking authorities for your state publication requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo in the state of New York, at the
close of business March 31,1997
Thousands
of dollars
ASSETS
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin............ $ 1,026,267
Interest-bearing balances...... 2,219,196
Held-to-maturity securities.... 0
Available-for-sale securities.. 3,728,393
Federal funds sold and securities
purchased under agreements to
resell....................... 1,830,419
Loans and lease financing receivables:
Loans and leases net of unearned
income............................ 21,110,911
LESS: Allowance for loan and lease
losses....................... 441,315
LESS: Allocated transfer
risk reserve................. 0
Loans and lease, net of unearned
income allowance, and reserve..... 20,669,596
Trading assets...................... 1,005,199
Premises and fixed assets (including
capitalized leases)............... 217,027
Other real estate owned .............. 18,586
Investments in unconsolidated
subsidiaries and associated
companies........................... 0
Customers' liability to this bank
on acceptances outstanding......... 21,351
Intangible assets.................... 495,502
Other assets......................... 709,342
Total assets......................... 31,940,878
LIABILITIES
Deposits:
In domestic offices.................. 20,236,232
Noninterest-bearing................ 4,166,679
Interest-bearing.................. 16,069,553
In foreign offices, Edge, and
Agreement subsidiaries, and IBFs.. 2,639,327
Noninterest-bearing............... 0
Interest-bearing.................. 2,639,327
Federal funds sold and securities
purchased under agreements to
resell............................ 3,281,586
Demand notes issued to the U.S.
Treasury.......................... 197,415
Trading Liabilities................. 267,837
Other borrowed money:
With a remaining maturity of one
year or 1oss.................... 1,800,280
With a remaining maturity of more than one
year............................ 371,195
Bank's liability on acceptances executed
and outstanding.................... 21,351
Subordinated notes and debentures..... 497,585
Other liabilities..................... 525,585
Total liabilities..................... 29,838,393
Limited-life preferred stock and
related surplus..................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus............................. 0
Common Stock.......................... 205,000
Surplus............................... 1,983,378
Undivided profits and capital
reserves............................ (76,867)
Net unrealized holding gains (losses) on (9,026)
available-for-sale securities.......
Cumulative foreign currency translation
adjustments......................... 0
Total equity capital.................. 2,102,485
Total liabilities, limited-life
preferred stock, and equity
capital............................. 31,940,878
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 27.1
FINANCIAL DATA SCHEDULE
[TYPE] EX-27
[DESCRIPTION] ART.5FDS FILED WITH FORM S-4
[TEXT]
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE CONSOLIDATED
BALANCE SHEETS AT JUNE 30, 1996 AND MARCH 31, 1997
AND THE CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996 AND THE NINE
MONTH PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1997
<PERIOD-END> JUN-30-1996 MAR-31-1997
<CASH> 36 8
<SECURITIES> 0 0
<RECEIVABLES> 107 88
<ALLOWANCES> 1 1
<INVENTORY> 304 381
<CURRENT-ASSETS> 459 480
<PP&E> 391 378
<DEPRECIATION> 144 149
<TOTAL-ASSETS> 736 739
<CURRENT LIABILITIES> 252 296
<BONDS> 323 252
<COMMON> 2 2
213 213
0 0
<OTHER-SE> (304) (257)
<TOTAL-LIABILITY-AND-EQUITY> 736 739
<SALES> 1,304 934
<TOTAL REVENUES> 1,304 934
<CGS> 1,084 733
<TOTAL-COSTS> 1,084 733
<OTHER EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 67 37
<INCOME-PRETAX> 119 27
<INCOME-TAX> 11 2
<INCOME-CONTINUING> 105 25
<DISCONTINUED> 0 0
<EXTRAORDINARY> 10 4
<CHANGES> 7 0
<NET-INCOME> 88 21
<EPS-PRIMARY> 14.87 (127.13)
<EPS-DILUTED> 14.87 (127.13)
<PAGE>
</TABLE>
Exhibit 99.1
FORM OF LETTER OF TRANSMITTAL
DEL MONTE CORPORATION
DEL MONTE FOODS COMPANY
Offer to Exchange
Series B 12 1/4% Senior Subordinated Notes due 2007,
which have been registered under the Securities Act of 1933, as amended,
for any and all Outstanding
12 1/4% Senior Subordinated Notes due 2007
Pursuant to the Prospectus, dated _______ __, 1997.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME,
ON ___________ __, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON __________ __, 1997.
DELIVERY TO: BANKERS TRUST COMPANY, EXCHANGE AGENT
By Overnight Mail
By Mail: By Hand: or Courier:
- --------------------- --------------------- ---------------------------
BT Services Tennessee Bankers Trust Company BT Services Tennessee, Inc.
Inc. Receipt & Delivery Corporate Trust and
Reorganization Unit Window Agency Group
P.O. Box 292737 123 Washington Street, Reorganization Unit
Nashville, TN 1st Floor 648 Grassmere Park Road
37229-2737 New York, NY 10006 Nashville, TN 37211
For information call:
---------------------
(800) 735-7777
Confirm: (615) 835-3572
Facsimile: (615) 835-3701
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID
DELIVERY.
