<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 4, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DEL MONTE FOODS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
MARYLAND 6719 13-3542950
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NO.)
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ONE MARKET
SAN FRANCISCO, CA 94105
(415) 247-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
WILLIAM R. SAWYERS
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
DEL MONTE FOODS COMPANY
ONE MARKET
SAN FRANCISCO, CA 94105
(415) 247-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES OF CORRESPONDENCE TO:
GREGG F. VIGNOS, ESQ.
THERESA G. MORAN, ESQ.
PILLSBURY MADISON & SUTRO LLP
235 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 983-1000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this 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. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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==============================================================================================================================
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1)(2) FEE(2)
- ------------------------------------------------------------------------------------------------------------------------------
12 1/2 Senior Discount Notes Due
2007................................ $230,000,000 100% $125,524,800 $37,029.82
==============================================================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated in accordance with Rule 457(f) under the Securities Act of 1933.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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.
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<PAGE> 2
SUBJECT TO COMPLETION, DATED MARCH 4, 1998
PROSPECTUS STRICTLY CONFIDENTIAL
OFFER TO EXCHANGE ALL OUTSTANDING [LOGO]
12 1/2% SENIOR DISCOUNT NOTES DUE 2007
FOR
SERIES B 12 1/2% SENIOR DISCOUNT NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OF
DEL MONTE FOODS COMPANY
------------------------
Del Monte Foods Company, a Maryland corporation ("DMFC" and, together with
its subsidiaries, the "Company"), hereby offers, upon the terms and subject to
the conditions set forth in this Prospectus and the accompanying letter of
transmittal (the "Letter of Transmittal," and together with this Prospectus, the
"Exchange Offer"), to exchange its Series B 12 1/2% Senior Discount Notes Due
2007 (the "Exchange Notes"), which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement
(as defined herein) of which this Prospectus is a part, for the outstanding
12 1/2% Senior Discount Notes Due 2007 (the "Initial Notes" and, together with
the Exchange Notes, the "Notes") of DMFC.
DMFC will accept for exchange any and all Initial Notes that are validly
tendered on or prior to 5:00 p.m., New York City time, on the date the Exchange
Offer expires, which will be , 1998, unless the Exchange Offer is
extended (the "Expiration Date"). The exchange of Exchange Notes for the Initial
Notes will be made as soon as practicable after the close of the Exchange Offer.
DMFC will accept for exchange all Initial Notes tendered and not validly
withdrawn pursuant to the Exchange Offer and will deliver to the Trustee (as
defined herein) for cancellation all Initial Notes so accepted for exchange.
DMFC shall cause the Trustee to authenticate and deliver to each holder of the
Initial Notes the Exchange Notes equal in principal amount to the Initial Notes
of such holder so accepted for exchange. The Exchange Offer is not conditioned
upon any minimum principal amount of Initial Notes being tendered for exchange.
See "The Exchange Offer." DMFC has agreed to pay the expenses of the Exchange
Offer.
The Exchange Notes will be obligations of DMFC issued pursuant to the
Indenture (as defined herein) under which the Initial Notes were issued. The
form and terms of the Exchange Notes are identical in all material respects to
the form and terms of the Initial Notes except that the Exchange Notes will not
contain terms with respect to transfer restrictions and the Exchange Notes have
been registered under the Securities Act. See "The Exchange Offer."
The Exchange Notes will mature on December 15, 2007, unless previously
redeemed. Interest payable in cash will not commence to accrue on the Notes
prior to December 15, 2002. Commencing June 15, 2003, interest on the Notes will
be payable in cash semi-annually in arrears on June 15 and December 15 at a rate
of 12 1/2% per annum. The Notes will be redeemable, in whole or in part, at the
option of the Company on or after December 15, 2002, at the redemption prices
set forth herein. In addition, prior to December 15, 2000, the Company, at its
option, may redeem up to 35% of the aggregate principal amount at maturity of
the Notes originally issued with the Cash Net Proceeds (as defined herein) of
one or more Public Equity Offerings (as defined herein), if any, on the date of
redemption; provided that at least 65% of the aggregate principal amount at
maturity of Notes originally issued remains outstanding immediately after any
such redemption.
(Continued on next page)
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL DMFC ACCEPT SURRENDERS
FOR EXCHANGE FROM, HOLDERS OF INITIAL NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
SEE "RISK FACTORS" BEGINNING ON PAGE 18 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
EXCHANGE NOTES.
------------------------
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 , 1998
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
(Continued from cover page)
The Notes will be general, senior, unsecured obligations of DMFC. DMFC is a
holding company with substantially all of its assets consisting of the stock of
Del Monte Corporation, a New York corporation and wholly owned subsidiary of
DMFC ("DMC"), and, therefore, the Notes will be effectively subordinated to all
outstanding indebtedness and other liabilities, including trade payables, of
DMFC's subsidiaries. As of December 31, 1997, after giving effect to the
Contadina Acquisition (as defined herein) and related financings, the Company
had approximately $1.4 billion of indebtedness and other liabilities, including
trade payables, outstanding, of which $1.3 billion was indebtedness and other
liabilities, including trade payables, of DMC.
Upon a Change of Control (as defined herein), (i) the Company will have the
option, at any time prior to December 15, 2002, to redeem the Notes, in whole,
but not in part, at a redemption price equal to 101% of the Accreted Value
thereof plus the Applicable Premium (as defined herein), together with
Liquidated Damages (as defined herein), if any, to the date of redemption and
(ii) if the Company does not so redeem the Notes or if such Change of Control
occurs after December 15, 2002, each holder of the Notes will have the right to
require the Company to repurchase such holder's Notes at a price equal to 101%
of the Accreted Value plus accrued interest and Liquidated Damages, if any. In
addition, in certain circumstances, the Company would be obligated to offer to
repurchase the Notes at 100% of the Accreted Value plus accrued interest and
Liquidated Damages, if any, in the event of certain Asset Sales (as defined
herein).
The Exchange Notes are being offered hereunder to satisfy certain
obligations of DMFC contained in the Registration Agreement (as defined herein).
Based on existing interpretations of the Securities Act by the staff of the
Securities and Exchange Commission ("Commission") set forth in several no-action
letters to third parties, and subject to the immediately following sentence,
DMFC believes that the Exchange Notes issued pursuant to the Exchange Offer may
be offered for resale, resold and otherwise transferred by the holders thereof
without further compliance with the registration and prospectus delivery
provisions of the Securities Act. However, any holder of the Initial Notes who
is an "affiliate" of DMFC or who intends to participate in the Exchange Offer
for the purpose of distributing the Exchange Notes (i) will not be able to rely
on the interpretation by the staff of the Commission set forth in the above
mentioned no-action letters, (ii) will not be able to tender its Initial Notes
in the Exchange Offer and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the Initial Notes unless such sale or transfer is made pursuant to
an exemption from such requirements.
Each holder of the Initial Notes (other than certain specified holders) who
wishes to exchange the Initial Notes for Exchange Notes in the Exchange Offer is
required to represent to DMFC that (i) it is not an affiliate of DMFC, (ii) any
Exchange Notes to be received by it were acquired in the ordinary course of its
business and (iii) at the time of the commencement of the Exchange Offer, it has
no arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes. Each broker-dealer that
receives Exchange 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 Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. 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 Exchange Notes received in
exchange for Initial Notes where such Initial Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. DMFC has agreed that, starting on the Expiration Date and ending on
the close of business on the 180th day following the Expiration Date, it will
make this Prospectus available to any broker-dealer for use in connection with
any such resale. See "The Exchange Offer" and "Plan of Distribution."
Until , 1998 all dealers effecting transactions in the
registered securities, whether or not participating in this distribution, may be
required to deliver a prospectus. This is in addition to the obligation of
dealers to deliver a prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
The Initial Notes and the Exchange Notes constitute new issues of
securities with no established public trading market. The Initial Notes,
however, have traded on the National Association of Securities Dealers, Inc.'s
PORTAL Market. Any Initial Notes not tendered and accepted in the Exchange Offer
will remain outstanding. To the extent that Initial Notes are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered, and
tendered but unaccepted, Initial Notes could be adversely affected. Following
consummation of the Exchange Offer, the holders of Initial Notes will continue
to be subject to the existing restrictions on transfer thereof and DMFC will
have no further obligation to such holders to provide for the registration under
the Securities Act of the Initial Notes except under certain limited
circumstances. See "The Exchange Offer". No assurance can be given as to the
liquidity of the trading market for either the Initial Notes or the Exchange
Notes.
DMFC will not receive any proceeds from this offering, and no underwriter
is being utilized in connection with the Exchange Offer. See "Use of Proceeds."
i
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). The Company filed with the Commission a
Registration Statement on Form S-4 (the "Registration Statement," which term
shall encompass all amendments, exhibits, annexes and schedules thereto)
pursuant to the Securities Act and the rules and regulations promulgated
thereunder, covering the Exchange Notes being offered hereby. This Prospectus
does not contain all the information set forth in the Registration Statement.
For further information with respect to the Company and the Exchange Offer,
reference is made to the Registration Statement. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Registration Statement, including the exhibits
thereto, and the reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at the Regional Offices of the Commission at 7 World
Trade Center, 14th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
Under the terms of the Indenture (as defined herein), under which the
Initial Notes were issued, and under which the Exchange Notes are to be issued,
the Company has agreed that, whether or not it is required to do so by the rules
and regulations of the Commission, for so long as any of the Notes remain
outstanding, it will furnish to the holders of the Notes and file with the
Commission all reports and other information as it would be required to file
with the Commission by Section 13(a) or 15(d) under the Exchange Act if it were
subject thereto.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
THE GENERAL COUNSEL AT ONE MARKET, SAN FRANCISCO, CALIFORNIA 94105, (415)
247-3000. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE AT LEAST FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE OF THE
EXCHANGE OFFER.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE ISSUERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, THE EXCHANGE NOTES IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
ii
<PAGE> 5
TABLE OF CONTENTS
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PAGE
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Available Information....................................... ii
Summary..................................................... 1
Risk Factors................................................ 18
The Exchange Offer.......................................... 24
The Contadina Acquisition................................... 32
Use of Proceeds............................................. 34
Capitalization.............................................. 34
Unaudited Pro Forma Financial Data.......................... 35
Selected Consolidated Financial Data........................ 40
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 44
Business.................................................... 54
Corporate History........................................... 69
Management.................................................. 71
Certain Relationships and Related Transactions.............. 79
Capital Stock of DMFC....................................... 80
Description of Existing Indebtedness........................ 81
Description of the Notes.................................... 83
Certain U.S. Federal Income Tax Considerations.............. 112
Plan of Distribution........................................ 116
Legal Matters............................................... 117
Experts..................................................... 117
Incorporation of Certain Documents by Reference............. 117
Index to Financial Statements............................... F-1
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FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus under the captions "Summary," "Risk
Factors," "The Contadina Acquisition," "Unaudited Pro Forma Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" and elsewhere constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or
achievements of the Company, or industry results, to differ materially from any
future results, performances or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and other important
factors include, among others: general economic and business conditions; weather
conditions; crop yields; industry trends; competition; raw material costs and
availability; the loss of significant customers; changes in business strategy or
development plans; availability, terms and deployment of capital; availability
of qualified personnel; changes in, or the failure or inability to comply with,
governmental regulations, including, without limitation, environmental
regulations; industry trends and capacity and other factors referenced in this
Prospectus. See "Risk Factors." These forward-looking statements speak only as
of the date of this Prospectus. The Company expressly disclaims any obligation
or undertaking to disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any such statement is based.
iii
<PAGE> 6
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 ("Prospectus"). As used throughout this Prospectus
unless the context otherwise requires, "DMFC" means Del Monte Foods Company, the
issuer of the Notes, and the parent of DMC, "DMC" means Del Monte Corporation,
and, unless stated otherwise or the context otherwise requires, the "Company" or
"Del Monte" means DMFC and DMC, together with 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). Except where
specifically indicated, discussions of the Company contained in this Prospectus
do not give effect to the Contadina Acquisition. Unless otherwise indicated,
references herein to U.S. market share data are to case volume sold through
retail grocery stores with at least $2 million in sales and are based upon data
provided to the Company by A.C. Nielsen Company ("ACNielsen"), 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, which has been an insignificant portion of the
Company's operations. See "Business -- General."
THE COMPANY
GENERAL
The Company is the largest producer and distributor of canned vegetables
and canned fruit in the United States with net sales of $1.2 billion in fiscal
1997. For the 52-weeks ended December 27, 1997, the Company had domestic market
shares of 19.7% of canned vegetable products and 41.0% 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(R) 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 substantial competitive advantage in
selling to the retail grocery industry and in leveraging its brand equity to
improve sales and operating margins.
Following the consummation of the Recapitalization (as defined herein) in
1997, the Company implemented a new business strategy designed to leverage its
brand and price leadership to improve sales and operating margins by: (i)
increasing market share and household penetration of high margin specialty
products, (ii) introducing new product and packaging innovations, (iii)
achieving cost savings through operating efficiencies, plant consolidations and
investments in new and upgraded production equipment, (iv) increasing
penetration of high growth distribution channels, and (v) completing strategic
acquisitions.
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 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
1
<PAGE> 7
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.
CONTADINA ACQUISITION
Pursuant to the asset purchase agreement, dated as of November 12, 1997
(the "Asset Purchase Agreement"), by and among DMFC, DMC and Nestle USA, Inc.
("Nestle") and Contadina Services, Inc., on December 19, 1997 DMC consummated
the acquisition (the "Contadina Acquisition") of certain assets comprising
Nestle's U.S. business of manufacturing and marketing certain canned tomato
products for the retail, foodservice and industrial markets ("Contadina"), for
$177 million in cash, plus an estimated working capital adjustment of
approximately $20 million (the "Working Capital Adjustment"). The purchase price
is subject to adjustment based on the final calculation of net working capital
as of the closing date. In accordance with the Asset Purchase Agreement, Nestle
has provided its calculation of the net working capital which would result in a
payment to the Company of approximately $2 million. The Company has until April
18, 1998 to review this calculation and determine if it has any objection to the
calculation. The Contadina Acquisition also included the assumption of certain
liabilities of approximately $4 million. The acquisition was accounted for using
the purchase method of accounting.
Contadina was a major domestic processor and marketer of a broad variety of
canned tomato products, including: crushed, diced, stewed, puree, and whole
tomatoes, tomato sauce, tomato paste and pizza sauce. Contadina's assets
included two modern plants, one of which is considered to be a state-of-the-art
plant in Hanford, California. Contadina was one of only two national tomato
processors whose products spanned the entire branded canned tomato category. See
"The Contadina Acquisition."
The Company believes that the Contadina Acquisition is consistent with its
acquisition strategy and it will benefit from the following acquisition
characteristics: (i) strong brand that is complementary to the Company's
existing tomato product line; (ii) significantly increases the Company's tomato
processing scale, providing opportunities for lowering cost of production; (iii)
includes efficient state-of-the-art manufacturing facility; (iv) worldwide brand
name provides growth opportunities; and (v) further diversification of the
Company's revenue base.
Cash funding requirements for the Contadina Acquisition (which was
consummated on December 19, 1997), including the Initial Purchasers' (as defined
herein) discount in connection with the issuance and sale of the Initial Notes
and other fees and expenses, totaled $211 million, and were satisfied through
$126 million from the gross proceeds of the offering of the Initial Notes (the
"Offering"); $50 million of borrowings under a senior secured term loan facility
among DMFC, as guarantor, DMC, as borrower, Bank of America National Trust and
Savings Association ("BofA") and Bankers Trust Company ("BTCo."), as agents,
each an affiliate of an Initial Purchaser (the "Term Loan Facility") and other
lenders party thereto; and an additional equity investment of $40 million (the
"Equity Contribution") from the Company's majority shareholder, Texas Pacific
Group ("TPG"), and certain other investors. As a result of subsequent
preliminary revisions to the Working Capital Adjustment, excess funding of
approximately $5 million was applied to the Revolving Credit Facility (as
defined herein).
2
<PAGE> 8
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 -- For the 52-weeks
ended December 27, 1997, the Company had domestic market shares of 19.7% of
canned vegetable products and 41.0% 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 24.0% 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.
<TABLE>
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MARKET SHARE FOR THE 52-WEEKS ENDED
DECEMBER 27, 1997
------------------------------------------------------
MARKET NEXT LEADING BRANDED
CATEGORY POSITION(A) PERCENTAGE COMPETITOR'S PERCENTAGE(A)
-------- ----------- ---------- ---------------------------
<S> <C> <C> <C>
Canned Vegetables......................... #1 19.7% 13.6% (Green Giant)
Canned Fruit.............................. #1 41.0% 11.7% (Libby's)
Canned Cut Tomato Products................ #1 24.0% 10.8% (Hunt's)
</TABLE>
- ---------------
(a) Excludes private label.
- - STRONG CASH FLOW AND INCREASING MARGINS -- The Company's established market
position, strong brand recognition, pricing strategy and significant cost
reduction efforts have led to consistent and increasing operating margins and
cash flow. EBITDA (excluding the results of the Divested Operations (as
defined herein)) for fiscal 1995, 1996 and 1997 was $76 million, $92 million
and $121 million, respectively. EBITDA margins (excluding for these
calculations, Divested Operations) for the same periods were 6.9%, 8.6% and
10.4%, respectively. Management believes that there will continue to be
substantial opportunities to improve margins by increasing sales of high
margin products and by reducing costs through increased operating
efficiencies, implementation of capital projects which offer rapid returns on
investment and strategic acquisitions that result in operating synergies. See
"-- Summary Historical Financial Data of the Company" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
- - EXTENSIVE NATIONAL SALES AND DISTRIBUTION SYSTEM -- The Company's extensive
sales and distribution network is responsible for the distribution of finished
goods to over 2,400 customer destinations nationwide. This network enables the
Company 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 makes
an important contribution 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, and warehousing
and distribution efficiencies.
- - 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's scope of product
offerings as well as its proprietary software tools have enabled the Company
to form alliances with key customers. To support these alliances, Del Monte
has developed proprietary software systems and programs in category
3
<PAGE> 9
management which have enabled its customers to free shelf space, increase the
number of the Company's products offered, 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 sales of the
Company's products and shelf space dedicated to the Company's products 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 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 its products. The Company intends to pursue
additional alliances with key customers.
- - 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 -- Two veteran managers with extensive food
industry experience, Richard G. Wolford and Wesley J. Smith, are the Chief
Executive Officer and Chief Operating Officer, respectively. 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, and 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
Following the consummation of the Company's Recapitalization in 1997, the
Company implemented a new business strategy designed to leverage its brand and
price leadership to improve sales and operating margins by: (i) increasing
market share and household penetration of high margin specialty products; (ii)
introducing product and packaging innovations; (iii) achieving cost savings
through operating efficiencies, plant consolidations and investments in new and
upgraded production equipment; (iv) increasing penetration of high growth
distribution channels; and (v) completing strategic acquisitions. The key
elements of this new business strategy are discussed below.
- - IMPROVE SALES THROUGH INCREASED PENETRATION OF SPECIALTY PRODUCTS AND PRODUCT
AND PACKAGING INNOVATIONS -- The Company plans to leverage the Del Monte and
Contadina brand names and the Company's strong relationships with customers to
increase sales of its existing high margin products, such as its speciality
vegetables and its Fruit Cup(R) line, where the Company has historically had
either relatively low market share or low household penetration. The Company
has also been developing new high margin products designed to leverage the
Company's presence in existing categories and to exploit its existing
manufacturing capabilities. Specifically, the Company has successfully
introduced flavored diced tomatoes; flavored canned fruits; Orchard Select(R)
fruit-in-glass, a premium shelf-stable fruit product; Fruit Smoothie
Blenders(TM), a flavored fruit drink; and other value-added products that
extend the Company's traditional product lines and appeal to consumers' demand
for high quality, convenient and nutritious products. The Company is
evaluating introductions of new products packaged in glass and plastic to
expand the Company's presence in the market beyond the canned food aisle.
- - IMPLEMENT FURTHER COST SAVINGS -- The Company is aggressively pursuing cost
reduction opportunities, which have already contributed to an increase in
EBITDA margins (excluding the results of Divested
4
<PAGE> 10
Operations) from 6.9% in 1995 to 10.4% in 1997. Management believes that it
will achieve significant increases in operating margins from increasing
operating efficiencies, plant consolidations and capital projects which offer
rapid returns on investment. The Company has announced plans to consolidate
six existing fruit and tomato operations in California into four facilities,
including one large facility acquired as part of the Contadina Acquisition.
The Company continually evaluates its production facilities and believes that
further consolidations may be warranted in the future. In addition, the
Company plans to invest in new, state-of-the-art production equipment to
increase production efficiencies and strengthen its status as a low-cost
producer.
- - REFOCUS MARKETING STRATEGY -- To enhance its ability to leverage its brand
equity in canned fruits, vegetables and tomatoes, the Company has refocused
its marketing efforts and promotional strategy. Specifically, the Company has
implemented performance-based trade promotion programs, increased consumer
targeted marketing programs and established clearly differentiated product
positioning that emphasizes the Company's premium quality. Under the Company's
"Go-to-Market" strategy, trade spending is based on retailers' sales to
consumers rather than on purchases from the Company. The Company believes that
this performance-based strategy, coupled with the Company's category
management capabilities, will continue to increase sales and reduce costs. The
Company has also increased its focus on consumer targeted marketing, primarily
through the distribution of free-standing coupon inserts. The Company
increased spending on consumer promotions from $12 million in fiscal 1996 to
$46 million in fiscal 1997 and anticipates generally consistent levels of
consumer spending in fiscal 1998 and 1999.
- - GENERATE GROWTH THROUGH ACQUISITIONS -- The Company will continue to pursue
strategic acquisitions where there are opportunities to generate incremental
sales growth and leverage the Company's key strengths in production,
distribution and sales. In evaluating potential acquisition candidates, the
Company seeks, among other things: (i) brands complementary to those of the
Company; (ii) new product opportunities; (iii) economies of scale in
manufacturing and capacity utilization; and (iv) positive earnings
contribution. The Contadina Acquisition, for example, provides a platform to
strengthen the Company's market share in key tomato segments, realize cost
savings through plant consolidations and increase sales to the branded
foodservice market. The Contadina Acquisition also provides the Company new
opportunities to take advantage of increased economics of scale and access to
state-of-the-art production facilities.
- - INCREASE PENETRATION OF HIGH-GROWTH DISTRIBUTION CHANNELS -- 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.
THE RECAPITALIZATION
On April 18, 1997, TPG Shield Acquisition Corporation ("Shield"), an
affiliate of the Company's majority shareholder, was merged with and into DMFC
(the "Merger"), with DMFC surviving. In connection with the Merger, DMC repaid
substantially all of its funded debt obligations (the "Debt Retirement").
Cash funding requirements for the Recapitalization were $809 million, and
were satisfied through: (i) cash equity investment by TPG and other investors of
$161 million; (ii) $380 million of borrowings under the Term Loan Facility;
(iii) $119 million of borrowings under a senior secured revolving credit
facility among DMFC, as guarantor, DMC, as borrower, BofA and BTCo., as agents,
and other lenders party thereto (the "Revolving Credit Facility" and, together
with the Term Loan Facility, the "Bank Financing"); (iv) $147 million from the
net proceeds of the issuance and sale of 12 1/4% Senior Subordinated Notes due
2007 (the "DMC Notes") by DMFC, as issuer of a senior subordinated guarantee,
and DMC, as issuer; and (v) $2 million of proceeds from the sale of a surplus
property.
5
<PAGE> 11
The above described transactions are herein referred to collectively as the
"Recapitalization."
TEXAS PACIFIC GROUP
TPG was founded by David Bonderman, James G. Coulter and William S. Price
III in 1992 to pursue public and private investment opportunities through a
variety of methods, including leveraged buyouts, recapitalizations, joint
ventures, restructurings and strategic public securities investments. The
principals of TPG operate TPG Partners, L.P. and TPG Partners II, L.P., both
Delaware limited partnerships with aggregate committed capital of over $3.2
billion. Among TPG's other investments are branded consumer products companies
Beringer Wine Estates, Ducati Motor, Favorite Brands International and J. Crew.
Other TPG portfolio companies include America West Airlines, Belden & Blake
Corporation, Denbury Resources, Genesis ElderCare, Paradyne, Virgin
Entertainment, and Vivra Specialty Partners. In addition, the principals of TPG
led the $9 billion reorganization of Continental Airlines in 1993. Prior to the
Equity Contribution, TPG owned 78% of the common equity of the Company.
------------------------
DMFC was incorporated under the laws of the State of Maryland in 1989. DMC
was incorporated under the laws of the State of New York in 1978. Each of DMFC
and DMC maintains its principal executive office at One Market, San Francisco,
California 94105, and their telephone number is (415) 247-3000. DMFC is the
parent company of DMC.
6
<PAGE> 12
THE EXCHANGE OFFER
REGISTRATION RIGHTS
AGREEMENT................... The Initial Notes were issued on December 17,
1997 to Bear, Stearns & Co. Inc., BancAmerica
Robertson Stephens and BT Alex. Brown
Incorporated (the "Initial Purchasers"). The
Initial Purchasers placed the Initial Notes
with institutional investors. In connection
therewith, DMFC and the Initial Purchasers
entered into the Registration Rights Agreement
(as defined herein), providing, among other
things, for the Exchange Offer. See "The
Exchange Offer."
THE EXCHANGE OFFER............ Exchange Notes are being offered in exchange
for an equal principal amount of Initial Notes.
As of the date hereof, $230,000,000 aggregate
principal amount at maturity of Initial Notes
is outstanding. Initial Notes may be tendered
only in integral multiples of $1,000.
RESALE OF EXCHANGE 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, DMFC believes that the
Exchange 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
Exchange Notes directly from 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 DMFC) without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that
such Exchange 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
Exchange Notes and has no arrangement with any,
person to participate in a distribution of such
Exchange Notes. By tendering the Initial Notes
in exchange for Exchange Notes, each holder,
other than a broker-dealer, will represent to
DMFC that: (i) it is not an affiliate (as
defined in Rule 405 under the Securities Act)
of DMFC; (ii) it is not a broker-dealer
tendering Initial Notes acquired for its own
account directly from DMFC; (iii) any Exchange
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 Exchange Notes and
has no arrangement or understanding to
participate in a distribution of the Exchange
Notes. If a holder of Initial Notes is engaged
in or intends to engage in a distribution of
the Exchange Notes or has any arrangement or
understanding with respect to the distribution
of the Exchange 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 Exchange Notes for its own
account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus
in connection with any resale
7
<PAGE> 13
of such Exchange 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 Exchange Notes
received in exchange for Initial Notes where
such Initial Notes were acquired by such
Participating Broker-Dealer as a result of
market-making activities or other trading
activities. 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 necessary to qualify
for sale or register the Exchange Notes prior
to offering or selling such Exchange Notes.
DMFC has agreed, pursuant to the Registration
Rights Agreement and subject to certain
specified limitations therein, to register or
qualify the Exchange Notes for offer or sale
under the securities or "blue sky" laws of such
jurisdictions as may be necessary to permit the
holders of Exchange Notes to trade the Exchange
Notes without any restrictions or limitations
under the securities laws of the several states
of the United States.
CONSEQUENCES OF FAILURE TO
EXCHANGE INITIAL NOTES...... Upon consummation of the Exchange Offer,
subject to certain exceptions, holders of
Initial Notes who do not exchange their Initial
Notes for Exchange Notes in the Exchange Offer
will no longer be entitled to registration
rights and will not be able to offer or sell
their Initial Notes, unless such Initial 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 -- Consequences of Exchange and Failure
to Exchange" and "The Exchange Offer -- Terms
of the Exchange Offer."
EXPIRATION DATE............... 5:00 p.m., New York City time, on ,
1998 (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 EXCHANGE
NOTES......................... The Exchange 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 Initial Notes
surrendered in exchange therefor or (ii) if the
Initial 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
Initial Notes, from December 15, 2002. Interest
8
<PAGE> 14
on the Exchange Notes is payable on June 15 and
December 15 of each year commencing June 15,
2003.
CONDITIONS TO THE EXCHANGE
OFFER....................... The Exchange Offer is not conditioned upon any
minimum principal amount of Initial Notes being
tendered for exchange. However, the Exchange
Offer is subject to certain customary
conditions, which may be waived by 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 DMFC in connection with the
Exchange Offer.
PROCEDURES FOR TENDERING
INITIAL NOTES................. Each holder of Initial 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 Initial
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 Initial 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 Initial Notes who wish to tender
their Initial Notes and whose Initial Notes are
not immediately available or who cannot deliver
their Initial 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 Initial Notes according to the
guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery
Procedures."
WITHDRAWAL RIGHTS............. Tenders of Initial 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 Initial 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 INITIAL NOTES
AND DELIVERY OF EXCHANGE
NOTES....................... Subject to certain conditions, any and all
Initial 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 Exchange 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 Exchange Notes for Initial
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."
9
<PAGE> 15
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
DMFC. See "The Exchange Offer -- Fees and
Expenses."
USE OF PROCEEDS............... There will be no cash proceeds payable to DMFC
from the issuance of the Exchange Notes
pursuant to the Exchange Offer. See "Use of
Proceeds."
10
<PAGE> 16
THE EXCHANGE NOTES
ISSUER........................ Del Monte Foods Company (the "Company").
THE NOTES..................... $230 million aggregate principal amount at
maturity of 12 1/2% Senior Discount Notes due
2007. The Exchange Notes will be entitled to
the benefits of the same Indenture that governs
the Initial Notes and that will govern the
Exchange Notes. The form and terms of the
Exchange Notes are the same in all material
respects as the form and terms of the Initial
Notes, except that the Exchange Notes have been
registered under the Securities Act and
therefore will not bear legends restricting the
transfer thereof. See "Description of the
Notes."
MATURITY DATE................. December 15, 2007.
ISSUE PRICE................... $545.76 per $1,000 principal amount at maturity
of the Notes.
YIELD TO MATURITY............. 12 1/2% per annum (computed on a semiannual
bond-equivalent basis), calculated from
December 17, 1997. Interest payable in cash
will not commence to accrue prior to December
15, 2002, and will be payable on each June 15
and December 15 thereafter until maturity,
commencing June 15, 2003.
ORIGINAL ISSUE DISCOUNT....... Each Note will have an Original Issue Discount
(as defined herein) for United States federal
income tax purposes equal to the excess of all
required principal and interest payments over
the amount of the Issue Price of such Note.
Prospective purchasers of Notes should be aware
that, even though periodic cash payments of
interest on the Notes will not commence until
June 15, 2003, accrued Original Issue Discount
will be includable, periodically, in a holder's
gross income for United States federal income
tax purposes even if in advance of the receipt
of cash payments to which such income is
attributable, regardless of the holder's
regular method of accounting. See "Certain U.S.
Federal Income Tax Considerations" and "Risk
Factors -- Original Issue Discount."
OPTIONAL REDEMPTION........... The Notes may be redeemed at the option of the
Company in whole or from time to time in part
at any time on and after December 15, 2002 at
the redemption prices set forth herein on the
date of redemption. Notwithstanding the
foregoing, prior to December 15, 2002, upon a
Change of Control (as defined herein) the
Company will have the option to redeem the
Notes, in whole, but not in part, at a
redemption price equal to the Accreted Value
(as defined herein) on the date of redemption,
plus the Applicable Premium (as defined herein)
and Liquidated Damages, if any. In addition,
prior to December 15, 2000, the Company may
redeem up to 35% of the original aggregate
principal amount at maturity of the Notes with
the Cash Net Proceeds (as defined herein) of
one or more Public Equity Offerings (as defined
herein) at a redemption price of 112.5% of
Accreted Value, plus Liquidated Damages, if
any; provided that at least 65% of the original
aggregate principal amount at maturity of the
Notes remains outstanding immediately
thereafter. See "Description of the
Notes -- Optional Redemptions."
11
<PAGE> 17
REDEMPTION UPON CHANGE OF
CONTROL AT HOLDERS'
OPTION...................... If, upon a Change of Control, the Company does
not redeem the Notes as described under
"Description of the Notes -- Optional
Redemption upon a Change of Control prior to
December 15, 2002", each holder of the Notes
will have the right to require the Company to
repurchase all or a portion of such holder's
Notes at a price equal to 101% of Accreted
Value plus accrued interest and Liquidated
Damages, if any, on the date of repurchase.
RANKING AND HOLDING COMPANY
STRUCTURE..................... The Notes will be general, senior, unsecured
obligations of the Company and will rank pari
passu in right of payment with all future
senior indebtedness of the Company, including
the guarantee by DMFC of the Bank Financing,
and senior to all future subordinated
indebtedness of the Company, including DMFC's
guarantee of the DMC Notes. Substantially all
of the Company's consolidated liabilities
(other than the Notes) are liabilities of its
subsidiaries. DMFC is a holding company and
therefore the Notes will be effectively
subordinated to all existing and future
indebtedness and other liabilities of the
Company's subsidiaries, including trade
payables. As of December 31, 1997, after giving
effect to the Contadina Acquisition and related
financings, the outstanding indebtedness and
other liabilities, including trade payables, of
such subsidiaries were approximately $1.3
billion. See "Risk Factors -- Holding Company
Structure; Limitations on Access to Cash Flow"
and "Description of the Notes."
CERTAIN COVENANTS............. The indenture governing the Notes (the
"Indenture") will limit, among other things,
(i) the incurrence of additional debt and the
issuance of capital stock by the Company and
its subsidiaries, (ii) the payment of dividends
on the capital stock of the Company and its
subsidiaries and the redemption or repurchase
of the capital stock of the Company and its
subsidiaries, (iii) the sale of assets and
subsidiary stock, (iv) transactions with
affiliates, (v) the creation of liens on the
assets of the Company and its subsidiaries and
(vi) consolidations, mergers and transfers of
all or substantially all of the Company's
assets. The foregoing limitations and
prohibitions, however, are subject to a number
of qualifications. See "Description of the
Notes -- Certain Covenants."
USE OF PROCEEDS............... The Company will not receive any proceeds from
the Exchange Offer, and no underwriter is being
utilized in connection with the Exchange Offer.
See "Use of Proceeds."
RISK FACTORS
Prospective investors in the Notes should consider carefully all of the
information set forth in this Prospectus and, in particular, should evaluate the
specific factors set forth under "Risk Factors" beginning on page 17 for risks
attendant to an investment in the Notes or tendering of the Initial Notes for
the Exchange Notes offered hereby.
12
<PAGE> 18
SUMMARY HISTORICAL FINANCIAL DATA OF THE COMPANY
The following table presents summary historical consolidated financial data
of the Company. The historical unaudited financial data presented below as of
December 31, 1996 and 1997 and for the six 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, 1997. Operating results for the six months ended
December 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, 1993, 1994, 1995, 1996 and 1997 and for the years
then ended were derived from the June 30, 1997 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.
13
<PAGE> 19
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, DECEMBER 31,
------------------------------------------ --------------
1993 1994 1995 1996 1997 1996 1997
------ ------ ------ ------ ------ ----- ------
(DOLLARS IN MILLIONS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales(a)............................ $1,556 $1,500 $1,527 $1,305 $1,217 $ 628 $ 620
Cost of sales(a)........................ 1,213 1,208 1,183 984 817 430 413
------ ------ ------ ------ ------ ----- ------
Gross profit............................ 343 292 344 321 400 198 207
Selling, advertising, administrative and
general expenses(a)(b)................ 286 225 264 239 327 156 162
Special charges(c)...................... 140 -- -- -- -- -- --
------ ------ ------ ------ ------ ----- ------
Operating income (loss)................. (83) 67 80 82 73 42 45
Interest expense........................ 68 61 76 67 52 26 36
Loss (gain) on sale of assets(d)........ (13) (13) -- (107) 5 5 --
Other (income) expense(e)............... 4 8 (11) 3 30 -- 6
------ ------ ------ ------ ------ ----- ------
Income (loss) before income taxes,
minority interest, extraordinary item
and cumulative effect of accounting
change................................ (142) 11 15 119 (14) 11 3
Provision for income taxes.............. 10 3 2 11 -- 2 --
Minority interest in earnings of
subsidiary............................ 8 5 1 3 -- -- --
------ ------ ------ ------ ------ ----- ------
Income (loss) before extraordinary item
and cumulative effect of accounting
change................................ (160) 3 12 105 (14) 9 3
Extraordinary loss(f)................... -- -- 7 10 42 4 --
Cumulative effect of accounting
change(g)............................. 28 -- -- 7 -- -- --
------ ------ ------ ------ ------ ----- ------
Net income (loss)....................... $ (188) $ 3 $ 5 $ 88 $ (56) $ 5 $ 3
====== ====== ====== ====== ====== ===== ======
OTHER DATA:
EBITDA(h)............................... $ 62 $ 63 $ 76 $ 92 $ 121 $ 54 $ 59
Depreciation and amortization(i)........ 59 35 35 26 24 12 13
Capital expenditures.................... 34 36 24 16 20 5 6
BALANCE SHEET DATA:
Working capital......................... $ 92 $ 88 $ 99 $ 207 $ 11 $ 173 $ 224
Total assets............................ 1,066 936 960 736 667 848 1,053
Total debt, including current
maturities............................ 624 569 576 373 610 388 856
Redeemable preferred stock.............. 216 215 215 213 32 213 32
Stockholders' equity (deficit).......... (385) (384) (393) (304) (412) (273) (368)
</TABLE>
- ---------------
(a) In fiscal 1997, certain merchandising allowances, which previously were
included as a cost of sales, have been reclassified to selling expense. Such
merchandising allowances totaled $113 million, $67 million, $106 million,
$100 million, $143 million and $68 million in the fiscal years ended June
30, 1993, 1994, 1995, 1996 and 1997 and the six months ended December 31,
1996, respectively. In addition, certain military distributor allowances,
which previously were treated as a reduction in net sales, have been
reclassified to selling expense. Such military distributor allowances
amounted to $1 million, $1 million, $1 million, $1 million, $2 million and
$1 million in fiscal years ended June 30, 1993, 1994, 1995, 1996 and 1997
and the six months ended December 31, 1996, respectively. All financial
information has been restated to conform to this presentation.
(b) In connection with the Recapitalization in fiscal 1997, expenses of
approximately $25 million were incurred primarily for management incentive
payments and, in part, for severance payments.
(c) 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.
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<PAGE> 20
(d) The Company sold its equity investment in Del Monte International, Inc.
("Del Monte International") 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 is being 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 $2 million of related transaction expenses, resulted in a loss of
$5 million.
(e) In fiscal 1995, other income reflects the Company's receipt of proceeds of a
$30 million letter of credit, reduced by $4 million of related transaction
expenses, as a result of the termination of a merger agreement with Grupo
Empacador de Mexico, S.A. de C.V. In fiscal 1997, $22 million of expenses
were incurred in conjunction with the Recapitalization, primarily for legal,
investment advisory and management fees.
(f) 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
retirement of debt. In fiscal 1997, $42 million of expenses related to the
early retirement of debt and to the Recapitalization was charged to net
income. In September 1996, the Company repurchased outstanding debt, in
conjunction with which capitalized debt issue costs of $4 million, net of a
discount on such debt, were written off and accounted for as an
extraordinary loss. In conjunction with the refinancing of debt that
occurred at the time of the Recapitalization, the Company recorded a $38
million extraordinary loss related to the early retirement of debt. The $38
million extraordinary loss consisted of previously capitalized debt issue
costs of approximately $19 million and a premium payment and a term loan
make-whole payment aggregating to $19 million.
(g) 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.
(h) 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
herein). EBITDA should not be considered in isolation from and 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 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, other
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<PAGE> 21
one-time charges included $3 million for relocation costs and $6 million of
costs associated with a significant headcount reduction. For fiscal 1997,
EBITDA excludes $47 million of expenses incurred in connection with the
Recapitalization and $7 million related to the write-off of a long-term
asset. For the six months ended December 31, 1997, one-time charges
consisted of $7 million of certain indirect expenses incurred in connection
with the Contadina Acquisition.
(i) Depreciation and amortization exclude amortization of $8 million, $5
million, $5 million, $5 million and $5 million of deferred debt issue costs
for fiscal 1993, 1994, 1995, 1996 and 1997, respectively. Depreciation and
amortization exclude amortization of $3 million and $2 million of deferred
debt issue costs in the six-month periods ended December 31, 1996 and 1997,
respectively.
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<PAGE> 22
SUMMARY HISTORICAL FINANCIAL DATA OF CONTADINA
The following table presents unaudited summary historical financial data of
Contadina for purchased product lines as of December 31, 1994, 1995 and 1996 and
for the nine months ended September 30, 1996 and 1997. Such data was prepared by
the Company and derived from information related to the operations of Contadina.
The data excludes certain unusual or non-recurring expenses and income and
discontinued products.
Contadina was not operated as a separate business unit and, as such, it did
not have regularly prepared financial statements. Contadina's books and records
have been audited only for the fiscal year ended December 31, 1996. In
connection with the Company's filing of the financial statements required by
Rule 3.05 of Regulation S-X, the Company has obtained and prepared financial
information for the year ended December 31, 1996 and for the nine-month periods
ended September 30, 1996 and 1997. The historical financial information for
these periods is materially different than that presented in conjunction with
the Offering as a result of additional information obtained by the Company
subsequent to the acquisition. Such historical financial information now
includes allocations from Nestle for certain operating costs including, without
limitation, costs of utilizing outside storage facilities; all selling costs
including, without limitation, direct sales force and brokerage expenses; costs
for utilizing centralized distribution and storage facilities; costs associated
with marketing services; and general and administrative costs associated with
support services such as finance, legal, human resources and information
systems. This historical financial information also reflects adjustments made by
Nestle and includes an allocation of interest expense from Nestle. The
additional operating cost allocations were $23 million, $22 million and $24
million; the adjustments resulted in a $2 million reduction in expense, a $1
million reduction in expense and a $5 million increase in expense; and the
interest allocations were $6 million, $4 million and $4 million for the year
ended December 31, 1996 and the nine-month periods ended September 30, 1996 and
1997, respectively. The Company believes that a significant portion of the
operating cost allocations will not be incurred as part of the on-going
operations of Contadina since the date of the acquisition. Financial information
presented herein concerning Contadina's earlier periods has, of necessity,
required estimation by the Company and must therefore not be relied upon to a
material extent. See "Risk Factors -- Risks Relating to the Contadina
Acquisition."
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------ -------------
1994(A) 1995(A) 1996 1996 1997
------- ------- ---- ----- -----
(DOLLARS IN MILLIONS)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.............................................. $195 $183 $160 $112 $108
Cost of sales.......................................... 160 154 151 108 112
---- ---- ---- ---- ----
Gross margin...................................... 35 29 9 4 (4)
Selling, administrative and general expenses........... 11 10 20 19 19
---- ---- ---- ---- ----
Operating income (loss)................................ $ 24 $ 19 (11) (15) (23)
==== ====
Interest expense....................................... 6 4 4
---- ---- ----
Net loss before income taxes...................... $(17) $(19) $(27)
==== ==== ====
OTHER DATA:
Depreciation and amortization.......................... $ 11 $ 12 $ 12 $ 8 $ 8
Capital expenditures................................... 28 7 10 7 7
</TABLE>
- ---------------
(a) For 1994 and 1995, "operating income" does not include certain costs
allocated to Contadina by Nestle. Such costs are excluded in 1994 and 1995
because that information is not available and are comprised of certain other
operating costs described above. Other expenses not reflected in 1994 and
1995 include interest expense and amortization of goodwill also allocated
from Nestle, and not available for those periods.
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<PAGE> 23
RISK FACTORS
Before tendering their Initial Notes for the Exchange Notes offered hereby,
holders of Initial Notes and prospective purchasers of the Notes should
carefully review the information contained and incorporated by reference in this
Prospectus and should particularly consider the following matters:
CONSEQUENCES OF EXCHANGE AND FAILURE TO EXCHANGE
Holders of Initial Notes who do not exchange their Initial Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Initial Notes as set forth in the legend
thereon as a consequence of the issuance of the Initial 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 Initial Notes may not be offered or sold, unless registered under
the Securities Act and applicable state securities laws, or pursuant to an
exemption therefrom. The Company does not intend to register the Initial Notes
under the Securities Act. In addition, any holder of Initial Notes who tenders
in the Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes may be deemed to have received restricted securities and, if so,
will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. To
the extent Initial Notes are tendered and accepted in the Exchange Offer, the
trading market, if any, for the Initial Notes could be adversely affected. See
"The Exchange Offer."
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT
The Company is highly leveraged. As of December 31, 1997, after giving
effect to the Contadina Acquisition and related financings, the Company had
approximately $1.4 billion of indebtedness (and other liabilities, including
trade payables) and its stockholders' equity (deficit) was $(368) million. In
addition, subject to the restrictions contained in the Bank Financing, the DMC
Notes and the Indenture, the Company and its subsidiaries 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, the Company'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 the Company is leveraged could have important
consequences to the Holders of the Notes, including, but not limited to, the
following: (i) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions, general
corporate or other purposes may be impaired; (ii) a significant portion of the
Company's cash flow from operations must be dedicated to the payment of
principal and interest on its indebtedness, thereby reducing the funds available
to the Company for its operations; (iii) significant amounts of the Company's
borrowings, including all borrowings under the Bank Financing, will be at
variable rates of interest, which could result in higher interest expense; (iv)
the Indenture, the DMC Notes and the Bank Financing contain financial and/or
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 the Company; (v) the indebtedness outstanding under the Bank Financing is
secured and matures prior to the maturity of the Notes; (vi) the DMC Notes
mature prior to the maturity of the Notes; (vii) the Company may be
substantially more leveraged than certain of its competitors, which may place
the Company at a competitive disadvantage; and (viii) the Company'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 "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Financing Activities -- The Recapitalization," "Description of
Existing Indebtedness" and "Description of the Notes."