The undersigned acknowledges receipt of the
Prospectus, dated _______ __, 1997 (the "Prospectus"), of Del
Monte Corporation, a New York corporation ("DMC"), and Del Monte
Foods Company, a Maryland corporation ("DMFC") and this Letter of
Transmittal (this "Letter"), which together constitute the offer
(the "Exchange Offer") to exchange an aggregate principal amount
of up to $150,000,000 of Series B 12 1/4% Senior Subordinated
Notes due 2007 (the "New Notes") for an equal principal amount of
the outstanding 12 1/4% Senior Subordinated Notes due 2007 (the
"Old Notes"). Bankers Trust Company is the exchange agent for the
Exchange Offer (the "Exchange Agent").
For each Old Note accepted for exchange, the holder of
such Old Note will receive a New Note having a principal amount
at maturity equal to that of the surrendered Old Note. The New
Notes will accrue interest at the applicable per annum rate from
_______ __, 199_. Interest on the New Notes is payable on April
15 and October 15 of each year commencing _______ 15, 199_.
<PAGE>
Notwithstanding the foregoing, additional interest
("Additional Interest") shall become payable in respect of the
Old Notes as follows:
(i) if (A) neither a registration statement with
respect to the New Notes (the "Registration Statement") nor
a shelf registration statement covering resales of the Old
Notes (the "Shelf Registration Statement") is filed with
the Securities and Exchange Commission (the "Commission")
within 60 days following April 18, 1997 (the "Issue Date")
or (B) notwithstanding that DMC and DMFC have consummated
or will consummate the Exchange Offer, DMC and DMFC are
required to file a Shelf Registration Statement and such
Shelf Registration Statement is not filed on or prior to
the date required by the Registration Rights Agreement
dated as of April 18, 1997, by and among DMC, DMFC and BT
Securities Corporation, Bankers Trust International plc,
BancAmerica Securities, Inc. and Bear, Stearns & Co. Inc.,
then commencing on the day after either such required
filing date, Additional Interest shall accrue on the
principal amount of the Old Notes at a rate of .50% per
annum for the first 90 days immediately following each such
filing date, such Additional Interest rate increasing by an
additional .50% per annum at the beginning of each
subsequent 90-day period; or
(ii) if (A) neither the Registration Statement nor a
Shelf Registration Statement is declared effective by the
Commission within 135 days following the Issue Date or (B)
notwithstanding that DMC and DMFC have consummated or will
consummate an Exchange Offer, DMC and DFMC are required to
file a Shelf Registration Statement and such Shelf
Registration Statement is not declared effective by the
Commission on or prior to the 60th day following the date
such Shelf Registration Statement was filed, then,
commencing on the day after either such required effective
date, Additional Interest shall accrue on the principal
amount of the Old Notes at a rate of .50% per annum for the
first 90 days immediately following such date, such
Additional Interest rate increasing by an additional .50%
per annum at the beginning of each subsequent 90-day
period; or
(iii) if (A) DMC and DMFC have not exchanged New Notes
for all Old Notes validly tendered in accordance with the
terms of the Exchange Offer on or prior to the 45th day
after the date on which the Registration Statement was
declared effective or (B) if applicable, the Shelf
Registration Statement has been declared effective and such
Shelf Registration Statement ceases to be effective at any
time prior to the third anniversary of the Issue Date
(other than after such time as all Old Notes have been
disposed of thereunder), then Additional Interest shall
accrue on the principal amount of the Old Notes at a rate
of .50% per annum for the first 90 days commencing on (x)
the 46th day after such effective date, in the case of (A)
above, or (y) the day such Shelf Registration Statement
ceases to be effective in the case of (B) above, such
Additional Interest rate increasing by an additional .50%
per annum at the beginning of each subsequent 90-day
period;
provided, however, that the Additional Interest rate
on the Old Notes may not exceed in the aggregate 1.0% per anum;
provided, further, however, that (1) upon the filing of the
Registration Statement or a Shelf Registration Statement (in the
case of clause (i) above), (2) upon the effectiveness of the
Registration Statement or a Shelf Registration Statement (in the
case of clause (ii) above), or (3) upon the exchange of New Notes
for all Old Notes tendered (in the case of clause (iii)(A)
above), or upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of
clause (iii)(B) above), Additional Interest on the Old Notes as a
result of such clause (or the relevant subclause thereof), as the
case may be, shall cease to accrue.
Any amounts of Additional Interest due pursuant to
clause (i), (ii) or (iii) above will be payable in cash on the
original interest payment dates specified with respect to the Old
Notes.
2
<PAGE>
DMC and DMFC reserve the right (i) to delay acceptance
of any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer and not permit acceptance of Old Notes not
previously accepted if any of the conditions set forth in "The
Exchange Offer-- Conditions" section of the Prospectus shall have
occurred and shall not have been waived by DMC and DMFC, by
giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to amend the terms of
the Exchange Offer in any manner deemed by it to be advantageous
to the holders of the Old Notes. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly
as practicable by oral or written notice thereof to the Exchange
Agent. If the Exchange Offer is amended in a manner determined by
DMC to constitute a material change, DMC will promptly disclose
such amendment in a manner reasonably calculated to inform the
holders of the Old Notes of such amendment.
Without limiting the manner in which DMC and DMFC may
choose to make public announcement of any delay, extension,
amendment or termination of the Exchange Offer, DMC and DMFC
shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement.
This Letter is to be completed by a holder of Old
Notes either if Old Notes are to be forwarded herewith or if a
tender of Old Notes, if available, is to be made by book-entry
transfer to the account maintained by the Exchange Agent at The
Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in "The Exchange Offer"
section of the Prospectus. Holders of Old Notes whose
certificates are not immediately available, or who are unable to
deliver their certificates or confirmation of the book-entry
tender of their Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility (a "Book-Entry Confirmation")
and all other documents required by this Letter to the Exchange
Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth
in "The Exchange Offer--Guaranteed Delivery Procedures" section
of the Prospectus. See Instruction 1. Delivery of documents to
the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The undersigned has completed the appropriate boxes
below and signed this Letter to indicate the action the
undersigned desires to take with respect to the Exchange Offer.
3
<PAGE>
List below the Old Notes to which this Letter relates.
If the space provided below is inadequate, the certificate numbers
and principal amount of Old Notes should be listed on a separate
signed schedule affixed hereto.
- -----------------------------------------------------------------------
DESCRIPTION OF OLD NOTES 1 2 3
- -----------------------------------------------------------------------
Aggregate
Name(s) and Address(es) Principal Principal
of Registered Holder(s) Certificate Amount Amount
(Please fill in, if blank) Number(s)* of Old Note(s) Tendered**
- -------------------------- ---------- -------------- ----------
____________ ____________ ____________
____________ ____________ ____________
Total ____________ ____________
- -----------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed
to have tendered ALL of the Old Notes represented by the Old Notes
indicated in column 2. See Instruction 2. Old Notes tendered
hereby must be in denominations of principal amount of $1,000 and
any integral multiple thereof. See Instruction 1.
- -----------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE
EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution____________________________________
Account Number____________ Transaction Code Number______________
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)__________________________________
Window Ticket Number (if any)____________________________________
Date of Execution of Notice of Guaranteed Delivery_______________
Name of Institution which guaranteed delivery____________________
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number____________ 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:_________________________________________________________
_________________________________________________________________
4
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the
Exchange Offer, the undersigned hereby tenders to DMC the
aggregate principal amount of Old Notes indicated above. Subject
to, and effective upon, the acceptance for exchange of the Old
Notes tendered hereby, the undersigned hereby sells, assigns and
transfers to, or upon the order of, DMC all right, title and
interest in and to such Old Notes as are being tendered hereby.
The undersigned hereby represents and warrants that
the undersigned has full power and authority to tender, sell,
assign and transfer the Old Notes tendered hereby and that DMC
will acquire good and unencumbered title thereto, free and clear
of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim when the same are accepted by DMC.
The undersigned hereby further represents that any New Notes
acquired in exchange for Old Notes tendered hereby will have been
acquired in the ordinary course of business of the person
receiving such New Notes, whether or not such person is the
undersigned, that neither the holder of such Old Notes nor any
such other person is engaged in, or intends to engage in a
distribution of such New Notes, or has an arrangement or
understanding with any person to participate in the distribution
of such New Notes, and that neither the holder of such Old Notes
nor any such other person is an "affiliate," as defined in Rule
405 under the Securities Act of 1933, as amended (the "Securities
Act"), of DMC or DMFC.
The undersigned also acknowledges that this Exchange
Offer is being made based DMC's and DMFC's understanding of an
interpretation by the staff of the Commission as set forth in
no-action letters issued to third parties, including Exxon
Capital Holdings Corporation, SEC No-Action Letter (available May
13, 1988), Morgan Stanley & Co. Incorporated, SEC No-Action
Letter (available June 5, 1991) and Shearman & Sterling, SEC
No-Action Letter (available July 2, 1993), that the New Notes
issued in exchange for the Old Notes pursuant to the Exchange
Offer may be offered for resale, resold and otherwise transferred
by each holder thereof (other than a broker-dealer who acquires
such New Notes directly from DMC or DMFC for resale pursuant to
Rule 144A under the Securities Act or any other available
exemption under the Securities Act or any such holder that is an
"affiliate" of DMC or DMFC within the meaning of Rule 405 under
the Securities Act), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such
holder's business and such holder is not engaged in, and does not
intend to engage in, a distribution of such New Notes and has no
arrangement with any person to participate in the distribution of
such New Notes. If a holder of Old Notes is engaged in or intends
to engage in a distribution of the New Notes or has any
arrangement or understanding with respect to the distribution of
the New Notes to be acquired pursuant to the Exchange Offer, such
holder may not rely on the applicable interpretations of the
staff of the Commission and must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. If the
undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes, it represents that the
Old Notes to be exchanged for the New 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 New 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.