The Company'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 the Company's operating results, cash flow and capital resources
will be sufficient for payment of its
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<PAGE> 24
indebtedness in the future. In the absence of such operating results and
resources, the Company 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 the Company could realize therefrom. In addition,
because the Company's obligations under the Bank Financing bear interest at
floating rates, an increase in interest rates could adversely affect, among
other things, the Company's ability to meet its debt service obligations. The
Company will be required to make scheduled principal payments under the Bank
Financing commencing in the third quarter of fiscal 1998. If the Company 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.
HOLDING COMPANY STRUCTURE; LIMITATIONS ON ACCESS TO CASH FLOW
DMFC is a holding company with no substantial business operations or assets
(other than the capital stock of DMC) of its own. DMFC's assets consist
primarily of its ownership interests in DMC. The Notes will be effectively
subordinated to all existing and future indebtedness and other liabilities of
DMFC's subsidiaries because DMFC's right to receive the assets of any such
affiliates upon their liquidation or reorganization will be subordinated by
operation of law to the claims of such subsidiaries' creditors (including trade
creditors), except to the extent that DMFC is itself recognized as a creditor of
any such affiliate, in which case the claims of DMFC would still be subordinated
to any indebtedness of such affiliate that is senior in right of payment to
DMFC's claim. DMFC's subsidiaries have substantial indebtedness and other
liabilities. As of December 31, 1997, DMFC's subsidiaries had $1.3 billion of
indebtedness outstanding (including other liabilities and trade payables). The
instruments governing indebtedness of the Company, including, without
limitation, the DMC Notes and the Bank Financing, severely limit the ability of
the Company's subsidiaries to distribute to the Company any cash or other
assets, which could materially and adversely affect the ability of the Company
to service the Notes, when they require payment of interest in cash commencing
June 15, 2003, upon acceleration, at maturity or otherwise. If the Company is
unable to service its obligations on the Notes as required, it may have to
refinance the Notes or otherwise raise additional funding with regard to which
there can be no assurance that the Company will be able to do so on acceptable
terms, if at all. In addition, future borrowings by the Company's subsidiaries
can be expected to contain further restrictions or prohibitions on the payment
of dividends by such subsidiaries to DMFC. See "Description of the Notes."
PRICING AND PROMOTIONAL STRATEGY
Following the consummation of the Recapitalization in 1997, the Company
implemented a new business strategy designed to leverage its brand and price
leadership to improve sales and operating margins. In implementing the Company's
new pricing strategy, the Company increased prices for many of its fruit and
vegetable products. Certain canned fruit, vegetable and tomato competitors
initially elected not to increase their prices on competing products. As a
result, the difference between the Company's prices and those of these
competitors became significantly higher than it had been in recent years, and
the Company experienced some market share loss, particularly in vegetables.
There can be no assurance that competitors will increase their prices in
response to, or in anticipation of, recent or future Company 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
19
<PAGE> 25
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." In addition the
Company will consider acquisition opportunities, both domestically and
internationally, as such opportunities present themselves. There can be no
assurance that the Company will pursue any such acquisitions or that, if
undertaken, they will be successful.
RISKS RELATING TO THE CONTADINA ACQUISITION
Contadina was not operated as a separate business unit and, as such, it did
not have regularly prepared financial statements. Contadina's books and records
have been audited only for the fiscal year ended December 31, 1996. Financial
information presented herein concerning Contadina's other periods has of
necessity required estimation by the Company and must therefore not be relied
upon to a material extent. See "Summary -- Summary Historical Financial Data of
Contadina" and "Unaudited Pro Forma Financial Data."
The Contadina Acquisition has been accounted for using the purchase method.
This accounting treatment requires all purchased assets to be recorded on the
Company's books based upon their fair value. Accordingly, the inventory of
Contadina acquired in the Contadina Acquisition was recorded on the Company's
books at fair value (generally higher than the recorded cost). The Company
expects to report a lower gross margin upon future sales of the revalued
inventory.
The historical financial information for Contadina for the year ended
December 31, 1996, the twelve month period ended September 30, 1997 and the
nine-month periods ended September 30, 1996 and 1997, is materially different
from that presented in conjunction with the Offering in that it now includes
allocations from Nestle for certain operating costs including, without
limitation, costs of utilizing outside storage facilities; all selling costs
including without limitation, direct sales force and brokerage expenses; costs
for utilizing centralized distribution and storage facilities; costs associated
with marketing services; and general and administrative costs associated with
support services such as finance, legal, human resources and information
systems. This historical information also reflects adjustments made and includes
an allocation of interest expense from Nestle. The Company believes that a
significant portion of the operating cost allocations will not be incurred as
part of the on-going operations of Contadina since the date of the acquisition.
The full benefits of the acquisition of Contadina's assets by DMC will
require the coordination of each company's operations, the implementation of
appropriate operational, financial and management systems and controls in order
to operate effectively and efficiently, and the integration of the Contadina
business into the Company's administrative, finance and marketing organizations.
This will require substantial attention from the Company's management team. The
diversion of management attention, as well as any other difficulties which may
be encountered in the transition and integration process, could have an adverse
impact on the revenue and operating results of the Company. In addition, there
can be no assurance that the Company will be successful in integrating the
operations of Contadina, or that any planned benefits will be realized.
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. For example, the Company's
peach and pear growing regions experienced a compressed summer 1997 harvesting
season due to adverse weather. This shortened time frame for harvesting caused
an increase in the use of cold storage for peaches and pears until processing
capacity became available. In
20
<PAGE> 26
addition, smaller fruit size lowered raw product recoveries and cooler weather
than normal resulted in late plantings for some vegetables, lower field yields
and lower recoveries. Furthermore, competing manufacturers of canned vegetable,
fruit or tomato products may be affected differently depending on the location
of their principal sources of supply. If the supply of any of the Company's
products is adversely affected by 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, only a small number of well-established companies
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 and other companies. Certain of these competitors have greater
financial resources and flexibility than the Company. Several of the Company's
product lines are sensitive to competition from regional brands and many of the
Company's product lines compete with imports, private label products and fresh
alternatives. While no single private label competitor has greater market share
than the Company in its principal product categories, for the 52-weeks ended
December 27, 1997, as a group private label competition represented 42.7%, 40.5%
and 32.0% of canned vegetables, fruit and cut tomato product sales,
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"), as amended or under similar
state laws. Based on available information, the Company is defending itself in
these actions as appropriate, and believes that none of the matters will have a
material adverse impact on the Company's financial position or results of
operations. 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 other 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 or previously 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 DMFC."
LIMITATION ON CHANGE OF CONTROL
Upon a Change of Control, (i) the Company will have the option, at any time
prior to December 15, 2002, to redeem the Notes, in whole but not in part, at a
redemption price equal to 100% of the principal amount thereof, plus the
Applicable Premium, through the date of redemption, and (ii) if the Company does
21
<PAGE> 27
not so redeem the Notes or if such Change of Control occurs after December 15,
2002, each Holder of the Notes will have the right to require the Company to
repurchase such Holder's Notes at a price equal to 101% of the Accreted Value
thereof to the date of repurchase, plus accrued and unpaid interest, if any. The
Change of Control purchase feature of the Notes may in certain circumstances
discourage or make more difficult a sale or takeover of the Company. In
particular, a Change of Control of the Company or certain of its subsidiaries
may cause an acceleration of, or require an offer to repurchase under, the DMC
Notes and other indebtedness, if any, in which case such indebtedness would be
required to be repaid in full before repurchase of the Notes. See "Description
of Existing Indebtedness" and "Description of the Notes -- Change of Control."
The inability to repay such indebtedness, if accelerated, and to purchase all of
the tendered Notes would constitute an event of default under the Indenture.
There can be no assurance that the Company will have funds available to
repurchase the Notes upon the occurrence of a Change of Control.
RESTRICTIVE DEBT COVENANTS
The Indenture, the DMC Notes and the Bank Financing contain a number of
significant covenants that, among other things, restrict the ability of the
Company 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 capital 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, the Company 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 "Description of Existing
Indebtedness" and "Description of the Notes."
The Company'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, the DMC Notes or the Indenture, which would
permit certain lenders 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 "Description of Existing Indebtedness."
ORIGINAL ISSUE DISCOUNT
The Initial Notes were issued at a substantial discount from their
principal amount at maturity. For United States Federal income tax purposes, the
difference between the issue price (the initial price at which the Initial Notes
are sold) and the stated principal amount at maturity of each Note constitutes
original issue discount ("Original Issue Discount"). Holders of the Notes will
be required to include Original Issue Discount in income periodically over the
term of the Notes before receipt of the cash or other payment attributable to
such income.
For United States Federal income tax purposes, each Holder of a Note must
generally include in gross income a portion of the Original Issue Discount in
each taxable year during which the Note is held in an amount equal to the
Original Issue Discount that accrues on the Note during such period, determined
by using a constant yield to maturity method. The Original Issue Discount
included in income for each year will be calculated under a compounding formula
that will result in the allocation of less Original Issue Discount to the
earlier years of the term of the Note and more Original Issue Discount to later
years. Any amount included in income as Original Issue Discount will increase a
Holder's tax basis in the Note.
ABSENCE OF A PUBLIC MARKET FOR THE EXCHANGE NOTES
Prior to the Exchange Offer there was no public market for the Exchange
Notes. If such a market were to develop, the Exchange Notes could trade at
prices that may be higher or lower than their Accreted Value. The Company does
not intend to apply for listing of the Exchange Notes on any securities exchange
or for
22
<PAGE> 28
quotation of the Exchange Notes on the Nasdaq Stock Market's National Market or
otherwise. The Company has been advised by the Initial Purchasers that they
currently intend to make a market in the Exchange 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 Exchange
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 Exchange Notes or
that any active public market for the Exchange Notes will develop or continue.
If an active public market does not develop or continue, the market price and
liquidity of the Exchange Notes may be adversely affected.
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<PAGE> 29
THE EXCHANGE OFFER
The summary herein of certain provisions of the Registration Rights
Agreement entered into between DMFC and the Initial Purchasers as of December
17, 1997 (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 Initial Notes pursuant to a Purchase
Agreement dated as of December 9, 1997, by and among 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, DMFC are required to file within
75 days after December 19, 1997 (the date the Contadina Acquisition closed (the
"Acquisition 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 Initial Notes except that the new
notes shall contain no restrictive legend thereon. Under the Registration Rights
Agreement, DMFC is required to use its best efforts to (i) cause the
Registration Statement to become effective within 150 days after the Acquisition
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 Initial Notes and (iii) consummate the Exchange Offer
on or prior to the 30th 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 Initial 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. Exchange Notes of the same class will be issued in
exchange for an equal principal amount of outstanding Initial Notes accepted in
the Exchange Offer. Initial 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 , 1998. The Exchange
Offer is not conditioned upon any minimum principal amount of Initial Notes
being tendered in exchange. However, the obligation to accept Initial Notes for
exchange pursuant to the Exchange Offer is subject to certain conditions as set
forth herein under "-- Conditions."
Initial 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 Initial Notes for the purposes of receiving the Exchange Notes and delivering
Exchange 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, DMFC believes that the Exchange 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 Exchange Notes
directly from 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
DMFC) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange 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 Exchange Notes and
has no arrangement with any person to participate in a distribution of such
Exchange Notes. By tendering the Initial Notes in exchange for Exchange Notes,
each holder, other than a broker-dealer, will represent to DMFC that: (i) any
Exchange Notes to be received by it will be acquired in the ordinary course of
its business; (ii) it is not engaged in, and does not intend to engage in, a
distribution of such Exchange Notes and has no arrangement
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<PAGE> 30
or understanding to participate in a distribution of the Exchange Notes; and
(iii) it is not an affiliate (as defined in Rule 405 under the Securities Act)
of DMFC. If a holder of Initial Notes is engaged in or intends to engage in a
distribution of the Exchange Notes or has any arrangement or understanding with
respect to the distribution of the Exchange 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 Exchange
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 Exchange
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 Exchange Notes
received in exchange for Initial Notes where such Initial Notes were acquired by
such Participating Broker-Dealer as a result of market-making activities or
other trading activities. DMFC has agreed that it 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 DMFC to effect the Exchange Offer,
(ii) the Exchange Offer is not consummated within 180 days of the Acquisition
Date, (iii) in certain circumstances, certain holders of unregistered Exchange
Notes so request, or (iv) in the case of any of holder of Initial Notes 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 DMFC within the meaning of the Securities Act), then in the case
of clauses (i) through (iv) of this sentence, DMFC shall (x) promptly deliver to
the holders of Initial 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 Initial 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 two years after Issue Date (subject to extension under certain
circumstances) or such time as all of the applicable Initial Notes have been
sold thereunder. DMFC will, in the event that a Shelf Registration Statement is
filed, provide to each holder of the Initial 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 Exchange Notes. A holder
that sells Initial 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 DMFC fails to comply with the above provision or if the Registration
Statement or the Shelf Registration Statement (in the event the Shelf
Registration Statement is required to be filed pursuant to the circumstances
described above) fails to become effective, then, as liquidated damages,
additional interest (the "Additional Interest" or "Liquidated Damages") shall
become payable in respect of the Initial Notes as follows:
(i) if (A) neither the Registration Statement nor the Shelf
Registration Statement is filed with the Commission within 75 days
following the Acquisition Date or (B) notwithstanding that DMFC has
consummated or will consummate an Exchange Offer, DMFC is 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 Accreted Value (determined
pursuant to the Registration Rights Agreement) of the Initial Notes at a
rate of .50% per annum for the first 90 days immediately following
25
<PAGE> 31
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 150
days following the Acquisition Date or (B) notwithstanding that DMFC has
consummated or will consummate an Exchange Offer, DMFC is required to file
a Shelf Registration Statement and such Shelf Registration Statement is not
declared effective by the Commission on or prior to the 150th day following
the Acquisition Date, then, commencing on the day after either such
required effective date, Additional Interest shall accrue on the Accreted
Value (determined pursuant to the Registration Rights Agreement) of the
Initial 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) DMFC has not exchanged Exchange Notes for all Initial
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 30th 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
second anniversary of the Issue Date (other than after such time as all
Initial Notes have been disposed of thereunder), then Additional Interest
shall accrue on the Accreted Value (determined pursuant to the Registration
Rights Agreement) of the Initial Notes at a rate of .50% per annum for the
first 90 days commencing on (x) the 30th 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 Initial 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 Exchange Notes for all Initial 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 Initial 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 Initial Notes.
Upon consummation of the Exchange Offer, subject to certain exceptions,
holders of Initial Notes who do not exchange their Initial Notes for Exchange
Notes in the Exchange Offer will no longer be entitled to registration rights
and will not be able to offer or sell their Initial Notes, unless such Initial
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 -- Consequences of Exchange and Failure to Exchange."
Expiration Date; Extensions; Amendments; Termination
The term "Expiration Date" shall mean , 1998 (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 may notify the
holders of the Initial Notes by means of mail of an announcement or 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.
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<PAGE> 32
DMFC reserves the right (i) to delay acceptance of any Initial Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and not permit
acceptance of Initial Notes not previously accepted if any of the conditions set
forth herein under "-- Conditions" shall have occurred and shall not have been
waived by DMFC (if permitted to be waived), 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 Initial 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 DMFC to constitute a material change, DMFC will
promptly disclose such amendment in a manner reasonably calculated to inform the
holders of the Initial Notes of such amendment.
Without limiting the manner in which DMFC may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, DMFC shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement.
Interest on the Exchange Notes
The Exchange Notes will accrue interest payable in cash 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
Initial Notes surrendered in exchange therefor or (ii) if the Initial 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 Initial Notes, from December 15, 2002. Interest on the
Exchange Notes is payable on June 15 and December 15 of each year commencing
June 15, 2003.
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, or an Agent's Message
together with the Initial Notes and 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 Initial 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
Initial Notes, if such procedure is available, into the Exchange Agent's account
at The Depository Trust Company (the "Book-Entry Transfer Facility" or "DTC")
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 INITIAL NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. INSTEAD OF DELIVERY BY
MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND-DELIVERY SERVICE.
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
INITIAL 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 term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Exchange Agent and forming a part of
a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering Initial Notes which are the subject of such
Book-Entry Conformation that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal, and that DMFC may enforce such
agreement against such participant.
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<PAGE> 33
The tender by a holder of Initial Notes will constitute an agreement
between such holder and DMFC in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
Only a holder of Initial Notes may tender such Initial Notes in the
Exchange Offer. The term "holder" with respect to the Exchange Offer means any
person in whose name Initial Notes are registered on the books of DMFC or any
other person who has obtained a properly completed bond power from the
registered holder.
Any beneficial owner whose Initial 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 Initial Notes, either
make appropriate arrangements to register ownership of the Initial 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 a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Exchange Act (each an "Eligible Institution") unless the
Initial Notes tendered pursuant thereto are tendered (i) by a registered holder
(or by a participant in DTC whose name appears on a security position listing as
the owner) who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
and the Exchange Notes are being issued directly to such registered holder (or
deposited into the participant's account at DTC) or (ii) for the account of an
Eligible Institution.
If the Letter of Transmittal is signed by the recordholder(s) of the
Initial Notes tendered thereby, the signature must correspond with the name(s)
written on the face of the Initial Notes without alteration, enlargement or any
change whatsoever. If the Letter of Transmittal is signed by a participant in
DTC, the signature must correspond with the name as it appears on the security
position listing as the holder of the Initial Notes.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Initial Notes listed therein, such Initial Notes must
be endorsed or accompanied by bond powers and a proxy which authorize such
person to tender the Initial Notes on behalf of the registered holder, in each
case as the name of the registered holder or holders appears on the Initial
Notes.
If the Letter of Transmittal or any Initial 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 DMFC, evidence
satisfactory to DMFC of their authority to so act must be submitted with the
Letter of Transmittal.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed Letter of Transmittal accompanied by Initial
Notes (or a timely confirmation received of a book-entry transfer of Initial
Notes into the Exchange Agent's account at DTC with an Agent's Message) or a
Notice of Guaranteed Delivery from an Eligible Institution is received by the
Exchange Agent. Issuances of Exchange Notes in exchange for Initial Notes
tendered pursuant to a Notice of Guaranteed Delivery by an Eligible Institution
will be made only against delivery of the Letter of Transmittal (and any other
required documents) and the tendered Initial Notes (or a timely confirmation
received of a book-entry transfer of Initial Notes into the Exchange Agent's
account at DTC) with the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Initial Notes will be
determined by DMFC in its sole discretion, which determination will be final and
binding. DMFC reserves the absolute right to reject any and all Initial Notes
not properly tendered or any Initial Notes which, if accepted, would, in the
opinion of DMFC or its counsel, be unlawful. DMFC also reserves the absolute
right to waive any conditions of the Exchange Offer or irregularities or defects
in tender as to particular Initial Notes. DMFC'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,
28
<PAGE> 34
any defects or irregularities in connection with tenders of Initial Notes must
be cured within such time as DMFC shall determine. Neither 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 Initial Notes, nor shall
any of them incur any liability for failure to give such notification. Tenders
of Initial Notes will not be deemed to have been made until such irregularities
have been cured or waived. Any Initial 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 by the Exchange Agent to the
tendering holders of such Initial Notes, unless otherwise provided in the Letter
of Transmittal, as soon as practicable following the Expiration Date.
In addition, DMFC reserves the right in its sole discretion, subject to the
provisions of the Indenture, to (i) purchase or make offers for any Initial
Notes that remain outstanding subsequent to the Expiration Date or, as set forth
under "-- Expiration Date; Extensions; Amendments; Termination," 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 Initial
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 Initial Notes for Exchange; Delivery of Exchange Notes
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Initial Notes properly tendered will be accepted, promptly after the
Expiration Date, and the Exchange Notes will be issued promptly after acceptance
of the Initial Notes. See "-- Conditions" below. For purposes of the Exchange
Offer, Initial Notes shall be deemed to have been accepted as validly tendered
for exchange when, as and if DMFC has given oral or written notice thereof to
the Exchange Agent.
In all cases, issuance of Exchange Notes for Initial 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 Initial Notes or a
timely Book-Entry Confirmation of such Initial 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
Initial Notes are not accepted for any reason set forth in the terms and
conditions of the Exchange Offer or if Initial Notes are submitted for a greater
principal amount than the holder desires to exchange, such unaccepted or
nonexchanged Initial Notes will be returned without expense to the tendering
holder thereof (or, in the case of Initial Notes tendered by book-entry transfer
procedures described below, such nonexchanged Initial Notes will be credited to
an account 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 Initial 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 Initial Notes by causing the
Book-Entry Transfer Facility to transfer such Initial 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 Initial Notes may be effected through book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility, an Agent's Message
or 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. DELIVERY OF DOCUMENTS
TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. All references in
this Prospectus to deposit or delivery of Initial Notes shall be deemed to
include the Book-Entry Transfer Facility's book-entry delivery method.
Guaranteed Delivery Procedures
If a registered holder of the Initial Notes desires to tender such Initial
Notes, and the Initial Notes are not immediately available, or time will not
permit such holder's Initial 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 and an Agent's Message delivered,
a tender may be effected if (i) the tender is
29
<PAGE> 35
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 facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by DMFC (by facsimile
transmission, mail or hand delivery), setting forth the name and address of the
holder of Initial Notes and the amount of Initial Notes tendered, stating that
the tender is being made thereby and guaranteeing that within five business days
after the Expiration Date the certificates for all physically tendered Initial
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 Initial 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 five business days after the Expiration Date.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of Initial Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time on the business day
prior to 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
business day prior to the Expiration Date at one of the addresses set forth
below under "-- Exchange Agent" and prior to acceptance for exchange thereof by
DMFC. Any such notice of withdrawal must (i) specify the name of the person
having tendered the Initial Notes to be withdrawn (the "Depositor"), (ii)
identify the Initial Notes to be withdrawn (including, if applicable, the
registration number or numbers and total principal amount of such Initial
Notes), (iii) be signed by the Depositor in the same manner as the original
signature on the Letter of Transmittal by which such Initial Notes were tendered
(including any required signature guarantees) or be accompanied by documents of
transfer sufficient to permit the Trustee with respect to the Initial Notes to
register the transfer of such Initial Notes into the name of the Depositor
withdrawing the tender, (iv) specify the name in which any such Initial Notes
are to be registered, if different from that of the Depositor and (v) if
applicable because the Initial Notes have been tendered pursuant to the
book-entry procedures, specify the name and number of the participant's account
at DTC to be credited, if different than that of the Depositor. 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 Initial Notes so withdrawn will be deemed not to
have been validly tendered for exchange for purposes of the Exchange Offer. Any
Initial Notes which have been tendered for exchange which are not exchanged for
any reason will be returned to the holder thereof without cost to such holder
(or, in the case of Initial 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 Initial Notes will be
credited to an account maintained with such Book-Entry Transfer Facility for the
Initial Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Initial 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, Initial Notes will
not be required to be accepted for exchange, nor will Exchange Notes be issued
in exchange for any Initial Notes, and DMFC may terminate or amend the Exchange
Offer as provided herein before the acceptance of such Initial Notes, if because
of any change in law, or applicable interpretations thereof by the Commission,
DMFC determines that it is not permitted to effect the Exchange Offer. DMFC has
no obligation to, and will not knowingly, permit acceptance of tenders of
Initial Notes from affiliates of 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 Exchange Notes to be received by such
holder or holders of Initial Notes in the Exchange Offer, upon receipt, will not
be tradable by such holder
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<PAGE> 36
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.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Initial Notes, as reflected in the Company's accounting records on the date of
the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. The costs of the Exchange Offer and the unamortized
expenses related to the issuance of the Initial Notes will be amortized over the
term of the Exchange Notes.
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:
<TABLE>
<CAPTION>
By Mail By Overnight Mail or Courier: By Hand
------- ----------------------------- -------
<S> <C> <C>
BT Services Tennessee, Inc. BT Services Tennessee, Inc. Bankers Trust Company
Reorganization Unit Corporate Trust and Agency Group Corporate Trust and Agency Group
P.O. Box 292737 Reorganization Unit Receipt & Delivery Window
Nashville, TN 37229-2737 648 Grassmere Park Road 123 Washington Street, 1st Floor
Nashville, TN 37211 New York, NY 10006
</TABLE>
Facsimile Transmission: (615) 835-3701
Confirm by Telephone: (615) 835-3572
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by 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.
DMFC will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. 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. 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, Letters of Transmittal and related documents to the
beneficial owners of the Initial Notes, and in handling or forwarding tenders
for exchange.
The expenses to be incurred in connection with the Exchange Offer will be
paid by DMFC, including fees and expenses of the Exchange Agent and Trustee and
accounting, legal, printing and related fees and expenses.
DMFC will pay all transfer taxes, if any, applicable to the exchange of
Initial Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or Initial 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
Initial Notes tendered, or if tendered Initial 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 Initial 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.
31
<PAGE> 37
THE CONTADINA ACQUISITION
Pursuant to the Asset Purchase Agreement by and among DMFC, DMC, Nestle and
Contadina Services, Inc., on December 19, 1997, DMC consummated the acquisition
(the "Contadina Acquisition") of certain assets comprising Nestle's U.S.
business of manufacturing and marketing certain canned tomato products for the
retail, foodservice and industrial markets ("Contadina"), for $177 million in
cash, plus an estimated Working Capital Adjustment of approximately $20 million.
The purchase price is subject to adjustment based on the final calculation of
net working capital as of the closing date. In accordance with the Asset
Purchase Agreement, Nestle has provided its calculation of the net working
capital which would result in a payment to the Company of approximately $2
million. The Company has until April 18, 1998 to review this calculation and
determine if it has an objection to the calculation. The Contadina Acquisition
also included the assumption of certain liabilities of approximately $4 million.
The acquisition was accounted for using the purchase method of accounting.
Pursuant to the terms of the Contadina Acquisition, Nestle retained an
exclusive license for five years to use the Contadina(R) trademark in connection
with specific product lines (consisting primarily of dry pasta and refrigerated
and frozen products) which were not acquired by the Company.
Contadina was a major domestic processor and marketer of a broad variety of
tomato products, including: crushed, diced, stewed, puree, and whole tomatoes,
tomato sauce, tomato paste and pizza sauce. Contadina was one of only two
national tomato processors whose products spanned the entire branded canned
tomato category.
The Company continues to operate Contadina to produce a variety of canned
tomato products for three categories of customers: retail, foodservice and
industrial. The largest segment, retail, accounted for approximately 68% of
Contadina's 1997 net sales and includes all Contadina branded, private label and
export tomatoes sold in retail outlets such as supermarkets, club stores and
convenience stores. The foodservice segment, which accounted for approximately
23% of Contadina's 1997 net sales, is comprised of sales to national and
regional restaurants and non-commercial accounts. Sales within the industrial
segment accounted for approximately 9% of Contadina's 1997 net sales and
consists of bulk tomato paste and bulk diced tomatoes supplied as an ingredient
to food processors.
The retail segment includes a complete line of branded and private label
canned tomatoes sold to the retail sector, including multiple offerings in the
following segments: crushed, diced, stewed, puree and whole tomatoes, tomato
sauce, tomato paste and pizza sauce. In addition, the segment includes export
sales of certain retail branded products. With 38 retail SKUs, Contadina offers
a complete line of canned tomato products to the grocery channel. In addition to
its broad line of product offerings, Contadina's products are also widely
distributed, reaching 93% of the nation's grocery stores. While Contadina's
retail products are distributed across all channels, 90% of its sales are
generated within the grocery channel, with the remaining 10% of sales occurring
in the military, drug store and mass merchandiser channels.
The foodservice segment of the domestic canned tomato market is estimated
by the Company to be a $1.5 billion market, divided approximately equally
between ready-to-use and from scratch products. These customers tend to be
driven primarily by product quality issues, including consistent formulation,
taste and appearance, rather than solely by price. Within the foodservice
segment, Contadina has an established customer base which consists of a number
of diverse national accounts including major pizza chains, mid-scale restaurant
chains and non-commercial accounts, such as hospitals, cafeterias and
educational institutions. Contadina offers retail products in both foodservice
form and custom formulated products.
The industrial segment is comprised of sales of bulk diced and bulk paste
products to food processors, which historically have included other Nestle
businesses. The approximately 3.5 million ton market for industrial paste sold
to third parties has historically experienced cyclical fluctuations in pricing
largely due to imbalances in supply and inventory levels. Approximately 65% of
Contadina's estimated 1997 industrial sales were to Nestle. The Company entered
into a contract under which the Company will supply bulk tomato products to
Nestle until August 31, 1999 in an amount approximating 75% of Nestle's
purchases of such products from Contadina during the 1997 calendar year. In
addition, the Company entered into a co-pack
32
<PAGE> 38
agreement with an affiliate of Nestle pursuant to which the Company will pack
Ortega salsa for an affiliate of Nestle for a period of six months from December
19, 1997, with respect to the United States as a whole and until August 31, 1999
with respect to the Western United States.
The Company continues to operate the two Contadina manufacturing plants: a
598,686 square-foot state-of-the-art facility in Hanford, California and a
596,000 square-foot facility in Woodland, California. The Hanford Facility is in
operation year-round and primarily produces canned and bagged tomato products.
Currently the Woodland Facility is operated during the fresh season only (which
runs July through September) and is built to produce bulk tomato paste and bulk
diced tomatoes.
The Company believes that the Contadina Acquisition is consistent with its
acquisition strategy and it will benefit from the following acquisition
characteristics: (i) strong brand that is complementary to the Company's
existing tomato product line; (ii) significantly increases the Company's tomato
processing scale, providing opportunities for lowering cost of production; (iii)
includes an efficient state-of-the-art manufacturing facility; (iv) worldwide
brand name provides growth opportunities; and (v) further diversification of the
Company's revenue base. However, there can be no assurance that the benefits
described above will be realized. See "Risk Factors -- Risks Relating to the
Contadina Acquisition."
33
<PAGE> 39
USE OF PROCEEDS
There will be no cash proceeds payable to the Company from the issuance of
the Exchange Notes pursuant to the Exchange Offer. In consideration for issuing
the Exchange Notes as contemplated in this Prospectus, the Company will receive
in exchange Initial Notes in like principal amount, the terms of which are
identical in all material respects to the Exchange Notes. The Initial Notes
surrendered in exchange for the Exchange Notes will be retired and cancelled and
cannot be reissued. Accordingly, the issuance of the Exchange Notes will not
result in any increase in the indebtedness of the Company.
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
at December 31, 1997 on an actual basis giving effect to the Contadina
Acquisition and related financings. This table should be read in conjunction
with the "Unaudited Pro Forma Financial Data" and "Selected Consolidated
Financial Data" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
---------------------
(UNAUDITED)
<S> <C>
Total debt, including current portion:
Revolving Credit Facility (a).................... $ 153
Term Loan Facility (b)........................... 430
12 1/4% Senior Subordinated Notes of DMC......... 147
12 1/2% Senior Discount Notes offered hereby..... 126
-----
Total debt, including current portion.... 856
Redeemable preferred stock......................... 32
Stockholders' equity (deficit)..................... (368)
-----
Total capitalization..................... $ 520
=====
</TABLE>
- ---------------
(a) The total capacity under the Revolving Credit Facility is $350 million. The
purchase price of the Contadina Acquisition is subject to adjustment based
on the final calculation of the net working capital as of the closing date.
Any adjustment to the purchase price will result in a corresponding increase
or decrease to the Revolving Credit Facility. See "Unaudited Pro Forma
Financial Data" and "Description of Existing Indebtedness."
(b) The Company amended the existing loan documents to increase the amount of
this facility by $50 million in order to consummate the Contadina
Acquisition.
34
<PAGE> 40
UNAUDITED PRO FORMA FINANCIAL DATA
The following Unaudited Pro Forma Statements of Operations were prepared by
the Company as if the Contadina Acquisition, the Recapitalization and related
financings had occurred as of July 1, 1996. 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 Contadina Acquisition, the
Recapitalization and related financings had occurred 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.
Contadina was not operated as a separate business unit and, as such, it did
not have regularly prepared financial statements. Contadina's books and records
have been audited only for the fiscal year ended December 31, 1996. In
connection with the Company's filing of the financial statements required by
Rule 3.05 of Regulation S-X, the Company has obtained and prepared financial
information for the year ended December 31, 1996 and for the nine-month periods
ended September 30, 1996 and 1997. The historical financial information for
these periods is materially different than that presented in conjunction with
the Offering as a result of additional information obtained by the Company
subsequent to the acquisition. Due to the limited information available to the
Company then and now, the Company has prepared the Unaudited Pro Forma Statement
of Operations for the year ended June 30, 1997 using Contadina historical
financial information for the twelve-month period ended September 30, 1997
derived from the audited and unaudited financial statements appearing elsewhere
in this Prospectus. The Unaudited Pro Forma Statement of Operations for the
six-month period ended December 31, 1997 reflects the historical revenues and
expenses of Contadina from July 1, 1997 through December 18, 1997. Such
historical financial information now includes allocations from Nestle for
certain operating costs including, without limitation, costs of utilizing
outside storage facilities; all selling costs including, without limitation,
direct sales force and brokerage expenses; costs for utilizing centralized
distribution and storage facilities; costs associated with marketing services;
and general and administrative costs associated with support services such as
finance, legal, human resources and information systems. This historical
financial information also reflects adjustments made by Nestle and includes an
allocation of interest expense from Nestle. Although the unaudited pro forma
statements of operations include such allocations, the Company believes that a
significant portion of the operating cost allocations from Nestle will not be
incurred as part of the on-going operations of Contadina subsequent to the date
of the acquisition. See "Risk Factors -- Risks Relating to the Contadina
Acquisition."
35
<PAGE> 41
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
HISTORICAL
------------------------------
CONTADINA(a)
TWELVE
DEL MONTE MONTHS PRO FORMA
YEAR ENDED ENDED PRO FORMA YEAR ENDED
JUNE 30, 1997 SEPT. 30, 1997 ADJUSTMENTS JUNE 30, 1997
------------- -------------- ----------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales................................... $1,217 $156 $ -- $1,373
Cost of sales (without inventory step-up)... 817 155 (19)(c) 953
Inventory step-up (d)....................... -- -- 9 9
------ ---- ---- ------
Gross profit.............................. 400 1 10 411
Selling, advertising, administrative and 327 20 14(e) 361
general expenses..........................
------ ---- ---- ------
OPERATING INCOME (LOSS)..................... 73 (19) (4) 50
Interest expense............................ 52 6 35(f) 93
Loss on sale of divested assets............. 5 -- -- 5
Other expense............................... 30 -- 7(g) 37
------ ---- ---- ------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY (14) (25) (46) (85)
ITEM......................................
Provision for income taxes.................. -- -- -- --
------ ---- ---- ------
LOSS BEFORE EXTRAORDINARY ITEM.............. $ (14) $(25) $(46) $ (85)
====== ==== ==== ======
Other Data:
EBITDA (h):
Operating Income.......................... $ 73 $ 50
Other expense............................. (30) (37)
Depreciation and amortization (i)......... 24 36
One-time and non-cash charges (h)......... 54 70
------ ------
$ 121 $ 119
====== ======
Ratio of earnings to fixed charges (j).... -- --
Deficiency of earnings to cover fixed $ 14 $ 85
charges (j)............................
</TABLE>
See accompanying notes.
36
<PAGE> 42
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
SIX-MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
HISTORICAL
--------------------------- PRO FORMA
DEL MONTE CONTADINA(a)(b) ADJUSTMENTS PRO FORMA
--------- --------------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales..................................... $620 $ 92 $ -- $712
Cost of sales (without inventory step-up)..... 413 91 (16)(c) 488
Inventory step-up(d).......................... -- -- -- --
---- ---- ---- ----
Gross profit............................. 207 1 16 224
Selling, advertising, administrative and 162 13 12(c) 187
general expenses............................
---- ---- ---- ----
OPERATING INCOME.............................. 45 (12) 4 37
Interest expense.............................. 36 3 10(f) 49
Other (income) expense........................ 6 -- (7)(g) (1)
---- ---- ---- ----
INCOME (LOSS) BEFORE INCOME TAXES............. 3 (15) 1 (11)
Provision for income taxes.................... -- -- -- --
---- ---- ---- ----
INCOME (LOSS)................................. $ 3 $(15) $ 1 $(11)
==== ==== ==== ====
Other Data:
EBITDA (h):
Operating income......................... $ 45 $ 37
Other income (expense)................... (6) 1
Depreciation and amortization (i)........ 13 18
One-time charges (h)..................... 7 --
---- ----
59 56
==== ====
Ratio of earnings to fixed charges (j)........ 1.1x --
Deficiency of earnings to cover fixed charges -- $ 11
(j).........................................
</TABLE>
See accompanying notes.
37
<PAGE> 43
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
The Pro Forma Consolidated Statements of Operations reflect the adjustments
for the Contadina Acquisition and related financings and the Recapitalization as
if such events had occurred as of July 1, 1996.
(a) The historical financial information for Contadina for the twelve-month
period ended September 30, 1997 was derived from the audited and unaudited
financial statements appearing elsewhere in this Prospectus.
The historical financial data provided to the Company includes certain
allocated expenses for functions and services provided by Nestle. Such
allocated costs are comprised of, without limitation, costs of utilizing
outside storage facilities; all selling costs including, without limitation,
direct sales force and brokerage expenses; costs for utilizing centralized
distribution and storage facilities; costs associated with marketing
services; and general and administrative costs associated with support
services such as finance, legal, human resources and information systems and
interest expense. The additional operating cost allocations were $25 million
and $17 million; and the interest allocations were $6 million and $3 million
for the twelve-month period ended September 30, 1997 and the six month
period ended December 31, 1997, respectively.
(b) Represents the historical revenue and expenses of Contadina from July 1,
1997 through December 18, 1997.
(c) Adjustment to cost of sales reflects the following:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
JUNE 30, DECEMBER 31,
1997 1997
---------- ------------
<S> <C> <C>
Reclassification of Contadina trade promotion
costs............................................. $(14) $(13)
Elimination of royalties to Nestle for trademark
license........................................... (5) (3)
---- ----
$(19) $(16)
==== ====
</TABLE>
(d) Represents the cost of sales related to the sales of the inventory acquired
from Contadina which was written-up by the Company to estimated fair value
as part of the Contadina Acquisition preliminary purchase price allocation.
(e) Adjustment to selling, advertising, administrative and general expenses
reflect the following:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
JUNE 30, DECEMBER 31,
1997 1997
---------- ------------
<S> <C> <C>
Reclassification of Contadina trade promotion
costs............................................. $14 $13
Elimination of amortization of Nestle goodwill...... (1) (1)
Amortization of intangible acquired................. 1 --
--- ---
$14 $12
=== ===
</TABLE>
(f) Represents interest adjustments due to debt incurred related to the
Contadina Acquisition, interest adjustments for the pro forma interest
related to the Recapitalization and the reversal of interest allocated from
Nestle.
(g) For the year ended June 30, 1997, represents the inclusion of $7 million of
certain indirect expenses incurred in connection with the Contadina
Acquisition. For the six months ended December 31, 1997, represents
exclusion of $7 million of such indirect expenses.
(h) 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 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,
38
<PAGE> 44
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. For
the year ended June 30, 1997, pro forma one-time charges include expenses
related to the Recapitalization of $25 million, primarily for management
incentive payments, and $22 million in other transaction fees and expenses.
Also in fiscal 1997, pro forma one-time charges include $7 million related
to the write-off of a long-term asset. Pro forma one-time and non-cash
charges include $9 million related to the application of purchase accounting
in connection with the Contadina Acquisition for fiscal 1997. For the six
months ended December 31, 1997, historical one-time charges include $7
million of certain indirect expenses related to the Contadina Acquisition.
(i) Historical depreciation and amortization exclude amortization of $5 million
and $2 million of deferred debt issue costs for fiscal 1997 and for the
six-month period ended December 31, 1997. Pro forma depreciation and
amortization exclude amortization of $5 million and $2 million of pro forma
deferred debt issue costs for fiscal 1997 and for the six-month period ended
December 31, 1997.
(j) 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, 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.
39
<PAGE> 45
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 December 31, 1996 and 1997 and for the six 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, 1997. Operating results for the
six months ended December 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 four-year period ended June 30, 1996 and the balance
sheet data as of June 30, 1993, 1994, 1995 and 1996 have been derived from
consolidated financial statements of the Company audited by Ernst & Young LLP,
independent auditors. The statement of operations data for the year ended June
30, 1997 and the balance sheet data as of June 30, 1997 have been derived from
consolidated financial statements of the Company audited by KPMG Peat Marwick
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.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, DECEMBER 31,
------------------------------------------ --------------
1993 1994 1995 1996 1997 1996 1997
------ ------ ------ ------ ------ ----- ------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales(a)...................... $1,556 $1,500 $1,527 $1,305 $1,217 $ 628 $ 620
Cost of sales(a).................. 1,213 1,208 1,183 984 817 430 413
------ ------ ------ ------ ------ ----- ------
Gross profit...................... 343 292 344 321 400 198 207
Selling, advertising,
administrative and general
expenses(a)(b).................. 286 225 264 239 327 156 162
Special charges(c)................ 140 -- -- -- -- -- --
------ ------ ------ ------ ------ ----- ------
Operating income (loss)........... (83) 67 80 82 73 42 45
Interest expense.................. 68 61 76 67 52 26 36
Loss (gain) on sale of
assets(d)....................... (13) (13) -- (107) 5 5 --
Other (income) expense(e)......... 4 8 (11) 3 30 -- 6
------ ------ ------ ------ ------ ----- ------
Income (loss) before income taxes,
minority interest, extraordinary
item and cumulative effect of
accounting change............... (142) 11 15 119 (14) 11 3
Provision for income taxes........ 10 3 2 11 -- 2 --
Minority interest in earnings of
subsidiary...................... 8 5 1 3 -- -- --
------ ------ ------ ------ ------ ----- ------
Income (loss) before extraordinary
item and cumulative effect of
accounting change............... (160) 3 12 105 (14) 9 3
Extraordinary loss(f)............. -- -- 7 10 42 4 --
Cumulative effect of accounting
change(g)....................... 28 -- -- 7 -- -- --
------ ------ ------ ------ ------ ----- ------
Net income (loss)................. $ (188) $ 3 $ 5 $ 88 $ (56) $ 5 $ 3
====== ====== ====== ====== ====== ===== ======
</TABLE>
40
<PAGE> 46
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, DECEMBER 31,
------------------------------------------ --------------
1993 1994 1995 1996 1997 1996 1997
------ ------ ------ ------ ------ ----- ------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Gross margin(a)................... 22.0% 19.5% 22.5% 24.6% 32.9% 31.5% 33.4%
EBITDA(h)......................... $ 62 $ 63 $ 76 $ 92 $ 121 $ 54 $ 59
SELECTED RATIOS:
Ratio of earnings to fixed charges
(i)............................. -- 1.2x 1.2x 2.6x -- 1.3x 1.1x
Deficiency of earnings to cover
fixed charges(i)................ $ 142 -- -- -- $ 14 -- --
CASH FLOW DATA:
Depreciation and amortization..... $ 67 $ 40 $ 40 $ 31 $ 29 $ 15 $ 15
Capital expenditures.............. $ 34 $ 36 $ 24 $ 16 $ 20 $ 5 $ 6
Other non-cash charges:
Extraordinary loss from debt
retirement(c)................ $ -- $ -- $ 7 $ 5 $ 42 $ 4 $ --
Special charges(a).............. 140 -- -- -- -- -- --
Cumulative effect of accounting
change (g)................... 28 -- -- 7 -- -- --
Other (j)....................... 12 7 3 -- -- -- --
------ ------ ------ ------ ------ ----- ------
Total other non-cash
charges.................... $ 180 $ 7 $ 10 $ 12 $ 42 $ 4 $ --
====== ====== ====== ====== ====== ===== ======
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
------------------------------------------ ----------------
1993 1994 1995 1996 1997 1996 1997
------ ------ ------ ------ ------ ------ -------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................... $ 92 $ 88 $ 99 $ 207 $ 116 $ 173 $ 224
Total assets...................... 1,066 936 960 736 667 848 1,053
Total debt, including current
maturities...................... 624 569 576 373 610 388 856
Redeemable preferred stock........ 216 215 215 213 32 213 32
Stockholders' equity (deficit).... (385) (384) (393) (304) (412) (273) (368)
</TABLE>
- ---------------
(a) In fiscal 1997, certain merchandising allowances, which previously were
included as a cost of sales, have been reclassified to selling expense. Such
merchandising allowances totaled $113 million, $67 million, $106 million,
$100 million, $143 million and $68 million in the fiscal years ended June
30, 1993, 1994, 1995, 1996 and 1997, and the six months ended December 31,
1996, respectively. In addition, certain military distributor allowances,
which previously were treated as a reduction in net sales, have been
reclassified to selling expense. Such military distributor allowances
amounted to $1 million, $1 million, $1 million, $1 million, $2 million and
$1 million in fiscal years ended June 30, 1993, 1994, 1995, 1996 and 1997,
and the six months ended December 31, 1996, respectively. All financial
information has been restated to conform to this presentation.