The undersigned will, upon request, execute and
deliver any additional documents deemed by DMC to be necessary or
desirable to complete the sale, assignment and transfer of the
Old Notes tendered hereby. All authority conferred or agreed to
be conferred in this Letter and every obligation of the
5
<PAGE>
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. This tender may be withdrawn only in accordance with
the procedures set forth in "The Exchange Offer--Withdrawal of
Tenders" section of the Prospectus.
Unless otherwise indicated herein in the box entitled
"Special Issuance Instructions" below, please deliver the New
Notes (and, if applicable, substitute certificates representing
Old Notes for any Old Notes not exchanged) in the name of the
undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at
the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions"
below, please send the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the
box entitled "Description of Old Notes".
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED
"DESCRIPTION OF OLD NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE
DEEMED TO HAVE TENDERED THE OLD NOTES AS SET FORTH IN SUCH BOX ABOVE.
6
<PAGE>
- ------------------------------------ -------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if certi- To be completed ONLY if certi-
ficates for Old Notes not ex- ficates for Old Notes not ex-
changed and/or New Notes are to changed and/or New Notes are to be
be issued in the name of and sent sent to someone other than the
to someone other than the person(s) person(s) whose signature(s)
whose signature(s) appear(s) on this appear(s) on this Letter above or
Letter above, or if Old Notes de- to such person(s) at an address
livered by book-entry transfer which other than shown in the box
are not accepted for exchange are to entitled "Description of Old Notes"
be returned by credit to an account on this Letter above.
maintained at the Book-Entry Transfer
Facility other than the account
indicated above.
Issue New Notes and/or Old Notes Mail New Notes and/or Old Notes
to: to:
Name(s):___________________________ Name(s):___________________________
(Please Type or Print) (Please Type or Print)
___________________________________ ___________________________________
(Please Type or Print) (Please Type or Print)
Address:___________________________ Address:___________________________
___________________________________ ___________________________________
(Including Zip Code) (Including Zip Code)
(Complete accompanying Substitute Form W-9)
_ Credit unexchanged Old Notes delivered by book-
entry transfer to the Book-Entry Transfer Facility
account set forth below.
________________________________
(Book-Entry Transfer Facility
Account Number, if applicable)
- ------------------------------------ -------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE
CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL
OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY)
MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW
YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
7
<PAGE>
- ----------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete accompanying Substitute Form W-9)
Dated:........................................................, 1997
______________________________________________________________x
______________________________________________________________x
(Signature(s) of Owner) (Date)
Area Code and Telephone Number:___________________________
If a holder is tendering any Old Notes, this Letter must be
signed by the registered holder(s) as the name(s) appear(s) on
the certificate(s) for the Old Notes or by any 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:__________________________________________________
__________________________________________________________
(Including Zip Code)
SIGNATURE GUARANTEE
(if required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:__________________________________
(Authorized Signature)
__________________________________________________________
(Title)
__________________________________________________________
(Name and Firm)
Dated:_________________________________________________________, 1997
- ----------------------------------------------------------------------
8
<PAGE>
INSTRUCTIONS
Del Monte Corporation
Del Monte Foods Company
Forming Part of the Terms and Conditions of the Offer to
Exchange Series B 12 1/4% Senior Subordinated Notes due
2007,
which have been registered under the Securities Act of 1933, as amended,
for any and all Outstanding
12 1/4% Senior Subordinated Notes due 2007.
1. Delivery of this Letter and Old Notes; Guaranteed Delivery
Procedures.
This Letter is to be completed by holders of Old Notes
either if certificates are to be forwarded herewith or if tenders
are to be made pursuant to the procedures for delivery by
book-entry transfer set forth in "The Exchange Offer --
Book-Entry Transfer" section of the Prospectus. Certificates for
all physically tendered Old Notes, or Book-Entry Confirmation, as
the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any
other documents required by this Letter, must be received by the
Exchange Agent at the address set forth herein on or prior to the
Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedures set forth below. Old Notes
tendered hereby must be in denominations of principal amount at
maturity of $1,000 and any integral multiple thereof.
Holders of Old Notes whose certificates for Old Notes
are not immediately available or who cannot deliver their
certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date, or who cannot complete
the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery
procedures set forth in "The Exchange Offer--Guaranteed Delivery
Procedures" section of the Prospectus. Pursuant to such
procedures, (i) such tender must be made through an Eligible
Institution (as defined below), (ii) prior to the Expiration
Date, the Exchange Agent must receive from such Eligible
Institution a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by DMC (by facsimile
transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered
Old Notes, or a Book-Entry Confirmation, as the case may be, and
any other documents required by this Letter will be deposited by
the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Old Notes, in proper
form for transfer, or Book-Entry Confirmation, as the case may
be, and all other documents required by this Letter, are received
by the Exchange Agent within three NYSE trading days after the
date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes
and all other required documents is at the election and risk of
the tendering holders, but the delivery will be deemed made only
when actually received or confirmed by the Exchange Agent. If Old
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.
See "The Exchange Offer" section of the Prospectus.
9
<PAGE>
2. Partial Tenders (not applicable to holders of Old Notes
who tender by book-entry transfer).
If less than all of the Old Notes evidenced by a
submitted certificate are to be tendered, the tendering holder(s)
should fill in the aggregate principal amount of Old Notes to be
tendered in the box above entitled "Description of Old
Notes--Principal Amount Tendered." A reissued certificate
representing the balance of nontendered Old Notes will be sent to
such tendering holder, unless otherwise provided in the
appropriate box on this Letter, promptly after the Expiration
Date. All of the Old Notes delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated.
3. Signatures of this Letter; Bond Powers and Endorsements;
Guarantee of Signatures.
If this Letter is signed by the registered holder of
the Old Notes tendered hereby, the signature must correspond
exactly with the name as written on the face of the certificates
without any change whatsoever.
If any tendered Old Notes are owned of record by two
or more joint owners, all such owners must sign this Letter.
If any tendered Old Notes are registered in different
names on several certificates, it will be necessary to complete,
sign and submit as many separate copies of this Letter as there
are different registrations of certificates.
When this Letter is signed by the registered holder of
the Old Notes specified herein and tendered hereby, no
endorsements of certificates or separate bond powers are
required. If, however, the New Notes are to be issued, or any
untendered Old Notes are to be reissued, to a person other than
the registered holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required.
Signatures on such certificates must be guaranteed by an Eligible
Institution.
If this Letter is signed by a person other than the
registered holder of any certificates specified herein, such
certificates must be endorsed or accompanied by appropriate bond
powers, in either case signed exactly as the name of the
registered holder appears on the certificates and the signatures
on such certificates must be guaranteed by an Eligible
Institution.
If this Letter or any certificates 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 DMC, proper evidence
satisfactory to DMC of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR
SIGNATURES ON BOND POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE
GUARANTEED BY A FIRM WHICH IS A MEMBER OF A REGISTERED NATIONAL
SECURITIES EXCHANGE OR A MEMBER OF THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC., BY A COMMERCIAL BANK OR TRUST COMPANY
HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES OR BY AN
"ELIGIBLE GUARANTOR" INSTITUTION WITHIN THE MEANING OF RULE
17AD-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AN "ELIGIBLE
INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN
ELIGIBLE INSTITUTION, PROVIDED THE OLD NOTES ARE TENDERED: (I) BY
A REGISTERED HOLDER OF OLD NOTES (WHICH TERM, FOR PURPOSES OF THE
EXCHANGE OFFER, INCLUDES ANY PARTICIPANT IN THE BOOK-ENTRY
TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS ON A SECURITY
POSITION LISTING AS THE HOLDER OF SUCH OLD NOTES) TENDERED WHO
HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE
INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER,
OR (II) FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION.
10
<PAGE>
4. Special Issuance and Delivery Instructions.
Tendering holders of Old Notes should indicate in the
applicable box the name and address to which New Notes issued
pursuant to the Exchange Offer and/or substitute certificates
evidencing Old Notes not exchanged are to be issued or sent, if
different from the name or address of the person signing this
Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must
also be indicated. A holder of Old Notes tendering Old Notes by
book-entry transfer may request that Old Notes not exchanged be
credited to such account maintained at the Book-Entry Transfer
Facility as such holder of Old Notes may designate hereon. If no
such instructions are given, such Old Notes not exchanged will be
returned to the name or address of the person signing this
Letter.
5. Tax Identification Number.
Federal income tax law generally requires that a
tendering holder whose Old Notes are accepted for exchange must
provide DMC (as payor) with such Holder's correct Taxpayer
Identification Number ("TIN") on Substitute Form W-9 below,
which, in the case of a tendering holder who is an individual, is
his or her social security number. If DMC is not provided with
the current TIN or an adequate basis for an exemption, such
tendering holder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, delivery of New Notes to
such tendering holder may be subject to backup withholding in an
amount equal to 31% of all reportable payments made after the
exchange. If withholding results in an overpayment of taxes, a
refund may be obtained.