(b) In connection with the Recapitalization in fiscal 1997, expenses of
approximately $25 million were incurred primarily for management incentive
payments and, in part, for severance payments.
(c) 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.
41
<PAGE> 47
(d) The Company sold its equity investment in Del Monte International 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 is being 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 $2 million of related transaction
expenses, resulted in a loss of $5 million.
(e) In fiscal 1995, other income reflects the Company's receipt of proceeds of a
$30 million letter of credit, reduced by $4 million of related transaction
expenses, as a result of the termination of a merger agreement with Grupo
Empacador de Mexico, S.A. de C.V. In fiscal 1997, $22 million of expenses
were incurred in conjunction with the Recapitalization, primarily for legal,
investment advisory and management fees.
(f) 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 retirement of debt. In fiscal 1997, $42 million of expenses related
to the early retirement of debt and to the Recapitalization was charged to
net income. In September 1996, the Company repurchased outstanding debt, in
conjunction with which capitalized debt issue costs of $4 million, net of a
discount on such debt, were written off and accounted for as an
extraordinary loss. In conjunction with the refinancing of debt that
occurred at the time of the Recapitalization in April 1997, the Company
recorded a $38 million extraordinary loss related to the early retirement
of debt. The $38 million extraordinary loss consisted of previously
capitalized debt issue costs of approximately $19 million and a premium
payment and a term loan make-whole payment aggregating $19 million.
(g) 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.
(h) 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
herein). 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
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
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<PAGE> 48
a management equity plan. For fiscal 1996, other one-time charges included
$3 million for relocation costs and $6 million of costs associated with a
significant headcount reduction. For fiscal 1997, EBITDA excludes $47
million of expenses incurred in connection with the Recapitalization and $7
million related to the write-off of a long-term asset. For the six months
ended December 31, 1997, one-time charges consisted of $7 million of certain
indirect expenses incurred in connection with the Contadina Acquisition.
(i) 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.
(j) Represents non-cash charges related to the RJR Nabisco Sale (as defined
herein) and non-cash accretions for Postretirement Benefits Other Than
Pensions. Also included are non-cash charges for certain employee benefits.
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<PAGE> 49
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 six-month periods ended December 31, 1996 and 1997, and the
three-year period ended June 30, 1997. This discussion should be read in
conjunction with the unaudited consolidated financial statements of the Company
for the six-month periods ended December 31, 1996 and 1997 and the audited
consolidated financial statements of the Company for the three-year period ended
June 30, 1997 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 fruit, while tomato production was slightly
higher than expected. Vegetable production during fiscal 1996 was above average.
This, coupled with an industry decrease in sales, resulted in higher than
expected carryover inventories of vegetables. In response, planned vegetable
plantings were decreased for summer 1997 which resulted in higher vegetable
costs. In addition, cooler weather than normal resulted in late plantings for
some vegetables causing lower recoveries, while smaller fruit size lowered raw
product fruit recoveries. These conditions have had very little impact on the
Company's supply of product available for sale, however, since carry-in
inventories were adequate to cover shortfalls from the summer 1997 harvest.
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 production costs 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 of fiscal 1996 as a
result of higher net selling prices. These price increases were applied to all
product lines in fiscal 1997. Although the Company's aggregate volumes decreased
in fiscal 1997 as compared to fiscal 1996, the Company regained and exceeded
prior year fruit market share while vegetable market share was maintained and
profitability growth continued due to these higher net selling prices.
Profitability growth and market share may be unfavorably impacted in the future
due to the market dynamics of available supply and competitors' pricing.
Commencing in 1996, the Company has sought to leverage its brand and price
leadership to improve sales and operating margins and, to that end, increased
prices for many of its fruit and vegetable products in that year. The Company
coupled these price increases with a new marketing strategy that emphasizes
consumption-driven trade promotion programs as well as consumer-targeted
promotions such as advertising and coupons to encourage retailers to use store
advertisements, displays and consumer-targeted promotions, rather
44
<PAGE> 50
than periodic price-only promotions. In prior periods, the Company relied
primarily upon periodic price-only trade promotions. The Company plans to
continue to emphasize its status as a price leader and, in 1997, implemented a
new business strategy designed to improve sales and operating margins by: (i)
increasing market share and household penetration of high margin specialty
products; (ii) introducing product and packaging innovations; (iii) achieving
cost savings through operating efficiencies, plan consolidations and investments
in new and upgraded production equipment; (iv) increasing penetration of high
growth distribution channels; and (v) completing strategic acquisitions. As part
of this new strategy, the Company completed the Contadina Acquisition in
December 1997. See "Summary --Summary Historical Financial Data of Contadina"
and "Unaudited Pro Forma Financial Data."
In fiscal 1995, Del Monte terminated an exclusive supply agreement with PCP
to purchase substantially all of PCP's tomato and fruit production. See
"Business -- Legal Proceedings." 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 expired under which Del Monte sold certain
products for Yorkshire Dried Fruits and Nuts, Inc. ("Yorkshire") at cost. These
events are collectively referred to as the "Divested Operations."
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:
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
-------------------- ------------
1995 1996 1997 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales....................................... 100% 100% 100% 100% 100%
Cost of sales................................... 78 76 67 68 67
--- --- --- --- ---
Gross margin.................................... 22 24 33 32 33
Selling, advertising, administrative and general
expenses...................................... 17 18 27 25 26
--- --- --- --- ---
Operating income................................ 5% 6% 6% 7% 7%
=== === === === ===
Interest expense................................ 5% 5% 4% 4% 6%
=== === === === ===
</TABLE>
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:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, DECEMBER 31,
-------------------------- ------------
1995 1996 1997 1996 1997
------ ------ ------ ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NET SALES:
Canned vegetables(a)................... $ 441 $ 402 $ 437 $227 $248
Canned fruit(a)........................ 394 367 431 226 218
Tomato products(a)..................... 211 217 229 101 116
Canned pineapple(a).................... 66 72 65 35 34
Other(b)............................... 219 89 41 25 4
------ ------ ------ ---- ----
Subtotal domestic............ 1,331 1,147 1,203 614 620
Latin America.......................... 65 55 17 17 --
Philippines............................ 180 142 -- -- --
Intercompany sales..................... (49) (39) (3) (3) --
------ ------ ------ ---- ----
Total net sales.............. $1,527 $1,305 $1,217 $628 $620
====== ====== ====== ==== ====
</TABLE>
45
<PAGE> 51
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
---------------------- -------------
1995 1996 1997 1996 1997
---- ----- ----- ----- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
AS A PERCENTAGE OF NET SALES:
Canned vegetables(a).................................... 29% 31% 36% 36% 40%
Canned fruit(a)......................................... 26 28 35 36 35
Tomato products(a)...................................... 14 16 19 16 19
Canned pineapple(a)..................................... 4 6 5 6 5
Other(b)................................................ 14 7 4 3 1
--- --- --- --- ---
Subtotal domestic............................. 87 88 99 97 100
Latin America........................................... 4 4 1 3 --
Philippines............................................. 12 11 -- -- --
Intercompany sales...................................... (3) (3) -- -- --
--- --- --- --- ---
Total......................................... 100% 100% 100% 100% 100%
=== === === === ===
</TABLE>
- ---------------
(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.
SIX MONTHS ENDED DECEMBER 31, 1997 VS. SIX MONTHS ENDED DECEMBER 31, 1996
Contadina Acquisition. On December 19, 1997, the Company completed the
Contadina Acquisition for a total of $197 million, comprised of a base price of
$177 million and an estimated Working Capital Adjustment of approximately $20
million. The purchase price is subject to adjustment based on the final
calculation of net working capital as of the closing date. In accordance with
the Asset Purchase Agreement, Nestle has provided its calculation of the net
working capital which would result in a payment to the Company of approximately
$2 million. The Company has until April 18, 1998 to review this calculation and
determine if it has any objection to the calculation. The Contadina Acquisition
also included the assumption of certain liabilities of approximately $4 million.
The acquisition was accounted for using the purchase method of accounting.
Net Sales. Consolidated net sales for the six months ended December 31,
1997 decreased by $8 million compared to the same period of the prior year. Net
sales, after adjusting for the effect of the Divested Operations, increased by
$27 million compared to the prior year six-month period primarily due to higher
volumes in the vegetable and tomato businesses and the acquisition of Contadina
($6 million). The vegetable and tomato businesses have experienced an increase
in sales volumes year-to-date of 9% and 17%, respectively, while net sales for
the vegetable and tomato businesses increased by 10% and 15%, respectively,
compared to the prior year period. Although fruit volume has been relatively
flat, net sales for fruit decreased 3% primarily due to competitive pricing
pressures in the foodservice market. The Company addressed competitive
discounting in the marketplace in the vegetable and tomato businesses by using
an effective mix of targeted trade and consumer promotions. As a result, these
actions enabled the Company to achieve increased volumes and net sales in the
vegetable and tomato businesses.
Cost of Sales and Gross Profit. Gross profit for the first half of fiscal
1998 increased by $9 million from the same prior year period. Gross margin
percentage on a year-to-date basis, after adjusting for the effect of the
Divested Operations, has remained relatively stable. Although costs have
increased in the current year over the prior year, this increase has been offset
to date by a favorable sales mix of higher margin products.
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<PAGE> 52
Costs have increased in the current year primarily due to an increase in
processing costs caused by a compressed harvesting season for fruits which
resulted in the increased use of cold storage until processing capacity became
available. Also affecting costs were reduced plantings for some vegetables and
lower fruit raw product recoveries. The adverse harvesting conditions have had
very little impact on the Company's supply of product available for sale,
however, since carry-in inventories were adequate to cover shortfalls from the
current year harvest.
Selling, Advertising, Administrative and General Expenses. Selling,
advertising, administrative and general expenses, after adjusting for Divested
Operations, increased by $9 million for the six-month period versus the same
period of the prior year. Selling, advertising, administrative and general
expenses have increased from the prior year period due to an increase in trade
promotion support offset by lower benefit plan costs. The increase in trade
promotion was primarily due to an increase in volumes.
Interest Expense. Interest expense has increased by $10 million for the
first half of fiscal 1998 compared to the same period in the prior year
primarily due to higher outstanding debt balances in the first half of the
current year resulting from the Recapitalization that occurred in the fourth
quarter of fiscal 1997.
Other Expense. Other expense for the current year primarily represents
certain indirect costs associated with the Contadina Acquisition.
THREE YEARS ENDED JUNE 30, 1997
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 $1,072 million for fiscal 1996 as compared to $1,110 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. Consolidated net sales for fiscal 1997 decreased by $88 million or 7% from
fiscal 1996. This decrease was attributable to the absence of the Divested
Operations. Net sales for the domestic operations, after adjusting for the
effect of Divested Operations, increased by $97 million from $1,072 million in
fiscal 1996 to $1,169 million in fiscal 1997 due to higher prices across all
product lines. The retail vegetable and fruit businesses 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 the Company's emphasis on consumer promotions were
contributing factors towards realizing the higher prices. Volume increases in
the fruit business were more than offset by volume decreases in the vegetable
and tomato businesses. The volume decrease in the Company's vegetable business
reflects, in part, an overall decline in canned vegetable consumption. In fiscal
1997, the Company's market share for Del Monte branded vegetables, based on case
volume, was 20.3% versus 20.4% in the previous year, while the Company's market
share for Del Monte branded fruit was 40.6% compared to 35.6% 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.
Cost of Sales and Gross Profit. Gross margin was 22.5%, 24.6% and 32.9% in
fiscal 1995, 1996 and 1997, respectively. Domestic gross margin (adjusted for
the absence of the Divested Operations) was 26.4%, 26.4% and 34.0% in fiscal
1995, 1996 and 1997, respectively. Higher selling prices, changes in marketing
strategy and relatively stable costs resulted in significantly higher gross
profit margin than in prior years. In fiscal 1996, higher manufacturing costs
were offset by price increases across all major product lines.
Del Monte Philippines' gross margins were 11.8% and 17.4% in fiscal 1995
and 1996, respectively. Gross margins for Del Monte Latin America were 23.8% and
24.3% in fiscal 1995 and 1996, respectively. The
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<PAGE> 53
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 21.2%, 19.8% and 27.5% in fiscal 1995,
1996 and 1997, respectively. Selling, advertising, administrative and general
expenses for fiscal 1997 increased significantly due to the Recapitalization and
the change in marketing strategy. Expenses incurred primarily for management
incentive payments and, in part, for severance payments incurred related to the
Recapitalization were approximately $25 million. Marketing spending increased as
the Company placed more emphasis on consumer promotion programs versus discounts
off of retailers' list prices than in prior year.
Included in general and administrative expenses are research and
development costs of $6 million, $6 million and $5 million for fiscal 1995, 1996
and 1997, respectively. Research and development spending in fiscal 1995, 1996
and 1997 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. Interest expense decreased 22% in
fiscal 1997 compared to fiscal 1996. This decrease was due to the lower
outstanding debt balances during the first nine months of fiscal 1997 (before
the Recapitalization).
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. Other
expense for fiscal 1997 increased due to $22 million of expenses incurred in the
Recapitalization (primarily legal, investment advisory and management fees).
Also included in fiscal 1997 other expense is the revaluation of a long-term
asset.
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 in fiscal
1996. There was no tax provision in fiscal 1997 compared to a provision of $11
million in fiscal 1996. This decrease was primarily due to the expenses of the
Recapitalization. As of June 30, 1997, the Company had $84 million in net
operating loss carryforwards for tax purposes, which will expire between 2008
and 2012.
Extraordinary Loss. In June 1995, the Company refinanced its
then-outstanding revolving credit facility, term loan and senior notes. 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 were charged to income, both of which have been
accounted for as an extraordinary item. 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.
In conjunction with an exchange offer, capitalized debt issue costs of
approximately $4 million, net of a discount, were charged to net income in
fiscal 1997 and accounted for as an extraordinary loss. In conjunction with the
refinancing of debt that occurred at the time of the Recapitalization,
previously capitalized debt issue costs of approximately $19 million and a note
premium and a term loan make-whole aggregating $19 million were charged to
fiscal 1997 net income and accounted for as an extraordinary loss.
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.
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<PAGE> 54
Recently Issued Accounting Standards
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation". SFAS No. 123 granted companies the option to
recognize and measure compensation costs related to employee stock plans based
on either the fair value of the award at date of grant or the difference between
the quoted market price of the stock at the date the award is granted over the
amount the employee must pay to acquire the stock (the "intrinsic value based
method"). The Company has implemented a stock option program and a stock
purchase program. See "Management -- Employment and Other Arrangements."
In October 1996, the AICPA Accounting Standards Executive Committee issued
Statement of Position ("SOP") No. 96-1 "Environmental Remediation Liabilities".
The SOP provides guidance with respect to the recognition, measurement and
disclosure of environmental remediation liabilities. SOP No. 96-1 is required to
be adopted for fiscal years beginning after December 15, 1996. The Company has
adopted SOP 96-1 for the first quarter of fiscal year 1998 and, based on current
circumstances, does not believe the effect of adoption will be material.
The FASB recently issued SFAS No. 128, "Earnings per Share"; SFAS No. 129,
"Disclosure of Information about Capital Structure"; SFAS No. 130, "Reporting
Comprehensive Income"; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company believes the effect of adoption
of these statements will not be material.
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.
Management believes that cash flow from operations and availability under
the 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. In
addition the Company will have to refinance the Bank Financing and the DMC Notes
prior to the maturity of the Notes, as to which there can be no assurance. The
Company actively considers various financing alternatives, including the
issuance of equity securities in the U.S. and international markets. Any such
equity issuance would depend on a variety of factors, including market
conditions, the interests of the Company's controlling shareholder and the
Company's results of operations and prospects.
Operating Activities
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 uses funds
from its Revolving Credit Facility, which provides for a $350 million line of
credit, to finance the seasonal working capital needs of its operations.
Inventories at December 31, 1997 consist of inventories of Contadina of
$101 million (as calculated based on the preliminary working capital which is
subject to adjustment based on the final calculation of the Working Capital
Adjustment and activity since acquisition) and other inventories of $499
million. The increase in inventories (excluding the Contadina inventory) at
December 31, 1997 from June 30, 1997 reflects the seasonal inventory buildup.
The increase in accounts payable and accrued expenses from June 30, 1997 to
December 31, 1997 primarily reflects accrued expenses resulting from higher
levels of trade and consumer
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<PAGE> 55
promotions and accruals remaining from the peak production period. As of
December 31, 1997, $153 million was outstanding under the Revolving Credit
Facility, compared to $82 million at June 30, 1997.
Cash provided by operating activities decreased by $3 million in fiscal
1996 over fiscal 1995 primarily due to a decrease in inventories and in accounts
receivable offset by a decrease in accounts payable and accrued expenses. The
decrease in inventories resulted from high carry-over inventories from fiscal
1995 versus low inventory levels at the end of fiscal 1996 due to a tight
industry supply of certain inventory items. The decrease in accounts receivable
resulted primarily from a decrease in sales activity during June 1996 as
compared to June 1995. The decrease in accounts payable and accrued expenses was
due primarily to a decrease in amounts payable to PCP due to the termination of
a joint venture at the end of fiscal 1995 and a decrease in marketing accruals
due to a change in marketing strategy during fiscal 1996. Also impacting accrued
expenses in fiscal 1996 was a charge to an accrual established in fiscal 1993 to
implement multi-year cost savings measures. The decrease occurred as costs
associated with fiscal 1996 consolidation efforts were charged to this accrual.
In fiscal 1997, cash provided by operations decreased by $35 million over fiscal
1996 primarily due to various expenses associated with the Recapitalization, as
well as an increase in inventories due to lower sales volume during the year
than anticipated.
Investing Activities
The increase of $191 million in cash provided by investing activities in
fiscal 1996 versus fiscal 1995 and the decrease of $133 million in cash provided
by investing activities in fiscal 1997 versus fiscal 1996 was principally due to
net cash proceeds from the sale of its Pudding Business ($85 million) and the
sale of its interest in Del Monte Philippines ($98 million) in fiscal 1996. The
effect of the fiscal 1996 divested asset sales was partially offset in fiscal
1997 by the sale of the Company's Latin America subsidiaries ($48 million).
Capital expenditures for fiscal 1997 were $20 million including
approximately $1 million for environmental compliance. The Company expects that
capital expenditures during fiscal 1998 will be approximately $40 million as the
Company implements a new program which is intended to generate cost savings by
introducing new equipment that would result in general production efficiencies.
Capital expenditures are expected to be funded from internally generated cash
flows and by borrowing from available financing sources.
Financing Activities
Contadina Acquisition. In connection with the Contadina Acquisition, the
Company issued senior discount notes with an aggregate principal amount at
maturity of $230 million and received gross proceeds of approximately $126
million. These Initial Notes accrue interest at 12.50% payable on each June 15
and December 15, which will be accreted through December 15, 2002, after which
time interest will be paid in cash until maturity. The Initial Notes mature on
December 15, 2007. These Initial Notes are redeemable in whole or in part at the
option of the Company on or after December 15, 2002 at a price that initially is
106.250% of par and that decreases to par, if redeemed, on December 15, 2006 or
thereafter. On or prior to December 15, 2000, the Company may, at its option,
redeem up to 35% of the aggregate principal amount at maturity of the Initial
Notes originally issued with the net cash proceeds of one or more Public Equity
Offerings, at a redemption price of 112.50% of the accreted value to the date of
redemption. The Initial Notes were issued with registration rights requiring the
Company (i) to file, within 75 days of the consummation of the Contadina
Acquisition, a registration statement under the Securities Act of 1933, as
amended, to exchange the Initial Notes for new registered notes, and (ii) to use
its best efforts to effect that registration within 150 days after the
consummation of the Contadina Acquisition.
In connection with the Contadina Acquisition, the Company also amended its
bank financing agreements and related debt covenants to permit additional
funding under the existing Term B loan in an amount of $50 million. Amortization
of the additional Term B loan amount is incremental to the scheduled
amortization of the existing Term B loan. Such additional amortization will
begin on a quarterly basis in the second quarter of fiscal 1999 in the amount of
$0.5 million on an annual basis with such amortization increasing in the fourth
quarter of fiscal 2004, through the third quarter of fiscal 2005, to
approximately $12 million per quarter.
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The Recapitalization. On February 21, 1997, DMFC entered into a Merger
Agreement which was amended and restated as of April 14, 1997, with TPG and
Shield. On April 18, 1997, DMFC was recapitalized through the merger of Shield
with and into DMFC with DMFC being the surviving corporation. By virtue of the
Recapitalization, shares of DMFC's preferred stock having an implied value of
approximately $14 million held by certain of DMFC's stockholders who remained
investors were cancelled and were converted into the right to receive new DMFC
Common Stock. All other shares of DMFC stock were cancelled and were converted
into the right to receive cash consideration. In connection with the
Recapitalization, Del Monte Corporation repaid substantially all of its funded
debt obligations existing immediately before the Recapitalization. In the
Recapitalization, the common stock and preferred stock of Shield 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,
$.01 par value, and issued and has outstanding 140,000 shares of Common Stock,
and 35,000 shares of Preferred Stock.
Cash funding requirements for the Recapitalization totaled $809 million and
included repayment of $158 million of PIK Notes, $113 million of the
then-existing term loan, and $30 million of the then-existing revolving credit
facility. In addition, $422 million was paid to former shareholders as cash
consideration for their shares and approximately $86 million was paid in other
fees and expenses. These cash funding requirements were satisfied through the
following: (i) a cash equity investment by TPG and other investors of $126
million in common stock; (ii) a cash equity investment by TPG and other
investors of $35 million in shares of redeemable preferred stock and warrants to
purchase Common Stock; (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 offering of the DMC Notes; and
(vi) $2 million of proceeds from the sale of a surplus property.
Bank Financing. Concurrent with the Recapitalization, the Company entered
into the Bank Financing. The Term Loan Facility provides for term loans in the
aggregate amount of $380 million, consisting of Term Loan A of $200 million and
Term Loan B of $180 million. The Revolving Credit Facility provides 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, Term Loan A will mature in fiscal 2003, and Term Loan B will mature
in fiscal 2005. Scheduled principal payments on Term Loan A begin in the first
quarter of fiscal 1999 and continue quarterly through maturity. Initial
quarterly amortization is approximately $8 million per quarter, rising
periodically at approximately $1 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 Term Loan B begin
in the third quarter of fiscal 1998 and continue quarterly through maturity.
Initial quarterly amortization amounts to approximately $2 million per year.
Substantial amortization begins in the fourth quarter of fiscal 2004, with
quarterly amortization of approximately $42 million. 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 are, at the Company's option, either (i) the base rate plus 2.00% or (ii) the
offshore rate plus 3.00%.
Senior Subordinated Notes. In connection with the Recapitalization, on
April 18, 1997, DMC issued senior subordinated notes with an aggregate principal
amount of $150 million and received gross proceeds of $147 million. The DMC
Notes accrue interest at 12.25% per year, payable semiannually in cash on each
April 15 and October 15. These DMC Notes are guaranteed by DMFC and mature on
April 15, 2007. The DMC Notes are redeemable at the option of DMC on or after
April 15, 2002 at a premium to par that initially is 106.313% and that decreases
to par on April 15, 2006 and thereafter. On or prior to April 15, 2000, DMC, at
its option, may redeem up to 35% of the aggregate principal amount of DMC 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 DMC Notes originally
issued remains outstanding immediately after any such redemption.
51
<PAGE> 57
As of December 31, 1997, the Company's short-term borrowings and long-term
debt primarily consisted of a revolving credit facility, bank term loans, senior
subordinated notes and senior discount notes (collectively, the "Debt"). The
Debt agreements contain restrictive covenants, the most restrictive of which is
minimum EBITDA (as defined in the Debt covenants). The Company was in compliance
with all Debt covenants at June 30, 1997 and December 31, 1997.
Financing Activities -- 1996 Activity. The increase in net cash used in
financing activities of $180 million in fiscal 1996 as compared to fiscal 1995
reflects a lower balance under the Revolving Credit Facility at year end 1996
versus 1995 and higher net pay-down of long-term debt. The higher payments on
the Revolving Credit Facility and long-term debt were due to cash available from
the Company's sales of the pudding business and Del Monte Philippines. In
connection with the early debt repayment a prepayment penalty of $5 million was
charged to income and recorded as an extraordinary loss. Included in other
financing activities in fiscal 1996 was a deposit of $30 million of Del Monte
Philippines sale proceeds into the Specific Proceeds Collateral Account until
agreement was reached with the Term Lenders as to final application.
Pension Funding
Del Monte'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. 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 a total of $55 million to its defined benefit pension plans
through calendar 2001 of which $15 million was contributed within 30 days after
the consummation of the Recapitalization. The contributions 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.
Tax Net Operating Loss Carryforwards
As of June 30, 1997, the Company had $84 million in net operating loss
carryforwards for tax purposes, which will expire between 2008 and 2012.
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.
Environmental Matters
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 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 cannot
predict the extent to which any environmental law or regulation that may be
enacted or enforced in the future may affect its operations. 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 approximately $5 million on
domestic environmental expenditures from fiscal 1995 through fiscal 1997, and
projects that it will spend an aggregate of approximately $4 million in fiscal
1998 and 1999 on capital projects and other expenditures in connection with
environmental compliance.
In connection with the Company's divestiture of certain 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 these and other such remediation costs will have a material adverse
effect on the Company's financial condition or results of operations.
52
<PAGE> 58
The Company has been notified by governmental authorities and private
claimants that it is a potentially responsible party ("PRP") for environmental
investigation and remediation costs at certain contaminated sites under CERCLA
or under similar state laws. Currently the Company is indemnified for any
liability at two of these sites, which indemnification obligation has been
accepted by the indemnitors for each such matter.
With one exception, the Company is considered a PRP at each site because it
sent certain wastes from its operations to these sites for disposal. With
respect to the sites at which the Company has been identified as a PRP and is
not indemnified by another party, the environmental investigation and
remediation are at various stages. Because the investigation and remediation
process is usually long and complicated, it is difficult to predict the ultimate
extent of the Company's liability. However, at most such sites, the Company
believes it will incur a minor, if any, 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 or previously owned or operated by the Company. The Company
believes that its CERCLA and any other environmental liabilities will not have a
material adverse effect on the Company's financial position or results of
operations.
53
<PAGE> 59
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, Inc. ("RJR Nabisco"). In December 1989, RJR Nabisco
sold the Company's fresh produce operations, Del Monte Fresh Fruit, to Polly
Peck International PLC. In January 1990, an investor group led by Merrill Lynch
purchased the Company and certain of its subsidiaries from RJR Nabisco for $1.5
billion (the "RJR Nabisco Sale"). Following such sale, the Company divested
several of its non-core businesses and all of its foreign operations.
The Company is the largest producer and distributor of canned vegetables
and canned fruit in the United States, with net sales of $1.2 billion in fiscal
1997. The Company's primary domestic channel of distribution is retail outlets,
which accounted for approximately $885 million (or 74%) of the Company's fiscal
1997 domestic sales. In December 1997, the Company had domestic market shares of
19.7% of canned vegetable products and 41.0% 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(R) 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 substantial competitive advantage in
selling to the retail grocery industry and in leveraging its brand equity to
improve sales and operating margins.
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 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), Orchard Select(R),
Fruit Smoothie Blenders(TM), Del Monte Lite(R) and Contadina(R). In connection
with and subsequent to the RJR Nabisco sale, the Company granted various
perpetual, exclusive royalty-free licenses for the use of the Del Monte name and
trademark, as well as the use of certain copyrights, patents, and trade secrets,
generally outside of the United States. The licensees include Fresh Del Monte
and its affiliates (which succeeded to Polly Peck International PLC as the owner
of the Company's former fresh produce operations), Del Monte International,
Kikkoman Corporation ("Kikkoman"), affiliates of RJR Nabisco, and Yorkshire.
None of the licensees is an affiliate of the Company, other than Yorkshire with
respect to which the Company owns 20% of the common stock. See "-- Intellectual
Property."
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<PAGE> 60
In fiscal 1995, 1996 and 1997, the Company invested an aggregate of
approximately $50 million of capital in its domestic operating facilities. The
Company believes that 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.
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 -- For the 52-weeks
ended December 27, 1997, the Company had domestic market shares of 19.7% of
canned vegetable products and 41.0% 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 24.0% 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.
<TABLE>
<CAPTION>
MARKET SHARE FOR 52-WEEKS ENDED
-----------------------------------------------------------------------------------------------
DECEMBER 28, 1996 DECEMBER 27, 1997
---------------------------------------------- ----------------------------------------------
NEXT NEXT
LEADING LEADING
BRANDED BRANDED
MARKET COMPETITOR'S MARKET COMPETITOR'S
CATEGORY POSITION(A) PERCENTAGE PERCENTAGE(A) POSITION(A) PERCENTAGE PERCENTAGE(A)
-------- ----------- ---------- ------------------- ----------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Canned Vegetables........... #1 20.0% 12.4% (Green Giant) #1 19.7% 13.6% (Green Giant)
Canned Fruit................ #1 38.1% 12.0% (Libby's) #1 41.0% 11.7% (Libby's)
Canned Cut Tomato
Products.................. #1 25.4% 10.8% (Hunt's) #1 24.0% 10.8% (Hunt's)
</TABLE>
- ---------------
(a) Excludes private label.
- - STRONG CASH FLOWS AND INCREASING MARGINS -- The Company's established market
position, strong brand recognition, new pricing strategy and significant cost
reduction efforts have led to consistent and increasing operating margins and
cash flow. EBITDA (excluding the results of the Divested Operations) for
fiscal 1995, 1996 and 1997 was $76 million, $92 million and $121 million,
respectively. EBITDA margins for the same periods were 6.9%, 8.6% and 10.4%,
respectively. Management believes that there will continue to be substantial
opportunities to improve margins by increasing sales of high margin products
and by reducing costs through increased operating efficiencies, implementation
of capital projects which offer rapid returns on investment and strategic
acquisitions that result in operating synergies. See "Summary -- Summary
Historical Financial Data of the Company" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
- - EXTENSIVE NATIONAL SALES AND DISTRIBUTION SYSTEM -- The Company's extensive
sales and distribution network is responsible for the distribution of finished
goods to over 2,400 customer destinations nationwide. This network enables the
Company 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 makes
an important contribution to the Company's success and provides the Company
with a competitive advantage over regional and private label competitors.
55
<PAGE> 61
- - 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, and warehousing
and distribution efficiencies.
- - 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's scope of product
offerings as well as its proprietary software tools have enabled the Company
to form alliances with key customers. To support these alliances, Del Monte
has developed proprietary software systems and programs in category management
which have enabled its customers to free shelf space, increase the number of
the Company's products offered, 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 sales of the Company's
products and shelf space dedicated to the Company's products 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 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 its products. The Company intends to pursue additional
alliances with key customers.
- - 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 -- Two veteran managers with extensive food
industry experience, Richard G. Wolford and Wesley J. Smith are the Chief
Executive Officer and Chief Operating Officer, respectively. 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, and 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
Following the consummation of the Company's Recapitalization in 1997, the
Company implemented a new business strategy designed to leverage its brand and
price leadership to improve sales and operating margins by: (i) increasing
market share and household penetration of high margin specialty products; (ii)
introducing product and packaging innovations; (iii) achieving cost savings
through operating efficiencies, plant consolidations and investments in new and
upgraded production equipment; (iv) increasing penetration of high growth
distribution channels; and (v) completing strategic acquisitions. The key
elements of this new business strategy are discussed below.
- - IMPROVE SALES THROUGH INCREASED PENETRATION OF SPECIALTY PRODUCTS AND PRODUCT
AND PACKAGING INNOVATIONS -- The Company plans to leverage the Del Monte and
Contadina brand names and the Company's strong relationships with customers to
increase sales of its existing high margin products, such as its specialty
vegetables and its Fruit Cup(R) line, where the Company has historically had
either relatively low market share or low household penetration. The Company
has also been developing new high margin
56
<PAGE> 62
products designed to leverage the Company's presence in existing categories
and to exploit its existing manufacturing capabilities. Specifically, the
Company has successfully introduced flavored diced tomatoes; flavored canned
fruits; Orchard Select(R)fruit-in-glass, a premium shelf-stable fruit product;
Fruit Smoothie Blenders(TM), a flavored fruit drink; and other value-added
products that extend the Company's traditional product lines and appeal to
consumers' demand for high quality, convenient and nutritious products. The
Company is evaluating introductions of new products packaged in glass and
plastic to expand the Company's presence in the market beyond the canned food
aisle.
- - IMPLEMENT FURTHER COST SAVINGS -- The Company is aggressively pursuing cost
reduction opportunities, which have already contributed to an increase in
EBITDA margins (excluding the results of Divested Operations) from 6.9% in
1995 to 10.4% in 1997. Management believes that it will achieve significant
increases in operating margins from increasing operating efficiencies, plant
consolidations and capital projects which offer rapid returns on investment.
The Company has announced plans to consolidate six existing fruit and tomato
operations in California into four facilities, including one large facility
acquired as part of the Contadina Acquisition. The Company continually
evaluates its production facilities and believes that further consolidations
may be warranted in the future. In addition, the Company plans to invest in
new, state-of-the-art production equipment to increase production efficiencies
and strengthen its status as a low-cost producer.
- - REFOCUS MARKETING STRATEGY -- To enhance its ability to leverage its brand
equity in canned fruits, vegetables and tomatoes, the Company has refocused
its marketing efforts and promotional strategy. Specifically, the Company has
implemented performance-based trade promotion programs, increased consumer
targeted marketing programs and established clearly differentiated product
positioning that emphasizes the Company's premium quality. Under the Company's
"Go-to-Market" strategy, trade spending is based on retailers' sales to
consumers rather than on purchases from the Company. The Company believes that
this performance-based strategy, coupled with the Company's category
management capabilities, will continue to increase sales and reduce costs. The
Company has also increased its focus on consumer targeted marketing, primarily
through the distribution of free-standing coupon inserts. The Company
increased spending on consumer promotions from $12 million in fiscal 1996 to
$46 million in fiscal 1997 and anticipates generally consistent levels of
consumer spending in fiscal 1998 and 1999.
- - GENERATE GROWTH THROUGH ACQUISITIONS -- The Company will continue to pursue
strategic acquisitions where there are opportunities to generate incremental
sales growth and leverage the Company's key strengths in production,
distribution and sales. In evaluating potential acquisition candidates, the
Company seeks, among other things: (i) brands complementary to those of the
Company; (ii) new product opportunities; (iii) economies of scale in
manufacturing and capacity utilization; and (iv) positive earnings
contribution. The Contadina Acquisition, for example, provides a platform to
strengthen the Company's market share in key tomato segments, realize cost
savings through plant consolidations and increase sales to the branded
foodservice market. The Contadina Acquisition also provides the Company new
opportunities to take advantage of increased economics of scale and access to
state-of-the-art production facilities.
- - INCREASE PENETRATION OF HIGH-GROWTH DISTRIBUTION CHANNELS -- 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.
57
<PAGE> 63
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.
COMPANY PRODUCTS
The Company has a multi-category presence with products in four major
processed food categories: canned vegetables, fruit, pineapple and tomato
products.
Canned Vegetables. The canned and jarred vegetable industry in the United
States generated approximately $3.3 billion in sales in fiscal 1997. 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:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
(DOLLARS IN BILLIONS)
<S> <C> <C> <C> <C> <C>
All Canned/Jarred Vegetables.................. $3.0 $3.0 $3.1 $3.2 $3.3
</TABLE>
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
$780 million or approximately 65% of fiscal 1997 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 $237 million or approximately 17% of fiscal 1997 supermarket case
sales of canned vegetables. The specialty segment, comprised of asparagus,
zucchini, baby beets and a variety of corn and bean offerings, represents $284
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 $349 million in retail sales in fiscal 1997. During
the 52-weeks ended December 27, 1997, Del Monte brand vegetable products enjoyed
an average premium of 19c (41%) per item over private label products and the
Company held a 19.7% 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
for the 52-weeks ended December 27, 1997 held a 23.6% market share in green
beans, a 19.0% market share in corn and a 16.3% 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 (42.7%
for the 52-weeks ended December 27, 1997), but their market share has remained
relatively stable over the past decade.
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<PAGE> 64
The Company's primary branded competitors in the market include Green Giant
nationally, and regional brands such as Freshlike, Stokely and Libby's, in
addition to private label producers.
CANNED VEGETABLE MARKET SHARE
<TABLE>
<S> <C>
DEL MONTE................................................... 19.7%
Green Giant................................................. 13.6%
Stokely..................................................... 2.4%
Libby's (Seneca)............................................ 3.6%
Freshlike (Dean Foods)...................................... 2.1%
All private label combined.................................. 42.7%
</TABLE>
- ---------------
Source: ACNielsen SCANTRACK, 52-weeks ended December 27, 1997 (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 $2.4 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.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
(DOLLARS IN BILLIONS)
<S> <C> <C> <C> <C> <C>
All Canned/Jarred Fruit....................... $2.3 $2.3 $2.3 $2.2 $2.4
</TABLE>
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 $1.4 billion of total
canned fruit industry sales in fiscal 1997.
Major fruit accounted for sales by retailers of $625 million in fiscal
1997. Sales by retailers of Del Monte brand major fruit products totaled $291
million in fiscal 1997. For the 52-weeks ended December 27, 1997, the Company
was the branded share leader with a 41.0% 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 65% market share. The Company's major fruit and
fruit cup products are distributed in substantially all grocery outlets, with
the average store stocking 23 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 71% and 66% of grocery outlets, respectively. Mandarin oranges and cherries
are distributed in 23% and 8% 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 7c
(8%) 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 11.7%. Forty-one percent of industry sales are generated primarily by private
label producers including Tri-Valley Growers and PCP.
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<PAGE> 65
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 decline. 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 52-weeks ended December 27, 1997 to 41.0%, a higher level than
experienced prior to the price increases. See "Risk Factors -- Pricing and
Promotional Strategy."
CANNED MAJOR FRUIT MARKET SHARE
<TABLE>
<S> <C>
DEL MONTE................................................... 41.0%
Libby's (Tri-Valley)........................................ 11.7%
All private label combined.................................. 40.5%
</TABLE>
- ---------------
Source: ACNielsen SCANTRACK, 52-weeks ended December 27, 1997 (based on
equivalent cases).
The Company has relationships with approximately 600 fruit growers located
in California, Oregon and Washington.
Canned Pineapple. The canned pineapple products industry in the United
States generated approximately $339 million in sales in fiscal 1997. 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.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Canned Pineapple Products..................... $334 $329 $317 $329 $339
</TABLE>
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 $35 million in fiscal 1997, 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 14.0%
market share for the 52-weeks ended December 27, 1997. Dole is the industry
leader with a market share of 45.1%. Private label and foreign pack brands
comprise the low-price segment of this category and hold market shares of 27.4%
and 12.2%, 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.
CANNED MAJOR FRUIT MARKET SHARE
<TABLE>
<S> <C>
DEL MONTE................................................... 14.0%
Dole........................................................ 45.1%
Foreign pack................................................ 12.2%
All private label combined.................................. 27.4%
</TABLE>
- ---------------
Source: ACNielsen SCANTRACK, 52-weeks ended December 27, 1997 (based on
equivalent cases).
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<PAGE> 66
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.
Canned Tomato Products. Tomato products generated fiscal 1997 industry-wide
sales of $5.4 billion. Total sales of tomato products have grown steadily in
recent years, achieving a five-year compound annual growth rate of 3% per year.
The diced and chunky segment of the retail solid tomato category grew 13% on an
equivalent case basis during the 52-weeks ended December 27, 1997. The following
table presents total industry sales of all processed tomato products in recent
years.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
(DOLLARS IN BILLIONS)
<S> <C> <C> <C> <C> <C>
Processed Tomato Products..................... $4.7 $4.8 $5.1 $5.3 $5.4
</TABLE>
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 generally have 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 $3.8 billion in fiscal 1997, including sales of $261 million in the
Company's key category of cut tomato products. Sales by retailers of Del Monte
branded cut tomato products in fiscal 1997 accounted for $74 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.
The Company is active in the value-added tomato product segment with its
pasta and spaghetti sauces, and sloppy joe sauces. This segment has enjoyed
significant growth over the last four years, with grocery retail sales of $2.3
billion in fiscal 1997 compared to grocery retail sales of $1.9 billion in
fiscal 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 $1.4 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.
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, 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; and Hunt's and Hormel in the sloppy
joe sauce category. 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 for the 52-weeks ended
December 27, 1997 of 4.1% in spaghetti sauce and 6.2% in tomato sauce), it is
the largest branded competitor in the cut tomato segment with a market share of
24.0% for the 52-weeks ended December 27, 1997. Hunt's, the next largest branded
processor, possessed a 10.8% share for this period. In other key categories, for
the 52-weeks ended
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<PAGE> 67
December 27, 1997, Heinz was the market leader in ketchup with a 46.5% market
share, Hunt's was the leader in tomato sauce with a 34.9% market share.
CANNED CUT TOMATO PRODUCTS (A)
MARKET SHARE
<TABLE>
<S> <C>
DEL MONTE................................................... 24.0%
Hunt's...................................................... 10.8%
S&W......................................................... 9.6%
Contadina................................................... 4.6%
All private label combined.................................. 32.0%
</TABLE>
- ---------------
(a) Includes tomato wedges and stewed, diced and chunky canned tomato products.
Source: ACNielsen SCANTRACK, 52-weeks ended December 27, 1997 (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.
SALES, MARKETING AND DISTRIBUTION
Sales. The Company's sales organization for retail products is divided into
three groups: (i) a retail broker network (which consists of 100% independent
broker representation at the market level, managed by Company sales managers);
(ii) Warehouse Clubs, Mass Merchandisers and Supercenters; and (iii) Trade
Promotion. 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 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 third group, Promotion, is
responsible for managing trade promotion. 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 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, 1997 the
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<PAGE> 68
Company had purchase commitments outstanding of approximately $265 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.
Fifteen 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 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.
In January 1998, management announced a four-year plan to consolidate its
California manufacturing operations in order to enhance the efficiency of fruit
and tomato processing operations and allow the Company to better meet the
competitive challenges of the market. Tomato production currently taking place
at the Modesto plant is expected to be transferred to the Company's newly
acquired facility in Hanford in 1999. The Modesto location would then be
converted to a fruit processing plant allowing production currently processed at
the San Jose plant to be transferred to Modesto. At the end of the year 2000
production season, the Company is also expected to close its Stockton fruit
plant and transfer production from that plant to Modesto. Considerations of
plant age and location were primary factors in the decision to close the
eighty-year-old San Jose plant and the seventy-year old Stockton plant and
transfer production closer to the growing areas. The Company believes that none
of its other plants will be directly affected by these decisions.
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
substantially 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 1997 net sales. The Company's 15 largest
customers during fiscal 1997 represented approximately 45.1% of the Company's
net sales. These companies have all been Del Monte customers for at least ten
years and, in some 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
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<PAGE> 69
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. The agreement expires in
November 2002 with optional successive one-year extensions. 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 1995,
1996 and 1997, 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.
EMPLOYEES
At December 31, 1997, the Company had approximately 2,700 full-time
employees. An additional 12,400 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 ten collective bargaining agreements with seven unions
covering approximately 10,800 of its hourly and seasonal employees. Three
collective bargaining agreements expire in calendar 1998. The remaining
agreements expire in calendar 1999, 2000 and 2001. The Company believes that
each of these agreements will be successfully renegotiated, but there can be no
assurance that negotiations will be successful.
INTELLECTUAL PROPERTY
The Company owns a number of registered and unregistered trademarks for use
in connection with various food products, including the marks Del Monte(R),
Snack Cups(R), Fruit Cup(R), Fruit Naturals(R), Orchard Select(R),Fruit Smoothie
Blenders(TM), Del Monte Lite(R) and Contadina(R). 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, or its licensees, where applicable, comply with all applicable renewal
requirements including, where necessary, the continued use of the marks in
connection with similar goods. The Company is not aware of any material
challenge to the ownership by the Company of its major trademarks.
Del Monte Corporation owns approximately twelve issued U.S. patents
covering machines used in filling, cleaning, and sealing cans, food preservation
methods, extracts and colors, and peeling and coring devices. The patents expire
between 2002 and 2014 and cannot be renewed. Patents are generally not material
to the Company's business.
The Company claims copyright protection in its proprietary category
management software and vendor-managed inventory software. See " -- Business
Strategy -- Customer Alliances." The Company's customers receive reports
generated by these software programs and provide data to the Company for use in
connection with the programs. The software itself, however, is not currently
licensed to the Company's customers. The copyrights are not registered.
The Company has developed a number of proprietary vegetable seed varieties
which it protects against disclosure by restricting access and/or by the use of
non-disclosure agreements. There can be no assurance that the means taken by the
Company to protect the secrecy of its seed varieties will be sufficient to
protect their secrecy or that others will not independently develop similar
technology. The Company has obtained U.S. plant variety protection certificates
under the Plant Variety Protection Act on some of its proprietary seed
varieties. Under such a certificate, the breeder has the right, among other
rights, to exclude others from
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<PAGE> 70
offering or selling the variety or reproducing it in the United States. The
protection afforded by a plant variety protection certificate generally runs for
twenty years from the date of its issuance.