Exempt holders of Old Notes (including, among others,
all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the
enclosed Guidelines of Certification of Taxpayer Identification
Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder
of Old Notes must provide its correct TIN by completing the
"Substitute Form W-9" set forth below, certifying that the TIN
provided is correct (or that such holder is awaiting a TIN) and
that (i) the holder is exempt from backup withholding, (ii) the
holder has not been notified by the Internal Revenue Service that
such holder is subject to a backup withholding as a result of a
failure to report all interest or dividends or (iii) the Internal
Revenue Service has notified the holder that such holder is no
longer subject to backup withholding. If the tendering holder of
Old Notes is a nonresident alien or foreign entity not subject to
backup withholding, such holder must give DMC a completed Form
W-8, Certificate of Foreign Status. These forms may be obtained
from the Exchange Agent. If the Old Notes are in more than one
name or are not in the name of the actual owner, such holder
should consult the W-9 Guidelines for information on which TIN to
report. If such holder does not have a TIN, such holder should
consult the W-9 Guidelines for instructions on applying for a
TIN, check the box in Part 2 of the Substitute Form W-9 and write
"applied for" in lieu of its TIN. Note: checking this box and
writing "applied for" on the form means that such holder has
already applied for a TIN or that such holder intends to apply
for one in the near future. If such holder does not provide its
TIN to DMC within 60 days, backup withholding will begin and
continue until such holder furnishes its TIN to DMC.
6. Transfer Taxes.
DMC will pay all transfer taxes, if any, applicable to
the transfer of Old Notes to it or its order pursuant to the
Exchange Offer. If, however, New Notes and/or substitute Old
Notes not exchanged 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 Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other
than the person signing this Letter, or if a transfer tax is
imposed for any reason other than the transfer of Old Notes to
DMC or its order pursuant to the Exchange Offer, the amount of
any such transfer taxes (whether imposed
11
<PAGE>
on the registered holder or any other persons) will be payable by
the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such
tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT IS NOT
NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES
SPECIFIED IN THIS LETTER.
7. Waiver of Conditions.
DMC and DMFC reserve the absolute right to waive
satisfaction of any or all conditions enumerated in the
Prospectus.
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent
tenders will be accepted. All tendering holders of Old Notes, by
execution of this Letter, shall waive any right to receive notice
of the acceptance of their Old Notes for exchange.
Neither DMC, DMFC, the Exchange Agent nor any other
person is obligated to give notice of any defect or irregularity
with respect to any tender of Old Notes nor shall any of them
incur any liability for failure to give any such notice.
9. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any holder whose Old Notes have been mutilated, lost,
stolen or destroyed should contact the Exchange Agent at the
address indicated above for further instructions.
10. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as
well as requests for additional copies of the Prospectus and this
Letter, may be directed to the Exchange Agent, at the address and
telephone number indicated above.
12
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: DEL MONTE CORPORATION
- ----------------------------------------------------------------------------
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR
Form W-9 TIN IN THE BOX AT RIGHT AND TIN:________________________
CERTIFY BY SIGNING AND (Social Security Number or
DATING BELOW. Employer Identification Number)
----------------------------------------------------------------
Department Part 2 -- TIN Applied For [ ]
of the
Treasury
----------------------------------------------------------------
Internal CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Revenue
Service (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).
Payor's (2) I am not subject to backup withholding
Request either because: (a) I am exempt from Taxpayer
For backup withholding, or (b) I have not been
Taxpayer notified by the Internal Revenue Service
Identification (the "IRS") that I am subject to backup
Number withholding as a result of a failure to report
("TIN") and all interest or dividends, or (c) the IRS has
Certification notified me that I am no longer subject to backup
witholding, and
(3) any other information provided on this form is
true and correct.
SIGNATURE___________________________ DATE________________
- ----------------------------------------------------------------------------
You must cross out item (2) of the above certification if you
have been notified by the IRS that you are subject to
backup withholding because of underreporting of interest or
dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
- ----------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF 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 (a) 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 (b) I intend
to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification
number by the time of the exchange, 31 percent of all reportable
payments made to me thereafter will be withheld until I provide a
number.
_______________________________________ ____________________
Signature Date
- -------------------------------------------------------------------------
13
<PAGE>
Exhibit 99.2
FORM OF NOTICE OF GUARANTEED DELIVERY FOR
DEL MONTE CORPORATION
This form or one substantially equivalent hereto must
be used to accept the Exchange Offer of Del Monte Corporation
("DMC") made pursuant to the Prospectus, dated ________ __, 1997
(the "Prospectus"), and the enclosed Letter of Transmittal (the
"Letter of Transmittal") if certificates for Old Notes are not
immediately available or if the procedure for book-entry transfer
cannot be completed on a timely basis or time will not permit all
required documents to reach DMC prior to 5:00 P.M., New York City
time, on the Expiration Date of the Exchange Offer. Such form may
be delivered or transmitted by facsimile transmission, mail or
hand delivery to Bankers Trust Company (the "Exchange Agent") as
set forth below. In addition, in order to utilize the guaranteed
delivery procedure to tender Old Notes pursuant to the Exchange
Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent
prior to 5:00 P.M., New York City time, on the Expiration Date.
Capitalized terms not defined herein are defined in the
Prospectus.
DELIVERY TO: BANKERS TRUST COMPANY, EXCHANGE AGENT
By Overnight Mail
By Mail: By Hand: or Courier:
- --------------------- --------------------- ---------------------------
BT Services Tennessee Bankers Trust Company BT Services Tennessee, Inc.
Inc. Receipt & Delivery Corporate Trust and
Reorganization Unit Window Agency Group
P.O. Box 292737 123 Washington Street, Reorganization Unit
Nashville, TN 1st Floor 648 Grassmere Park Road
37229-2737 New York, NY 10006 Nashville, TN 37211
For information call:
---------------------
(800) 735-7777
Confirm: (615) 835-3572
Facsimile: (615) 835-3701
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID
DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the
Prospectus and the accompanying Letter of Transmittal, the
undersigned hereby tenders to DMC the principal amount of Old
Notes set forth below, pursuant to the guaranteed delivery
procedure described in "The Exchange Offer -- Guaranteed Delivery
Procedures" section of the Prospectus.
<PAGE>
Principal Amount of Old Notes Tendered: Name(s) of Record Holders(s):
$_________________________________
__________________________________
Certificate Nos. (if available):
__________________________________
Address(es):
__________________________________
__________________________________
__________________________________
__________________________________
If Old Notes will be delivered by Area Code and Telephone Number(s):
book-entry transfer to The
Depositary Trust Company, provide
account number.
__________________________________
Signature(s):
Account Number___________________
__________________________________
__________________________________
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED.
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that 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 correspondent in the United States or any
"eligible guarantor" institution within the meaning of Rule
17Ad-15 of the Securities Exchange Act of 1934, as amended,
hereby (a) guarantees to deliver to the Exchange Agent, at one
its address set forth above, the certificates representing all
tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, and any other documents required
by the Letter of Transmittal within three New York Stock Exchange
trading days after the date of execution of this Notice of
Guaranteed Delivery.
Name of Firm: ___________________ _________________________
(Authorized Signature)
Address:_________________________
_________________________________
Area Code and
Telephone Number:________________
Title:____________________
Name:_____________________
Date:_____________________
<PAGE>
Exhibit 99.3
FORM OF LETTER
DEL MONTE CORPORATION
DEL MONTE FOODS COMPANY
Offer to Exchange
Series B 12 1/4% Senior Subordinated Notes due 2007,
which have been registered under the Securities Act of 1933, as amended,
for any and all Outstanding
12 1/4% Senior Subordinated Notes due 2007
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Upon and subject to the terms and conditions set forth
in the Prospectus, dated ______ __, 1997 (the "Prospectus"), and
the enclosed Letter of Transmittal (the "Letter of Transmittal"),
an offer to exchange (the "Exchange Offer") the registered Series
B 12 1/4% Senior Subordinated Notes due 2007 (the "New Notes")
for any and all outstanding 12 1/4% Senior Subordinated Notes due
2007 (the "Old Notes") (CUSIP No. _____________) is being made
pursuant to such Prospectus. The Exchange Offer is being made in
order to satisfy certain obligations of Del Monte Corporation
("DMC") and Del Monte Foods Company ("DMFC") contained in the
Registration Rights Agreement, dated as of April 18, 1997,
between DMC, DMFC and BT Securities Corporation, Bankers Trust
International plc, BancAmerica Securities, Inc. and Bear, Stearns
& Co. Inc. (as the Initial Purchasers).
We are requesting that you contact your clients for
whom you hold Old Notes regarding the Exchange Offer. For your
information and for forwarding to your clients for whom you hold
Old Notes registered in your name or in the name of your nominee,
or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. Prospectus dated _________ __, 1997;
2. The Letter of Transmittal for your use and for the
information of your clients;
3. A Notice of Guaranteed Delivery to be used to
accept the Exchange Offer if certificates for Old Notes are not
immediately available or time will not permit all required
documents to reach the Exchange Agent prior to the Expiration
Date (as defined below) or if the procedure for book-entry
transfer cannot be completed on a timely basis; and
4. A form of letter which may be sent to your clients
for whose account you hold Old Notes registered in your name or
the name of your nominee, with space provided for obtaining such
clients' instructions with regard to the Exchange Offer.
Your prompt action is requested. The Exchange Offer
will expire at 5:00 p.m., New York City time, on _____________
__, 1997 (the "Expiration Date") (30 calendar days following the
commencement of the Exchange Offer), unless extended by DMC. Old
Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time before the Expiration Date.
<PAGE>
To participate in the Exchange Offer, a duly executed
and properly completed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees and any other required
documents, should be sent to the Exchange Agent and certificates
representing the Old Notes should be delivered to the Exchange
Agent, all in accordance with the instructions set forth in the
Letter of Transmittal and the Prospectus.
If holders of Old Notes wish to tender, but it is
impracticable for them to forward their certificates for Old
Notes prior to the expiration of the Exchange Offer or to comply
with the book-entry transfer procedures on a timely basis, a
tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer
- - Guaranteed Delivery Procedures."
Additional copies of the enclosed material may be
obtained from the Exchange Agent, Bankers Trust Company,
Corporate Trust and Agency Group, 123 Street, 1st floor New York,
New York 10006, Telephone: (615) 835-3572, Facsimile: (615)
835-3701.