In connection with the RJR Nabisco Sale, and the divestitures of the
Company's non-core and foreign operations subsequent to that sale, the Company
granted various perpetual, exclusive, royalty-free licenses for use of the Del
Monte name and mark along with certain other trademarks, patents, copyrights and
trade secrets to the acquiring companies or their affiliates. In particular,
with respect to all food and beverage products other than fresh fruits,
vegetables and produce, 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 and Pacific Rim (excluding the
Philippines); Del Monte International holds the rights in Europe, Africa, the
Middle East and the Indian Subcontinent. Fresh Del Monte holds the rights to use
the Del Monte name and trademark with respect to fresh fruit, vegetables, and
produce and certain chilled and frozen products related thereto throughout the
world. With respect to dried fruit, nut, 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 agreements to sell Del Monte Latin
America, an affiliate of Hicks, Muse, Tate & Furst acquired the right to use the
Del Monte trademarks with respect to all food and beverage products other than
fresh fruits, vegetables, and produce in Mexico and Capital Universal Ltd. (an
affiliate of Donald W. Dickerson, Inc.) acquired similar rights in Central
America and the Caribbean. Dewey Limited (an affiliate of Del Monte
International) owns the rights in the Philippines to the Del Monte brand name.
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 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 and tangible interests in its
trademarks and related trade names, copyrights, patents, trade secrets and other
intellectual property to its creditors, in connection with the Bank Financing,
and to its licensees, to secure certain of the Company's obligations under the
license agreements.
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.
PENSION CONTRIBUTIONS
As described more fully in Note F to the audited consolidated financial
statements of the Company for the year ended June 30, 1997, 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
contributed $15 million within 30 days after the consummation of the
Recapitalization to its defined benefit pension plans. The Company will also
contribute a minimum of $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 contribution required to be made in 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 contribution required to be
made in 1998 or prior to obtaining the letter of credit.
LEGAL PROCEEDINGS
The Company is involved from time to time 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.
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<PAGE> 71
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
matters in which the Company is involved.
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.
During fiscal 1997 and 1998, the Company was engaged in ongoing discussions
with the FDA concerning the Company's FreshCut brand labeling on certain tomato,
vegetable and pineapple products. The Company believes that its labeling
complies in all respects with applicable law. However, as part of these
discussions, the Company has agreed to modify its labeling for the 1998 pack in
order to address certain concerns expressed by the FDA.
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. In January 1998, the Company
reached a settlement of this litigation. The settlement resolves all claims and
disputes relating to the sale of the Company's Mexican subsidiary, including the
purchase price adjustment contemplated at the time of the sale. The Company's
portion of the settlement was within the amount reserved and thus did not
adversely impact net income of the Company.
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 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 cannot
predict the extent to which any environmental law or regulation that may be
enacted or enforced in the future may affect its operations. 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 approximately $5 million on
domestic environmental expenditures from fiscal 1995 through fiscal 1997, and
projects that it will spend an aggregate of approximately $4 million in fiscal
1998 and 1999 on capital projects and other expenditures in connection with
environmental compliance.
In connection with the Company's divestiture of certain 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. At one such property,
the Company is currently conducting groundwater investigation for contamination
that it believes resulted from third party operations. At the present time, the
Company is unable to predict the total remediation cost for this matter or the
extent to which it may obtain contributions for any related remediation from
such third party. Nonetheless, the Company does not expect that these and other
such remediation costs will have a material adverse effect on the Company's
financial condition or results of operations.
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<PAGE> 72
The Company has been notified by governmental authorities and private
claimants that it is a potentially responsible party ("PRP") for environmental
investigation and remediation costs at certain contaminated sites under CERCLA
or under similar state laws. Currently the Company is indemnified for any
liability at two of these sites, which indemnification obligation has been
accepted by the indemnitors for each such matter.
With one exception, the Company is considered a PRP at each site because it
sent certain wastes from its operations to these sites for disposal. With
respect to the sites at which the Company has been identified as a PRP and is
not indemnified by another party, the environmental investigation and
remediation are at various stages. Because the investigation and remediation
process is usually long and complicated, it is difficult to predict the ultimate
extent of the Company's liability. However, at most such sites, the Company
believes it will incur a minor, if any, 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 or previously owned or operated by the Company. The Company
believes that its CERCLA and any other environmental liabilities 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 December 31, 1997, the Company operated 15 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.
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<PAGE> 73
The following table summarizes the Company's production facilities:
DEL MONTE PRODUCTION FACILITIES
<TABLE>
<CAPTION>
LOCATION PRIMARY PRODUCT LINE SQUARE FOOTAGE
-------- -------------------- --------------
<S> <C> <C>
Hanford, CA....................... Crushed, Diced, Stewed, Puree and Whole 589,000
Tomatoes, Tomato Sauce, Tomato Paste and
Pizza Sauce
Kingsburg, CA..................... Peaches, Zucchini, Corn 121,000
Modesto, CA....................... Peeled Tomatoes, Ketchup, Tomato Sauce, 220,000
Salsa, Spaghetti Sauce, Bulk Paste,
Snap-E-Tom(R)
San Jose, CA...................... Apricots, Fruit Cups, Fruit Cocktail, 371,000
Chunky Fruit, Diced Pears
Stockton, CA...................... Peaches, Cocktail Cherries, Fruit Cocktail, 446,000
Concentrate
Woodland, CA...................... Bulk Paste, Bulk Diced Tomatoes 520,000
Mendota, IL....................... Peas, Corn, Lima Beans, Mixed Vegetables, 246,000
Prune Juice, Carrots, Peas & Carrots
Plymouth, IN...................... Snap-E-Tom(R), Ketchup, Tomato Sauce & 156,000
Juice, Pineapple Juice, Spaghetti Sauce,
Sloppy Joe
Sleepy Eye, MN.................... Peas, Corn 230,000
Crystal City, TX.................. Green Beans, Spinach, Carrots, Beets, 362,000
Potatoes
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
</TABLE>
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.
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 "Description of Existing Indebtedness."
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CORPORATE HISTORY
DMC was acquired in 1979 by the predecessor of RJR Nabisco. In 1990, DMC
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 fruits,
vegetables, and produce business, which was sold by RJR Nabisco to Polly Peck,
which, in turn, sold it to Fresh Del Monte. In connection with the RJR Nabisco
Sale and, subsequently, in connection with the sale of the Company's foreign
operations, as described below, the Company granted various perpetual, exclusive
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 International,
Kikkoman Corporation, Fresh Del Monte and Yorkshire. None of the licensees is
affiliated with the Company except for Yorkshire, of which the Company owns 20%
of the common stock. See "Business -- Intellectual Property."
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
International 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 International, the Company acquired an 8.35% equity investment
in Del Monte International. 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 International 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. 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. The supply agreement provides the Company with a long-term supply
of cans at prices that adjust over time for normal manufacturing cost increases
or decreases. See "Business -- Supply and 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 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
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<PAGE> 75
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.
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.
On April 18, 1997, TPG Shield Acquisition Corporation was merged with and
into DMFC, with DMFC being the surviving corporation. In connection with the
Merger, DMC repaid substantially all of its funded debt obligations existing
immediately before the closing of the Merger.
On December 19, 1997, the Company acquired the Contadina business for $177
million in cash, plus an estimated Working Capital Adjustment of approximately
$20 million. The purchase price is subject to adjustment based on the final
calculation of net working capital as of the closing date. In accordance with
the Asset Purchase Agreement, Nestle has provided its calculation of the net
working capital which would result in a payment to the Company of approximately
$2 million. The Company has until April 18, 1998 to review this calculation and
determine if it has any objection to the calculation. The Contadina Acquisition
also included the assumption of certain liabilities of approximately $4 million.
See "The Contadina Acquisition."
TEXAS PACIFIC GROUP
Texas Pacific Group was founded by David Bonderman, James G. Coulter and
William S. Price, III 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. The principals of TPG operate TPG Partners, L.P. and TPG Partners
II, L.P., both Delaware limited partnerships, with aggregate committed capital
of over $3.2 billion. Prior to the Equity contribution, TPG owned 78% of the
common equity of the Company.
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. In addition to
the Company, TPG's portfolio companies include America West Airlines, Belden &
Blake Corporation, Beringer Wine Estates, Denbury Resources, Ducati Motor,
Favorite Brands International, Genesis ElderCare, J. Crew, Paradyne, Virgin
Entertainment and Vivra Specialty Partners.
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 included 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.
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<PAGE> 76
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.
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.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Richard W. Boyce....................... 43 Chairman of the Board; Director
Richard G. Wolford..................... 53 Chief Executive Officer; Director
Wesley J. Smith........................ 51 Chief Operating Officer; Director
Timothy G. Bruer....................... 40 Director
Al Carey............................... 46 Director
Patrick Foley.......................... 66 Director
Brian E. Haycox........................ 56 Director
Denise M. O'Leary...................... 40 Director
William S. Price III................... 41 Director
Jeffrey A. Shaw........................ 33 Director
David L. Meyers........................ 52 Executive Vice President,
Administration and Chief Financial
Officer
Glynn M. Phillips...................... 60 Executive Vice President, Sales
Brent D. Bailey........................ 45 Executive Vice President, Marketing
Thomas E. Gibbons...................... 50 Senior Vice President and Treasurer
William J. Spain....................... 56 Senior Vice President, Technology
Richard L. French...................... 40 Vice President and Chief Accounting
Officer
William R. Sawyers..................... 35 Vice President, General Counsel and
Secretary
</TABLE>
Richard W. Boyce, Chairman of the Board; Director. Mr. Boyce became
Chairman of the Board and a director of both DMC and DMFC in August 1997. Mr.
Boyce became President of CAF, Inc., an affiliate of TPG, in 1997. He was
employed by PepsiCo from 1992 to 1997, most recently as Senior Vice President of
Operations for Pepsi-Cola North America. From 1980 to 1992, Mr. Boyce was
employed by Bain & Co.
Richard G. Wolford, Chief Executive Officer; Director. Mr. Wolford joined
both DMC and DMFC as Chief Executive Officer and a director in April 1997 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 in April 1997 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.
Timothy G. Bruer, Director. Mr. Bruer became a director of both DMC and
DMFC in August 1997. Mr. Bruer has been President and Chief Executive Officer
and a director of Silverado Foods, Inc. since March 1997. From 1993 until that
time, he was Vice President and General Manager of the Culinary Division of
Nestle USA. He is also a director of Authentic Specialty Foods Inc.
Al Carey, Director. Mr. Carey became a director of both DMC and DMFC in
November 1997. He is the Chief Operating Officer of Frito-Lay, Inc., a division
of PepsiCo, Inc., and has been employed in various capacities with that company
since 1981.
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<PAGE> 77
Patrick Foley, Director. Mr. Foley became a director of both DMC and DMFC
in August 1997. Mr. Foley is Chairman and Chief Executive Officer of DHL
Corporation, Inc. and its major subsidiary, DHL Airways, Inc. He joined DHL in
September 1988, with more than 30 years experience in hotel and airline
industries. He was formerly Chairman and President of Hyatt Hotel Corporation.
Mr. Foley serves on the Boards of Directors of Continental Airlines, Inc., DHL
International, Foundation Health Systems, Inc., Flextronics International and
Glenborough Realty Trust, Inc.
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.
Denise M. O'Leary, Director. Ms. O'Leary became a director of both DMC and
DMFC in August 1997. Ms. O'Leary has been a Special Limited Partner of Menlo
Ventures since 1996. From 1983 to 1996, she was a General Partner of Menlo
Ventures. Ms. O'Leary serves on the Boards of Directors of various private
companies as well as on the Board of ALZA Corporation. She is a member of the
Board of Trustees of Stanford University and a director of UCSF Stanford Health
Care.
William S. Price III, Director. Mr. Price became a director of both DMC and
DMFC in August 1997. Mr. Price was founding partner of TPG in 1992. Prior to
forming TPG, he was Vice President of Strategic Planning and Business
Development for G. E. Capital. Mr. Price is Chairman of the Board of Favorite
Brands International, Inc. He also serves on the Boards of Directors of Belden &
Blake Corporation, Beringer Wine Estates, Continental Airlines, Inc., Denbury
Resources and Vivra Specialty Partners, Inc.
Jeffrey A. Shaw, Director. Mr. Shaw became a director of both DMC and DMFC
in May 1997. 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 Favorite Brands
International, Inc., Ryanair PLC, Ducati Motors S.p.A and Ducati North America,
Inc.
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.
Brent D. Bailey, Executive Vice President, Marketing. Mr. Bailey joined the
Company in his current position in January 1998. Prior to that he was with The
Dial Corporation since 1992 as Senior Vice President and General
Manager -- Household Division and as Senior Vice President -- Portfolio Group.
From 1974 to 1992, Mr. Bailey held marketing management positions with Proctor &
Gamble, Frito-Lay and Pillsbury.
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.
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<PAGE> 78
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 the Company in November 1993 and was elected 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.
EXECUTIVE COMPENSATION
The following table sets forth compensation paid by the Company for fiscal
years 1995, 1996 and 1997 to each individual serving as its Chief Executive
Officer during fiscal 1997 and to each of the four other most highly compensated
executive officers of the Company as of the end of fiscal 1997, and to one
executive officer whose employment terminated prior to the end of fiscal 1997.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION(3)
---------------
OTHER ANNUAL LTIP ALL OTHER
SALARY(1) BONUS COMP. (2) PAYOUTS COMP.(4)
NAME AND PRINCIPAL POSITIONS FISCAL YEAR ($) ($) ($) ($) ($)
- ---------------------------- ----------- --------- ------- ------------ --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Wolford(5)........ 1997 100,641 -- -- -- 251,196
Chief Executive Officer
Brian E. Haycox.............. 1997 602,404 -- 73,471 -- 5,323,303
Co-Chairman/Co-CEO(6) 1996 420,673 -- 247,780 -- 8,052
Paul H. Mullan............... 1997 602,404 -- 221,940 -- 5,288,452
Co-Chairman/Co-CEO(7) 1996 420,673 -- 817,978 -- 8,052
David L. Meyers.............. 1997 286,000 159,400 -- 421,000 2,959,771
Executive Vice President, 1996 273,000 143,000 55,386 421,000 11,242
Administration & CFO 1995 302,500 -- 145,954 421,000 9,786
Glynn M. Phillips............ 1997 239,118 118,300 -- 280,000 1,974,454
Executive Vice President, 1996 225,750 118,250 -- 280,000 9,206
Sales
1995 158,907 -- -- 280,000 52,724
Thomas E. Gibbons............ 1997 183,458 59,900 -- 210,000 115,829
Senior Vice President and 1996 175,600 63,900 -- 54,600 4,717
Treasurer 1995 161,703 53,600 -- 50,400 4,728
William J. Spain............. 1997 147,917 49,500 -- 162,000 115,766
Senior Vice President, 1996 139,167 49,700 -- 42,100 4,417
Technology 1995 126,542 40,700 -- 38,900 4,024
David M. Little(8)........... 1997 250,250 -- -- 421,000 3,363,581
Executive Vice President, 1996 286,650 150,150 -- 421,000 10,660
Worldwide Operations 1995 309,500 -- -- 421,000 10,302
</TABLE>
- ---------------
(1) Reflects actual base earnings for the fiscal year specified.
(2) Fiscal 1995 reflects certain perquisites, including moving expenses for Mr.
Meyers ($129,838). Fiscal 1996 reflects certain perquisites, including
relocation related expenses for Mr. Haycox ($243,092) and Mr. Mullan
($812,333); moving expenses for Mr. Meyers ($33,091) and company car
($15,500). Fiscal 1997 reflects certain perquisites, including relocation
related taxes for Mr. Haycox ($57,005) and Mr. Mullan ($198,955).
(3) Reflects payments under the Company's Management Equity Plan and Long Term
Incentive Plan.
(4) For fiscal 1995: Company contributions to the Del Monte Corporation Savings
Plan -- Mr. Meyers $4,500; Mr. Gibbons $4,500; Mr. Spain $3,796; Mr. Little
$4,500, Company paid term life premiums -- Mr. Meyers $1,960; Mr. Phillips
$2,724; Mr. Gibbons $228; Mr. Spain $228; Mr. Little $2,080, a sign-on
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<PAGE> 79
bonus for Mr. Phillips $50,000, amount paid under the nonqualified
Additional Benefits Plan -- Mr. Meyers $3,326; Mr. Little $3,722. For fiscal
1996: Company contributions to the Del Monte Corporation Savings Plan -- Mr.
Haycox $4,500; Mr. Mullan $4,500; Mr. Meyers $4,500; Mr. Phillips $4,500;
Mr. Gibbons $4,500; Mr. Spain $4,200; Mr. Little $4,500, Company paid term
life premiums -- Mr. Haycox $3,552; Mr. Mullan $3,552; Mr. Meyers $3,407;
Mr. Phillips $4,706; Mr. Gibbons $217; Mr. Spain $217; Mr. Little $2,428,
amount paid under the nonqualified Additional Benefits Plan -- Mr. Meyers
$3,335; Mr. Little $3,732. For fiscal 1997: Company contributions to the Del
Monte Corporation Savings Plan -- Mr. Haycox $4,800; Mr. Mullan $5,738; Mr.
Meyers $4,500; Mr. Phillips $4,500; Mr. Gibbons $4,500; Mr. Spain $4,437;
Mr. Little $3,003; Company paid term life premiums -- Mr. Wolford $1,196;
Mr. Haycox $13,057; Mr. Mullan $10,657; Mr. Meyers $4,198; Mr. Phillips
$5,325; Mr. Gibbons $217; Mr. Spain $217; Mr. Little $2,739, amount paid
under the nonqualified Additional Benefits Plan -- Mr. Meyers $4,130; Mr.
Little $4,567, amount paid due to termination for Mr. Haycox $393,874; Mr.
Mullan $360,485; Mr. Little $406,329, change in control bonus paid April
1997 -- Mr. Haycox $4,911,572; Mr. Mullan $4,911,572; Mr. Meyers $2,946,943;
Mr. Phillips $1,964,629; Mr. Gibbons $111,112; Mr. Spain $111,112; Mr.
Little $2,946,943. For Mr. Wolford, the fiscal 1997 amount includes a
consulting fee of $250,000 paid in December 1997 for the period prior to
April 18, 1997.
(5) Mr. Wolford became Chief Executive Officer as of April 18, 1997.
(6) Mr. Haycox's employment as Co-Chairman/Co-CEO terminated as of April 18,
1997.
(7) Mr. Mullan's employment as Co-Chairman/Co-CEO terminated as of April 18,
1997.
(8) Mr. Little's employment as Executive Vice President, Worldwide Operations
terminated as of April 30, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL YEAR END(1)
NAME # EXERCISABLE/UNEXERCISABLE
---- -----------------------------
<S> <C>
Richard G. Wolford............................. --
Brian E. Haycox................................ --
Paul H. Mullan................................. --
David L. Meyers................................ 0/122
Glynn M. Phillips.............................. --
Thomas E. Gibbons.............................. 0/122
William J. Spain............................... 0/122
David M. Little................................ 0/122
</TABLE>
- ---------------
(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") provided
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 was 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 was set aside for payment to the Company's
executive officers. The MEP was terminated concurrent with the Recapitalization.
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<PAGE> 80
In connection with the Recapitalization, the Company made payments
aggregating approximately $19.7 million pursuant to the MEP. This amount was
allocated as follows:
<TABLE>
<S> <C>
Mr. Haycox............................................... $4,911,572
Mr. Mullan............................................... 4,911,572
Mr. Little............................................... 2,946,943
Mr. Meyers............................................... 2,946,943
Mr. Phillips............................................. 1,964,629
Other officers(1)........................................ 2,000,016
</TABLE>
- ---------------
(1) Other officers include Messrs. Gibbons and Spain and 16 other senior
officers.
Messrs. 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 paid these fiscal 1997
awards at the time of the Recapitalization.
Long Term Incentive Plan. Established on July 1, 1990, amended and restated
on July 1, 1995, the Long Term Incentive Plan ("LTIP") provided certain key
management employees with a long-term incentive program based on Company
performance. The LTIP had 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 was 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 were 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. Mr. Spain received fiscal 1995 and
fiscal 1996 awards of $38,900 and $42,100, respectively. Mr. Spain received the
final fiscal 1997 award in the amount of $162,000 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. Little -- 50%, Mr. Meyers -- 50%, Mr. Phillips -- 50%, Mr.
Gibbons -- 30% and Mr. Spain -- 30%. Mr. Haycox and Mr. Mullan were not eligible
for the AIAP for fiscal 1996 or fiscal 1997. Mr. Wolford was not eligible for
the AIAP for fiscal 1997. Mr. Little received his fiscal 1997 AIAP payment of
$150,150 at the time of his termination as of April 30, 1997.
Stock Purchase Plan. The Del Monte Foods Company Employee Stock Purchase
Plan was approved on August 4, 1997 and amended on November 4, 1997. Under the
Plan, key employees will be allowed to purchase up to $5 million in common stock
of DMFC to be issued at fair market value. To date, 2,371 shares of the
Company's common stock have been purchased by and issued to eligible employees.
Stock Incentive Plan. The Del Monte Foods Company 1997 Stock Incentive Plan
was approved on August 4, 1997 and amended on November 4, 1997. Under the Plan,
grants of incentive stock options and nonqualified stock options representing
9,319 shares of common stock of DMFC may be made to key employees. The options
will be granted at an exercise price equal to the fair market value of the
shares and have a ten (10) year term. Two different vesting schedules have been
approved under the 1997 Stock Incentive Plan. The first provides for annual
vesting on a proportionate basis over five years and the second provides for
monthly vesting on a proportionate basis over four years. Participants generally
vest in the options 20% for each year of service from the grant date. Pursuant
to this Plan, options for 9,066 shares were granted to eligible employees to
date and options for 8,940 shares remain outstanding. The per share exercise
price of
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<PAGE> 81
the options granted to date was $1,000 which was determined to be the fair
market value of said shares. In February 1998, the Company adopted a stock
incentive plan with substantially identical terms for the benefit of Mr. Boyce
as Chairman of the Board of the Company. Pursuant to that plan, Mr. Boyce
received options representing 777 shares of 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:
<TABLE>
<CAPTION>
ALL MONTHLY MONTHLY COMPENSATION
PARTICIPANT AGE COMPENSATION ABOVE SOCIAL SECURITY BASE
--------------- ------------ --------------------------
<S> <C> <C>
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
</TABLE>
The Del Monte Corporation Retirement Plan was amended effective January 1,
1998 to change the interest credit from 110% of the U.S. Pension Benefit
Guarantee Corporation ("PBGC") rate to the yield on the 12-month Treasury Bill
rate plus 1.5%. In addition, the factors for annuity conversions were changed
from specific Company factors to factors based on 30-year Treasury Bond yields
and an Internal Revenue Service ("IRS") specified mortality table. A
participant's annual age 65 annuity benefit will be the greater of an annuity
based on (1) the credit balance as of December 31, 1997 increased by interest
credits (and not compensation credits) of 110% of the December 31, 1997 PBGC
rate divided by 8.2 or (2) the credit balance at the time of retirement using an
annuity factor based on 30-year Treasury Bond yields and an IRS specified
mortality table. 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 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 lump sum of the alternative 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 "top hat" and "excess" 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
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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:
<TABLE>
<CAPTION>
YEAR ATTAINING ESTIMATED ANNUAL
PARTICIPANT AGE 65 RETIREMENT BENEFIT(A)
----------- -------------- ---------------------
<S> <C> <C>
Mr. Wolford................................... 2009 $125,819
Mr. Phillips.................................. 2002 28,260
Mr. Meyers.................................... 2010 179,742
Mr. Gibbons................................... 2012 178,762
Mr. Spain..................................... 2007 104,915
</TABLE>
- ---------------
(a) The estimated annual retirement benefits shown assumes no increase in
compensation or AIAP and interest credits off 6.68%.
Employment Arrangements. During fiscal 1997, the Company had employment
agreements with each of Messrs. Haycox, Mullan, Meyers, Little, Phillips,
Gibbons and Spain. 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 provided 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, if he resigns for good reason 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 or if the executive resigns for good reason, 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.
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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 or if Mr. Phillips resigns for good reason, 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.
Messrs. Gibbons' and Spain's employment agreement is similar to that of Mr.
Phillips except that it does not require Messrs. Gibbons or Spain 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 Company policy, Messrs. Bruer, Carey, Foley and Haycox and Ms.
O'Leary will each receive $25,000 per year to be paid in cash or in Common Stock
of DMFC, at the option of the director. Each of these directors will also
receive $2,000 for each committee meeting of the Board of Directors attended in
person.
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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 an annual fee from the Company for management
advisory services equal to the greater of $500,000 and 0.05% of the budgeted
consolidated net sales of the Company for each fiscal year under the contract
term. In addition, the Company has agreed to indemnify TPG, its affiliates and
shareholders, and their respective directors, officers, controlling persons,
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 a
ten-year 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 a
fee of 1.5% of the "transaction value" for each 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). The Transaction Advisory Agreement includes
indemnification terms similar to those in the Management Advisory Agreement. In
connection with the Contadina Acquisition, TPG received from the Company a
transaction fee of approximately $3 million. 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 virtue of the Merger. Since the beginning of fiscal 1996, 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 continued to receive the salary that
he would have earned pursuant to the CEO Agreement until September 1997. In
September 1997, the Company paid to Mr. Haycox a lump sum payment of salary.
Such lump sum payment was 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 was made and December 31, 1997.
During the second and third quarters of fiscal 1998, the Company sold
shares of its common stock to certain key employees, including the executive
officers of the Company pursuant to its Stock Purchase Plan. See
"Management -- Employment and Other Arrangements -- Stock Purchase Plan."
Messrs. Wolford and Smith each borrowed $175,000 from the Company in order to
acquire a portion of the stock purchased pursuant to the stock purchase plan.
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CAPITAL STOCK OF DMFC
DMFC does not have any material assets other than the stock of DMC, its
wholly owned subsidiary.
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
redeemable preferred stock of DMFC (the "Preferred Stock"). TPG and certain of
its affiliates or partners held 109,248 shares of DMFC's common stock, certain
investors who held shares of DMFC stock prior to the Recapitalization held
14,252 shares of DMFC's common stock, and other investors held 16,500 shares of
DMFC's common stock (including Westar Capital, which held 5,000 shares, TCW
Capital Investment Corporation ("TCW"), which held 1,500 shares, BT Investment
Partners, Inc., an affiliate of one of the Initial Purchasers, which held 5,000
shares, BankAmerica Investment Corporation, an affiliate of one of the Initial
Purchasers, which held 4,500 shares and MIG Partners III, an affiliate of
BankAmerica Investment Corporation, which held 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 connection with the Contadina Acquisition, TPG and certain other
investors made the Equity Contribution and received in consideration therefor
additional shares of common stock of DMFC in respect of their capital
contribution of $40,000,000.
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
accumulates dividends at the rate of 14% per annum, which dividends are 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 ranging from 103% of the liquidation preference, if
redeemed prior to October 1998, to 100% of the liquidation preference, if
redeemed after October 2000, 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. In certain other
circumstances, including the occurrence of a change of control of DMFC, the
holders of the Preferred Stock will have the right to require DMFC to repurchase
said shares at 101% of the liquidation preference, plus accumulated and unpaid
dividends to the redemption date. 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. 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 2,857 shares of DMFC common stock. In January 1998, TPG and certain
of its affiliates sold approximately 93% of their Preferred Stock holdings to
unaffiliated investors.
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DESCRIPTION OF EXISTING INDEBTEDNESS
BANK FINANCING
The existing indebtedness of DMC summarized below remained outstanding
subsequent to the Contadina Acquisition. The summaries of such indebtedness
contained herein do not purport to be complete and are qualified in their
entirety by reference to the provisions of the various agreements and indentures
related thereto, copies of which are available from DMC upon request.
In order to complete the Contadina Acquisition, DMC obtained certain
consents and/or waivers from the lenders under the Bank Financing. The Bank
Financing agreements require prepayments in the case of certain events,
including the issuance of subordinated indebtedness. DMC requested and received
amendments to these restrictions in order to complete the Contadina Acquisition.
Revolving Credit Facility. The Revolving Credit Facility provides for
revolving loans in an aggregate amount of $350 million, including a letter of
credit sublimit of $70 million and a "swingline loan" sublimit of $25 million
(representing funds that DMC may borrow with only limited advance notice).
Amounts available under the Revolving Credit Facility are subject to certain
borrowing base limitations based upon, among other things, the amounts and
applicable advance rates in respect of DMC's eligible accounts receivable and
eligible inventory. Interest rates per annum applicable to amounts outstanding
under the Revolving Credit Facility are, at DMC's option, either (i) the Base
Rate (as defined) plus 1.00% (the "Applicable Base Rate Margin") or (ii) the
reserve adjusted Offshore Rate (as defined) plus 2.00% (the "Applicable Offshore
Rate Margin"). In addition, DMC is required to pay to lenders under the
Revolving Credit Facility a commitment fee (the "Commitment Fee") of 0.425%,
payable quarterly in arrears, on the unused portion of such Revolving Credit
Facility. DMC is also required to pay to lenders under the Revolving Credit
Facility letter of credit fees (collectively, the "Letter of Credit Fees") of
1.50% for commercial letters of credit and 2.00% for all other letters of
credit, as well as an additional fee in the amount of 0.25% to the bank issuing
such letters of credit. Upon attainment of certain levels of the Senior Debt
Ratio (as defined), such Applicable Base Rate Margin and Applicable Offshore
Rate Margin, as well as the Commitment Fee and Letter of Credit Fees, will be
adjusted.
Consummation of the Contadina Acquisition on December 19, 1997 resulted in
a paydown of the Revolving Credit Facility in an amount of approximately $5
million. Any amounts which may be payable to finalize the Working Capital
Adjustment will be paid from the Revolving Credit Facility.
Term Loan. The Term Loan Facility consists of term loans in an aggregate
amount of $430 million, consisting of a $200 million Tranche A term loan and a
$230 million Tranche B term loan. Interest rates per annum applicable to the
Tranche A term loan are, at DMC's option, either (i) the Base Rate plus the
Applicable Base Rate Margin, or (ii) the Offshore Rate plus the Applicable
Offshore Rate Margin. Upon attainment of certain levels of the Senior Debt
Ratio, such Applicable Base Rate Margin and Applicable Offshore Rate Margin will
be adjusted. Interest rates applicable to the Tranche B term loan are, at DMC's
option, either (i) the Base Rate plus 2.00% or (ii) the Offshore Rate plus
3.00%.
Consummation of the Contadina Acquisition required appropriate amendments
under the Bank Financing agreements to permit additional funding under the
existing Tranche B term loan in an amount of $50 million. Amortization of the
additional Tranche B term loan amount is incremental to scheduled amortization
of the existing Tranche B term loan. Such additional amortization will commence
in the second quarter of fiscal 1999 in a quarterly amount equal to $0.1
million, with such amortization increasing in the fourth quarter of fiscal 2004,
through the third quarter of fiscal 2005, to $11.8 million per quarter.
Amortization/Prepayment. The Revolving Credit Facility terminates March 31,
2003. The Tranche A term loan matures March 31, 2003, and is subject to
quarterly amortization, commencing with the first quarter of fiscal 1999, in the
quarterly amounts of $7.50 million, $8.75 million, $10.00 million and $11.25
million during the fiscal years 1999 through 2002, respectively, and $16.67
million per quarter for the first three quarters of fiscal 2003. The Tranche B
term loan matures March 31, 2005, and is subject to quarterly amortization,
commencing with the third quarter of fiscal 1998, in the quarterly amount of
$0.45 million, with such amortization increasing to $42.19 million per quarter
in the fourth quarter of fiscal 2004 through the first three quarters of fiscal
2005. The incremental amortization which results from the additional Tranche B
term loan is described in the paragraph immediately above. With certain
exceptions, as set forth in the Bank
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Financing agreements, DMC will be required to make prepayments under both the
Revolving Credit Facility and the Term Loan Facility from excess cash flow,
asset sales, issuances of debt and equity securities and insurance or
condemnation proceeds.
Guarantees and Collateral. DMFC has guaranteed DMC's obligations under the
Bank Financing. 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 Bank Financing, DMC is required to
meet certain financial tests, including minimum levels of consolidated EBITDA
(as defined), 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.
Events of Default. The Bank Financing 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 Bank Financing to be in full force and effect and a
change of control of DMFC or DMC.
THE DMC NOTES
On April 15, 1997, DMC issued and sold $150 million principal amount of
12 1/4% Senior Subordinated Notes due 2007 (the "Original DMC Notes") pursuant
to an Indenture, dated April 18, 1997, by and among DMC and Marine Midland Bank
as Trustee (the "DMC Indenture"). The Original DMC Notes were sold pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. On July
31, 1997, DMC completed an exchange offer whereby the Original DMC Notes were
exchanged into new Senior Subordinated Notes due 2007, which are registered
under the Securities Act with terms substantially identical to the Original DMC
Notes (the "DMC Notes").
The DMC Notes will mature on April 15, 2007. Interest accrues at the rate
of 12 1/4% per annum and is payable semi-annually in arrears on each April 15
and October 15. Payment of principal, premium and interest on the DMC Notes are
subordinated, as set forth in the DMC Indenture, to the prior payment in full of
DMC's Senior Debt (as defined in the DMC Indenture).
At any time on or prior to April 15, 2000, DMC may use the net cash
proceeds of one or more Public Equity Offerings to redeem up to 35% of the
aggregate principal amount of the DMC Notes originally issued at a redemption
price equal to 112.625% of the principal amount thereof plus accrued and unpaid
interest thereon, if any. At any time prior to April 15, 2002, the DMC Notes may
be redeemed as a whole at the option of DMC upon the occurrence of a Change of
Control at a redemption price of 100% of the principal amount thereof plus an
Applicable Premium. On or after April 15, 2002, the DMC Notes may be redeemed at
a premium that declines each year until April 15, 2006 when the DMC Notes may be
prepaid in whole or in part at 100% of their principal amount. Upon a Change of
Control, each holder can require DMC to redeem such holder's DMC Notes at an
offer price equal to 101% of their principal amount plus accrued and unpaid
interest.
The obligations of DMC pursuant to the DMC Notes, including the repurchase
obligations resulting from a Change of Control, are unconditionally guaranteed
on a senior subordinated basis by DMFC. The DMC Indenture contains various
restrictive 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 of any Senior Debt and senior in right of payment to the DMC 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 or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of DMC.
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DESCRIPTION OF THE NOTES
The Initial Notes where issued, and the Exchange Notes offered hereby will
be issued, under an indenture, dated as of December 17, 1997 (the "Indenture"),
by and between the Company 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, unless specified
otherwise, references to the Company include only Del Monte Foods Company and
not its subsidiaries.
GENERAL
The Exchange 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 Exchange
Notes. The Exchange 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. The Company
may change any Paying Agent and Registrar without notice to holders of the
Exchange Notes (the "Holders"). The Company will pay principal (and premium, if
any) on the Exchange Notes at Bankers Trust Company's office at the above
address. At the Company'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 Initial Notes that remain outstanding after the
completion of the Exchange Offer, together with the Exchange Notes issued in
connection with the Exchange Offer, will be treated as a single class of
securities under the Indenture. There will be no mandatory sinking fund payments
for the Exchange Notes.
The Exchange Notes will be general, unsecured, senior obligations of the
Company. The Company is a holding company with no substantial business
operations of its own. The Company's assets consist primarily of its ownership
interests in its subsidiaries. The Exchange Notes will be effectively
subordinated to all existing and future indebtedness and other liabilities of
the Company's subsidiaries because the Company's right to receive the assets of
any such affiliates upon their liquidation or reorganization will be
subordinated by operation of law to the claims of such subsidiaries' creditors
(including trade creditors), except to the extent that the Company is itself
recognized as a creditor of any such affiliate, in which case the claims of the
Company would still be subordinated to any indebtedness of such affiliate that
is senior in right of payment to the Company's claim. The Company's subsidiaries
have substantial indebtedness and other liabilities.
See "-- Ranking."
PRINCIPAL, MATURITY AND INTEREST; PAYMENT OF LIQUIDATED DAMAGES
The Exchange Notes are limited in aggregate principal amount at maturity to
$230 million and will mature on December 15, 2007. The Initial Notes were issued
at a substantial discount from their principal amount at maturity to generate
gross proceeds of approximately $126 million. Until December 15, 2002, no
interest payable in cash will accrue on the Exchange Notes, but the Accreted
Value will increase (representing amortization of original issue discount)
between the date of original issuance and December 15, 2002, on a semi-annual
bond equivalent basis using a 360-day year comprised of twelve 30-day months,
such that the Accreted Value shall be equal to the full principal amount at
maturity of the Exchange Notes on December 15, 2002. Beginning on December 15,
2002, interest payable in cash on the Exchange Notes will accrue at the rate of
12 1/2% per annum and will be payable semi-annually in arrears on June 15, and
December 15, commencing on June 15, 2003, to Holders of record on the
immediately preceding June 1 and December 1, respectively. Interest payable in
cash on the Exchange Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 15, 2002.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. Principal, Accreted Value, premium, if any, and interest and
Liquidated Damages (as defined in the Registration Rights Agreement) on the
Exchange Notes will be payable at the office or agency of the Company maintained
for such purpose
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within the City and State of New York or, at the option of the Company, payment
of principal, Accreted Value, premium, interest, and Liquidated Damages may be
made by check mailed to the Holders of the Exchange Notes at their respective
addresses set forth in the register of Holders of the Exchange Notes; provided
that all payments of principal, Accreted Value, premium, interest and Liquidated
Damages with respect to the Exchange Notes represented by one or more permanent
global Exchange Notes will be required to be made by wire transfer of
immediately available funds to the accounts of the Depository Trust Company or
any successor thereto. Whenever the Company is required by the terms of the
Indenture to effect a payment to Holders of any amounts as a result of the
occurrence of any event, the Company will include, in addition to such amount,
an additional amount equal to any Liquidated Damages then owing to such Holders.
Until otherwise designated by the Company, the Company's office or agency in New
York will be the office of the Trustee maintained for such purpose.
OPTIONAL REDEMPTIONS
Optional Redemption. Except as set forth below, the Exchange Notes will not
be redeemable at the option of the Company prior to December 15, 2002. On and
after December 15, 2002, the Exchange Notes will be redeemable, at the Company's
option, in whole at any time or in part from time to time, upon not less than 30
nor more than 60 days' notice, at the following redemption prices (expressed as
percentages of the Accreted Value thereof on the date of redemption) if redeemed
during the twelve-month period commencing on December 15 of the year set forth
below, plus, in each case, accrued and unpaid interest to the date of
redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002...................................................... 106.250%
2003...................................................... 104.688%
2004...................................................... 103.125%
2005...................................................... 101.563%
2006 and thereafter....................................... 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. At any time, or from time
to time, prior to December 15, 2000, the Company may, at its option, use the
Cash Net Proceeds of one or more Public Equity Offerings to redeem up to 35% of
the aggregate principal amount at maturity of Exchange Notes originally issued
at a redemption price equal to 112.5% of the Accreted Value thereof to the date
of redemption; provided that at least 65% of the aggregate principal amount at
maturity of Exchange 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 must consummate such
redemption not more than 120 days after the consummation of the applicable
Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act.
Optional Redemption upon a Change of Control prior to December 15, 2002. At
any time prior to December 15, 2002, the Exchange Notes may be redeemed as a
whole, but not in part, at the option of the Company 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 Accreted Value thereof, plus the
Applicable Premium as of, the date of redemption (the "Redemption Date").
"Applicable Premium" means, with respect to an Exchange Note at any
Redemption Date, the greater of (i) 1.0% of the Accreted Value of such Exchange
Note and (ii) the excess of (A) the present value at such time of the redemption
price of such Exchange Note at December 15, 2002 (such redemption price being
described under "-- Optional Redemption"), computed using a discount rate equal
to the Treasury Rate plus 1.0% per annum, over (B) the Accreted Value of such
Exchange Note on such Redemption Date.
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<PAGE> 90
"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 December
15, 2002, provided, however, that if the period from the Redemption Date to
December 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 Redemption Date to December
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 fewer than all of the Exchange Notes are to be redeemed
at any time, selection of such Exchange 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 Exchange Notes are listed or, if such Exchange
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 Exchange Notes of a principal amount at maturity 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 Exchange 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 Depository Trust Company 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 Exchange Notes to be redeemed at its registered address.
If any Exchange Note is to be redeemed in part only, the notice of redemption
that relates to such Exchange Note shall state the portion of the principal
amount at maturity thereof to be redeemed. A new note in a principal amount at
maturity equal to the unredeemed portion thereof will be issued in the name of
the Holder thereof upon cancellation of the original Exchange Note. On and after
the redemption date, interest will cease to accrue on Exchange Notes or portions
thereof called for redemption as long as the Company has deposited with the
Paying Agent funds in satisfaction of the applicable redemption price pursuant
to the Indenture.
RANKING
The Exchange Notes will be general, unsecured, senior obligations of the
Company, and the indebtedness evidenced by the Exchange Notes will rank pari
passu in right of payment with all other existing and future unsubordinated
obligations of the Company, and senior in right of payment to all existing and
future obligations of the Company expressly subordinated in right of payment to
the Exchange Notes, including the Company's guarantee of DMC's obligations under
the DMC Notes.
The Company is a holding company with no substantial business operations of
its own. The Company's assets consist primarily of its ownership interests in
its subsidiaries. The Exchange Notes will be effectively subordinated to all
existing and future indebtedness and other liabilities of the Company's
subsidiaries because the Company's right to receive the assets of any such
affiliates upon their liquidation or reorganization will be subordinated by
contract to the claims of such subsidiaries' creditors (including trade
creditors), except to the extent that the Company is itself recognized as a
creditor of any such affiliate, in which case the claims of the Company would
still be subordinated to any indebtedness of such affiliate that is senior in
right of payment to the Company's claim. The Company's subsidiaries have
substantial indebtedness and other liabilities. As of December 31, 1997, after
giving effect to the Contadina Acquisition, the Company and its consolidated
subsidiaries had approximately $1.4 billion of indebtedness outstanding,
including other liabilities and trade payables (exclusive of unused commitments
of $171 million), of which $1.3 billion was indebtedness of the Company's
subsidiaries.
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<PAGE> 91
CHANGE OF CONTROL
The Indenture will provide that, upon the occurrence of a Change of
Control, if the Company does not redeem the Exchange Notes as provided under the
heading "Optional Redemption upon Change of Control prior to December 15, 2002,"
above, the 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 Exchange Notes pursuant to such Change of Control Offer, at a purchase
price equal to 101% of the Accreted Value thereof, plus accrued interest, if
any, to the date of purchase.
Within 30 days following the date upon which the Change of Control
occurred, unless the Company has mailed an irrevocable notice with respect to a
redemption described under the heading "Optional Redemption upon Change of
Control prior to December 15, 2002" above with respect to all the Exchange Notes
in connection with a Change of Control occurring on or prior to December 15,
2002, the Company must send, by first-class mail, a notice to each Holder, with
a copy to the Trustee and each Paying Agent, which notice shall govern the terms
of the Change of Control Offer. Such notice shall state, among other things, the
purchase date, which must be no earlier than 30 days nor later than 45 days from
the date such notice is mailed, other than as may be required by law (the
"Change of Control Payment Date"). Holders electing to have an Exchange Note
purchased pursuant to a Change of Control Offer will be required to surrender
the Exchange Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Exchange Note completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the third
business day prior to the Change of Control Payment Date.
Neither the Board of Directors of the Company 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 the Company 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 the Company, whether favored or
opposed by the management of the Company. Consummation of any such transaction
in certain circumstances may require repurchase of the Exchange Notes, and there
can be no assurance that the Company or the acquiring party will have sufficient
financial resources to effect such repurchase. Such restrictions may, in certain
circumstances, make more difficult or discourage any leveraged buyout of the
Company. 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 Exchange Notes protection in all circumstances
from the adverse aspects of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction.
The Company will comply with the requirements of Rule 14e-l 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 Exchange 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, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under the Indenture, but that
could increase the amount of indebtedness outstanding at such time or otherwise
affect the Company'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 Exchange
Notes to require that the Company repurchase the Exchange Notes in the event of
a takeover, recapitalization or similar transaction.
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<PAGE> 92
CERTAIN COVENANTS
The Indenture will contain, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness), including Acquired 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, the Company and
its Restricted Subsidiaries may incur Indebtedness (including, without
limitation, Acquired Indebtedness) on the date of the incurrence of such
Indebtedness, if after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 1.75 to 1.0.
Limitation on Restricted Payments. The Company will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly, (a)
declare or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of the Company or in options,
warrants or other rights to purchase such Qualified Capital Stock) on or in
respect of shares of the Company's Capital Stock to holders of such Capital
Stock, (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, as applicable, any Indebtedness of the Company that is
subordinate or junior in right of payment to the Notes or (d) make any
Investment (other than Permitted Investments) (each of the foregoing actions set
forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted
Payment"), if at the time of such Restricted Payment or immediately after giving
effect thereto, (i) a Default or an Event of Default shall have occurred and be
continuing or (ii) the Company is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with 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
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 Cash Net Proceeds received by
the Company from any Person (other than a Subsidiary of the Company and other
than with respect to the TPG Equity Contribution) 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 (excluding
Disqualified Capital Stock) into Qualified Capital Stock) and, subject to the
limitation set forth in clause (5) 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 Cash Net Proceeds of any Equity
Contribution (other than the TPG Equity Contribution) received by the Company
subsequent to the Issue Date and on or prior to such Reference Date from a
holder of the Company's Capital Stock and, subject to the limitation set forth
in clause (5) 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 (l) the aggregate amount returned to the Company or a
Restricted Subsidiary 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 paym
ents, (2) the Cash Net 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 (5) of the immediately
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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 subsequent to the Issue Date and on or
prior to such Reference Date, the fair market value of the net assets 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 and on or prior to such
Reference 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 (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 the instrument governing the terms of
such Indebtedness 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 the Company to redeem or
repurchase Common Stock of the Company or options in respect thereof from
employees or officers of the Company 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; and (5) 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), (3), (4) and (5) shall be included in 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 the 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' certificate.
Limitation on Asset Sales. The Company will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale, unless (i) the Company
or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (in each case as determined in
good faith by the Company's Board of Directors), (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 purposes of this
provision) and is received at the time of such disposition, provided that the
Company and its Restricted Subsidiaries may
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<PAGE> 94
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
Company 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 Indebtedness of a Wholly
Owned Restricted Subsidiary (provided that any proceeds of an Asset Sale used to
repay amounts outstanding under any revolving credit facility shall result in a
permanent reduction in the availability under such revolving credit facility),
(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 (and other Indebtedness of the Company
ranking on a parity with the Notes from time to time outstanding with similar
provisions requiring the Company to make an offer to purchase or to redeem such
Indebtedness with the proceeds from asset sales, pro rata in proportion to the
respective principal amounts, or accreted values in the case of Indebtedness
issued with an Original Issue Discount) equal to the Net Proceeds Offer Amount
at a price equal to 100% of the Accreted Value (as of the date of purchase
thereof) of the Notes to be purchased, plus accrued and unpaid interest thereon
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 Net Proceeds Offer Amount not utilized in
accordance with this covenant, 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 governed by and permitted under the
covenant described under "-- Merger, Consolidation and Sale of Assets of the
Company," the successor corporation shall be deemed to have sold the properties
and assets of the Company 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 the Company 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 Notes in whole or in part in integral multiples of $1,000
principal amount at maturity in exchange for cash. To the extent Holders
properly tender Notes (if applicable, along with such other pari passu
Indebtedness referred to above) in an amount exceeding the Net Proceeds Offer
Amount, Notes of tendering Holders (if applicable, along with such other pari
passu Indebtedness referred to above) will be purchased on a pro rata basis
(based on amounts tendered). To the extent that the aggregate amount of the
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
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<PAGE> 95
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.
The Company will comply with the requirements of Rule 14e-l under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale'
provisions of the Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of the Indenture by virtue
thereof.
Notwithstanding the foregoing, 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.
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary of the Company to (a) pay dividends or
make any other distributions on or in respect of its Capital Stock; (b) make
loans or advances or to pay any Indebtedness or other obligation owed to the
Company or any other Restricted Subsidiary of the Company; or (c) transfer any
of its property or assets to the Company or any other Restricted Subsidiary of
the Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) the Indenture and other pari passu
Indebtedness of the Company that does not contain any encumbrances or
restrictions more restrictive than those contained in the 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 and the DMC Notes) 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 the Company as determined by the Board of Directors
of the Company in its reasonable and good faith judgment than the provisions
relating to such encumbrance or restriction contained in agreements referred to
in such clause (2), (4), (5) or (6); and (11) Standard Securitization
Undertakings relating to a Receivables Subsidiary or Special Purpose Vehicle.
Limitation on Preferred Stock of Restricted Subsidiaries. The Company 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 the Company or to a Wholly Owned Restricted Subsidiary of the Company)
or
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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).
Limitation on Liens. The Company will not, and will not cause or permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or permit or suffer to exist any Liens of any kind against or upon any property
or assets of the Company or any of its Restricted Subsidiaries whether owned on
the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or
assign or otherwise convey any right to receive income or profits therefrom for
purposes of security, unless (i) in the case of Liens securing Indebtedness that
is expressly subordinate or junior in right of payment to the Notes, the Notes
are secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens and (ii) in all other cases, the Notes are equally and
ratably secured, except for (A) Liens existing as of the Issue Date to the
extent and in the manner such Liens are in effect on the Issue Date; (B) Liens
securing the Notes; (C) Liens of the Company or a Wholly Owned Restricted
Subsidiary of the Company on assets of any Restricted Subsidiary of the Company;
(D) Liens securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness which has been secured by a Lien permitted under the Indenture and
which has been incurred in accordance with the provisions of the Indenture;
provided, however, that such Liens (1) are not materially less favorable to the
Holders and are not materially more favorable to the lienholders with respect to
such Liens than the Liens in respect of the Indebtedness being Refinanced and
(2) do not extend to or cover any property or assets of the Company or any of
its Restricted Subsidiaries not securing the Indebtedness so Refinanced; and (E)
Permitted Liens; provided, further, that such Liens do not encumber any capital
stock of DMC held by the Company, except to the extent that such Liens secure
Indebtedness to a commercial lending institution pursuant to the Credit
Agreement.
Restriction of Lines of Business to Food, Food Distribution and Related
Businesses. The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any material business activity except the food, food
distribution and related businesses.
Merger, Consolidation and Sale of Assets of the Company. The Company 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 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: (i) either (1) the Company
shall be the surviving or continuing corporation or (2) 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, the Indenture and,
if applicable, the Registration Rights Agreement on the part of the Company 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), 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) pursuant to the covenant described under "-- Limitation on
Incurrence of Additional Indebtedness"; (iii) immediately after giving effect to
such transaction, the Company 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 the Company 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
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occurred and be continuing; and (v) the Company 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 the Company with an Affiliate
incorporated solely for the purpose of reincorporating the Company 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 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.
The Indenture will provide that 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 (except in the case of a Sale and Leaseback Transaction) be
substituted for, and may exercise every right and power of, the Company under
the 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 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 the Company with respect to periods subsequent to the effective time of such
merger, consolidation or transfer of assets.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below, and (y) Affiliate Transactions
on terms that are no less favorable to the Company or the relevant Restricted
Subsidiary than those that might reasonably have been obtained in a comparable
transaction at such time on an arm's-length basis from a Person that is not an
Affiliate of the Company or such Restricted Subsidiary. All Affiliate
Transactions (and each series of related Affiliate Transactions which are part
of a common plan) involving aggregate payments or other property with a fair
market value in excess of $1 million shall be approved by a majority of the
disinterested members of 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.
The restrictions set forth in clause (a) shall not apply to (i) reasonable
fees and compensation paid to (including issuances and grant of securities and
stock options) employment agreements and stock option and ownership plans for
the benefit of and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Restricted 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
the Indenture; (iii) any agreement as in effect as of the Issue
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Date or any amendment thereto or any transaction contemplated thereby (including
pursuant to any amendment thereto or any replacement agreement thereto so long
as any such amendment or replacement agreement is not more disadvantageous to
the Holders in any material respect than the original agreement as in effect on
the Issue Date); (iv) payments and investments permitted by the Indenture; (v)
the issuance of Qualified Capital Stock of the Company; (vi) any obligations of
the Company pursuant to the Management Advisory Agreement and the Transaction
Advisory Agreement; (vii) transactions permitted by, and complying with, the
provisions of the covenants described under "-- Merger, Consolidation and Sale
of Assets of the Company"; (viii) payments made in connection with the
Recapitalization, including transaction fees to stockholders of DMFC not
exceeding an aggregate of $10,000,000 from the original issue date of the DMC
Notes; (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 the Company in the good faith
determination of a majority of the disinterested 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.
Limitation on Guarantees by Restricted Subsidiaries. Notwithstanding
anything to the contrary contained in the Indenture, the Company will not permit
any of its domestic Restricted Subsidiaries directly or indirectly, by way of
the pledge of any intercompany note or otherwise, to assume, guarantee or in any
other manner become liable with respect to any Indebtedness of the Company or
any other Restricted Subsidiary (other than Permitted Indebtedness of a
Restricted Subsidiary), unless, in any such case (a) such Restricted Subsidiary
executes and delivers a supplemental indenture to the Indenture, providing an
unconditional and full (subject to the following two paragraphs) guarantee of
the Notes (a "Guarantee") by such Restricted Subsidiary and (b) 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 the instrument governing the terms of such
subordinated Indebtedness.
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 and complete
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 first paragraph of this covenant; or (ii) any sale or other
disposition (by merger or otherwise) to any Person that 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 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.
Limitation on Sales of Common Stock of Restricted Subsidiaries. The Company
will not, and will not permit any of its Restricted Subsidiaries, to issue,
sell, offer to sell, or otherwise transfer any shares of the common stock of any
Restricted Subsidiary to any person other than the Company or a Restricted
Subsidiary of the Company; provided that this restriction will not apply to
sales, offers to sell or transfers of all shares of the common stock of any
Restricted Subsidiary (other than DMC) in a single transaction for the purpose
of selling the common equity interest in the business of such Restricted
Subsidiary substantially as an entirety; provided, further, that the any such
sale of such business as an entirety otherwise complies with the provisions of
the Indenture.
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Reports to Holders. The Indenture will provide that so long as the Notes
are outstanding the Company will deliver to the Trustee within 15 days after the
filing of the same with the Commission, copies of the quarterly and annual
reports and of the information, documents and other reports, if any, which the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act. The Indenture will further provide that, notwithstanding
that the Company may not be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, so long as the Notes are outstanding the Company
will file with the 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. The Company will
also comply with the provisions of TIA Section 314(a).
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default:"
(1) the failure to pay interest on any Notes when the same becomes due and
payable and the default continues for a period of 30 days;
(2) the failure to pay the principal or Accreted Value, as applicable, or
premium on any Notes, when such 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, Mandatory Redemption upon
the occurrence of a Triggering Event, or a Net Proceeds Offer);
(3) 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 the Company from the Trustee or by the
Company and the Trustee from the Holders of at least 25% of the aggregate
outstanding principal amount at maturity of the Notes;
(4) the failure to pay principal, premium or interest at final stated
maturity (giving effect to any applicable grace periods and any extensions
thereof) 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 maturity or which has been
accelerated aggregates $20 million or more at any time;
(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;
(6) the failure of a guaranty of the 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
(7) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries.
If an Event of Default (other than an Event of Default specified in clause
(7) above with respect to the Company) shall occur and be continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount at maturity
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 shall become immediately
due and payable. If an Event of Default specified in clause (7) above with
respect to the Company occurs and is continuing, then all unpaid principal, or
Accreted Value, if applicable, of and premium, if any, and accrued and unpaid
interest on all of the outstanding Notes and, if applicable, accrued Liquidated
Damages 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 Notes as described in the preceding
paragraph, the Holders of a majority in aggregate principal amount at
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maturity 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 Accreted Value, if
applicable, 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, or Accreted Value, if
applicable, which has become due otherwise than by such declaration of
acceleration has been paid, (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and any other amounts due the Trustee under the
Indenture, and (v) in the event of the cure or waiver of an Event of Default of
the type described in clause (7) 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 aggregate principal amount at maturity of the
Notes may waive any existing Default or Event of Default under the Indenture and
its consequences, except a default in the payment, or Accreted Value, if
applicable, of the principal of or interest on any Notes.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture and under the 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 at maturity of the then outstanding Notes have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee.
Under the Indenture, the Company 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 the Company, as such,
shall have any liability for any obligations 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 Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
Notes, except for (i) the rights of Holders to receive payments in respect of
the principal of, premium, if any, and interest on the Notes when such payments
are due, (ii) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes and the maintenance of an office or agency for payments, (iii) the
rights, powers, trust, duties and immunities of the Trustee and the Company's
obligations in connection therewith and (iv) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the 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
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders, cash in U.S. dollars, non-callable U.S.
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government obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the Notes
on the stated date for payment thereof or on the applicable redemption date, as
the case may be; (ii) in the case of Legal Defeasance, 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 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, the
Company shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders 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 the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound; (vi) 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;
(vii) 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; (viii) the Company shall have delivered to the Trustee an opinion
of counsel to the effect that assuming no intervening bankruptcy 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,
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
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when: (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company 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 Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (ii)
the Company has paid all other sums payable under the Indenture by the Company;
and (iii) the Company has delivered to the Trustee an officers' certificate and
an opinion of counsel stating that all conditions precedent under the Indenture
relating to the satisfaction and discharge of the Indenture have been complied
with.
MODIFICATION OF THE INDENTURE
From time to time, the Company 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
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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, the Company 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 the
Company under the Indenture as permitted by the Indenture, to provide for
uncertificated Notes in addition to or in place of certificated 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 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 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 aggregate principal amount at maturity of the then
outstanding Notes issued under the Indenture, except that, without the consent
of each Holder affected thereby, no amendment may: (i) reduce the amount of
Notes whose Holders must consent to an amendment; (ii) reduce the rate of or
change or have the effect of changing the time for payment of interest including
defaulted interest, or the rate at which Accreted Value increases, on any Notes;
(iii) reduce the principal, or Accreted Value, if applicable, 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; (iv) make any Notes payable in money other than that stated in the
Notes; (v) make any change in provisions of the Indenture protecting the right
of each Holder to receive payment of principal, or Accreted Value, if
applicable, 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
aggregate principal amount at maturity of Notes to waive Defaults or Events of
Default (other than Defaults or Events of Default with respect to the payment of
principal, Accreted Value, of, or interest on, the Notes); (vi) amend, change or
modify in any material respect the obligation of the Company 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
to render the rights of the Holders with respect to the Notes subordinate in
right of payment to those of any other creditor with respect to any other
Indebtedness, or the provisions set forth under "-- Secured Proceeds Account" or
the definitions relating thereto in a manner which adversely affects the Holders
in any material respect.
GOVERNING LAW
The Indenture will provide that it and the 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 the Company, 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.
"Accreted Value" means as of any date of determination prior to December
15, 2002, the sum of (a) the initial offering price of each Note and (b) the
portion of the excess of the principal amount at maturity of each Note over such
initial offering price which shall have been accreted thereon through such date,
such amount to be so accreted at the rate of 12 1/2% per annum of the initial
offering price of the Notes, compounded semi-annually on each June 15 and
December 15 from the date of issuance of the Notes through the date of
determination. On and after December 15, 2002, the Accreted Value of each Note
shall be equal to the principal amount at maturity thereof.
"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.
"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 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, 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 other than in the ordinary course of business
any other properties or assets of any such other Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Wholly Owned Restricted Subsidiary of the
Company of (a) any Capital Stock of any Restricted Subsidiary of the Company; or
(b) any other property or assets of the Company or any Restricted Subsidiary of
the Company other than in the ordinary course of business; provided, however,
that Asset Sales shall not include (i) a transaction or series of related
transactions for which the Company or its Restricted Subsidiaries receive
aggregate consideration of less than $1 million; (ii) the sale, lease,
conveyance, disposition or other transfer of all or substantially all of the
assets of the Company as permitted under "Merger, Consolidation and Sale of
Assets of the Company"; (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 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,
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however, that any amendment to or waiver of any closing condition that
individually or in the aggregate is material to the Asset Swap shall be deemed
to be a new Asset Swap.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"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.
"Cash Net Proceeds" means the aggregate amount of cash or Cash Equivalents
received by the Company in the case of a sale of Qualified Capital Stock or a
Capital Contribution plus, in the case of an issuance of Qualified Capital Stock
upon any exercise, exchange or conversion of securities (including options,
warrants, rights and convertible or exchangeable debt) of the Company that were
issued for cash on or after the Issue Date, the amount of cash originally
received by the Company upon the issuance of such securities (including options,
warrants, rights and convertible or exchangeable debt) less, in each case, the
sum of all payments, fees, commissions and expenses (including, without
limitation, the fees and expenses of legal counsel and investment banking fees
and expenses) incurred in connection with such sale of Qualified Capital Stock.
"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 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
the Company of any plan or proposal for the liquidation or dissolution of the
Company (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 the Company and (B) TPG and its Related Parties
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shall beneficially own, directly or indirectly, in the aggregate a lesser
percentage of the Voting Stock of the Company than such other Person or Group;
or (iv) the replacement of a majority of the Board of Directors of the Company
over a two-year period from the directors who constituted the Board of Directors
of the Company 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 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.
"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 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
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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.
"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 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
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 (other than DMC) 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, depreciation or charge 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) and 17 (including non-cash charges relating to intangibles and
goodwill).
"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
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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 charge which requires an accrual of or
a reserve for cash charges for any future period).
"Consolidation" means, with respect to the Company, the consolidation of
the accounts of the Restricted Subsidiaries with those of the Company, all in
accordance with GAAP; provided that "consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary with the accounts
of the Company. The term "consolidated" has a correlative meaning to the
foregoing.
"Credit Agreement" means the Credit Agreement dated as of April 18, 1997,
among 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, 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 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.
"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.
"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; provided that Capital Stock that would
be "Disqualified Capital Stock" solely by virtue of its containing a customary
requirement that the issuer offer to repurchase such Capital Stock upon a change
of control of the issuer will not be deemed to be "Disqualified Capital Stock."
"Equity Contribution" means a contribution of cash or Cash Equivalents by a
stockholder of the Company to the consolidated stockholders' equity of the
Company solely in exchange for, if anything, shares of the Company's common
stock with no preferences or special rights or privileges and with no redemption
or prepayment provisions.
"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
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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 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 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 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 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.
"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 the Company, "Investment" shall exclude
extensions of trade credit (including trade receivables) by the Company and its
Restricted Subsidiaries on commercially reasonable terms in accordance with
normal trade practices of the Company or such Restricted Subsidiary, as the case
may be. For the purposes of 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 the Company's proportionate equity interest
in such Subsidiary at the time that such Restricted Subsidiary is designated an
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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.
"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
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
secured by the assets or properties that are the subject of such Asset Sale and
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.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Notes 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 the Company or 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 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;
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(iv) Interest Swap Obligations of the Company or any Restricted
Subsidiaries 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 or 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 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) such 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 the
Indenture and the Notes and (b) if as of any date any Person other than a
Wholly Owned Restricted Subsidiary of the Company owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness,
there shall be deemed to have occurred on such date the incurrence of
Indebtedness not constituting Permitted Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within five business days of incurrence;
(ix) Indebtedness of the Company or any of its Restricted Subsidiaries
in respect of security for workers' compensation claims, payment
obligations in connection with self-insurance, performance bonds, surety
bonds or similar requirements in the ordinary course of business;
(x) Capitalized Lease Obligations and Purchase Money Indebtedness of
the Company and its Restricted Subsidiaries incurred in the ordinary course
of business 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 and guarantees by its Wholly
Owned Restricted Subsidiaries of Indebtedness of other Wholly Owned
Restricted Subsidiaries; provided that such Indebtedness is permitted to be
incurred under the Indenture, including, with respect to guarantees by
Wholly Owned Restricted Subsidiaries of the Company, the covenant described
under "Certain Covenants -- Limitation of Guarantees by Restricted
Subsidiaries;"
(xii) 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
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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 (xii), when taken together with all Indebtedness incurred
pursuant to this clause (xii) and then outstanding, shall not exceed $20
million;
(xiii) 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;
(xiv) Refinancing Indebtedness;
(xv) Receivables Program Obligations; and
(xvi) 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 the 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 businesses 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' business 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 the Company 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 Covenant -- Limitation of Guarantees by Restricted Subsidiaries;" (xi)
Related Business Investments in companies and ventures in which the Company or a
Restricted Subsidiaries of the Company holds an equity ownership interest of not
less than 33% 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 the Company or any of its Restricted
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent for
a period of more than 60 days or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
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(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 lenders 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 when 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
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 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
accrued or constructed and shall not be secured by any property or assets
of the Company or any Restricted Subsidiary of the Company other than the
property and assets being acquired or constructed and (B) the Lien securing
such Indebtedness shall be created within 90 days of such acquisition or
construction;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(ix) Liens securing reimbursement obligations with respect to letters
of credit which encumber documents and other property relating to such
letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and
set-off;
(xi) Liens securing Interest Swap Obligations that relate to
Indebtedness that is otherwise permitted under 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 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;
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(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;
(xvi) Liens on Receivables Program Assets securing Receivables Program
Obligations;
(xvii) Liens securing Indebtedness of Restricted Subsidiaries (so long
as the Company is neither co-obligor, guarantor, or otherwise directly
liable with respect to such Indebtedness), which Indebtedness is incurred
in compliance with the Indenture; and
(xviii) Liens securing the Credit Agreement.
"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"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.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any such 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:
(i) no portion of the indebtedness or any other obligations
(contingent or otherwise) of a Receivables Subsidiary or Special Purpose
Vehicle (a) is guaranteed by the Company or any other Seller (excluding
guarantees of obligations pursuant to Standard Securitization
Undertakings), (b) is recourse to or obligates the Company or any other
Seller in any way other than pursuant to Standard Securitization
Undertakings or (c) 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;
(ii) neither the Company 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 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
(iii) 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.
"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
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any interest or finance charges), which rights are identified in the accounting
records of the Company or such Seller as accounts receivable.
"Receivables Documents" means (x) a receivables purchase agreement, pooling
and servicing agreement, credit agreement, agreements to acquire undivided
interests or other agreement to transfer, or create a security interest in,
Receivables Program Assets, in each case as amended, modified, supplemented or
restated and in effect from time to time and entered into by the Company,
another Seller and/or a Receivables Subsidiary, and (y) each other instrument,
agreement and other document entered into by the Company, any other Seller or a
Receivables Subsidiary relating to the transactions contemplated by the
agreements referred to in clause (x) above, in each case as amended, modified,
supplemented or restated and in effect from time to time.
"Receivables Program Assets" means (a) all Receivables which are described
as being transferred by the Company, another Seller or a Receivables Subsidiary
pursuant to the Receivables Documents, (b) all Receivables Related Assets, and
(c) all collections (including recoveries) and other proceeds of the assets
described in the foregoing clauses.
"Receivables Program Obligations" means (a) notes, trust certificates,
undivided interests, partnership interests or other interests representing the
right to be paid a specified principal amount for the Receivables Program
Assets, and (b) related obligations of the Company, a Subsidiary of the Company
or a Special Purpose Vehicle (including, without limitation, rights in respect
of interest or yield, breach of warranty claims and expense reimbursement and
indemnity provisions).
"Receivables Related Assets" means (i) any rights arising under the
documentation governing or relating to Receivables (including rights in respect
of liens securing such Receivables and other credit support in respect of such
Receivables), (ii) any proceeds of such Receivables and any lockboxes or
accounts in which such proceeds are deposited, (iii) spread accounts and other
similar accounts (and any amounts on deposit therein) established in connection
with a Qualified Receivables Transaction, (iv) any warranty, indemnity, dilution
and other intercompany claim arising out of Receivables Documents and (v) other
assets which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable.
"Receivables Subsidiary" means a special purpose wholly owned subsidiary of
the Company created in connection with the transactions contemplated by a
Qualified Receivables Transaction, which subsidiary engages in no activities
other than those incidental to such Qualified Receivables Transaction and which
is designated as a Receivables Subsidiary by the Company's Board of Directors.
Any such designation by the Board of Directors shall be evidenced by filing with
the Trustee a Board Resolution of the Company giving effect to such designation
and an Officers Certificate certifying, to the best of such officers' knowledge
and belief after consulting with counsel, such designation, and the transactions
in which the Receivables Subsidiary will engage, comply with the requirements of
the definition of Qualified Receivables Transaction.
"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
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), (xii), (xiii), or (xvi) of the definition of
Permitted Indebtedness), in each case that does not (1) result in an increase in
the aggregate 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 or its Restricted Subsidiaries in
connection with such Refinancing) or (2) create Indebtedness with (A) a Weighted
Average Life to Maturity that is less than the Weighted Average Life to Maturity
of the Indebtedness being Refinanced or (B) a final maturity earlier than the
final maturity of the Indebtedness being Refinanced; provided that (x) if such
Indebtedness being Refinanced is solely Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if
such
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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.
"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.
"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 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.
"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.
"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 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 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
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.
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such
Person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary by the Board of Directors of such Person in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors of the Company may designate any Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, the Company or any other Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated; provided that
(x) the Company certifies to the Trustee that such designation complies with 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 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 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
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by the Board of Directors of the Company shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect to
such designation and an officers' certificate certifying that such designation
complied with the foregoing provisions.
"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.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
IN GENERAL
The following summary describes the principal U.S. federal income tax
consequences of the exchange of the Initial Notes for Exchange Notes (the
"Exchange") and of the principal U.S. federal income tax consequences of the
purchase, ownership and disposition of the Exchange Notes, but does not purport
to be a comprehensive description of all the tax considerations that may be
relevant to a decision to exchange the Initial Notes. In particular, special tax
considerations that may apply to certain types of taxpayers, including
securities dealers, banks, tax exempt investors and insurance companies are not
addressed. In addition, this summary does not describe any tax consequences
arising under the laws of any state, locality or taxing jurisdiction other than
the United States federal government. In general, the summary assumes that a
holder holds such Exchange Note as a capital asset under the U.S. Internal
Revenue Code of 1986 and not as part of a "hedge," "straddle," "conversion
transaction," "synthetic security" or other integrated investment.
This summary is based on the U.S. federal income tax laws, regulations,
rulings and decisions in effect or available on the date hereof. All of the
foregoing are subject to change, which change may apply retroactively and could
affect the continued validity of this summary.
As used in this section, the term "U.S. holder" means a holder of an
Exchange Note who is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized under the laws of the U.S. or
any state or political subdivision thereof, an estate that is subject to U.S.
federal income taxation without regard to the source of its income, or a trust
whose administration is subject to the primary supervision of a U.S. court and
which has one or more U.S. persons who have the authority to control all
substantial decisions of the trust.
ALL HOLDERS OF INITIAL NOTES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE U.S. FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE EXCHANGE OF
INITIAL NOTES FOR EXCHANGE NOTES AND OF THE OWNERSHIP AND DISPOSITION OF
EXCHANGE NOTES RECEIVED IN THE EXCHANGE OFFER IN VIEW OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
TAX TREATMENT OF U.S. HOLDERS OF NOTES
The Exchange of Initial Notes. 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 Initial Note whose Initial Note is accepted in an Exchange Offer
will not recognize gain on the Exchange. A tendering holder's tax basis in the
Exchange Notes will be the same as such holder's tax basis in its Initial Notes.
A tendering holder's holding period for the Exchange Notes received pursuant to
the Exchange Offer will include its holding period for the Initial Notes
surrendered therefor.
Original Issue Discount. The Exchange Notes will have original issue
discount ("OID"), and U.S. holders of the Exchange Notes (including cash basis
holders) will be required to include such OID in income as interest income on a
constant yield basis, generally in advance of the receipt of the cash payments
to which such income is attributable and generally in increasing amounts until
December 15, 2002. Any amount of OID included will increase a holder's tax basis
in the Exchange Notes.
The total amount of OID with respect to an Exchange Note will be equal to
the excess of the "stated redemption price at maturity" of such Exchange Note
over its "issue price". The "stated redemption price at maturity" of an Exchange
Note will be the sum of all payments, whether denominated as interest or
principal, required to be made on such Exchange Note other than payments of
"qualified stated interest". Qualified stated interest is stated interest that
is unconditionally payable at least annually at a single fixed rate that
appropriately takes into account the length of the interval between payments.
Because interest is not payable on the Exchange Notes until June 15, 2003, none
of the interest payments on an Exchange Note will constitute qualified stated
interest and all such payments will be included in the Exchange Note's stated
redemption price at maturity. The "issue price" of an Exchange Note was the
first price to the public (not
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including bond houses, brokers, or similar persons or organizations acting in
the capacity of underwriters or wholesalers) at which a substantial portion of
the Initial Notes were initially sold.
The amount of OID required to be included in a U.S. holder's income with
respect to an Exchange Note for any taxable year (regardless of whether such
holder uses the cash or accrual method of accounting) is the sum of the daily
portions of OID with respect to the Exchange Note for each day during the
taxable year or portion thereof in which such holder holds such Exchange Note. A
daily portion is determined by allocating to each day in any "accrual period" a
pro rata portion of the OID allocable to that accrual period. Accrual periods
with respect to an Exchange Note may be of any length selected by the holder and
may vary in length over the term of the Exchange Note as long as (i) no accrual
period is longer than one year and (ii) each scheduled payment of interest or
principal on the Exchange Note occurs on either the first or final day of an
accrual period. The amount of OID allocable to each accrual period will be the
product of the adjusted issue price of the Exchange Note at the beginning of
that accrual period and the yield to maturity of such Exchange Note (determined
on the basis of a compounding assumption that reflects the length of the accrual
period). The adjusted issue price of an Exchange Note at the beginning of an
accrual period will be its original issue price, increased by all previously
accrued OID and reduced by the amount of all previous cash payments on the
Exchange Note. The yield to maturity is the interest rate, expressed as a
constant annual interest rate, that when used in computing the present value of
all payments of principal and interest to be paid in connection with Exchange
Note produces an amount equal to the issue price of the Exchange Note.
Under the foregoing rules, holders of the Exchange Notes (including cash
basis holders) during the 5-year period during which interest will accrue but
not be paid will be required to include in income, on a constant yield basis (as
described above), an aggregate amount of OID equal to the excess of the
principal amount payable at maturity over the issue price of the Exchange Notes.
Thereafter, the amount of OID required to be included in the income of the
holders of Exchange Notes during each taxable year will be equal to the amount
of the scheduled interest payments due on the Exchange Notes during such taxable
year.
The Exchange Notes are expected to be subject to the applicable high-yield
debt obligation ("HYDO") rules that restrict the deduction of interest by the
Company. The original issue discount that would otherwise be deductible by the
Company as the original issue discount economically accrues would be deductible
only when paid in cash or property, but would not be deductible to the extent
that the yield to maturity on the Initial Notes exceeds the Applicable Federal
Rate at the time of issuance plus six percentage points ("the disqualified
portion"). The disqualified portion may be treated as a dividend (rather than
original issue discount) to corporate holders solely for purposes of the
dividends received deduction to the extent such amount would have been treated
as a dividend if it were a distribution with respect to stock.
Sale, Exchange and Retirement of Notes. Upon the sale, exchange,
redemption, retirement or other taxable disposition ("Disposition") of an
Exchange Note, a holder generally will recognize gain or loss equal to the
difference between the amount realized on such Disposition and the holder's tax
basis in the Exchange Note. Gain or loss recognized by a holder on Disposition
of an Exchange Note will be capital gain or loss and will, in the case of
individuals, be long-term capital gain or loss subject to a maximum rate of 20%
if the Exchange Note has been held for more than eighteen months at the time of
Disposition. Net capital gain recognized by a Holder on Disposition of the
Exchange Notes that have been held for more than 12 months but for not more than
18 months will be subject to tax at a rate not to exceed 28% and capital gain
recognized from Disposition of the Exchange Notes that have been held for 12
months or less will be subject to tax at ordinary income tax rates. In addition,
capital gain recognized by a corporate taxpayer will be subject to tax at the
ordinary income tax rates applicable to corporations.
Market Discount. If an Exchange Note is acquired by a subsequent purchaser
at a "market discount," some or all of any gain realized upon a disposition
(including a sale or a taxable exchange) or payment at maturity of such Exchange
Note may be treated as ordinary income. "Market discount" with respect to an
Exchange Note is, subject to a de minimis exception, the excess of (1) the issue
price of the Initial Exchange Note exchanged therefor plus all previously
accrued original issue discount over (2) such U.S. Holder's tax basis in the
Exchange Note. The amount of market discount treated as having accrued will be
determined either on a ratable basis, or, if the U.S. Holder so elects, on a
constant interest method. Upon any subsequent
113
<PAGE> 119
disposition (including a gift or payment at maturity) of such Exchange Note
(other than in connection with certain nonrecognition transactions), the lesser
of any gain on such disposition (or appreciation, in the case of a gift) or the
portion of the market discount that accrued while the Exchange Note was held by
such U.S. Holder will be treated as ordinary interest income at the time of the
disposition. In lieu of including accrued market discount in income at the time
of disposition, a U.S. Holder may elect to include market discount in income
currently. Unless a U.S. Holder so elects, such U.S. Holder may be required to
defer a portion of any interest expense that may otherwise be deductible on any
indebtedness incurred or maintained to purchase or carry such Exchange Note
until the U.S. Holder disposes of the Exchange Note.
Acquisition Premium. A subsequent U.S. Holder of an Exchange Note is
generally subject to rules for accruing OID described above. However, if such
U.S. Holder's purchase price for the Exchange Note exceeds the "revised issue
price" (the sum of the issue price of the Exchange Note and the aggregate amount
of the OID includible in the gross income of all holders for periods before the
acquisition of the Exchange Note by such U.S. Holder), the excess (referred to
as "acquisition premium") is offset ratably against the amount of OID otherwise
includible in such U.S. Holder's taxable income (i.e., such U.S. Holder may
reduce the daily portions of OID by a fraction, the numerator of which is the
excess of such U.S. Holder's purchase price for the Exchange Note over the
revised issue price, and the denominator of which is the excess of the sum of
all amounts payable on the Exchange Note after the purchase date over the
Exchange Note's revised issue price).
TAX TREATMENT OF NON-U.S. HOLDERS
In the case of a non-U.S. holder, payments made with respect to the
Exchange Notes will not be subject to U.S. withholding tax, provided that such
holder complies with applicable certification requirements (including in general
the furnishing of an Internal Revenue Service Form W-8 or a substitute form).
Any capital gain realized on Disposition of the Exchange Notes by such holder
will generally not be subject to U.S. federal income tax if (i) such gain is not
effectively connected with a U.S. trade or business of such holder and (ii) in
the case of an individual, such individual is not present in the United States
for 183 days or more in the taxable year of Disposition and certain other
requirements are met or the gain is not attributable to a fixed place of
business maintained by such individual in the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under current United States federal income tax law, a 31% "backup'
withholding tax is applied to certain payments (including amounts in respect of
Original Issue Discount) made to, and to the proceeds of sales before maturity
by, certain U.S. persons if such persons (i) fail to furnish their taxpayer
identification numbers which, for an individual, would be his Social Security
Number or (ii) in certain circumstances, fail to certify, under penalties of
perjury, that they have both furnished a correct taxpayer identification number
and not been notified by the Internal Revenue Service that they are subject to
backup withholding for failure to report interest and dividend payments. Under
current regulations, this backup withholding will not apply to payments made
outside the United States by the Company or a paying agent on an Exchange Note
if the Owner's Statement is received; provided in each case that the Company or
the paying agent, as the case may be, does not have actual knowledge that the
payee is a U.S. person.
Under current regulations, payments of the proceeds of Disposition of an
Exchange Note to or through a foreign office of a "broker" will not be subject
to backup withholding but will be subject to information reporting if the broker
is a U.S. person, a controlled foreign corporation for United Stated federal
income tax purposes, or a foreign person 50% or more of whose gross income is
from a United States trade or business for a specified three-year period, unless
the broker has in its records documentary evidence that the holder of an
Exchange Note is not a U.S. person and certain conditions are met or the holder
of an Exchange Note otherwise establishes an exemption. Payment of the proceeds
of Disposition to or through the United States office of a broker is subject to
backup withholding and information reporting unless the holder certifies its
non-United States status under penalties of perjury or otherwise establishes an
exemption.
Recently, the U.S. Treasury Department released final regulations regarding
withholding and information reporting requirements discussed above. The final
regulations do not generally alter the treatment of non-U.S.
114
<PAGE> 120
Holders who furnish an Owner's Statement to the payor. The final regulations may
change certain procedures applicable to certain financial intermediaries acting
on behalf of beneficial owners. The final regulations are generally effective
for payments made after December 31, 1998.
115
<PAGE> 121
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange 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 Exchange 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 Exchange Notes received in
exchange for Initial Notes where such Initial Notes were acquired as a result of
market-making activities--or other trading activities. DMFC has agreed that it
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 Exchange Notes may be required to
deliver a prospectus.
DMFC will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange 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 Exchange 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 Exchange Notes. Any
broker-dealer that resells Exchange 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 Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange 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, 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. DMFC
has agreed to pay expenses incident to the Exchange Offer other than commissions
or concessions of any brokers or dealers and will indemnify the holders of the
Exchange Notes (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
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, DMFC believes that the Exchange 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 Exchange Notes
directly from 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
DMFC) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange 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 Exchange Notes and
has no arrangement with any person to participate in a distribution of such
Exchange Notes.
116
<PAGE> 122
LEGAL MATTERS
The validity of the Exchange Notes will be passed upon for the Company by
Pillsbury Madison & Sutro LLP, San Francisco, California.
EXPERTS
The consolidated financial statements of Del Monte Foods Company as of June
30, 1997, and for the year then ended, appearing in this Prospectus and
Registration Statement have been audited by KPMG Peat Marwick LLP, independent
public accountants, and as of June 30, 1996, and for each of the two years in
the period ended June 30, 1996, by Ernst & Young LLP, independent public
accountants, as set forth in their respective reports thereon appearing
elsewhere herein, and are included in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
The combined financial statements of Contadina (a division of Nestle USA,
Inc.) as of December 31, 1996, and for the year then ended, appearing in this
Prospectus and Registration Statement have been audited by KPMG Peat Marwick
LLP, independent public accountants, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance on such report given
upon the authority of said firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and any definitive proxy or information statements filed by the
Company or DMC 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
Exchange Offer 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.
117
<PAGE> 123
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
AUDITED FINANCIAL STATEMENTS
Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets -- June 30, 1996 and 1997....... F-3
Consolidated Statements of Operations -- Years ended June
30, 1995, 1996 and 1997................................... F-4
Consolidated Statements of Stockholders' Equity
(Deficit) -- Years ended June 30, 1995, 1996
and 1997.................................................. F-5
Consolidated Statements of Cash Flows -- Years ended June
30, 1995, 1996 and 1997................................... F-6
Notes to Consolidated Financial Statements.................. F-7
Report of Independent Auditors.............................. F-25
UNAUDITED FINANCIAL STATEMENTS
Consolidated Balance Sheets -- December 31, 1996 and
December 31, 1997......................................... F-26
Consolidated Statements of Operations -- Six-Month Periods
ended December 31, 1996
and 1997.................................................. F-27
Consolidated Statements of Cash Flows -- Six-Month Periods
ended December 31, 1996
and 1997.................................................. F-28
Notes to Consolidated Financial Statements.................. F-29
CONTADINA (A DIVISION OF NESTLE USA, INC.)
Independent Auditors' Report................................ F-32
Combined Balance Sheets at December 31, 1996 and September
30, 1997 (unaudited)...................................... F-33
Combined Statements of Operations and Divisional Equity for
the year ended December 31, 1996 and the nine-month
periods ended September 30, 1996 and 1997 (unaudited)..... F-34
Combined Statements of Cash Flows for the year ended
December 31, 1996 and the nine-month periods ended
September 30, 1996 and 1997 (unaudited)................... F-35
Notes to Combined Financial Statements for the year ended
December 31, 1996 and for the
nine-month periods ended September 30, 1996 and 1997
(unaudited)............................................... F-36
</TABLE>
F-1
<PAGE> 124
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Del Monte Foods Company
We have audited the accompanying consolidated balance sheet of Del Monte
Foods Company and subsidiaries as of June 30, 1997, and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the
year then ended. 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 audit. The accompanying financial statements
of Del Monte Foods Company and subsidiaries as of June 30, 1996 and for each of
the years in the two-year period ended June 30, 1996 were audited by other
auditors whose report, dated August 29, 1996, on those statements included an
explanatory paragraph that described the change in the Company's method of
accounting for impairment of long-lived assets and for long-lived assets to be
disposed of discussed in Note A to the financial statements.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the 1997 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Del Monte Foods Company and subsidiaries as of June 30, 1997 and the
consolidated results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
August 22, 1997
San Francisco, California
F-2
<PAGE> 125
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30,
--------------
1996 1997
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 6 $ 5
Restricted cash........................................... 30
Trade accounts receivable, net of allowance............... 98 67
Other receivables......................................... 8 2
Inventories............................................... 304 339
Prepaid expenses and other current assets................. 13 9
---- ----
Total current assets.............................. 459 422
Property, plant and equipment, net........................ 247 222
Other assets.............................................. 30 23
---- ----
Total assets...................................... $736 $667
==== ====
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses..................... $202 $222
Short-term borrowings..................................... 43 82
Current portion of long-term debt......................... 7 2
---- ----
Total current liabilities......................... 252 306
Long-term debt.............................................. 323 526
Other noncurrent liabilities................................ 250 215
Redeemable common stock ($.01 par value per share, 1,650,000
shares authorized; issued and outstanding: 159,386 at June
30, 1996)................................................. 2
Redeemable preferred stock ($.01 par value per share,
32,493,000 shares authorized; issued and outstanding:
17,300,041 at June 30, 1996; aggregate liquidation
preference: $579)......................................... 213
Redeemable preferred stock ($.01 par value per share,
1,000,000 shares authorized; issued and outstanding:
35,000 at June 30, 1997; aggregate liquidation preference:
$35)...................................................... 32
Stockholders' equity (deficit):
Common stock ($.01 par value per share, 1,700,000
shares authorized; issued and outstanding: 223,468 in
1996).................................................
Common stock ($.01 par value per share, 1,000,000
shares authorized;
issued and outstanding: 140,000 in 1997).............
Paid-in capital........................................ 3 129
Retained earnings (deficit)............................ (281) (541)
Cumulative translation adjustment...................... (26)
---- ----
Total stockholders' equity (deficit).............. (304) (412)
---- ----
Total liabilities and stockholders' equity........ $736 $667
==== ====
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE> 126
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Net sales................................................... $1,527 $1,305 $1,217
Cost of products sold....................................... 1,183 984 817
------ ------ ------
Gross profit.............................................. 344 321 400
Selling advertising, administrative and general expense..... 264 239 327
------ ------ ------
Operating income.......................................... 80 82 73
Interest expense............................................ 76 67 52
Loss (gain) on sale of divested assets (Note B)............. (107) 5
Other (income) expense (Note D)............................. (11) 3 30
------ ------ ------
Income (loss) before income taxes, minority interest,
extraordinary item and cumulative effect of accounting
change................................................. 15 119 (14)
Provision for income taxes.................................. 2 11
Minority interest in earnings of subsidiary................. 1 3
------ ------ ------
Income (loss) before extraordinary item and cumulative
effect of accounting change............................ 12 105 (14)
Extraordinary loss from refinancing of debt and early debt
retirement................................................ 7 10 42
Cumulative effect of accounting change...................... 7
------ ------ ------
Net income (loss)................................. $ 5 $ 88 $ (56)
====== ====== ======
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE> 127
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NOTES
RECEIVABLE RETAINED CUMULATIVE TOTAL
COMMON PAID-IN FROM EARNINGS TRANSLATION STOCKHOLDERS'
STOCK CAPITAL STOCKHOLDERS (DEFICIT) ADJUSTMENT (DEFICIT)
------ ------- ------------ --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1994............ $-- $ 3 $(1) $(374) $(12) $(384)
Repurchase of shares................
Net income.......................... 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.......................... 88 88
--- ---- --- ----- ---- -----
Balance at June 30, 1996............ -- 3 -- (281) (26) (304)
Cancellation of shares in connection
with the Recapitalization......... (3) (204) (207)
Issuance of shares.................. 129 129
Net loss............................ (56) (56)
Cumulative translation adjustment... 26 26
--- ---- --- ----- ---- -----
Balance at June 30, 1997............ $-- $129 $-- $(541) $ -- $(412)
=== ==== === ===== ==== =====
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
-----------------------------------------
COMMON TOTAL COMMON
STOCK CLASS A CLASS B CLASS E SHARES
------- -------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
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
Cancellation of shares............... (198,468) (25,000) (223,468)
Issuance of shares................... 140,000 140,000
------- -------- ------ ------- --------
Shares issued and outstanding at June
30, 1997........................... 140,000 -- -- -- 140,000
======= ======== ====== ======= ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE> 128
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Operating activities:
Net income (loss)......................................... $ 5 $ 88 $ (56)
Adjustments to reconcile net income (loss) to net cash
flows:.................................................
Extraordinary loss from refinancing of debt and early
debt retirement...................................... 7 10 42
Cumulative effect of accounting change................. 7
Loss (gain) on sale of divested assets................. (107) 5
Loss on sales of assets................................ 3 2 3
Depreciation and amortization.......................... 40 31 29
Minority interest in earnings of subsidiary............ 1
Changes in operating assets and liabilities:..............