DEL MONTE CORPORATION
DEL MONTE FOODS COMPANY
2
<PAGE>
Exhibit 99.4
FORM OF LETTER
DEL MONTE CORPORATION
DEL MONTE FOODS COMPANY
Offer to Exchange
Series B 12 1/4% Senior Subordinated Notes due 2007,
which have been registered under the Securities Act of 1933, as amended,
for any and all Outstanding
12 1/4% Senior Subordinated Notes due 2007
To Our Clients:
Enclosed for your consideration is a Prospectus of Del
Monte Corporation, a New York corporation ("DMC"), and Del Monte
Foods Company, a Maryland corporation ("DMFC"), dated ______ __,
1997 (the "Prospectus"), and the enclosed Letter of Transmittal
(the "Letter of Transmittal") relating to the offer to exchange
(the "Exchange Offer") of registered Series B 12 1/4% Senior
Subordinated Notes due 2007 (the "New Notes") for any and all
outstanding 12 1/4% Senior Subordinated Notes due 2007 (the "Old
Notes") (CUSIP No. _________), upon the terms and subject to the
conditions described in the Prospectus. The Exchange Offer is
being made in order to satisfy certain obligations of DMC and
DMFC contained in the Registration Rights Agreement, dated as of
April 18, 1997, between DMC, DMFC and BT Securities Corporation,
Bankers Trust International plc, BancAmerica Securities, Inc. and
Bear, Stearns & Co. Inc. (as the Initial Purchaser).
This material is being forwarded to you as the
beneficial owner of the Old Notes carried by us in your account
but not registered in your name. A TENDER OF SUCH OLD NOTES MAY
ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS.
Accordingly, we request instructions as to whether you
wish us to tender on your behalf the Old Notes held by us for
your account, pursuant to the terms and conditions set forth in
the enclosed Prospectus and Letter of Transmittal. We also
request that you confirm that we may, on your behalf, make the
representations and warranties contained in the Letter of
Transmittal.
Your instructions should be forwarded to us as
promptly as possible in order to permit us to tender the Old
Notes on your behalf in accordance with the provisions of the
Exchange Offer. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON ____________ __, 1997 (THE "EXPIRATION DATE")
(30 CALENDAR DAYS FOLLOWING THE COMMENCEMENT OF THE EXCHANGE
OFFER), UNLESS EXTENDED BY DMC. ANY OLD NOTES TENDERED PURSUANT
TO THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE 5:00
P.M., NEW YORK CITY TIME ON THE EXPIRATION DATE.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Notes.
2. The Exchange Offer is subject to certain conditions
set forth in the Prospectus in the section captioned "The
Exchange Offer -- Conditions."
3. Any transfer taxes incident to the transfer of
Old Notes from the holder to DMC will be paid by DMC, except as
otherwise provided in the Instructions in the Letter of
Transmittal.
<PAGE>
4. The Exchange Offer expires at 5:00 p.m., New York
City time, on the Expiration Date unless extended by DMC.
If you wish to have us tender your Old Notes, please so instruct
us by completing, executing and returning to us the instruction
form set forth below. The Letter of Transmittal is furnished to
you for information only and may not be used directly by you to
tender Old Notes.
Instructions with Respect to the Exchange Offer
The undersigned acknowledge(s) receipt of your letter
enclosing the Prospectus, dated ______ __, 1997, of Del Monte
Corporation, a New York corporation, and of Del Monte Foods
Company, a Maryland corporation, and the related specimen Letter
of Transmittal.
- ----------------------------------------------------------------------
This will instruct you to tender the number of Old Notes
indicated below held by you for the account of the undersigned,
pursuant to the terms and conditions set forth in the Prospectus
and the related Letter of Transmittal. (Check one).
Box 1 [ ] Please tender my Old Notes held by you for my
account. If I do not wish to tender all of the Old
Notes held by you for my account, I have identified on
a signed schedule attached hereto the number of Old
Notes that I do not wish tendered.
Box 2 [ ] Please do not tender any Old Notes held by you for my
account.
- ----------------------------------------------------------------------
Date__________________, 1997 ____________________________________
Signature(s)
____________________________________
____________________________________
Please print name(s) here
____________________________________
Area Code and Telephone No.
UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN IN THE
SPACE PROVIDED, YOUR SIGNATURE(S) HEREON SHALL CONSTITUTE AN
INSTRUCTION TO US TO TENDER ALL OLD NOTES.
2
<PAGE>
Exhibit 99.5
Pursuant to the provisions of Instruction 2 to Item 601,
the Registrant omits the Retention Agreement between Del Monte
Corporation and Paul H. Mullan, dated December 11, 1995 (the
"Mullan Retention Agreement"). The Mullan Retention Agreement is
substantially similar in all material respects to the Retention
Agreement between Del Monte Corporation and Brian E. Haycox,
dated December 11, 1995 (the "Haycox Retention Agreement") filed
as Exhibit 10.6. The Mullan Retention Agreement differs from the
Haycox Retention Agreement only as to the parties thereto.
<PAGE>