Accounts receivable.................................... (37) 33 24
Inventories............................................ (21) 11 (48)
Prepaid expenses and other current assets.............. 3 (2) 3
Other assets........................................... 4 1 6
Accounts payable and accrued expenses.................. 25 (28) 29
Other non-current liabilities.......................... 33 14 (12)
------- ------- -------
Net cash provided by operating activities......... 63 60 25
Investing activities:
Capital expenditures................................... (24) (16) (20)
Proceeds from sales of fixed assets.................... 3 4 9
Proceeds from sales of divested assets................. 182 48
------- ------- -------
Net cash provided by (used in) investing
activities...................................... (21) 170 37
Financing activities:
Short-term borrowings.................................. 1,901 1,276 1,137
Payment on short-term borrowings....................... (1,867) (1,354) (1,098)
Proceeds from long-term borrowing...................... 188 582
Principal payments on long-term debt................... (238) (108) (407)
Deferred debt issuance costs........................... (24) (2) (26)
Prepayment penalty..................................... (5) (20)
Payments to previous shareholders for cancellation of
stock................................................ (422)
Issuance of common and preferred stock................. 161
Specific Proceeds Collateral Account................... (30) 30
Dividends paid to minority shareholders................ (1)
Other.................................................. (3) (1)
------- ------- -------
Net cash used in financing activities............. (44) (224) (63)
Effect of exchange rate changes on cash and cash
equivalents............................................... 3 (8)
------- ------- -------
Net change in cash and cash equivalents........... 1 (2) (1)
Cash and cash equivalents at beginning of year.............. 7 8 6
------- ------- -------
Cash and cash equivalents at end of year.......... $ 8 $ 6 $ 5
======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE> 129
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(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 to a variety of food retailers, supermarkets
and mass merchandising stores. The Company holds the rights to the Del Monte
brand in the United States.
Basis of Accounting: Pursuant to the Agreement and Plan of Merger, dated
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 held by certain of DMFC's
stockholders, who remained investors, 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 as set forth in the Merger Agreement. In the Merger, the common
stock and preferred stock of Shield was converted into shares of new DMFC common
stock and preferred stock, respectively. The Merger was accounted for as a
leveraged recapitalization for accounting purposes (the "Recapitalization");
accordingly, all assets and liabilities are stated at historical cost. In
connection with the Merger, DMC repaid substantially all of its funded debt
obligations existing immediately before the closing of the Merger.
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.
Use of Estimates: 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 at June 30, 1996 represents a portion of
the proceeds from the Company's sale of its 50.1% interest in Del Monte Pacific
Resources Limited ("Del Monte Philippines"), a joint venture operating primarily
in the Philippines, which were deposited into the Specific Proceeds Collateral
Account until agreement was reached with the Term Loan lenders as to final
application of the funds (see Note B). These funds were used to repurchase
outstanding PIK Notes in September 1996.
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.
F-7
<PAGE> 130
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
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 $34, $26 and $24 for the years ended June 30, 1995, 1996 and
1997, respectively.
Cost of Products Sold: Cost of products sold includes raw material, labor
and overhead.
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 the
years ended June 30, 1995, 1996 and 1997, 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 were translated at the rate in effect at the balance sheet date, and
revenue and expense accounts were translated at the average rates during the
period. Translation adjustments were reflected as a separate component of
stockholders' equity.
Interest Rate Contracts: To manage interest rate exposure, the Company
uses interest-rate swap agreements. These agreements involve the receipt of
fixed rate amounts in exchange for floating rate interest payments over the life
of the agreement without an exchange of the underlying principal amount. The
differential to be paid or received is accrued as interest rates change and
recognized as an adjustment to interest expense related to the debt. The related
amount payable to or receivable from counterparties is included in other
liabilities or assets.
Fair Value of Financial Instruments: The carrying amount of the Company's
financial instruments, which primarily include cash, accounts receivable,
accounts payable, and accrued expenses, approximates fair value due to the
relatively short maturity of such instruments.
The carrying amounts of the Company's borrowings under its short-term
revolving credit agreement and long-term debt instruments, excluding the
Subordinated Notes, approximate their fair value. At June 30, 1997, the fair
value of the Subordinated Notes was $161, as estimated based on quoted market
prices from dealers.
The fair value of the interest rate swap agreements at June 30, 1997 was
$(1). The fair value of interest rate swap agreements are the estimated amounts
that the Company would receive or pay to terminate the agreements at the
reporting date, taking into account current interest rates and the current
credit worthiness of the counterparties.
Minority Interest: Minority interest represents the minority shareholders'
proportionate share of the earnings of Del Monte Philippines, 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. During fiscal 1996, 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.
F-8
<PAGE> 131
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
Reclassification: Beginning in the fourth quarter of fiscal 1997, certain
merchandising allowances, which previously were included as a cost of products
sold, have been reclassified to selling expense. Such merchandising allowances
totaled $106, $100 and $143 in the fiscal years ended June 30, 1995, 1996, and
1997, respectively. In addition, certain military distributor allowances, which
previously were treated as a reduction in net sales, have been reclassified to
selling expense. Such military distributor allowances amounted to $1, $1 and $2
in fiscal years ended June 30, 1995, 1996 and 1997, respectively. All financial
information has been restated to conform to this presentation.
NOTE B -- DIVESTED ASSETS
Del Monte 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 ("Hicks Muse"). This agreement was
amended and restated on October 25, 1996 for the sale of only the Company's
Mexican subsidiary, Productos Del Monte, S.A. de C.V. ("PDM") to an affiliate of
Hicks Muse for $38 which was completed on October 28, 1996. 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. In addition, the purchasers have alleged, among other things, that
the Company breached the purchase agreement 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 Company does not believe that this claim will have a material
adverse effect on the Company's financial position or results of operations (see
Note H). The combined proceeds of both sales of $50, reduced by $2 of related
transaction expenses, resulted in a loss of $5.
The following results of the Latin American operations are included in the
Statements of Operations:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Net sales............................................... $65 $55 $17
Costs and expenses...................................... 62 50 17
--- --- ---
Income from operations before income taxes.............. 3 5 --
Provision for income taxes.............................. 1 1 --
--- --- ---
Income from Latin American operations................... $ 2 $ 4 $--
=== === ===
</TABLE>
Del Monte Philippines. On March 29, 1996, the Company sold its 50.1%
interest in Del Monte Philippines, 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 fiscal 1996. 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 Del Monte Philippines over the agreement term. The gain
associated with the value of the premium was deferred and will be amortized over
the term of the agreement.
F-9
<PAGE> 132
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
The following results of the Del Monte Philippines operations are included
in the Statements of Operations:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
------------
1995 1996
---- ----
<S> <C> <C>
Net sales................................................... $142 $102
Costs and expenses.......................................... 141 97
---- ----
Income from operations before income taxes.................. 1 5
Provision for income taxes.................................. -- 2
---- ----
Income from operations...................................... $ 1 $ 3
==== ====
</TABLE>
All of the net proceeds from the sale of Del Monte Philippines 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 was reached with the Term Loan lenders
as to the application of funds. These funds were used in the September 1996
exchange offer.
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 following results of the Pudding Business are included in the
Statements of Operations:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
------------
1995 1996
---- ----
<S> <C> <C>
Net sales................................................... $47 $15
Costs and expenses.......................................... 33 11
--- ---
Income from operations...................................... $14 $ 4
=== ===
</TABLE>
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.
F-10
<PAGE> 133
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE C -- SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
JUNE 30,
------------
1996 1997
---- ----
<S> <C> <C>
Trade Accounts Receivable:
Trade..................................................... $ 99 $ 68
Allowance for doubtful accounts........................... (1) (1)
---- ----
Total trade accounts receivable................... $ 98 $ 67
==== ====
Inventories:
Finished product.......................................... $198 $239
Raw materials and supplies................................ 12 13
Other, principally packaging material..................... 94 87
---- ----
Total inventories................................. $304 $339
==== ====
Property, Plant and Equipment:
Land and land improvements................................ $ 44 $ 37
Buildings and leasehold improvements...................... 98 93
Machinery and equipment................................... 240 233
Construction in progress.................................. 9 10
---- ----
391 373
Accumulated depreciation.................................. (144) (151)
---- ----
Total property, plant and equipment............... $247 $222
==== ====
Other Assets:
Deferred debt issue costs................................. $ 26 $ 19
Other..................................................... 10 4
---- ----
36 23
Accumulated amortization.................................. (6) --
---- ----
Total other assets................................ $ 30 $ 23
==== ====
Accounts Payable and Accrued Expenses:
Accounts payable -- trade................................. $ 76 $ 79
Marketing and advertising................................. 39 59
Payroll and employee benefits............................. 18 17
Current portion of accrued pension liabilities............ 13 12
Current portion of other noncurrent liabilities........... 22 19
Other..................................................... 34 36
---- ----
Total accounts payable and accrued expenses....... $202 $222
==== ====
Other Noncurrent Liabilities:
Accrued postretirement benefits........................... $140 $145
Accrued pension liability................................. 48 26
Self-insurance liabilities................................ 12 15
Other..................................................... 50 29
---- ----
Total other noncurrent liabilities................ $250 $215
==== ====
</TABLE>
F-11
<PAGE> 134
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE D -- SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings under revolving credit agreements at June 30, 1996
and 1997 were $43 and $82, respectively. Unused amounts under the revolving
credit agreements at June 30, 1996 and 1997 totaled $328 and $242, respectively.
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 of the then-existing $400 revolving credit facility, term loan, and
Senior Subordinated Guaranteed Pay-in-Kind Notes. Concurrent with the
Recapitalization, the Company entered into a credit agreement with respect to
the Term Loan Facility (the "Term Loan") and the Revolving Credit Facility (the
"Revolver"). The Term Loan provides for term loans in the aggregate amount of
$380, consisting of Term Loan A of $200 and Term Loan B of $180. The Revolver
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.
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% (8.25% at
June 30, 1997). Interest rates on Term Loan B are, at the Company's option,
either (i) the base rate plus 2.00% or (ii) the offshore rate plus 3.00% (8.875%
at June 30, 1997).
The Company is required to pay the lenders under the Revolving Credit
Facility a commitment fee of 0.50% on the unused portion of such Facility. The
Company is also required to pay the lenders under the Revolving Credit Facility
letter of credit fees of 1.75% per year for commercial letters of credit and
2.25% per year for all other letters of credit, as well as an additional fee in
the amount of 0.25% per year 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. At June 30, 1997, a balance of $26 was outstanding on these letters of
credit.
In addition, on April 18, 1997, the Company issued senior subordinated
notes (the "Unregistered Notes") with an aggregate principal amount of $150 and
received gross proceeds of $147. The Unregistered Notes accrue interest at
12.25% per year, payable semiannually in cash on each April 15 and October 15.
These Unregistered Notes are guaranteed by DMFC and mature on April 15, 2007.
The Unregistered Notes are redeemable at the option of the Company on or after
April 15, 2002 at a premium to par that initially is 106.313% and that decreases
to par on April 15, 2006 and thereafter. On or prior to April 15, 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. The Unregistered
Notes were issued with registration rights requiring the Company to exchange the
Unregistered Notes for new notes (the "Subordinated Notes") registered under the
Securities Act of 1933, as amended. The form and terms of the Subordinated Notes
are substantially the same as the Unregistered Notes, except that there is no
restriction on the transfer thereof. The Company filed a registration statement
on Form S-4 with respect to the Unregistered Notes on June 12, 1997, which
became effective on June 24, 1997. The exchange of the Unregistered Notes for
the Subordinated Notes was completed on July 31, 1997.
In connection with the Recapitalization, the Company incurred expenses
totaling $85 of which $25 were included in selling, advertising, administrative
and general expense, $22 were charged to other expense and $38 were accounted
for as an extraordinary loss. The extraordinary loss consisted of previously
capitalized debt
F-12
<PAGE> 135
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
issue costs of approximately $19 and a 1996 PIK Note premium and a term loan
make-whole aggregating $19. In addition, in conjunction with the Bank Financing,
$19 of debt issue costs were capitalized.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JUNE 30,
------------
1996 1997
---- ----
<S> <C> <C>
Term Loan................................................... $ 68 $380
Subordinated Debt........................................... 243
Subordinated Notes.......................................... 147
Senior Secured Notes........................................ 13
Other....................................................... 6 1
---- ----
330 528
Less Current Portion........................................ 7 2
---- ----
$323 $526
==== ====
</TABLE>
At June 30, 1997, scheduled maturities of long-term debt in each of the
next five fiscal years and thereafter will be as follows:
<TABLE>
<S> <C>
1998........................................................ $ 2
1999........................................................ 32
2000........................................................ 36
2001........................................................ 42
2002........................................................ 47
Thereafter.................................................. 372
----
531
Less discount............................................... 3
----
$528
====
</TABLE>
The Term Loan and Revolver are collateralized by security interests in
certain of the Company's assets. At June 30, 1997, total assets that are not
pledged to secure the Debt are less than 10% of the Company's total consolidated
assets. At June 30, 1997, assets totaling $639 were pledged as collateral for
approximately $462 of short-term borrowings and long-term debt.
The Subordinated Notes, Term Loan and Revolver (collectively "the Debt")
agreements contain restrictive covenants with which the Company must comply.
These restrictive covenants, in some circumstances, limit the incurrence of
additional indebtedness, payment of dividends, transactions with affiliates,
asset sales, mergers, acquisitions, prepayment of other indebtedness, liens and
encumbrances. In addition, the Company 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. The Company is in compliance with all of the Debt
covenants at June 30, 1997.
In June 1995, the Company refinanced its then-existing revolving credit
agreement, term loan and Senior Secured Floating Rate Notes. In conjunction with
the refinancing, capitalized debt issue costs of $7 were charged to fiscal 1995
income and were accounted for as an extraordinary item.
At June 30, 1996, a balance of $29 was outstanding on letters of credit.
Letter of credit fees were 2.25% per year for commercial letters of credit and
2.75% per year for all other letters of credit with an additional fee of 0.50%
to the bank issuing such letters of credit. The Company paid a commitment fee to
maintain the lines of credit equal to 0.50% of the unused balance.
F-13
<PAGE> 136
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
At June 30, 1996, the then-existing term loan consisted of three
components. A $31 amortizing component was due in quarterly installments with an
interest rate of LIBOR plus 3.25%. The second component of this loan of $30 and
the third component of $7 were non-amortizing with interest fixed at 11.11% and
LIBOR plus 4.75%, respectively. 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 carried an interest rate of 18%, 14% payable in
cash and 4% payable in-kind in Secondary Notes, at the Company's option.
Interest payments were due quarterly.
Subordinated Debt consisted of Subordinated Guaranteed Payment-in-Kind
Notes ("PIK Notes"). Interest accrued at 12.25% per year and was generally
payable through the issuance of additional PIK Notes. The payment of such
interest in additional PIK Notes since issuance resulted in an increase in the
principal amount outstanding of such indebtedness.
In August 1996, the Company offered to redeem (the "Exchange Offer") a
portion of its outstanding PIK Notes for a cash payment and exchange the
remaining PIK Notes for new Senior Subordinated Guaranteed Pay-in-Kind Notes due
2002 (the "1996 PIK Notes"). On September 11, 1996, 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 Secured Notes
outstanding were repaid. Funding for the Exchange Offer was accomplished through
the application of $30 from the Specific Proceeds Collateral Account held by the
then-existing term lenders, additional borrowing in an aggregate amount of $55
under the then-existing term loan, and borrowing of approximately $36 from the
then-existing revolving credit facility. 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 in fiscal 1997 and accounted for as an
extraordinary loss.
The Company made cash interest payments of $44, $30 and $24 for the years
ended June 30, 1995, 1996 and 1997, respectively.
As required by the Company's Debt agreements, the Company has entered into
interest-rate swap agreements which effectively converts $235 notional principal
amount of floating rate debt to a fixed rate basis for a three-year period
beginning May 22, 1997, thus reducing the impact of interest-rate changes on
future income. The Company paid a fixed rate of 6.375% and received a weighted
average rate of 5.875%. The incremental effect on interest expense for 1997 was
insignificant. The agreements also include a provision establishing the rate the
Company will pay as 7.50% if the three-month LIBOR rate sets at or above 7.50%
during the term of the agreements. The Company will continue paying 7.50% until
the three-month LIBOR again sets below 7.50% at which time the fixed rate of
6.375% will again become effective. The Company is exposed to credit loss in the
event of nonperformance by the other parties to the interest rate swap
agreements. However, the Company does not anticipate nonperformance by the
counterparties.
NOTE E -- STOCKHOLDERS' EQUITY AND REDEEMABLE STOCK
On February 21, 1997, Del Monte Foods Company entered into a
recapitalization agreement and plan of merger, which was amended and restated as
of April 14, 1997, with affiliates of Texas Pacific Group. Under this agreement,
a corporation affiliated with TPG ("Merger Sub") was to be merged with and into
DMFC, 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-recapitalization stockholders who remained
investors pursuant to the Recapitalization, were cancelled, and were converted
into the right to receive new DMFC common stock. All other shares of DMFC stock
were cancelled and were converted into the right to receive
F-14
<PAGE> 137
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
cash consideration, as set forth in the Merger Agreement. In the Merger, the
common and preferred stock of Merger Sub were 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 (the "Common Stock"), $.01 par value, and 1,000,000 shares of
new preferred stock (the "Preferred Stock"), $.01 par value. The Company 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. TPG and certain of
its affiliates hold 17,500 outstanding shares of Series A Preferred Stock, and
TCW Capital Investment Corporation holds 17,500 outstanding shares of Series B
Preferred Stock.
The Preferred Stock accumulates dividends at the annual rate of 14% of the
liquidation value, payable quarterly. These dividends are 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, or through a
corresponding increase in the liquidation value of such stock. 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 is 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 purchasers of Preferred
Stock for consideration of $35 received 35,000 shares of Preferred Stock and
warrants (exercisable after October 17, 1997) to purchase, at a nominal exercise
price, shares of DMFC Common Stock representing 2% of the outstanding shares of
DMFC Common Stock. A value of $3 was placed on the warrants, and such amount is
reflected as paid-in-capital within stockholders' equity. The remaining $32 is
reflected as redeemable preferred stock.
The two series of preferred stock have no voting rights except the right to
elect one director to the Board for each series, resulting in the authorized
number of directors to be increased, in cases where dividends are in arrears for
six quarters or shares have not been redeemed within ten days of a redemption
date.
Stockholders' equity at June 30, 1996 included the following classes of
common stock, $.01 par value per share:
<TABLE>
<CAPTION>
SHARES ISSUED AND
CLASS SHARES AUTHORIZED OUTSTANDING
----- ----------------- -----------------
<S> <C> <C>
A.......................................... 1,000,000 198,468
B.......................................... 150,000
E.......................................... 550,000 25,000
--------- -------
1,700,000 223,468
========= =======
</TABLE>
Redeemable common and redeemable preferred stock at June 30, 1996 consisted
of the following:
Redeemable non-voting common stock ($.01 par value per share):
<TABLE>
<CAPTION>
SHARES ISSUED AND
CLASS SHARES AUTHORIZED OUTSTANDING
----- ----------------- -----------------
<S> <C> <C>
C.......................................... 550,000 6,903
D.......................................... 550,000 102,483
F.......................................... 550,000 50,000
--------- -------
1,650,000 159,386
========= =======
</TABLE>
F-15
<PAGE> 138
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
Redeemable preferred stock ($.01 par value per share):
<TABLE>
<CAPTION>
SHARES ISSUED AND
SERIES SHARES AUTHORIZED OUTSTANDING
------ ----------------- -----------------
<S> <C> <C>
A Cumulative (issuable in subseries A1 and
A2)........................................ 16,523,000 8,336,795
B Cumulative................................. 3,616,000 1,602,845
C Cumulative................................. 2,900,000 1,522,353
D Cumulative................................. 1,454,000 1,356,955
E Cumulative................................. 5,000,000 3,328,002
F Cumulative................................. 3,000,000 1,153,091
---------- ----------
32,493,000 17,300,041
========== ==========
</TABLE>
The Company declared dividends for the following series of redeemable
preferred stock:
<TABLE>
<CAPTION>
DIVIDEND RATE PER SHARE
YEAR ENDED JUNE 30,
-----------------------
SERIES 1995 1996 1997
------ ----- ----- -----
<S> <C> <C> <C>
A1................................................ $3.80 $3.81 $1.92
B................................................. $3.87 $3.87 $1.95
D................................................. $3.93 $3.94 $1.98
E................................................. $3.93 $3.94 $1.98
</TABLE>
These dividends were 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 were:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Additional shares...................... 1,564,117 1,824,999 1,027,406
Total par value........................ $ 0.016 $ 0.018 $ 0.010
</TABLE>
In the Recapitalization, all of the redeemable preferred stock issued prior
to April 18, 1997 was either cancelled and converted into the right to receive
new DMFC common stock or cancelled and converted into the right to receive cash
consideration as set forth in the Merger Agreement.
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 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. 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. Del Monte's defined benefit retirement plans have been determined to be
underfunded under federal ERISA guidelines. In connection with the
Recapitalization, the Company entered into an agreement with the U.S. Pension
Benefit Guaranty Corporation dated April 7, 1997 whereby the Company will
contribute a total of $55 to its defined benefit pension plans through calendar
2001, with $15 contributed within 30 days after the consummation of the
Recapitaliza-
F-16
<PAGE> 139
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
tion. The contributions to be made in 1999, 2000 and 2001 will be secured by a
$20 letter of credit to be obtained by the Company by August 31, 1998.
The following table sets forth the pension plans' funding status and
amounts recognized on the Company's balance sheet:
<TABLE>
<CAPTION>
JUNE 30,
--------------
1996 1997
----- -----
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation................................... $(265) $(269)
===== =====
Accumulated benefit obligation.............................. $(270) $(274)
===== =====
Projected benefit obligation for services rendered to
date...................................................... $(277) $(279)
Plan assets at fair value................................... 245 276
----- -----
Projected benefit obligation in excess of plan assets....... (32) (3)
Unrecognized net actuarial gain............................. (27) (34)
Unrecognized prior service income........................... (2) (1)
----- -----
Accrued pension cost recognized in the consolidated balance
sheet..................................................... $ (61) $ (38)
===== =====
</TABLE>
The components of net periodic pension cost for the years ended June 30,
1995, 1996 and 1997 for all defined benefit plans are as follows:
<TABLE>
<CAPTION>
JUNE 30,
------------------------
1995 1996 1997
---- -------- ----
<S> <C> <C> <C>
Service cost for benefits earned during period.............. $ 4 $ 4 $ 3
Interest cost on projected benefit obligation............... 22 21 21
Actual return on plan assets................................ (31) (32) (35)
Net amortization and deferral............................... 11 11 13
---- ---- ----
Net periodic pension cost................................... $ 6 $ 4 $ 2
==== ==== ====
</TABLE>
Significant rate assumptions used in determining net periodic pension cost
and related pension obligations, are as follows:
<TABLE>
<CAPTION>
AS OF JUNE 30,
--------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Discount rate used in determining projected benefit
obligation................................................ 7.75% 8.0% 7.75%
Rate of increase in compensation levels..................... 5.0 5.0 5.0
Long-term rate of return on assets.......................... 9.0 9.0 9.0
</TABLE>
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, 1995,
1996 and 1997 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 $3, $2, and $1 for the years ended June 30, 1995, 1996, and 1997,
respectively.
The Company provided retirement benefits under various arrangements to
substantially all employees in foreign locations who were not covered under the
above plans. Generally, benefits under these arrangements were based on years of
service and levels of salary. The majority of the Company's foreign plans were
commonly referred to as termination indemnities. The plans provided employees
with retirement benefits in
F-17
<PAGE> 140
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
accordance with programs mandated by the governments of the countries in which
such employees worked. The expense and related liabilities associated with these
arrangements were recorded by the Company based on established formulas, with
funding generally occurring when employees ceased active service.
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 1995, 1996
and 1997 included the following components:
<TABLE>
<CAPTION>
JUNE 30,
--------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Service cost................................................ $ 2 $ 2 $ 1
Interest cost............................................... 9 9 9
Amortization of prior service cost.......................... (1)
Amortization of actuarial losses (gains).................... (3) (3)
Curtailment gain............................................ (4)
--- --- ---
Net periodic postretirement benefit cost.................... $11 $ 4 $ 6
=== === ===
</TABLE>
The Company amortizes unrecognized gains and losses at the end of the
fiscal year over the expected remaining service of active employees. The
curtailment gain results 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:
<TABLE>
<CAPTION>
JUNE 30,
------------
1996 1997
---- ----
<S> <C> <C>
Accumulated postretirement benefit obligation:
Current retirees.......................................... $ 85 $ 80
Fully eligible active plan participants................... 16 11
Other active plan participants............................ 18 13
---- ----
119 104
Unrecognized prior service cost........................... 10
Unrecognized gain......................................... 30 38
---- ----
Accrued postretirement benefit cost....................... $149 $152
==== ====
</TABLE>
For fiscal years 1996 and 1997, the weighted average annual assumed rate of
increase in the health care cost trend is 13.33% and 12.42%, 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, 1997 by $10 and
the aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by $1.
The discount rate used in determining the accumulated postretirement
benefit obligation as of June 30, 1997 was 7.75%. The weighted-average discount
rate used in determining the accumulated postretirement benefit obligation as of
June 30, 1996 was 8.32%.
F-18
<PAGE> 141
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE G -- PROVISION FOR INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Income (loss) before minority interest and taxes:
Domestic.................................................. $2 $ 90 $(56)
Foreign................................................... 6 12 1
-- ---- ----
$8 $102 $(55)
== ==== ====
Income tax provision (benefit)
Current:
Federal................................................ $-- $ 5 $ --
Foreign and state...................................... 1 6 --
-- ---- ----
Total Current............................................. 1 11 --
-- ---- ----
Deferred:
Federal................................................ -- -- --
Foreign and state...................................... 1 -- --
-- ---- ----
Total Deferred............................................ 1 -- --
-- ---- ----
$2 $ 11 $ --
== ==== ====
</TABLE>
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 1997 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
-------------
1996 1997
---- -----
<S> <C> <C>
Deferred tax assets:
Post employment benefits.................................. $ 53 $ 53
Pension expense........................................... 24 16
Deferred gain............................................. 6 5
Workers' compensation..................................... 7 8
Leases and patents........................................ 5 4
Other..................................................... 20 24
Net operating loss and tax credit carry forward........... 16 33
---- -----
Gross deferred tax assets.............................. 131 143
Valuation allowance.................................... (98) (113)
---- -----
Net deferred tax assets................................ 33 30
Deferred tax liabilities:
Depreciation.............................................. 30 30
Other..................................................... 3 --
---- -----
Gross deferred liabilities............................. 33 30
---- -----
Net deferred tax asset................................. $ -- $ --
==== =====
</TABLE>
F-19
<PAGE> 142
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
The net change in the valuation allowance for the years ended June 30, 1996
and 1997 was a decrease of $27 and an increase of $15, respectively.
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:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Income taxes (benefit) computed at the statutory U.S.
federal income tax rates.................................. $2 $36 $(19)
Taxes on foreign income at rates different than U.S. federal
income tax rates.......................................... (1)
State taxes, net of federal benefit......................... 3
Net operating losses for which no benefit has been
recognized................................................ 19
Realization of prior years' net operating losses and tax
credits................................................... (27)
-- --- ----
Provision for income taxes.................................. $2 $11 $ --
== === ====
</TABLE>
As of June 30, 1997, the Company had operating loss carryforwards for tax
purposes available from domestic operations totaling $84 which will expire
between 2008 and 2012.
Extraordinary losses from refinancing of debt and early debt retirement and
the cumulative effect of change in accounting principle did not have any tax
effect due to the Company's current tax position.
The Company made income tax payments of $3, $5 and $4 for the years ended
June 30, 1995, 1996 and 1997, respectively.
NOTE H -- COMMITMENTS AND CONTINGENCIES
The Company leases certain property and equipment, agricultural lands, and
office and plant facilities. At June 30, 1997, the aggregate minimum rental
payments required under operating leases that have initial or remaining terms in
excess of one year are as follows:
<TABLE>
<S> <C>
1998........................................................ $14
1999........................................................ 13
2000........................................................ 12
2001........................................................ 9
2002........................................................ 6
Thereafter.................................................. 41
---
$95
===
</TABLE>
Minimum payments have not been reduced by minimum sublease rentals of $7
due through 2016 under noncancelable subleases.
Rent expense was $32, $28, and $32 for fiscal years ended June 30, 1995,
1996, and 1997, 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 two to ten years, to purchase certain quantities of raw
products. Total purchases under these agreements were $68, $54, and $114 for the
years ended June 30, 1995, 1996, and 1997, respectively. The Company also has
commitments to purchase certain finished goods.
F-20
<PAGE> 143
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
At June 30, 1997, aggregate future payments under such purchase commitments
(priced at the June 30, 1997 estimated cost) are estimated as follows:
<TABLE>
<S> <C>
1998........................................................ $ 68
1999........................................................ 56
2000........................................................ 44
2001........................................................ 33
2002........................................................ 26
Thereafter.................................................. 60
----
$287
====
</TABLE>
In addition, the Company expects to purchase $46 in fiscal 1998 under the
supply agreement for pineapple products entered into in conjunction with the
sale of the Del Monte Philippines operations (see Note B).
Effective August 13, 1993, DMC sold its dried fruit and snack operations to
Yorkshire Dried Fruits and Nuts, Inc., ("YDFNI"). 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 purchased and
resold certain of the former DMC dried fruit and snack products. This resale
agreement was terminated by the Company as of June 30, 1997.
Effective December 21, 1993, DMC sold substantially all of the assets and
certain related liabilities of its can manufacturing operations in the United
States to Silgan Containers Corporation ("Silgan"). 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.
Purchases under the agreement in fiscal 1997 amounted to $134. 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.
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 were $186.
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, 1995, 1996, and
1997 were $16, $16, and $18, respectively. The agreement expires in November
2002 with optional successive one year extensions.
F-21
<PAGE> 144
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
At June 30, 1997, base charge payments under the agreement are as follows:
<TABLE>
<S> <C>
1998........................................................ $14
1999........................................................ 14
2000........................................................ 13
2001........................................................ 13
2002........................................................ 13
Thereafter.................................................. 6
---
$73
===
</TABLE>
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 work force. Of these represented employees, 7% of employees
are under agreements that will expire in 1998.
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.
On March 25, 1997, the entities that purchased the Company's Mexican
subsidiary in October 1996 commenced an action in Texas state court 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 as a result of these alleged breaches. In connection
with this action, $8 of the cash proceeds from the Recapitalization which were
payable to shareholders and certain members of senior management of DMFC have
been held in escrow and will be 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 pursuant to provisions
of the purchase agreement. The Company does not believe that these claims, in
the aggregate, will have a material adverse effect on the Company's financial
position or results of operations.
NOTE I -- FOREIGN OPERATIONS AND GEOGRAPHIC DATA
The Company's earnings have historically been derived in part from foreign
operations. As of November 1996, all of these operations had been sold.
Transfers between geographic areas have been accounted for as intercompany
sales, and transfer prices have been based generally on negotiated contracts.
F-22
<PAGE> 145
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
The following table shows certain financial information relating to the
Company's operations in various geographic areas:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Net Sales:
United States.......................................... $1,331 $1,147 $1,203
Philippines............................................ 180 142
Latin America.......................................... 65 55 17
Transfer between geographic areas...................... (49) (39) (3)
------ ------ ------
Total net sales................................ $1,527 $1,305 $1,217
====== ====== ======
Operating income (loss):
United States.......................................... $ 64 $ 65 $ 73
Philippines............................................ 11 12
Latin America.......................................... 5 5
------ ------ ------
Total operating income......................... $ 80 $ 82 $ 73
====== ====== ======
Assets:
United States.......................................... $ 754 $ 701 $ 667
Philippines............................................ 164
Latin America.......................................... 42 35
------ ------ ------
$ 960 $ 736 $ 667
====== ====== ======
Liabilities of the Company's operations located in
foreign countries...................................... $ 128 $ 7 $ --
====== ====== ======
</TABLE>
NOTE J -- DEL MONTE CORPORATION
DMC is directly- and wholly-owned by DMFC. In the fiscal years ended June
30, 1996 and 1997, 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 K). As of June 30, 1996 and 1997, 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.
NOTE K -- TERMINATION OF AGREEMENT AND PLAN OF MERGER
On June 27, 1994 the Company entered into an Agreement and Plan of Merger
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 Agreement and Plan
of Merger provided that the Company was entitled to terminate the Agreement and
Plan of Merger 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 Agreement and Plan of Merger in accordance with its
terms.
F-23
<PAGE> 146
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
Pursuant to the Agreement and Plan of Merger, 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 Agreement and Plan
of Merger, the Company was entitled 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.
NOTE L -- RELATED PARTY 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 an annual fee from the Company 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 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 fees 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 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 to be
received by the Company.
F-24
<PAGE> 147
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Del Monte Foods Company
We have audited the accompanying consolidated balance sheet of Del Monte
Foods Company and subsidiaries as of June 30, 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended June 30, 1996 and 1995. 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 the consolidated
results of their operations and their cash flows for the years ended June 30,
1996 and 1995 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-25
<PAGE> 148
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 9 $ 12
Trade accounts receivable, net of allowance............... 90 87
Other receivables......................................... 4 3
Inventories............................................... 479 600
Prepaid expenses and other current assets................. 4 9
----- ------
Total current assets.............................. 586 711
Property, plant and equipment, net.......................... 231 291
Intangible assets, net...................................... 26
Other assets................................................ 31 25
----- ------
Total assets...................................... $ 848 $1,053
===== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 277 $ 317
Short-term borrowings..................................... 120 153
Current portion of long-term debt......................... 16 17
----- ------
Total current liabilities......................... 413 487
Long-term debt.............................................. 252 686
Other noncurrent liabilities................................ 241 216
Redeemable common stock ($.01 par value per share, 1,650,000 2
shares authorized; issued and outstanding: 159,386 at
December 31, 1996)........................................
Redeemable preferred stock ($.01 par value per share, 213
32,493,000 shares authorized; issued and outstanding:
18,327,449 at December 31, 1996, $625 aggregate
liquidation preference)...................................
Redeemable preferred stock ($.01 par value per share, 32
1,000,000 shares authorized; issued and outstanding:
37,254 at December 31, 1997, aggregate liquidation
preference: $39)..........................................
Stockholders' equity (deficit):
Common stock ($.01 par value per share, 1,700,000 shares
authorized; issued and outstanding: 223,468 at December
31, 1996)..............................................
Common stock ($.01 par value per share, 1,000,000 shares
authorized; issued and outstanding: 181,560 at December
31, 1997)..............................................
Paid-in capital........................................... 3 170
Retained earnings (deficit)............................... (276) (538)
----- ------
Total stockholders' equity (deficit).............. (273) (368)
----- ------
Total liabilities and stockholders' equity........ $ 848 $1,053
===== ======
</TABLE>
See Notes to Consolidated Financial Statements
F-26
<PAGE> 149
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
DECEMBER 31,
----------------
1996 1997
----- -----
<S> <C> <C>
Net sales................................................... $628 $620
Cost of products sold....................................... 430 413
---- ----
Gross profit........................................... 198 207
Selling, advertising, administrative and general expenses... 156 162
---- ----
Operating income....................................... 42 45
Interest expense............................................ 26 36
Loss on sale of divested assets............................. 5 --
Other expense............................................... -- 6
---- ----
Income before income taxes and extraordinary item........... 11 3
Provision for income taxes.................................. 2 --
---- ----
Income before extraordinary item....................... 9 3
Extraordinary loss from the early retirement of debt........ 4 --
---- ----
Net income............................................. $ 5 $ 3
==== ====
</TABLE>
See Notes to Consolidated Financial Statements
F-27
<PAGE> 150
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
DECEMBER 31,
----------------
1996 1997
----- -----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income................................................ $ 5 $ 3
Adjustments to reconcile net income to net cash flows
provided by (used in) operating activities:
Depreciation and amortization.......................... 15 15
Extraordinary loss from the early retirement of debt... 4
Gain on sale of assets................................. (1)
Loss on sale of divested assets........................ 5
Changes in operating assets and liabilities:
Accounts receivable.................................... (21)
Inventories............................................ (188) (156)
Prepaid expenses, other current assets and other
assets................................................ 7 5
Accounts payable and accrued expenses.................. 82 80
Other non-current liabilities.......................... 5
----- -----
Net cash used in operating activities............. (65) (75)
INVESTING ACTIVITIES:
Capital expenditures...................................... (5) (6)
Proceeds from the sale of operations and assets........... 49 5
Acquisition of businesses................................. (197)
----- -----
Net cash provided by (used in) investing
activities....................................... 44 (198)
FINANCING ACTIVITIES:
Short-term borrowings..................................... 710 228
Payments on short-term borrowings......................... (633) (157)
Proceeds from long-term borrowings........................ 55 176
Principal payments on long-term borrowings................ (131) (1)
Deferred debt issuance costs.............................. (7) (7)
Issuance of stock......................................... 41
Specific Proceeds Collateral Account...................... 30
----- -----
Net cash provided by financing activities......... 24 280
----- -----
Net change in cash and cash equivalents........... 3 7
Cash and cash equivalents at beginning of period............ 6 5
----- -----
Cash and cash equivalents at end of period........ $ 9 $ 12
===== =====
</TABLE>
See Notes to Consolidated Financial Statements.
F-28
<PAGE> 151
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE A -- BASIS OF FINANCIAL STATEMENTS
Basis of Presentation: The accompanying consolidated financial statements
at December 31, 1997 and for the six-month periods ended December 31, 1996 and
1997, 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, 1997, and notes thereto,
included in the Annual Report on Form 10-K.
NOTE B -- INVENTORIES
The major classes of inventory are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Finished product................................... $441 $547
Raw materials and supplies......................... 5 9
Other, principally packaging material.............. 33 44
---- ----
$479 $600
==== ====
</TABLE>
During the six months ended December 31, 1996 and 1997, respectively,
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 December 31, 1996 and December 31, 1997 or on results of
operations for the six-months ended December 31, 1996 and 1997, respectively.
NOTE C -- STOCKHOLDERS' EQUITY
Preferred Stock
On October 13, 1997, the Company authorized a new series of cumulative
redeemable preferred stock, Series C, and issuance of shares of such new series
of preferred stock in exchange for all of the issued and outstanding shares of
cumulative redeemable preferred stock, Series A and B, currently held by
preferred stock shareholders. The Series A and B preferred stock were retired
upon completion of this exchange.
The terms of the Series C preferred stock are substantially identical to
those of the Series A and B stock with the exception of a call premium and right
of holders to require redemption upon a change in control. The Series C
preferred stock will be redeemable at the option of the Company at a redemption
price ranging from 103% of the liquidation preference, if redeemed prior to
October 1998, to 100% of the liquidation preference, if redeemed after October
2000. The Series A and B preferred stock was redeemable by the Company at par.
In the event of a change of control of the Company, the holders of the Series C
preferred stock will have the right to require the Company to repurchase shares
of such stock at 101% of the liquidation preference. Under the terms of the
Series A and B preferred stock, shares of such stock were mandatorily redeemable
(i.e., the holder did not have the option of continuing to hold such shares) at
101% of the liquidation preference.
On January 16, 1998, TPG Partners L.P. ("TPG") and certain of its
affiliates sold approximately 93% of their Preferred Stock holdings to
unaffiliated investors.
Employee Stock Purchase Plan
Effective August 4, 1997, the Del Monte Foods Company Employee Stock
Purchase Plan was established under which certain key employees are eligible to
participate. A total of 5,000 shares of Common
F-29
<PAGE> 152
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
Stock of the Company are reserved for issuance under the Employee Stock Purchase
Plan. During December 1997, 1,560 shares of the Company's common stock were
purchased by and issued to eligible employees.
Stock Option Plan
On August 4, 1997, the Company adopted the 1997 Stock Incentive Plan which
allows the granting of options to certain key employees of the Company. Options
may be granted to participants with respect to 9,508 shares of the Company's
Common Stock. Options may be granted as incentive stock options or as non-
qualified options for purposes of the Internal Revenue Code. Options terminate
ten years from the date of grant. Two different vesting schedules have been
approved under the 1997 Stock Incentive Plan. The first provides for annual
vesting on a proportionate basis over five years and the second provides for
monthly vesting on a proportionate basis over four years. Pursuant to this plan,
options for 8,274 shares were granted to eligible employees in December 1997.
The per share exercise price of the options granted in December 1997 was $1,000,
which was determined to be the fair market value of said shares.
NOTE D -- CONTADINA ACQUISITION
On November 12, 1997, the Company entered into an asset purchase agreement
to acquire the Contadina canned tomato businesses, including the Contadina
trademark worldwide, capital assets and inventory from Nestle USA, Inc. and
Contadina Services, Inc. (the "Contadina Acquisition") for a total purchase
price of $197, comprised of a base price of $177 and an estimated net working
capital adjustment of $20. The purchase price is subject to adjustment based on
the final calculation of net working capital as of the closing date. The
transaction closed on December 19, 1997.
The Company funded the acquisition through the issuance of senior discount
notes (the "Initial Notes") with an aggregate principal amount at maturity of
$230, which resulted in gross proceeds of $126. These Initial Notes accrue
interest at 12.50% payable on each June 15 and December 15, which will be
accreted through December 15, 2002, after which time interest will be paid in
cash until maturity. The Initial Notes mature on December 15, 2007. An
additional source of funding was provided through an equity contribution of $40
from the Company's majority shareholder, Texas Pacific Group and certain other
investors. Also, the Company amended its bank financing agreements to permit
additional funding which was drawn in an amount of $50. Amortization of the
additional Term B loan amount is incremental to the scheduled amortization of
the existing Term B loan. Such additional amortization will begin on a quarterly
basis in the second quarter of fiscal 1999 in the amount of $0.5 on an annual
basis with such amortization increasing in the fourth quarter of fiscal 2004,
through the third quarter of fiscal 2005, to approximately $12 per quarter.
These debt agreements contain restrictive covenants, the most restrictive of
which currently is minimum EBITDA (as defined).
The Contadina Acquisition has been reflected in the balance sheet at
December 31, 1997. The transaction has been accounted for using the purchase
method of accounting. The total purchase price has been allocated to the
tangible and intangible assets and liabilities acquired based on preliminary
estimates of their respective fair values. Accordingly, adjustments will be made
based upon final determination of the purchase price adjustments and completion
of the valuations that are in progress. The results of operations of the
acquired business for the period from the closing of the acquisition to period
end and any other expenses of the transaction are reflected in the statements of
operations for the three and six month periods ended December 31, 1997, and did
not significantly effect the results of operations of the Company for those
periods. The Company filed a Comment Report on Form 8-K on January 5, 1998
reporting this acquisition. An amendment to the Form 8-K will be filed not later
than March 4, 1998 which will contain the financial information required by Rule
3-05 of Regulation S-X.
F-30
<PAGE> 153
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
NOTE E -- SUBSEQUENT EVENT
In January 1998, management announced a four-year plan to consolidate its
California manufacturing operations in order to enhance the efficiency of fruit
and tomato processing operations and allow the Company to better meet the
competitive challenges of the market. In 1999, tomato production currently
taking place at the Modesto plant is expected to be transferred to the Company's
newly acquired facility in Hanford. The Modesto location would then be converted
to a fruit processing plant allowing production currently processed at the San
Jose plant to be transferred to Modesto. At the end of the 2000 production
season, the Company is expected to close its Stockton fruit plant and transfer
production from that plant to Modesto. Considerations of plant age and location
were primary factors in the decision to close the eighty year-old San Jose plant
and transfer production closer to the growing areas. None of the Company's other
plants will be directly affected by these decisions.
The Company is currently analyzing the impact of such plans and will record
a restructuring charge as soon as this analysis has been completed, if
appropriate.
F-31
<PAGE> 154
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Del Monte Foods Company
We have audited the accompanying combined balance sheet of Contadina (a
division of Nestle USA, Inc.) as of December 31, 1996, and the related
statements of operations, divisional equity, and cash flows for the year then
ended. These financial statements are the responsibility of Del Monte Foods
Company management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Contadina (a division of
Nestle USA, Inc.) as of December 31, 1996, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
February 16, 1998
Los Angeles, California
F-32
<PAGE> 155
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
COMBINED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Trade accounts receivable................................. $ 10 $ 10
Other receivables......................................... 3 1
Inventories............................................... 92 137
---- ----
TOTAL CURRENT ASSETS.............................. 105 148
Property, plant and equipment............................... 94 92
Goodwill.................................................... 32 31
---- ----
TOTAL ASSETS...................................... $231 $271
==== ====
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 10 $ 13
Payable to Nestle USA, Inc................................ 17 81
---- ----
TOTAL CURRENT LIABILITIES......................... 27 94
Divisional equity........................................... 204 177
---- ----
TOTAL LIABILITIES AND DIVISIONAL EQUITY........... $231 $271
==== ====
</TABLE>
See Notes to Combined Financial Statements
F-33
<PAGE> 156
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
COMBINED STATEMENTS OF OPERATIONS AND
DIVISIONAL EQUITY
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, --------------
1996 1996 1997
------------ ----- -----
(UNAUDITED)
<S> <C> <C> <C>
Net sales................................................... $160 $112 $108
Cost of products sold....................................... 151 108 112
---- ---- ----
Gross profit (loss).................................... 9 4 (4)
Selling, advertising, administrative and general expense.... 20 19 19
---- ---- ----
OPERATING LOSS.................................... (11) (15) (23)
Interest expense............................................ 6 4 4
---- ---- ----
NET LOSS BEFORE INCOME TAXES...................... (17) (19) (27)
DIVISIONAL EQUITY, BEGINNING OF PERIOD...................... 221 221 204
---- ---- ----
DIVISIONAL EQUITY, END OF PERIOD............................ $204 $202 $177
==== ==== ====
</TABLE>
See Notes to Combined Financial Statements
F-34
<PAGE> 157
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, --------------
1996 1996 1997
------------ ----- -----
(UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss.................................................. $(17) $(19) $(27)
Adjustments to reconcile net loss to net cash flows used
in operating activities:
Depreciation and amortization.......................... 12 8 8
Gain on sale of assets................................. (1)
Changes in operating assets and liabilities:
Accounts receivable.................................... 9 7 2
Inventories............................................ (16) (40) (45)
Prepaid expense and other current assets............... (1)
Accounts payable and accrued expenses.................. 4 10 3
---- ---- ----
NET CASH USED IN OPERATING ACTIVITIES............. (8) (36) (59)
INVESTING ACTIVITIES:
Capital expenditures...................................... (10) (7) (6)
Proceeds from sale of assets.............................. 1 1
---- ---- ----
NET CASH USED IN INVESTING ACTIVITIES............. (9) (6) (6)
FINANCING ACTIVITIES: Net borrowings from Nestle USA, Inc... 17 42 65
---- ---- ----
NET CHANGE IN CASH AND CASH EQUIVALENTS........... -- -- --
Cash and cash equivalents at beginning of period............ -- -- --
---- ---- ----
CASH AND CASH EQUIVALENTS
AT END OF PERIOD................................ $ -- $ -- $ --
==== ==== ====
</TABLE>
See Notes to Combined Financial Statements
F-35
<PAGE> 158
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(DOLLARS IN MILLIONS)
NOTE A -- ORGANIZATION, OPERATIONS AND BASIS OF PRESENTATION
General: The accompanying combined financial statements includes the
accounts of Contadina Services, Inc., a wholly-owned subsidiary of Nestle USA,
Inc. ("Nestle") and other divisional accounts related to the Contadina canned
business within the culinary division of Nestle ("Contadina") on a carve-out
basis, excluding the effects of product lines not acquired (see Note E).
Contadina operates in one business segment which manufactures and markets
branded, private label, industrial and foodservice processed tomato products
from manufacturing facilities in Hanford, California and Woodland, California.
Contadina's products are distributed throughout the United States.
Contadina does not maintain stand-alone such as corporate treasury, legal,
tax and other similar corporate support functions. Therefore, corporate general
and administrative expense and interest expense, as well as certain other
expenses (see Note D), are allocated to Contadina from Nestle generally on a
proportional basis. Allocations and estimates, as described in Note D, are based
on assumptions that management believes are reasonable. It is impracticable to
determine whether such costs are comparable to those which would have been
incurred on a stand-alone basis. Long-term debt and income taxes are not
allocated by Nestle.
All purchases of inventory, payroll, capital and other expenditures are
funded through Contadina's intercompany account with Nestle. Remittances from
sales to customers are collected by Nestle and are accounted for through the
intercompany account. Accordingly, Contadina has no cash on a stand-alone basis.
Trade receivables and payables do represent the amounts due from/to
customers/suppliers at the dates presented.
Interim Financial Information: The accompanying financial statements at
September 30, 1997 and for the nine-month periods ended September 30, 1996 and
1997, 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 and the appropriate
allocations consistent with the annual financial statements) which, in the
opinion of management, are necessary for a fair presentation of financial
position, results of operations and cash flows.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventories: Inventories are stated at the lower of cost (first-in,
first-out) or market.
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 ranges of estimated useful lives for computing depreciation are:
buildings -- 30 years; leasehold improvements -- the shorter of useful life or
life of lease; and machinery and equipment -- 5 to 17 years. Depreciation of
plant and equipment and building and leasehold improvements amortization was $11
for the year ended December 31, 1996 and $7 (unaudited) for each of the
nine-month periods ended September 30, 1996 and 1997.
Goodwill: Goodwill represents the excess purchase price over fair value of
acquired assets and liabilities. Goodwill is amortized on a straight-line basis
over 40 years.
Fair Value of Financial Instruments: The carrying amount of the Company's
financial instruments, which primarily include trade accounts receivable,
accounts payable, and accrued expenses, approximates fair value due to the
relatively short maturity of such instruments.
Cost of Products Sold: Cost of products sold includes raw material, labor,
and overhead.
F-36
<PAGE> 159
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
Royalties: Under a royalty agreement with Nestle S.A. (parent of Nestle
and legal entity which owns the Contadina trademarks), royalties are charged for
the license of the Contadina trademarks at a rate of 3% of net sales. Royalty
expense under this agreement was $5 for the year ended December 31, 1996 and $3
(unaudited) for each of the nine-month periods ended September 30, 1996 and
1997.
Divisional Equity: Divisional equity includes the combined historical
legal capital of Contadina Services, Inc. and profit and losses of Contadina
from 1995 on a carve-out basis. Pre-1995 results of operations for the acquired
product line are not available. Transactions with Nestle for all other
intercompany transactions are included in and settled through the intercompany
account payable to Nestle.
Use of Estimates: Certain amounts reported in the financial statements are
based on management estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities as of December 31, 1996 and September 30, 1997, and the reported
amounts of income and expenses for the year ended December 31, 1996 and the
nine-month periods ended September 30, 1996 and 1997. The ultimate resolution of
these items may differ from those estimates.
Change in Accounting Principle: Effective January 1, 1996, Contadina
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. Contadina evaluates impairment based upon future cash flows. If
such cash flows indicate that long-lived assets may not be recoverable, the loss
is measured by discounting cash flows to present value. 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.
Contadina does not depreciate long-lived assets held for sale. There was no
material effect upon the adoption of this statement.
F-37
<PAGE> 160
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE C -- SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
Trade Accounts Receivable:
Trade..................................................... $ 10 $ 10
Allowance for doubtful accounts........................... -- --
---- ----
TOTAL TRADE ACCOUNTS RECEIVABLE................... $ 10 $ 10
==== ====
Inventories:
Finished product.......................................... $ 60 $ 96
Raw materials and supplies................................ 35 44
Other, principally packaging material..................... 2 2
Reserves.................................................. (5) (5)
---- ----
TOTAL INVENTORIES................................. $ 92 $137
==== ====
Property, Plant and Equipment:
Land and land improvements................................ $ 8 $ 8
Buildings................................................. 36 35
Machinery and equipment................................... 110 118
Construction in progress.................................. 10 10
---- ----
164 171
Accumulated amortization.................................. (70) (79)
---- ----
PROPERTY, PLANT AND EQUIPMENT, NET................ $ 94 $ 92
==== ====
Goodwill:
Goodwill.................................................. $ 44 $ 44
Accumulated amortization.................................. (12) (13)
---- ----
GOODWILL, NET..................................... $ 32 $ 31
==== ====
Accounts payable and accrued expenses:
Accounts payable.......................................... $ 6 $ 7
Payroll................................................... 1 2
Marketing................................................. 1 2
Other..................................................... 2 2
---- ----
ACCOUNTS PAYABLE AND ACCRUED EXPENSES............. $ 10 $ 13
==== ====
</TABLE>
F-38
<PAGE> 161
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE D -- CORPORATE ALLOCATIONS AND RELATED PARTY INFORMATION
Goodwill associated with the acquisition of Carnation Foods in 1985, the
then-parent of Contadina, was not recorded in the individual business units'
accounts. As such, goodwill relating to Contadina has been allocated based on a
percentage derived from the tax basis goodwill specifically identified to
Contadina in relation to total tax basis goodwill. This relative percentage was
then applied to aggregate goodwill to determine book basis goodwill attributable
to Contadina. This allocation basis was determined to be reasonable.
Since invoicing is centralized at Nestle for all business units, customer
discounts and unapplied cash related to trade receivables are allocated based on
Contadina relative sales dollars on a customer invoice as a percentage of the
total sales dollars on the customer invoice. Cash discounts are allocated to
Contadina based on Contadina receivables as a percent of total consolidated
Nestle receivables. A specific reserve for doubtful accounts is not maintained
on a business unit basis. Therefore, a reserve for doubtful accounts was
established for Contadina through an allocation of the corporate reserve based
on the percentage of Contadina's outstanding receivables to the total Nestle
outstanding accounts receivable balance.
Variable distribution costs are allocated based on the applied usage rate
for the respective products. Fixed distribution costs are allocated on an
historical average cost per case basis. Allocated distribution costs included in
cost of product sold for the year ended December 31, 1996 were $5 and for the
nine-month periods ended September 30, 1996 and 1997 were $5 (unaudited) for
each of the periods. Marketing and sales force expense is allocated based on
relative Contadina sales dollars to total Nestle sales dollars. The majority of
warehousing costs reported are actual costs related to Contadina's two
facilities; however, a component of warehousing cost also includes costs
allocated from Nestle based on historical average inventory stored at the
distribution center.
General and administrative expense are, for the most part, allocated by
function. Allocated selling, marketing, general and administrative expenses
amounted to $12 for the year ended December 31, 1996 and to $14 and $13
(unaudited) for the nine-month periods ended September 30, 1996 and 1997,
respectively. Benefit costs are allocated at a rate of 40% of gross wages which
is representative of total benefit costs (including pension, postretirement
benefits, bonus, 401(k) matching contribution, vacation) to total compensation.
Interest expense is charged to Contadina based on the end-of-month working
capital balance at an intercompany rate equal to 7% for all periods.
Contadina's sales of product to Nestle for the year ended December 31, 1996
were $6 and for the nine-month periods ended September 30, 1996 and 1997 were $3
and $3 (unaudited), respectively. Contadina sales price to Nestle is on a basis
that approximates cost.
NOTE E -- SALE OF CONTADINA
On December 19, 1997, Del Monte Foods Company acquired the Contadina canned
tomato businesses, including the Contadina trademark worldwide, capital assets
and inventory from Nestle and Contadina Services, Inc., for a total purchase
price of $197, comprised of a base price of $177 and an estimated net working
capital adjustment of $20. The purchase price is subject to adjustment based on
the final calculation of net working capital as of the closing date. In
accordance with the asset purchase agreement, dated November 12, 1997, by and
among Del Monte Foods Company, Del Monte Corporation ("DMC") and Nestle USA,
Inc., Nestle has provided its calculation of the net working capital which would
result in a payment to DMC of approximately $2. DMC has until April 18, 1998 to
review this calculation and determine if it has an objection to the calculation.
F-39
<PAGE> 162
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES TO WHICH
IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT ANY INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................... ii
Summary................................. 1
Risk Factors............................ 18
The Exchange Offer...................... 24
The Contadina Acquisition............... 32
Use of Proceeds......................... 34
Capitalization.......................... 34
Unaudited Pro Forma Financial Data...... 35
Selected Consolidated Financial Data.... 40
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 44
Business................................ 54
Corporate History....................... 69
Management.............................. 71
Certain Relationships and Related
Transactions.......................... 79
Capital Stock of DMFC................... 80
Description of Existing Indebtedness.... 81
Description of the Notes................ 83
Certain U.S. Federal Income Tax
Considerations........................ 112
Plan of Distribution.................... 116
Legal Matters........................... 117
Experts................................. 117
Incorporation of Certain Documents by
Reference............................. 117
Index to Financial Statements........... F-1
</TABLE>
======================================================
======================================================
$230,000,000
[LOGO]
DEL MONTE FOODS COMPANY
OFFER TO EXCHANGE
12 1/2% SENIOR DISCOUNT
NOTES DUE 2007
FOR
SERIES B 12 1/2% SENIOR DISCOUNT
NOTES DUE 2007
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
------------------------
PROSPECTUS
------------------------
, 1998
======================================================
<PAGE> 163
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
DMFC's Charter provides 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) Definitions. -- 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) Permitted indemnification of director. --
(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
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-1
<PAGE> 164
(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) No indemnification of directors liable for improper personal
benefit. -- 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) Required indemnification against expenses incurred in successful
defense. -- 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.
(3) A court of appropriate jurisdiction may be the same court in which
the proceeding involving the director's liability took place.
(e) Determination that indemnification is proper. --
(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 therefor and the committee cannot be established, by a majority
vote of the full board in which directors who are parties may
participate; or
II-2
<PAGE> 165
(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 of 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) Payment of expenses in advance of final disposition of action. --
(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.
(g) Validity of indemnification provision. -- 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) Reimbursement of director's expenses incurred while appearing as
witness. -- 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) Director's service to employee benefit plan. -- 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) Officer, employee or agent. -- 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);
II-3
<PAGE> 166
(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) Insurance or similar protection. --
(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.
(l) Report of indemnification to stockholders. -- 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.
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.
(a) 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.
(b) 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
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE> 167
(c) 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 S-4, 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.
(d) 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.
II-5
<PAGE> 168
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
March 3, 1998.
DEL MONTE FOODS COMPANY
By: /s/ RICHARD G. WOLFORD
------------------------------------
Richard G. Wolford
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints Richard G. Wolford, David L. Meyers and Wesley
J. Smith, and each of them, with full power to act without the other, his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities (unless revoked in writing) to sign any and all amendments (including
post-effective amendments thereto) to this Registration Statement to which this
power of attorney is attached, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting to such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as full to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on March 3, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/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 Financial
David L. Meyers Officer)
/s/ RICHARD L. FRENCH Vice President and Chief Accounting Officer
- ----------------------------------------------------- (Principal Accounting Officer)
Richard L. French
/s/ RICHARD W. BOYCE Chairman of the Board and Director
- -----------------------------------------------------
Richard W. Boyce
/s/ TIMOTHY G. BRUER Director
- -----------------------------------------------------
Timothy G. Bruer
Director
- -----------------------------------------------------
Al Carey
/s/ PATRICK FOLEY Director
- -----------------------------------------------------
Patrick Foley
</TABLE>
S-1
<PAGE> 169
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ BRIAN E. HAYCOX Director
- -----------------------------------------------------
Brian E. Haycox
/s/ JEFFREY A. SHAW Director
- -----------------------------------------------------
Jeffrey A. Shaw
/s/ WESLEY J. SMITH Chief Operating Officer and Director
- -----------------------------------------------------
Wesley J. Smith
/s/ DENISE M. O'LEARY Director
- -----------------------------------------------------
Denise M. O'Leary
/s/ WILLIAM S. PRICE, III Director
- -----------------------------------------------------
William S. Price, III
</TABLE>
S-2
<PAGE> 170
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 Asset Purchase Agreement, dated as of November 12, 1997,
among Nestle USA, Inc., Contadina Services, Inc., Del Monte
Corporation and Del Monte Foods Company (the "Asset Purchase
Agreement") (incorporated by reference to Exhibit 10.1 to
Report on Form 8-K filed January 5, 1998)
2.2 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")
(incorporated by reference to Exhibit 2.1 to Registration
Statement on Form S-4 No. 333-29079, filed June 14, 1997
(the "DMC Registration Statement"))
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 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 3.3)
3.2 Articles Supplementary of TPG Shield Acquisition
Corporation, filed April 18, 1997 (included as Exhibit A of
the Articles of Merger filed as Exhibit 3.3)
3.3 Articles of Merger between TPG Acquisition Corporation and
Del Monte Foods Company, filed April 18, 1997 (incorporated
by reference to Exhibit 3.6 to the DMC Registration
Statement)
3.4 By-laws of Del Monte Foods Company, as amended (incorporated
by reference to Exhibit 4.5 to Registration Statement on
Form S-8 filed November 24, 1997)
3.5 Articles Supplementary to the Charter of Del Monte Foods
Company, filed October 15, 1997 (incorporated by reference
to Exhibit 3 to the Quarterly Report for the quarter ended
September 30, 1997 on Form 10-Q filed November 14, 1997)
*4.1 Indenture, dated as of December 17, 1997, among Del Monte
Foods Company, as issuer, and Marine Midland Bank, as
trustee, relating to the Notes (the "Indenture")
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 Indenture.
*4.2 Form of Series B 12 1/2% Senior Discount Note due 2007 of
Del Monte Foods Company (the "Exchange Notes") (included as
Exhibit B of the Indenture filed as Exhibit 4.1)
*4.3 Registration Rights Agreement, dated as of December 17,
1997, by and among Del Monte Foods Company and the Initial
Purchasers listed therein, relating to the Notes (the
"Registration Rights Agreement")
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 Registration Rights Agreement.
*4.4 Amended and Restated Credit Agreement, dated as of December
17, 1997, among Del Monte Corporation, Bank of America
National Trust and Savings Association, as Administrative
Agent, and the other financial institutions parties thereto
(the "Amended Credit Agreement")
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 Amended Credit Agreement.
*4.5 Amended and Restated Parent Guaranty, dated December 17,
1997, executed by Del Monte Foods Company, with respect to
the obligations under the Amended Credit Agreement
</TABLE>
<PAGE> 171
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
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
Corporation and Bank of America National Trust and Savings
Association (incorporated by reference to Exhibit 4.7 to the
DMC Registration Statement)
4.8 Parent Pledge Agreement, dated April 18, 1997, between Del
Monte Foods Company and Bank of America National Trust and
Savings Association (incorporated by reference to Exhibit
4.8 to the DMC Registration Statement)
4.9 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 12 1/4 Senior Subordinated Notes Due 2007 (incorporated
by reference to Exhibit 4.2 to the DMC Registration
Statement)
4.10 Registration Rights Agreement, dated as of April 18, 1997,
by and among Del Monte Corporation and the Purchasers listed
therein, relating to the 12 1/4 Senior Subordinated Notes
Due 2007 (incorporated by reference to Exhibit 4.9 to the
DMC Registration Statement)
4.11 Stockholders' Agreement, dated as of April 18, 1997, among
Del Monte Foods Company and its Stockholders (incorporated
by reference to Exhibit 3.6 to the DMC Registration
Statement)
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
4.12 Form of Stockholders' Agreement among Del Monte Foods
Company and its employee stockholders (incorporated by
reference to Exhibit 4.1 to Registration Statement on Form
S-8 filed November 24, 1997)
*5.1 Opinion of Pillsbury Madison & Sutro LLP regarding legality
of the Exchange Notes
10.1 Transaction Advisory Agreement, dated as of April 18, 1997,
between Del Monte Corporation and TPG Partners, L.P
(incorporated by reference to Exhibit 10.1 to the DMC
Registration Statement)
10.2 Management Advisory Agreement, dated as of April 18, 1997,
between Del Monte Corporation and TPG Partners, L.P
(incorporated by reference to Exhibit 10.2 to the DMC
Registration Statement)
10.3 Retention Agreement between Del Monte Corporation and David
L. Meyers, dated November 1, 1991 (incorporated by reference
to Exhibit 10.3 to the DMC Registration Statement)
10.4 Retention Agreement between Del Monte Corporation and Glynn
M. Phillips, dated October 5, 1994 (incorporated by
reference to Exhibit 10.4 to the DMC Registration Statement)
10.5 Retention Agreement between Del Monte Corporation and Thomas
E. Gibbons, dated January 1, 1992 (incorporated by reference
to Exhibit 10.5 to the DMC Registration Statement)
10.6 Retention Agreement between Del Monte Corporation and Brian
E. Haycox, dated December 11, 1995 (incorporated by
reference to Exhibit 10.6 to the DMC Registration Statement)
10.8 Del Monte Foods Annual Incentive Award Plan and 1997 Plan
Year Amendments (incorporated by reference to Exhibit 10.8
to the DMC Registration Statement)
</TABLE>
<PAGE> 172
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.9 Additional Benefits Plan of Del Monte Corporation, as
amended and restated effective January 1, 1996 (incorporated
by reference to Exhibit 10.9 to the DMC Registration
Statement)
10.10 Supplemental Benefits Plan of Del Monte Corporation,
effective as of January 1, 1990, as amended as of January 1,
1992 and May 30, 1996 (incorporated by reference to Exhibit
10.10 to the DMC Registration Statement)
10.11 Del Monte Foods Company Employee Stock Purchase Plan
(incorporated by reference to Exhibit 4.1 to Registration
Statement on Form S-8 filed November 24, 1997)
10.12 Del Monte Foods Company 1997 Stock Incentive Plan
(incorporated by reference to Exhibit 4.2 to Registration
Statement on Form S-8 filed November 24, 1997)
10.13 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 (incorporated by reference to
Exhibit 10.11 to the DMC Registration Statement)
10.14 Supply Agreement between Del Monte Corporation and Silgan
Containers Corporation, dated as of September 3, 1993, as
amended as of December 21, 1993 (incorporated by reference
to Exhibit 10.12 to the DMC Registration Statement)
*12.1 Computation of ratio of earnings to fixed charges
*21.1 Subsidiaries of Del Monte Foods Company
*23.1 Consent of Ernst & Young LLP, Independent Auditors
*23.2 Consent of KPMG Peat Marwick LLP, Independent Auditors
*23.3 Consent of KPMG Peat Marwick LLP, Independent Auditors
*23.4 Consent of Pillsbury Madison & Sutro LLP (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
*99.1 Form of Exchange Agent Agreement
*99.2 Form of Letter of Transmittal
*99.3 Form of Notice of Guaranteed Delivery
*99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
*99.5 Form of Letter to Clients
*99.6 Schedule Identifying Documents Omitted pursuant to
Instruction to Item 601
</TABLE>
- ---------------
* Filed herewith
<PAGE> 1
EXHIBIT 4.1
DEL MONTE FOODS COMPANY,
as Issuer
and
MARINE MIDLAND BANK
as Trustee
____________________
INDENTURE
Dated as of December 17, 1997
____________________
$230,000,000
12 1/2% Senior Discount Notes due 2007
Series B 12 1/2% Senior Discount Notes due 2007
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
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; 11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.07; 4.08; 11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 11.02
(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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.04
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
</TABLE>
_________________
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture.
ii
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------
SECTION 1.02 Incorporation by Reference of TIA . . . . . . . . . . . . . . . . . 27
---------------------------------
SECTION 1.03 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . 28
---------------------
ARTICLE II
THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.01 Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------------
SECTION 2.02 Execution and Authentication;
------------------------------
Aggregate Principal Amount . . . . . . . . . . . . . . . . 29
--------------------------
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 . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.07 Replacement Notes. . . . . . . . . . . . . . . . . . . . . . . . . . 33
-----------------
SECTION 2.08 Outstanding Notes. . . . . . . . . . . . . . . . . . . . . . . . . 34
-----------------
SECTION 2.09 Treasury Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--------------
SECTION 2.10 Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------------
SECTION 2.11 Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
------------
SECTION 2.12 Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . . . 35
------------------
SECTION 2.13 CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
------------
SECTION 2.14 Deposit of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . 35
-----------------
SECTION 2.15 Restrictive Legends. . . . . . . . . . . . . . . . . . . . . . . . 36
-------------------
SECTION 2.16 Book-Entry Provisions for Global Note. . . . . . . . . . . . . . . . 37
-------------------------------------
SECTION 2.17 Special Transfer Provisions. . . . . . . . . . . . . . . . . . . . . 38
---------------------------
ARTICLE III
REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.01 Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 40
------------------
SECTION 3.02 Selection of Notes To Be Redeemed. . . . . . . . . . . . . . . . . . 41
---------------------------------
SECTION 3.03 Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . 41
--------------------
SECTION 3.04 Effect of Notice of Redemption. . . . . . . . . . . . . . . . . . . 42
------------------------------
</TABLE>
i
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 3.05 Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . 42
---------------------------
SECTION 3.06 Notes Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . 43
----------------------
ARTICLE IV
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.01 Payment of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . 43
----------------
SECTION 4.02 Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . 44
-------------------------------
SECTION 4.03 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . 44
-------------------
SECTION 4.04 Payment of Taxes and Other Claims. . . . . . . . . . . . . . . . . . 44
---------------------------------
SECTION 4.05 Maintenance of Properties and Insurance. . . . . . . . . . . . . . . 44
---------------------------------------
SECTION 4.06 Compliance Certificate; Notice of Default. . . . . . . . . . . . . . 45
-----------------------------------------
SECTION 4.07 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . 46
--------------------
SECTION 4.08 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
-----------
SECTION 4.09 Waiver of Stay, Extension or Usury Laws. . . . . . . . . . . . . . . 47
---------------------------------------
SECTION 4.10 Limitation on Restricted Payments. . . . . . . . . . . . . . . . . . 47
---------------------------------
SECTION 4.11 Limitation on Transactions with Affiliates. . . . . . . . . . . . . 49
------------------------------------------
SECTION 4.12 Limitation on Incurrence of Additional Indebtedness. . . . . . . . . 50
---------------------------------------------------
SECTION 4.13 Limitation on Dividends and Other Payment Restrictions
-------------------------------------------------------
Affecting Subsidiaries . . . . . . . . . . . . . . . . . . 51
----------------------
SECTION 4.14 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . 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. . . . . . . . . 58
---------------------------------------------------
SECTION 4.20 Restriction of Lines of Business to Food, Food
-----------------------------------------------
Distribution and Related Businesses . . . . . . . . . . . . 59
-----------------------------------
SECTION 4.21 Limitation on Sales of Common Stock of
---------------------------------------
Restricted Subsidiaries . . . . . . . . . . . . . . . . . . 59
-----------------------
SECTION 4.22 Deposit of Proceeds with Trustee. . . . . . . . . . . . . . . . . . 60
--------------------------------
ARTICLE V
SUCCESSOR CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 5.01 Merger, Consolidation and Sale of Assets
----------------------------------------
of the Company . . . . . . . . . . . . . . . . . . . . . . 60
--------------
SECTION 5.02 Successor Corporation Substituted for
--------------------------------------
the Company . . . . . . . . . . . . . . . . . . . . . . . . 62
-----------
</TABLE>
ii
<PAGE> 6
<TABLE>
<S> <C>
ARTICLE VI
DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 6.01 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . 62
-----------------
SECTION 6.02 Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
------------
SECTION 6.03 Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
--------------
SECTION 6.04 Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . 65
-----------------------
SECTION 6.05 Control by Majority. . . . . . . . . . . . . . . . . . . . . . . . . 65
-------------------
SECTION 6.06 Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . 65
-------------------
SECTION 6.07 Rights of Holders To Receive Payment. . . . . . . . . . . . . . . . 66
------------------------------------
SECTION 6.08 Collection Suit by Trustee. . . . . . . . . . . . . . . . . . . . . 66
--------------------------
SECTION 6.09 Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . 66
--------------------------------
SECTION 6.10 Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
----------
SECTION 6.11 Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . 67
---------------------
ARTICLE VII
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.01 Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 68
-----------------
SECTION 7.02 Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 69
-----------------
SECTION 7.03 Individual Rights of Trustee. . . . . . . . . . . . . . . . . . . . 70
----------------------------
SECTION 7.04 Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . 70
--------------------
SECTION 7.05 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . 70
-----------------
SECTION 7.06 Reports by Trustee to Holders. . . . . . . . . . . . . . . . . . . . 71
-----------------------------
SECTION 7.07 Compensation and Indemnity. . . . . . . . . . . . . . . . . . . . . 71
--------------------------
SECTION 7.08 Replacement of Trustee. . . . . . . . . . . . . . . . . . . . . . . 72
----------------------
SECTION 7.09 Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . . 73
--------------------------------
SECTION 7.10 Eligibility; Disqualification. . . . . . . . . . . . . . . . . . . . 73
-----------------------------
SECTION 7.11 Preferential Collection of Claims Against Company. . . . . . . . . . 73
-------------------------------------------------
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.01 Termination of the Company's Obligations. . . . . . . . . . . . . . 74
----------------------------------------
SECTION 8.02 Legal Defeasance and Covenant Defeasance. . . . . . . . . . . . . . 75
----------------------------------------
SECTION 8.03 Conditions to Legal Defeasance or
----------------------------------
Covenant Defeasance . . . . . . . . . . . . . . . . . . . . 76
-------------------
SECTION 8.04 Application of Trust Money. . . . . . . . . . . . . . . . . . . . . 77
--------------------------
SECTION 8.05 Repayment to the Company. . . . . . . . . . . . . . . . . . . . . . 78
------------------------
SECTION 8.06 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
-------------
</TABLE>
iii
<PAGE> 7
<TABLE>
<S> <C>
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 9.01 Without Consent of Holders. . . . . . . . . . . . . . . . . . . . . 79
--------------------------
SECTION 9.02 With Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . 80
-----------------------
SECTION 9.03 Compliance with TIA. . . . . . . . . . . . . . . . . . . . . . . . . 81
-------------------
SECTION 9.04 Revocation and Effect of Consents. . . . . . . . . . . . . . . . . . 81
---------------------------------
SECTION 9.05 Notation on or Exchange of Notes. . . . . . . . . . . . . . . . . . 82
--------------------------------
SECTION 9.06 Trustee To Sign Amendments, Etc. . . . . . . . . . . . . . . . . . . 82
-------------------------------
SECTION 9.07 Effect of Supplemental Indentures. . . . . . . . . . . . . . . . . . 82
---------------------------------
ARTICLE X
COLLATERAL ACCOUNT AND RELEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.01 Collateral Account. . . . . . . . . . . . . . . . . . . . . . . . . 83
------------------
SECTION 10.02 Eligible Investments. . . . . . . . . . . . . . . . . . . . . . . 84
--------------------
SECTION 10.03 Release of Collateral. . . . . . . . . . . . . . . . . . . . . . . 84
---------------------
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.01 TIA Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
------------
SECTION 11.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
-------
SECTION 11.03 Communications by Holders with Other Holders. . . . . . . . . . . . 87
--------------------------------------------
SECTION 11.04 Certificate and Opinion as to Conditions Precedent. . . . . . . . . 87
--------------------------------------------------
SECTION 11.05 Statements Required in Certificate or Opinion. . . . . . . . . . . 87
---------------------------------------------
SECTION 11.06 Rules by Trustee, Paying Agent, Registrar. . . . . . . . . . . . . 88
-----------------------------------------
SECTION 11.07 Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . 88
--------------
SECTION 11.08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 88
-------------
SECTION 11.09 No Adverse Interpretation of Other Agreements. . . . . . . . . . . 88
---------------------------------------------
SECTION 11.10 No Recourse Against Others. . . . . . . . . . . . . . . . . . . . . 89
--------------------------
SECTION 11.11 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
----------
SECTION 11.12 Duplicate Originals. . . . . . . . . . . . . . . . . . . . . . . . 89
-------------------
SECTION 11.13 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
------------
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
- ---------
EXHIBIT B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-1
- ---------
</TABLE>
iv
<PAGE> 8
<TABLE>
<S> <C>
EXHIBIT C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
SCHEDULE 1 ................................................................................................ S-1
</TABLE>
Note: This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture.
v
<PAGE> 9
INDENTURE, dated as of December 17, 1997, by and between DEL
MONTE FOODS COMPANY, a Maryland corporation ("Company"), and MARINE MIDLAND
BANK, a New York State banking corporation and trust company, as Trustee (the
"Trustee").
The Company has duly authorized the creation of an issue of
12 1/2% Senior Discount Notes due 2007 (the "Initial Notes") and Series B
12 1/2% Senior Discount 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.
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 ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"Acceleration Notice" has the meaning provided in Section
6.02(a).
"Accreted Value" means as of any date of determination prior
to December 15, 2002, the sum of (a) the initial offering price of each Note
and (b) the portion of the excess of the principal amount at maturity of each
Note over such initial offering price which shall have been accreted thereon
through such date, such amount to be so accreted at the rate of 12 1/2% per
annum of the initial offering price of the Notes, compounded semi-annually on
each June 15 and December 15 from the date of issuance of the Notes through the
date of determination. On and after December 15, 2002, the Accreted Value of
each Note shall be equal to the principal amount at maturity thereof.
"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.
1
<PAGE> 10
"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 Accreted
Value of such Note and (ii) the excess of (A) the present value at such time of
the redemption price of such Note at December 15, 2002 determined in accordance
with paragraph 6(a) of the Notes computed using a discount rate equal to the
Treasury Rate plus 1.0% per annum, over (B) the Accreted Value of such Note or
such Change of Control Redemption Date.
"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 other than in the
ordinary course of business any other properties or assets of such Person.
"Asset Purchase Agreement" shall have the meaning set forth in
the Offering Memorandum.
"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
2
<PAGE> 11
or other transfer of all or substantially all of the assets of the Company as
permitted under Section 5.01; (iii) the grant of Liens permitted by Section
4.18; (iv) the sale or transfer of Receivables Related Assets in connection
with a Qualified Receivables Transaction; and (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.
"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.
3
<PAGE> 12
"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 Rating Services ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Moody's;
(iv) certificates of deposit or bankers' acceptances maturing within one year
from the date of acquisition thereof issued by any bank organized under the
laws of the United States or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000; (v) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clause (i) above entered into with any bank meeting
the qualifications specified in clause (iv) above; and (vi) investments in
money market funds which invest substantially all their assets in securities of
the types described in clauses (i) through (v) above.
"Cash Net Proceeds" means the aggregate amount of cash or Cash
Equivalents received by the Company in the case of a sale of Qualified Capital
Stock or an Equity Contribution plus, in the case of an issuance of Qualified
Capital Stock upon any exercise, exchange or conversion of securities
(including options, warrants, rights and convertible or exchangeable debt) of
the Company that were issued for cash on or after the Issue Date, the amount of
cash originally received by the Company upon the issuance of such securities
(including options, warrants, rights and convertible or exchangeable debt)
less, in each case, the sum of all payments, fees, commissions and expenses
(including, without limitation, the fees and expenses of legal counsel and
investment banking fees and expenses) incurred in connection with such sale of
Qualified Capital Stock.
"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 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 of any plan or proposal for the
liquidation or dissolution of the Company (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 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 than such
other Person or Group; or (iv) the replacement of a majority of the
4
<PAGE> 13
Board of Directors of the Company over a two-year period from the directors who
constituted the Board of Directors of the Company 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 then still in office who
either were members of such Board of Directors at the beginning of such period
or whose election as a member of such Board of Directors was previously so
approved or who were nominated by, or designees of, TPG or its Related Parties.
"Change of Control Date" has the meaning provided in Section
4.15.
"Change of Control Offer" has the meaning provided in Section
4.15.
"Change of Control Payment Date" has the meaning provided in
Section 4.15.
"Change of Control Redemption Date" has the meaning provided
in Section 4.15.
"Collateral Account" has the meaning provided in Section
10.01(a).
"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 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
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<PAGE> 14
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 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
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<PAGE> 15
or accrued during such period times (y) a fraction, the numerator of which is
one and the denominator of which is one minus the then current effective
consolidated Federal, state and local tax rate of such Person, expressed as a
decimal.
"Consolidated Interest Expense" means, with respect to any
Person for any period, the sum (without duplication) of (i) the aggregate of
the interest expense of such Person and its Restricted Subsidiaries for such
period determined on a consolidated basis in 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 (other than DMC) 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 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, depreciation or charge of any
amounts required or
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<PAGE> 16
permitted by Accounting Principles Board Opinion Nos. 16 (including non-cash
write-ups and non-cash charges relating to inventory and fixed assets) and 17
(including non-cash charges relating to intangibles and goodwill).
"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).
"Consolidation" means, with respect to the Company, the
consolidation of the accounts of the Restricted Subsidiaries with those of the
Company, all in accordance with GAAP; provided that "consolidation" will not
include consolidation of the accounts of any Unrestricted Subsidiary with the
accounts of the Company. The term "consolidated" has a correlative meaning to
the foregoing.
"Contadina Acquisition" has the meaning set forth in the
Offering Memorandum.
"Covenant Defeasance" has the meaning provided in Section
8.02.
"Credit Agreement" means the Credit Agreement dated as of
April 18, 1997, among 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, 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.
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<PAGE> 17
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any Restricted Subsidiary of the Company against
fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any applicable Bankruptcy Law.
"Default" means an event or condition the occurrence of which
is, or with the lapse of time or the giving of notice or both would be, an
Event of Default.
"Depository" means The Depository Trust Company, its nominees
and successors.
"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;
provided that Capital Stock that would be "Disqualified Capital Stock" solely
by virtue of its containing a customary requirement that the issuer offer to
repurchase such Capital Stock upon a change of control of the issuer will not
be deemed to be "Disqualified Capital Stock."
"DMC" means Del Monte Corporation, a New York corporation, or
its successors.
"DMC Notes" shall have the meaning set forth in the Offering
Memorandum.
"Equity Contribution" means a contribution of cash or Cash
Equivalents by a stockholder of the Company to the consolidated stockholders'
equity of the Company, solely in exchange for, if anything, shares of the
Company's common stock with no preferences or special rights or privileges and
with no redemption or prepayment provisions.
"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
9
<PAGE> 18
amount at maturity equal to the aggregate principal amount at maturity of the
Initial Notes held by such Holder, all in accordance with the terms and
conditions of the Registration Rights Agreement.
"Extended Closing Option" shall have the meaning set forth in Section 4.22.
"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 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 a Guarantee of a Restricted Subsidiary
described in Section 4.19.
"Guarantor" means each Person 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 Person whose Guarantee has
terminated pursuant to Section 4.19 shall cease to be a Guarantor effective as
of such termination.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"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
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<PAGE> 19
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 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.
"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 Bear, Stearns & Co. Inc.,
BancAmerica Robertson Stephens and BT Alex. Brown Incorporated.
"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
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<PAGE> 20
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, as amended.
"Investment" means, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition by such Person of any
Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by, any other Person. In the case of the Company,
"Investment" shall exclude extensions of trade credit (including trade
receivables) by the Company and its Restricted Subsidiaries on commercially
reasonable terms in accordance with normal trade practices of the Company or
such Restricted Subsidiary, as the case may be. For the purposes of Section
4.10, (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 proportionate 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
Initial Notes.
"Legal Defeasance" has the meaning provided in Section 8.02.
"Legal Holiday" has the meaning provided in Section 11.07.
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<PAGE> 21
"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, as in
effect on the Issue Date.
"Mandatory Redemption" has the meaning provided in paragraph
5(d) of the Notes.
"Maturity Date" means December 15, 2007.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions), (b) taxes paid or payable after
taking into account any reduction in consolidated tax liability due to
available tax credits or deductions and any tax sharing arrangements, (c)
repayment of Indebtedness secured by the assets or properties that are the
subject of such Asset Sale and 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.
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<PAGE> 22
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering" shall have the meaning set forth in the Offering
Memorandum.
"Offering Memorandum" means the Offering Memorandum dated
December 9, 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.
"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 11.04 and 11.05, 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 replacement Credit Agreement) actually
made by the Company or 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
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<PAGE> 23
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 or
any Restricted Subsidiaries 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 or its Restricted
Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with this Indenture to the extent the notional
principal amount of such Interest Swap Obligation does not exceed the
principal amount of the Indebtedness to which such Interest Swap
Obligation relates;
(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
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<PAGE> 24
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;
(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 and
guarantees by its Wholly Owned Restricted Subsidiaries of Indebtedness
of other Wholly Owned Restricted Subsidiaries; 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) 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 (xii), when taken
together with all Indebtedness
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incurred pursuant to this clause (xii) and then outstanding, shall not
exceed $20 million;
(xiii) 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;
(xiv) Refinancing Indebtedness;
(xv) Receivables Program Obligations; and
(xvi) 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' business 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% 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
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Schedule 1 to this 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 the Company or any of
its Restricted Subsidiaries shall have set aside on its books such
reserves as may be required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen
and other Liens imposed by law incurred in the ordinary course of
business for sums not yet delinquent for a period of more than 60 days
or being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
in respect thereof;
(iii) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security or similar
obligations, including any Lien securing letters of credit issued in
the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, 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 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 any property or assets which is not
leased property subject to such lease;
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(vii) Liens securing Capitalized Lease Obligations
and Purchase Money Indebtedness incurred in accordance with Section
4.12; provided, however, that in the case of Purchase Money
Indebtedness (A) the Indebtedness shall not exceed the cost of such
property or assets being acquired or constructed and shall not be
secured by any property or assets of the Company or any Restricted
Subsidiary of the Company other than the property and assets being
acquired or constructed and (B) the Lien securing such Indebtedness
shall be created within 90 days of such acquisition or construction;
(viii) Liens upon specific items of inventory or
other goods and proceeds of any Person securing such Person's
obligations in respect of bankers' acceptances issued or created for
the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods;
(ix) Liens securing reimbursement obligations with
respect to letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
(x) Liens encumbering deposits made to secure
obligations arising from statutory, regulatory, contractual, or
warranty requirements of the Company or any of its Restricted
Subsidiaries, including rights of offset and set-off;
(xi) Liens securing Interest Swap Obligations that
relate to Indebtedness that is otherwise permitted under this
Indenture;
(xii) Liens securing Indebtedness under Currency
Agreements;
(xiii) Liens securing Acquired Indebtedness incurred
in accordance with Section 4.12; provided that (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;
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(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;
(xvi) Liens on Receivables Program Assets securing
Receivables Program Obligations;
(xvii) Liens securing Indebtedness of Restricted
Subsidiaries (so long as the Company is neither co-obligor, guarantor,
or otherwise directly liable with respect to such Indebtedness), which
Indebtedness is incurred in compliance with the Indenture; and
(xviii) Liens securing the Credit Agreement.
"Person" means an individual, partnership, corporation,
limited liability company, unincorporated organization, trust or joint venture,
or a governmental agency or political subdivision thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means
the outstanding principal amount of such Indebtedness plus the premium, if any,
on such Indebtedness.
"Private Placement Legend" has the meaning provided in Section
2.15.
"Proceeds Purchase Date" has the meaning provided in Section
4.16.
"pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms of this Indenture, a calculation in
accordance with Article 11 of Regulation S-X under the Securities Act (except
as specifically set forth herein), as determined by the Board of Directors of
the Company.
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"Public Equity Offering" means an underwritten public
offering of Qualified Capital Stock of the Company pursuant to a registration
statement filed with the SEC in accordance with the Securities Act.
"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.
"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
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<PAGE> 30
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 the Company
as set forth in the Offering Memorandum.
"Receivables" means all rights of the Company or any other
Seller to payments (whether constituting accounts, chattel paper, instruments,
general intangibles or otherwise, and including the right to payment of any
interest or finance charges), which rights are identified in the accounting
records of the Company or such Seller as accounts receivable.
"Receivables Documents" means (x) a receivables purchase
agreement, pooling and servicing agreement, credit agreement, agreements to
acquire undivided interests or other 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
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<PAGE> 31
any lockboxes or accounts in which such proceeds are deposited, (iii) spread
accounts and other similar accounts (and any amounts on deposit therein)
established in connection with a Qualified Receivables Transaction, (iv) any
warranty, indemnity, dilution and other intercompany claim arising out of
Receivables Documents and (v) other assets which are customarily transferred or
in respect of which security interests are customarily granted in connection
with asset securitization transactions involving accounts receivable.
"Receivables Subsidiary" means a special purpose wholly owned
Subsidiary of the Company created in connection with the transactions
contemplated by a Qualified Receivables Transaction, which Subsidiary engages
in no activities other than those incidental to such Qualified Receivables
Transaction and which is designated as a Receivables Subsidiary by the
Company's Board of Directors. Any such designation by the Board of Directors
shall be evidenced by filing with the Trustee a Board Resolution of the Company
giving effect to such designation and an Officers' Certificate certifying, to
the best of such officers' knowledge and belief after consulting with counsel,
such designation, and the transactions in which the Receivables Subsidiary will
engage, comply with the requirements of the definition of Qualified Receivables
Transaction.
"Record Date" means each of the dates designated as such in
the Notes, whether or not a Legal Holiday.
"Redemption Date," when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Notes.
"Redemption Price," when used with respect to any Note to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and the Notes.
"Reference Date" has the meaning provided in Section 4.10.
"Refinance" means, in respect of any security or Indebtedness,
to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire,
or to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness, in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the
Company or any Restricted Subsidiary of the Company of Indebtedness incurred in
accordance with Section 4.12 (other than pursuant to clauses (ii), (iv), (v),
(vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii) or (xvi) of the definition
of Permitted Indebtedness), in each case that does not (1) result in an
increase in the aggregate 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 or its Restricted
Subsidiaries in connection with such Refinancing) or (2) create Indebtedness
with (A) a Weighted
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Average Life to Maturity that is less than the Weighted Average Life to
Maturity of the Indebtedness being Refinanced or (B) a final maturity earlier
than the final maturity of the Indebtedness being Refinanced; provided that (x)
if such Indebtedness being Refinanced is solely Indebtedness of the Company,
then such Refinancing Indebtedness shall be Indebtedness solely of the Company
and (y) if such Indebtedness being Refinanced is subordinate or junior to the
Notes, then such Refinancing Indebtedness shall be subordinate to the Notes at
least to the same extent and in the same manner as the Indebtedness being
Refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement dated December 17, 1997 among the Company and the Initial Purchasers
for the benefit of themselves and the Holders, as the same may be amended or
modified from time to time in accordance with the terms thereof.
"Regulation S" means Regulation S under the Securities Act.
"Related Business Investment" means (i) any Investment by a
Person in any other Person a majority of whose revenues are derived from the
food, food distribution or related businesses; and (ii) any Investment by such
Person in any cooperative or other supplier, including, without limitation, any
joint venture which is intended to supply any product or service useful to the
business of the Company and its Restricted Subsidiaries.
"Related Party" means any Affiliate of TPG.
"Replacement Assets" has the meaning provided in Section 4.16.
"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
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<PAGE> 33
Restricted Subsidiary at the Issue Date or later acquired, which has been or is
to be sold or transferred by the Company or such Restricted Subsidiary to such
Person or to any other Person from whom funds have been or are to be advanced
by such Person on the security of such Property.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor statute or statutes thereto.
"Securities Intermediary" shall have the meaning set forth in
Section 10.01.
"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.
"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 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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.04.
"TPG" means TPG Partners, L.P., a Delaware limited
partnership, or its successors.
"TPG Equity Contribution" has the meaning set forth in the
Offering Memorandum.
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"Transaction Advisory Agreement" means the Transaction
Advisory Agreement, dated as of April 18, 1997, by and between the Company and
TPG, as in effect on the Issue Date.
"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 December 15, 2002; provided, however,
that if the period from the Change of Control Redemption Date to December 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
December 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.
"Triggering Event" means the earlier to occur of (i) February
3, 1998 (or May 12, 1998, if the Company has exercised the Extended Closing
Option) if by such date the consummation of the Contadina Acquisition on or
prior to such date has not occurred on terms (including with respect to the
making of the TPG Equity Contribution in a minimum amount of $40.0 million and
in consideration solely of common stock of the Company) substantially as set
forth in the Asset Purchase Agreement as in effect on the Issue Date, or (ii)
the determination in good faith by the Company, and concurrently therewith the
delivery by the Company to the Trustee of an Officers' Certificate, that by
such date the Contadina Acquisition will not so occur.
"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
that such
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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 of the Company shall be evidenced to the Trustee by promptly
filing with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations of, and
obligations guaranteed by, the United States for the payment of which the full
faith and credit of the United States is pledged.
"U.S. Legal Tender" means such coin or currency of the United
States as at the time of payment shall be legal tender for the payment of
public and private debts.
"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:
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<PAGE> 36
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or any
other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP 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 ARTICLE II
THE NOTES
SECTION 2.01 Form and Dating.
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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 (i) offered and sold in reliance on Rule 144A and (ii)
offered and sold in offshore transactions in reliance on Regulation S shall
each, in the case of (i) and (ii) 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.
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
"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.
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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 at maturity not to exceed $230,000,000
and (ii) Exchange Notes from time to time for issue only in exchange for a like
principal amount at maturity 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 at
maturity 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 Global Notes or Physical Notes. The aggregate
principal amount at maturity of Notes outstanding at any time may not exceed
$230,000,000 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 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
acknowledgment 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
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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 reimbursement for
its reasonable expenses and, if paid by the Trustee, it shall be a reimbursable
expense pursuant to Section 7.07.
The Company shall indemnify any such Authentication 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 expense of
defending themselves against any claim or liability in connection with the
exercise or performance of any of their rights, powers or duties hereunder.
The Notes shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 principal amount at maturity and
any integral multiple thereof.
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. Any such Paying
Agent or Registrar shall be entitled to reasonable compensation for its
services and reimbursement for its reasonable expenses and, if paid by the
Trustee, it shall be a reimbursable expense pursuant to Section 7.07.
The Company shall indemnify any such Paying Agent or Registrar
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
defendants themselves against any claim or liability in connection with the
exercise or performance of any of their rights, powers or duties hereunder.
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
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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 Bankers Trust Company has
resigned or a successor has been appointed, and by its acknowledgment 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 and premium of, Accreted Value and 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 in relation to such agreement to the
Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default or Event of Default, upon written
request to a Paying Agent, require such Paying Agent to distribute all assets
held by it to the Trustee and to account for any assets distributed. Upon
distribution to the Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent shall have no further liability
for such assets.
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
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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 at maturity 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 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 changes or transfers of beneficial
interests in such Global Note may be effected only
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through a book-entry system maintained by the Holder of such Global Note (or
its agent), and that ownership of a beneficial interest in the Global Note
shall be required to be reflected in a book-entry system.
SECTION 2.07 Replacement Notes.
If a mutilated Note is surrendered to the Registrar or if the
Holder of a Note claims that the Note has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee or any authenticating agent of
the Trustee shall authenticate a replacement Note if the Registrar's
requirements are met. If required by the Registrar or the Company, such Holder
must provide an affidavit of lost certificate and an indemnity bond or other
indemnity, sufficient, in the judgment of both the Company and the Registrar,
to protect the Company, the Trustee and any Agent from any loss which any of
them may suffer if a Note is replaced. The Company may charge such Holder for
its reasonable, out-of-pocket expenses in replacing a Note, including
reasonable fees and expenses of counsel. Every replacement Note shall
constitute an additional obligation of the Company.
SECTION 2.08 Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee, except those cancelled by the Registrar, those
delivered to the Registrar for cancellation and those described in this Section
as not outstanding. Subject to the provisions of Section 2.09, a Note does not
cease to be outstanding because the Company or any of its Affiliates holds the
Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Registrar receives an Opinion of Counsel that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon
surrender of such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent
holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of
the principal, premium, Accreted Value, as applicable, 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 at maturity 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,
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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 at maturity 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.
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.
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The Company in issuing the Notes may use "CUSIP" numbers, and
if so, the Trustee shall use the CUSIP numbers in notices of redemption or
exchange as a convenience to Holders; provided that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP
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 a 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.
SECTION 2.15 Restrictive Legends.
Each Global Note that constitutes a Restricted Security shall
bear the following legend (the "Private Placement Legend") on the face thereof
until December 17, 1999 (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:
THE SECURITY (OR ITS PREDECESSORS) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS NOT ACQUIRING THIS
SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT). THE HOLDER OF
THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
SUCH SECURITY
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MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT (C) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR
(d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE.
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.
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SECTION 2.16 Book-Entry Provisions for Global Note.
(a) Global Notes initially shall (i) be
registered in the name of the Depository or the nominee of such Depository,
(ii) be delivered to the Registrar as custodian for such Depository and (iii)
bear legends as set forth in Section 2.15.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Registrar as its custodian,
or under such Global Note, and the Depository may be treated by the Company,
the Trustee, each Agent and any agent of the Company, the Trustee or any Agent
as the absolute owner of the Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee, each Agent or any agent of the Company, the Trustee or any Agent from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.
(b) Transfers of Global Notes 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 Global Notes may be
transferred or exchanged for Physical Notes in accordance with the rules and
procedures of the Depository and the provisions of Section 2.17. In addition,
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in a 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 a Global Note to beneficial owners
pursuant to paragraph (b), the Registrar shall (if one or more Physical Notes
are to be issued) reflect on its books and records the date and a decrease in
the principal amount at maturity of such Global Note in an amount equal to the
principal amount at maturity 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 an 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 such Global Note, an equal aggregate principal amount at maturity
of Physical Notes of authorized denominations.
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(e) Any Physical Note constituting a Restricted
Security delivered in exchange for an interest in a 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 Private Placement Legend.
(f) The Holder of a Global Note may grant proxies
and otherwise authorize any Person, including Agent Members and Persons that
may hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
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 December 17, 1999 (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 Accreted Value 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 such 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 a 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 at maturity of such Global Note in an amount
equal to the principal amount at maturity of the beneficial interest in such
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.
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(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 a 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 at maturity of such Global Note in an
amount equal to the principal amount at maturity 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.
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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 III
REDEMPTION
SECTION 3.01 Notices to Trustee.
If the Company elects, or is required, to redeem Notes
pursuant to Paragraph 5 of the Notes, it shall notify the Trustee and the
Paying Agent in writing of the Redemption Date and the principal amount at
maturity of the Notes to be redeemed.
The Company shall give each notice provided for in this
Section 3.01 at least 30 days (20 days in the case of a Mandatory Redemption)
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 Registrar 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
appropriate manner chosen at the discretion of the Registrar; provided,
however, that if a partial redemption is made with the proceeds of a Public
Equity Offering, selection of the Notes or portions thereof for redemption
shall be made by the Registrar only on a pro rata basis, to the extent
practical (subject to applicable DTC procedures), unless such method is
otherwise prohibited. The Company shall promptly notify the Trustee and the
Registrar 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 Registrar 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 at
maturity thereof to be redeemed. Notes in denominations of $1,000 principal
amount at maturity may be redeemed only in whole. The Registrar may select for
redemption portions (equal to $1,000 principal amount at maturity or any
integral multiple thereof) of the principal of Notes that
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have denominations larger than $1,000 principal amount at maturity. 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 (exactly 20 days, in the case of a Mandatory Redemption), 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:
(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 Price, plus
accrued interest, if any, and that interest on the Notes to be
redeemed will cease to accrue, and Accreted Value will cease to
increase, 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, and Accreted Value will cease to increase, 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 at maturity 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 at
maturity equal to the unredeemed portion thereof will be issued; and
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(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 at
maturity of Notes to be redeemed and the aggregate principal amount at
maturity 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, if any) upon receipt by the Paying Agent of the necessary
funds from the Company, 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.
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 VII.
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, if applicable, to be redeemed
will cease to accrue, and Accreted Value will cease to increase, 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 at maturity to the unredeemed portion
of the Note surrendered.
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ARTICLE IV
COVENANTS
SECTION 4.01 Payment of Notes.
The Company shall pay the principal of, Accreted Value 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, Accreted Value 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, Accreted Value 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 Federal laws of
the United States from principal, Accreted Value or interest payments
hereunder.
SECTION 4.02 Maintenance of Office or Agency.
The Company shall maintain the office or agency required under
Section 2.03. The Company shall give prior written notice to the Trustee and
the Paying Agent of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee and the Paying
Agent with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in
Section 11.02.
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.
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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
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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 IV, V or VI of this Indenture insofar as
they relate to accounting matters or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(c) (i) If any Default or Event of Default has
occurred and is continuing or (ii) if any Holder seeks to exercise any remedy
hereunder with respect to a claimed Default under this Indenture or the Notes,
the Company shall deliver to the Trustee, at its address set forth in Section
11.02 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, any Agent 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,
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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 any Note is 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 Section 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 and
to prospective purchasers of such Holder's Notes reasonably identified to the
Company 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, Accreted Value, premium or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect
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the covenants or the performance of this Indenture; and (to the extent that it
may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 4.10 Limitation on Restricted Payments.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other than dividends or distributions
payable in Qualified Capital Stock of the Company or in options, warrants or
other rights to purchase such Qualified Capital Stock) on or in respect of
shares of the Company's Capital Stock to holders of such Capital Stock, (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, as applicable, any Indebtedness of the Company that is
subordinate or junior in right of payment to the Notes or (d) make any
Investment (other than Permitted Investments) (each of the foregoing actions
set forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted
Payment"), if at the time of such Restricted Payment or immediately after
giving effect thereto, (i) a Default or an Event of Default shall have occurred
and be continuing or (ii) the Company is not able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.12 or (iii) the aggregate amount of Restricted Payments (including
such proposed Restricted Payment) made subsequent to the Issue Date (the amount
expended for such purposes, if other than in cash, being the fair market value
of such property as determined reasonably and in good faith by the Board of
Directors of the Company) shall exceed the sum of: (v) $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 Cash Net
Proceeds received by the Company from any Person (other than a Subsidiary of
the Company and other than with respect to the TPG Equity Contribution) 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 (excluding Disqualified Capital Stock) into
Qualified Capital Stock) and, subject to the limitation set forth in clause (5)
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 Cash Net Proceeds of any Equity Contribution (other than the TPG
Equity Contribution) received by the Company subsequent to the Issue Date and
on or prior to such Reference Date from a holder of the Company's Capital Stock
and, subject to the limitation set forth in clause (5) of the
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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 to the Company or a Restricted Subsidiary 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 Cash Net
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
(5) 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
subsequent to the Issue Date and on or prior to such Reference Date, the fair
market value of the net assets 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 and on or prior to such Reference 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 (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 the
instrument governing the terms of such Indebtedness 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 the Company to redeem or repurchase Common Stock of
the Company or options in respect thereof from employees or officers of the
Company 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;
and (5) 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
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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), (3), (4) and (5) shall be included in
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' Certificate.
SECTION 4.11 Limitation on Transactions with Affiliates.
(a) The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, enter into or permit
to exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of its Affiliates
(each an "Affiliate Transaction"), other than (x) Affiliate Transactions
permitted under paragraph (b) below, and (y) Affiliate Transactions on terms
that are no less favorable to the Company or the relevant Restricted Subsidiary
than those that might reasonably have been obtained in a comparable transaction
at such time on an arm's-length basis from a Person that is not an Affiliate of
the Company or such Restricted Subsidiary. All Affiliate Transactions (and
each series of related Affiliate Transactions which are part of a common plan)
involving aggregate payments or other property with a fair market value in
excess of $1 million shall be approved by a majority of the disinterested
members of 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
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management; (ii) transactions between or among the Company and any of its
Restricted Subsidiaries or exclusively between or among such Restricted
Subsidiaries, provided that such transactions are not otherwise prohibited by
this Indenture; (iii) any agreement as in effect as of the Issue Date or any
amendment thereto or any transaction contemplated thereby (including pursuant
to any amendment thereto or any replacement agreement thereto so long as any
such amendment or replacement agreement is not more disadvantageous to the
Holders in any material respect than the original agreement as in effect on the
Issue Date); (iv) payments and investments permitted by this Indenture; (v) the
issuance of Qualified Capital Stock of the Company; (vi) any obligations of the
Company pursuant to the Management Advisory Agreement and the Transaction
Advisory Agreement; (vii) transactions permitted by, and complying with,
Article V; (viii) payments made in connection with the Recapitalization,
including transaction fees to stockholders of DMFC not exceeding an aggregate
of $10,000,000 from the original issue date of the DMC Notes; (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 a
majority of the disinterested 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.
SECTION 4.12 Limitation on Incurrence of Additional Indebtedness.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee, acquire, become liable, contingently or otherwise, with respect to,
or otherwise become responsible for payment of (collectively, "incur") any
Indebtedness (other than Permitted Indebtedness) including Acquired
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 and its Restricted
Subsidiaries may incur Indebtedness (including, without limitation, Acquired
Indebtedness) on the date of the incurrence of such Indebtedness, if after
giving effect to the incurrence of such Indebtedness, the Consolidated Fixed
Charge Coverage Ratio of the Company is greater than 1.75 to 1.0.
SECTION 4.13 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or permit to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary of the Company to (a)
pay dividends or make any other distributions on or in respect of its Capital
Stock; (b) make loans or advances or to pay any Indebtedness or other
obligation owed to the Company or any other Restricted Subsidiary of the
Company; or (c) transfer any of its property or assets to the Company
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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 and other pari passu Indebtedness of the Company that does not
contain any encumbrances or restrictions more restrictive than those contained
in the 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 and the DMC Notes) 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 favorable to the Company as determined by the Board
of Directors of the Company in its reasonable and good faith judgment than the
provisions relating to such encumbrance or restriction contained in agreements
referred to in such clause (2), (4), (5) or (6); and (11) Standard
Securitization Undertakings relating to a Receivables Subsidiary or Special
Purpose Vehicle.
SECTION 4.14 [Intentionally Omitted].
SECTION 4.15 Change of Control.
(a) At any time on or prior to December 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 Accreted Value thereof
plus the Applicable Premium as of the date fixed for such redemption (the
"Change of Control Redemption 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
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portion of such Holder's Notes pursuant to such Change of Control Offer, at a
purchase price equal to 101% of the Accreted Value thereof plus accrued
interest, if any, to the date of purchase.
(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, if applicable;
(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, if applicable, and
Accreted Value will cease to increase, 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;
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(7) that Holders whose Notes are purchased only
in part will be issued new Notes in a principal amount at maturity
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 at maturity of $1,000 or integral multiples
thereof; and
(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 at maturity 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 will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale, unless (i) the
Company or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (in each case as determined in
good faith by the Company's Board of Directors); (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
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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 Company 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
Indebtedness of a Wholly Owned Restricted Subsidiary (provided that any
proceeds of an Asset Sale used to repay amounts outstanding under any revolving
credit facility shall result in a permanent reduction in the availability under
such revolving credit facility), (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 (and other Indebtedness of the Company ranking on a
parity with the Notes from time to time outstanding with similar provisions
requiring the Company to make an offer to purchase or to redeem such
Indebtedness with the proceeds from asset sales, pro rata in proportion to the
respective principal amounts, or accreted values in the case of Indebtedness
issued with an Original Issue Discount) equal to the Net Proceeds Offer Amount
at a price equal to 100% of the Accreted Value (as of the date of purchase
thereof) of the Notes to be purchased, plus accrued and unpaid interest thereon
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 Section 4.16.
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 Net Proceeds
Offer Amount not utilized in accordance with this covenant, and not just the
amount in excess of $10 million, shall be applied as required pursuant to this
paragraph).
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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 governed by and permitted under
Section 5.01, the successor corporation 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.
Each Net Proceeds Offer will be mailed to the record Holders
as shown on the register of Holders within 25 days following the Net Proceeds
Offer Trigger Date, with a copy to the Trustee, and shall comply with the
procedures set forth in this Indenture. Upon receiving notice of the Net
Proceeds Offer, Holders may elect to tender their Notes in whole or in part in
integral multiples of $1,000 principal amount at maturity in exchange for cash.
To the extent Holders properly tender Notes (if applicable, along with such
other pari passu Indebtedness referred to above) in an amount exceeding the Net
Proceeds Offer Amount, Notes of tendering Holders (if applicable, along with
such other pari passu Indebtedness referred to above) 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.
The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.16, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.16 by virtue thereof.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries will be permitted to consummate an Asset Swap if (i) at the time
of entering into such Asset Swap or immediately after giving effect to such
Asset Swap, no Default or Event of Default shall have occurred or be continuing
or would occur as a consequence thereof, (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.
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(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
at maturity of Notes tendered in a Net Proceeds Offer exceeds the
aggregate amount at maturity 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 principal amount at maturity or
multiples thereof shall be purchased);
(2) the purchase price (including the amount of
accrued interest, if any) 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 (or increase in Accreted Value, as applicable);
(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
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(7) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount at maturity 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 at maturity 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 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 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 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 the Company or to a Wholly Owned Restricted
Subsidiary of the Company) or permit any Person (other than the Company or a
Wholly Owned Restricted Subsidiary of the Company) to own any Preferred Stock
of any Restricted Subsidiary of the Company (other than a Receivables
Subsidiary or a Special Purpose Vehicle).
SECTION 4.18 Limitation on Liens.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
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
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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 the Notes; (C) Liens of the
Company or a Wholly Owned Restricted Subsidiary of the Company on assets of any
Restricted Subsidiary of the Company; (D) Liens securing Refinancing
Indebtedness which is incurred to Refinance any Indebtedness which has been
secured by a Lien permitted under this Indenture and which has been incurred in
accordance with the provisions of this Indenture; provided, however, that such
Liens (1) are not materially less favorable to the Holders and are not
materially more favorable to the lienholders with respect to such Liens than the
Liens in respect of the Indebtedness being Refinanced and (2) do not extend to
or cover any property or assets of the Company or any of its Restricted
Subsidiaries not securing the Indebtedness so Refinanced; and (E) Permitted
Liens; provided, further, that such Liens do not encumber any capital stock of
DMC held by the Company, except to the extent that such Liens secure
Indebtedness to a commercial lending institution as provided for in the Credit
Agreement.
SECTION 4.19 Limitation on Guarantees by Restricted Subsidiaries.
The Company will not permit any of its domestic Restricted
Subsidiaries, directly or indirectly, by way of the pledge of any intercompany
note or otherwise, to assume, guarantee or in any other manner become liable
with respect to any Indebtedness of the Company or any other Restricted
Subsidiary (other than Permitted Indebtedness of a Restricted Subsidiary),
unless, in any such case (a) such Restricted Subsidiary executes and delivers a
supplemental indenture to this Indenture, providing an unconditional and full
(subject to the following two paragraphs) guarantee of payment of the Notes by
such Restricted Subsidiary (a "Guarantee"), and (b) 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 such Indebtedness.
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. 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
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unconditionally released and discharged, without any further action required on
the part of the Trustee or any Holder, upon: (i) the unconditional and
complete 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.
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 the
food, food distribution and related businesses.
SECTION 4.21 Limitation on Sales of Common Stock of
Restricted Subsidiaries.
The Company will not, and will not permit any of its
Restricted Subsidiaries, to issue, sell, offer to sell, or otherwise transfer
any shares of the common stock of any Restricted Subsidiary to any Person other
than the Company or a Restricted Subsidiary of the Company; provided that this
restriction will not apply to sales, offers to sell or transfers of all shares
of the common stock of any Restricted Subsidiary (other than DMC) in a single
transaction for the purpose of selling the common equity interest in the
business of such Restricted Subsidiary substantially as an entirety; provided,
further, that any such sale of such business as an entirety otherwise complies
with the provisions of the Indenture.
SECTION 4.22 Deposit of Proceeds with Trustee.
On the Issue Date, if the Contadina Acquisition has not closed
on the terms set forth in the Asset Purchase Agreement (as then in effect
without waiver of material condition by the Company) upon the closing of the
Offering, the Company shall pay to the Trustee for deposit in the Collateral
Account the net proceeds from the issuance of the Notes (the "Net Offering
Proceeds") and such additional amount as, when added to the Net Offering
Proceeds, equals $129,630,236, as set forth in Article 10. In the event that
the Company determines that the Contadina Acquisition will not be consummated
prior to February 23, 1998, solely by virtue of the expiration of any necessary
Hart-Scott-Rodino waiting period not having occurred as of such date, the
Company shall have the option to deliver to the Trustee an Officers'
Certificate to that effect provided the Company thereupon deposits into the
Collateral Account an additional $5,676,605 (the "Extended Closing Option").
If the Contadina Acquisition closes on the Issue Date, the Company will deliver
an Officers' Certificate to that effect.
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ARTICLE V
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;
(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;
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(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 (except in the case of a Sale and Leaseback Transaction) be substituted
for, and may exercise every right and power of, the Company under this
Indenture and the Notes with the same effect as if such surviving entity had
been named as such; provided, however that 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.
ARTICLE VI
DEFAULT AND REMEDIES
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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; or
(2) the Company fails to pay the principal,
premium or Accreted Value on any Notes when such 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, Mandatory Redemption, upon the occurrence of
a Triggering Event, or a Net Proceeds Offer); 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, premium or interest 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
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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
(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 6.2 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 aggregate principal amount at
maturity 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 shall become
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 or Accreted Value 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 at maturity 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 premium, Accreted Value, if
applicable, 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
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and overdue principal, or Accreted Value, if applicable, 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 aggregate 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, premium, Accreted Value or
interest on any Notes.
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 premium, Accreted Value or interest on the Notes or
to enforce the performance of any provision of the Notes or this Indenture; and
the Trustee shall have all the rights of a secured party under the UCC and all
rights now or hereafter existing under all other applicable laws with respect
to the Collateral Account established pursuant to Article 10 hereof and any
other collateral securing the payment of the Notes. The Company shall
reimburse the Trustee for all expenses of the Trustee in connection with the
exercise of the Trustee's rights hereunder, including, without limitation, all
attorneys' fees and legal expenses incurred by the Trustee.
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 at maturity 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 at maturity 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
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limitation, any remedies provided for in Section 6.03. Subject to Section
7.01, however, the Trustee may refuse to follow any direction unless such
Holders have offered to the Trustee reasonable indemnity; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction; and provided further that this provision
shall not affect the rights of the Trustee set forth in Section 7.01(d).
SECTION 6.06 Limitation on Suits.
A Holder may not pursue any remedy with respect to this Indenture or the Notes
unless:
(1) the Holder gives to the Trustee written
notice of a continuing Event of Default;
(2) Holders of at least 25% in principal amount
at maturity 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 at maturity 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
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trustee of an express trust against the Company or any other obligor on the
Notes for the whole amount of principal, premium, Accreted Value and accrued
interest remaining unpaid, together with interest on overdue principal and, to
the extent that payment of such interest is lawful, interest on overdue
installments of interest at the rate set forth in Section 4.01 and such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and its counsel, and any other amounts due the Trustee
under Section 7.07.
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable expenses and disbursements of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07) and the Holders allowed in any judicial proceedings
relating to the Company or any other obligor upon the Notes, any of their
respective creditors or any of their respective property and shall be entitled
and empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable expenses and disbursements of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07. The Company's payment obligations under this Section 6.09 shall be
secured in accordance with the provisions of Section 7.07 hereunder. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
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
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Fourth: to the Company or any other obligor on the
Notes, as their interests may appear, or as a court of
competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this
Section 6.10.
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more
than 10% in principal amount at maturity of the outstanding Notes.
ARTICLE VII
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) If 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 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.
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(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine
the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary
herein contained, the Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01.
(2) The Trustee shall not be liable for any error
of judgment made in good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(3) The Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.02, 6.04 or
6.05.
(d) No provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(e) Whether or not herein expressly provided,
every provision of this Indenture that in any way relates to the Trustee is
subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest
on any money or assets received by it except as the Trustee may agree in
writing with the Company. Assets held in trust by the Trustee need not be
segregated from other assets except to the extent required by law.
SECTION 7.02 Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may 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
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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.
(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.
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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.
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 V hereof, the Trustee may withhold such notice if and so
long as its Board of Directors, the executive committee of its Board of
Directors or a committee of its directors and/or Trust Officers in good faith
determines that withholding the notice is in the interest of the Holders.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each May 15, the Trustee shall, to the
extent that any of the events described in TIA Section 313(a) occurred within
the previous twelve months, but not otherwise, mail to each Holder a brief
report dated as of such date that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Sections 313(b), (c) and (d).
A copy of each report at the time of its mailing to Holders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes
become listed on any stock exchange and the Trustee shall comply with TIA
Section 313(d).
SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee and each Agent from time
to time reasonable compensation for their respective services. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon
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request for all reasonable fees and expenses, including reasonable and
documented out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under this Indenture. Such expenses shall include
the reasonable fees and expenses of the Trustee's and such Agent's agents,
consultants and counsel.
The Company shall indemnify the Trustee and each Agent and
their respective agents, employees, stockholders and directors and officers
for, and hold them harmless against, any loss, liability or expense incurred by
them except for such actions to the extent caused by any negligence, bad faith
or willful misconduct on their part, arising out of or in connection with the
administration of this trust including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with the
exercise or performance of any of their rights, powers or duties hereunder.
The Trustee and each Agent shall notify the Company 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.
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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;
(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
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transferee corporation without any further act shall, if such resulting,
surviving or transferee corporation is otherwise eligible hereunder, be the
successor Trustee; provided that such corporation shall be otherwise qualified
and eligible under this Article Seven.
SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the
case of a corporation included in a bank holding company system, the related
bank holding company) shall have a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition.
In addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA Section 310(a)(2). The Trustee shall comply with
TIA Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA
Section 310 shall apply to the Company, as obligor of the Notes.
SECTION 7.11 Preferential Collection of Claims Against
Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein. The provisions of TIA Section 311 shall apply to the
Company, as obligor on the Notes.
ARTICLE VIII
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:
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(a) either (i) pursuant to Article Three, the
Company shall have given notice to the Trustee and each Paying Agent and mailed
a notice of redemption to each Holder of the redemption of all of the Notes
under arrangements satisfactory to the Trustee for the giving of such notice or
(ii) all Notes have otherwise become due and payable hereunder;
(b) the Company shall have irrevocably deposited
or caused to be deposited with the Trustee or a trustee satisfactory to the
Trustee, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, as trust funds in trust solely for the
benefit of the Holders for that purpose, U.S. Legal Tender in such amount as
is sufficient without consideration of reinvestment of such interest, to pay
principal of Accreted Value, 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, Accreted Value, premium, if any, and interest with respect to the
Notes;
(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.
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SECTION 8.02 Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board
Resolution, at any time, elect to have either paragraph (b) or (c) below be
applied to all outstanding Notes upon compliance with the conditions set forth
in Section 8.03.
(b) Upon the Company's exercise under paragraph
(a) hereof of the option applicable to this paragraph (b), the Company shall,
subject to the satisfaction of the conditions set forth in Section 8.03, be
deemed to have been discharged from its obligations with respect to all
outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.04 hereof and the
other Sections of this Indenture referred to in (i) and (ii) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and
the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), 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 II 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 VIII.
Subject to compliance with this Article VIII, 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). 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
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to 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, Accreted Value, 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 Accreted Value 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;
(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
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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 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.
Anything in this Article VIII 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
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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 VIII, 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 VIII 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 VIII; provided that if the Company has made any payment of
interest on or principal of any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the U.S. Legal Tender or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01 Without Consent of Holders.
The Company, 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:
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(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; providedthat such
actions shall not adversely affect the interests of the Holders of
Notes in any material respect;
(2) to comply with Article V;
(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.
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.
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Subject to Section 6.07, the Company, 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 at maturity 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 at maturity 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, Accreted Value,
premium, 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
mandatory redemption or redemption at the option of the Company, or
reduce the mandatory redemption price or redemption price in
connection with a redemption at the option of the Company 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, Accreted Value, premium, 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
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 X or XIIor the definitions
used in Articles X or XII to adversely affect the Holders of the Notes
in any material respect.
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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 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Notes shall comply with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt
as the consenting Holder's Note, even if notation of the consent is not made on
any Note. Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Note or portion of such Note
by written notice to the Trustee or the Company received before the date on
which the Trustee receives an Officers' Certificate certifying that the Holders
of the requisite principal amount of Notes have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be at least 10 days
prior to the first solicitation of such consent. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it makes a change described in any of clauses
(1) through (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
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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 9.05 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 9.06 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 Sections 11.04 and 11.05 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 9.07 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article Nine, this Indenture shall be modified in accordance therewith, and
such supplemental indenture shall form a part of this Indenture for all
purposes; and every Holder of Notes theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
ARTICLE X
COLLATERAL ACCOUNT AND RELEASES
SECTION 10.01 Collateral Account.
(a) Prior to the Issue Date of the Notes, the
Company shall open with Marine Midland Bank, acting in its capacity as a
securities intermediary (the "Securities Intermediary") and shall require the
Securities Intermediary to establish on its books and maintain for the Trustee
on
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behalf of the Holders of the Notes, a trust account titled "Marine Midland
Bank, Trustee for the benefit of holders of securities of Del Monte Foods
Company, under an Indenture dated December 17, 1997 Collateral Account" (the
"Collateral Account") into which the Trustee shall deposit the amounts
specified in Section 4.22, when received from the Company pursuant to Section
4.22.
(b) In order to secure the full and punctual payment of
the Notes in accordance with the terms hereof, the Company hereby grants to the
Trustee, on behalf of the Holders, a continuing security interest in and to all
of its right, title and interest in and to the Collateral Account, all cash
deposited therein, and the U.S. Government Obligations and such other interest
and shares credited thereto (including those held therein pursuant to Section
10.02 hereof), any other property (including any investment property, financial
assets, securities, instruments or securities entitlements) credited thereto
and all proceeds of any of the foregoing, whether now existing or hereafter
acquired or arising.
(c) The Collateral Account shall relate solely to the
Notes and the collateral securing the Notes, and funds in such account shall
not be commingled with any other moneys or properties, tangible or intangible.
All payments to be made from time to time by the Paying Agent to the Holders of
Notes out of funds in the Collateral Account as payment of the Redemption Price
in connection with a Mandatory Redemption shall be made by the Trustee to the
Paying Agent. All moneys deposited from time to time in the Collateral Account
pursuant to this Indenture shall be held by the Trustee in trust hereunder as
collateral as herein provided. Any payments of principal of or interest on, or
proceeds from the sale of, any collateral held in the Collateral Account shall
be credited and deposited into the Collateral Account.
(d) The Collateral Account shall be maintained with the
Trustee on the terms and conditions set forth in the Securities Account Control
Agreement, dated December 17, 1997, among the Company, the Trustee and Marine
Midland Bank, as Securities Intermediary thereunder (the "Control Agreement"),
until released by the Trustee contemporaneously with the earliest of (i) the
closing of the Contadina Acquisition and receipt by the Trustee of an Officers'
Certificate from the Company (a) requesting that the Trustee release the
Collateral to the order of the Company and (b) stating that the Contadina
Acquisition will be simultaneously so consummated on or prior to February 3,
1998 (or if the Company has exercised the Extended Payment Option, on or prior
to May 12, 1998) on the terms substantially as set forth in the Asset Purchase
Agreement as in effect on the Issue Date , (ii) the Business Day immediately
prior to the Redemption Date for the Mandatory Redemption, or (iii) the date on
which no Notes remain outstanding.
SECTION 10.02 Eligible Investments.
Upon order from the Company, the Trustee shall invest any
funds in the Collateral Account in U.S. Government Obligations or interests in,
or shares of, a money market account registered pursuant to the Investment
Company Act of 1940, as amended, substantially all of whose investments consist
of interests in U.S. Government Obligations, provided that;
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(a) any such investment and the proceeds
therefrom are held through the Collateral Account and on the terms set forth in
the Control Agreement, and
(b) concurrently with making such investment, the
Trustee ensures that such U.S. Government Obligations or interests and shares
are credited to, and held through, the Collateral Account of the Securities
Intermediary.
The Trustee shall not be liable for any loss incurred on any
funds invested in the Collateral Account pursuant to the provisions of this
Section 10.02.
SECTION 10.03 Release of Collateral.
Upon the occurrence of an event specified in (i), (ii) or
(iii) of Section 10.01(d), all properties in the Collateral Account, including
investment earnings, shall be released (to the Company in the case of
subsection 10.01(d)(i) and (iii) and to the Paying Agent in the case of
subsection 10.01(d)(ii)) and the security interests in the collateral created
under Section 10.01 shall terminate; and upon the Mandatory Redemption, the
Paying Agent shall apply all funds received from the Trustee from the
Collateral Account (i) first, to pay the Redemption Price on the Redemption
Date in respect of the Mandatory Redemption and (ii) immediately after such
Redemption Date, to return any remaining collateral from the Collateral Account
to the Company. The Trustee, when required by the provisions of the foregoing
sentence, shall execute instruments (including any instruments required under
the Control Agreement) to release the collateral from the lien of this
Indenture, or convey the Trustee's interest in the same, in a manner and under
circumstances which are not inconsistent with the provisions of this Indenture,
and shall have the power to effect any sale of the property held in the
Collateral Account or any portion thereof at such time. The Trustee shall not
be liable for any loss incurred upon the sale of The property held in the
Collateral Account prior to maturity in accordance with this Section 10.03. No
party relying upon an instrument executed by the Trustee as provided in this
Article X shall be bound to ascertain the Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 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.
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SECTION 11.02 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:
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
with, in the case of any notice given pursuant to Article VI, a copy to:
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, in the case of any notice given pursuant to Article VI, a copy to:
Pillsbury, Madison & Sutro
235 Montgomery Street
San Francisco, California 94104
Attn: Gregg Vignos, Esq.
Telephone No.: (415) 983-1000
Facsimile No: (415) 983-1200
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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
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, 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, 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 11.02 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 11.03 Communications by Holders with Other Holders.
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Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA Section 312(c).
SECTION 11.04 Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company or Holdings to
the Trustee to take any action under this Indenture, the Company or Holdings,
as the case may be, shall furnish to the Trustee:
(1) an Officers' Certificate, in form and
substance reasonably satisfactory to the Trustee, stating that, in the
opinion of the signers, all conditions precedent to be performed by
the Company, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent to be performed
by the Company, if any, provided for in this Indenture relating to
the proposed action have been complied with.
SECTION 11.05 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 11.06 Rules by Trustee, Paying Agent, Registrar.
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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 11.07 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.
SECTION 11.08 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 11.09 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 11.10 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
89
<PAGE> 98
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
SECTION 11.11 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 11.12 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 11.13 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.
90
<PAGE> 99
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 FOODS COMPANY
By: /s/ RICHARD G. WOLFORD
----------------------------------
Name: Richard G. Wolford
Title: Chief Executive Officer
Trustee:
MARINE MIDLAND BANK,
as Trustee
By: /s/ METIN CANER
----------------------------------
Name: Metin Caner
Title: Vice President
ACKNOWLEDGED AND AGREED:
BANKERS TRUST COMPANY,
as Registrar, Paying Agent and
Authenticating Agent
By: /s/ JASON KRASILOVSKY
----------------------------------
Name: Jason Krasilovsky
Title: Assistant Treasurer
<PAGE> 100
FOR PURPOSES OF SECTIONS 1272 ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, THE ISSUE PRICE WITH RESPECT TO EACH $1,000 OF PRINCIPAL AT MATURITY
OF THIS NOTE IS $545.76, THE AMOUNT OF ORIGINAL DISCOUNT IS $454.24, THE ISSUE
DATE IS DECEMBER 17, 1997, AND THE YIELD TO MATURITY IS 12 1/2%.
EXHIBIT A
CUSIP No.:
DEL MONTE FOODS COMPANY
12 1/2% SENIOR DISCOUNT NOTE DUE 2007
No.__________ $________
DEL MONTE FOODS COMPANY, a Maryland 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 December 15, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 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 FOODS COMPANY
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Dated: __________,_____ Title:
Certificate of Authentication
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<PAGE> 101
This is one of the 12 1/2% Senior Discount 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
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<PAGE> 102
(REVERSE OF SECURITY)
12 1/2% SENIOR DISCOUNT NOTE DUE 2007
1. Interest. Until December 15, 2002, no interest
payable in cash will accrue on the Notes. Accreted Value will increase between
the Issue Date and December 15, 2002, on a semi-annual bond equivalent basis
using a 360-day year comprised of twelve 30-day months, such that the Accreted
Value shall be equal to the full principal amount at maturity of the Notes on
December 15, 2002. Beginning on December 15, 2002, interest payable in cash on
the Notes will accrue at the rate of 12 1/2% per annum and will be payable
semi-annually in arrears on June 15, and December 15, commencing on June 15,
2003, to Holders of record on the immediately preceding June 1 and
December 1, respectively. Interest payable in cash on the Notes will accrue
from the most recent date to which interest has been paid or, if no interest
has been paid, from December 15, 2002. Interest will be computed on the basis
of a 360-day year comprised 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. The Company issued the Notes under an
Indenture, dated as of December 17, 1997 (amended and supplemented from time to
time, the "Indenture"), among the Company 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 1/2% Senior Discount Notes due 2007 (the "Initial Notes").
The Notes are limited in aggregate principal amount at maturity to
$230,000,000. 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
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<PAGE> 103
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 Sections 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and said Act for a statement of such terms,
including the respective rights, duties and immunities thereunder of the
Company, the Guarantors, the Trustee and the Holders of the Notes and the terms
upon which the Notes are, and are to be, authenticated and delivered. The Notes
are general, unsecured, senior obligations of the Company.
5. 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 December 15, 2002, upon not less than 30 nor more than 60 days'
notice, at the following redemption prices (expressed as percentages of
Accreted Value as of the Redemption Date) if redeemed during the twelve-month
period commencing on December 15 of the year set forth below, plus, in each
case, accrued and unpaid interest thereon, if any, to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . 106.250%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . 104.688%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . 103.125%
2005 . . . . . . . . . . . . . . . . . . . . . . . . . 101.563%
2006 and thereafter . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Optional Redemption Upon Public Equity Offerings. At
any time, or from time to time, on or prior to December 15, 2000, the Company
may, at its option, use the Cash Net Proceeds of one or more Public Equity
Offerings (as defined in the Indenture) to redeem up to 35% of the aggregate
principal amount at maturity of Notes originally issued at a Redemption Price
equal to 112.5% of Accreted Value as of the Redemption Date; provided that at
least 65% of the principal amount at maturity 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 December 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
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<PAGE> 104
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 Accreted
Value thereof plus the Applicable Premium (as defined below) as of Redemption
Date (the "Change of Control Redemption Date").
(d) Mandatory Redemption. The Notes are subject to
mandatory redemption (a "Mandatory Redemption") upon the occurrence of a
Triggering Event. If a Triggering Event occurs, the Company will be required
to redeem the Notes at a Redemption Price equal to 101% of the Accreted Value
to and including the date of redemption, or 102% of Accreted Value to and
including the date of redemption if the Company has exercised the Extended
Closing Option. The Mandatory Redemption must occur no later than the earlier
of (i) February 23, 1998 (or June 1, 1998, if the Company has exercised the
Extended Closing Option) and (ii) 20 days after such earlier date that the
Company determines in good faith that the Contadina Acquisition will not occur
as set forth in this Indenture. Notice of Mandatory Redemption will be mailed
at least 20 days before the Redemption Date to each Holder of Notes to be
redeemed at its registered address.
In the event of a Mandatory Redemption, the Trustee will
release to the Paying Agent for the Notes an amount of Collateral in cash equal
to the aggregate Redemption Price of the Notes for payment to holders of the
Notes on the Redemption Date.
6. Notice of Redemption. Notice of redemption will be
mailed at least 30 days but not more than 60 days (exactly 20 days in the case
of a Mandatory Redemption) 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 principal amount at maturity 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.
7. 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.
8. 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 1/2% Senior
Discount Notes due 2007 (the "Exchange Notes"), which have been registered
under the Securities Act, in like principal amount at maturity and having terms
identical in all
A-5
<PAGE> 105
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.
9. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 principal amount
at maturity and integral multiples thereof. A Holder shall register the
transfer of or exchange Notes in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as permitted by the
Indenture. The Registrar need not register the transfer of or exchange of any
Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a
Note shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of
principal or interest remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Company. After that, all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the
Company at any time deposits with the Trustee U.S. Legal Tender or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Notes to redemption or maturity and complies with the other provisions of the
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount at maturity 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 at
maturity 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,
A-6
<PAGE> 106
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 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 at maturity 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 at
maturity of the Notes then outstanding to direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of Notes notice of
any continuing Default or Event of Default (except a Default in payment of
principal or interest) if it determines that withholding notice is in their
interest.
17. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder,
director, officer, employee or incorporator, as such, of the Company shall have
any liability for any obligation of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Note by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until
the Trustee or an Authenticating Agent manually signs the certificate of
authentication on this Note.
20. Governing Law. The laws of the State of New York
shall govern this Note and the Indenture, without regard to principles of
conflict of laws.
21. Abbreviations and Defined Terms. Customary
abbreviations may be used in the name of a Holder of a Note or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
A-7
<PAGE> 107
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 Foods Company, One Market Street, San Francisco,
California 94119.
A-8
<PAGE> 108
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) December 17, 1999 (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:
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<PAGE> 109
[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.
A-10
<PAGE> 110
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
A-11
<PAGE> 111
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state
the amount you elect to have purchased:
$___________________
Dated: _________________ ____________________________________
NOTICE: The signature on this
assignment must correspond with the
name as it appears upon the face of
the within Note in every particular
without alteration or enlargement or
any change whatsoever and be
guaranteed by the endorser's bank or
broker.
Signature Guarantee: ____________________________________
A-12
<PAGE> 112
FOR PURPOSES OF SECTIONS 1272 ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, THE ISSUE PRICE WITH RESPECT TO EACH $1,000 OF PRINCIPAL AT MATURITY
OF THIS NOTE IS $545.76, THE AMOUNT OF ORIGINAL DISCOUNT IS $454.24, THE ISSUE
DATE IS DECEMBER 17, 1997, AND THE YIELD TO MATURITY IS 12 1/2%.
EXHIBIT B
CUSIP No.:
DEL MONTE FOODS COMPANY
SERIES B 12-1/2% SENIOR DISCOUNT NOTE DUE 2007
No. ________________ $_______________
DEL MONTE FOODS COMPANY, a Maryland 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 December 15, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 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 FOODS COMPANY
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Dated: ____________, ______ Title:
Certificate of Authentication
B-1
<PAGE> 113
This is one of the Series B 12 1/2% Senior Discount 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
(REVERSE OF SECURITY)
B-2
<PAGE> 114
SERIES B 12 1/2% SENIOR DISCOUNT NOTE DUE 2007
1. Interest. Until December 15, 2002, no interest
payable in cash will accrue on the Notes. Accreted Value will increase between
the Issue Date and December 15, 2002, on a semi-annual bond equivalent basis
using a 360-day year comprised of twelve 30-day months, such that the Accreted
Value shall be equal to the full principal amount at maturity of the Notes on
December 15, 2002. Beginning on December 15, 2002, interest payable in cash on
the Notes will accrue at the rate of 12 1/2% per annum and will be payable
semi-annually in arrears on June 15, and December 15, commencing on June 15,
2003, to Holders of record on the immediately preceding June 1 and
December 1, respectively. Interest payable in cash on the Notes will accrue
from the most recent date to which interest has been paid or, if no interest
has been paid, from December 15, 2002. Interest will be computed on the basis
of a 360-day year comprised 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. The Company issued the Notes under an
Indenture, dated as of December 17, 1997 (amended and supplemented from time to
time, the "Indenture"), among the Company 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 1/2% Senior Discount Notes due 2007 (the "Initial Notes").
The Notes are limited in aggregate principal amount at maturity to
$230,000,000. 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 Sections
77aaa-77bbbb) (the
B-3
<PAGE> 115
"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 Holders of the Notes and the terms
upon which the Notes are, and are to be, authenticated and delivered. The Notes
are general, unsecured, senior obligations of the Company.
5. 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 December 15, 2002, upon not less than 30 nor more than 60 days'
notice, at the following redemption prices (expressed as percentages of
Accreted Value as of the Redemption Date) if redeemed during the twelve-month
period commencing on December 15 of the year set forth below, plus, in each
case, accrued and unpaid interest thereon, if any, to the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . 106.250%
2003 . . . . . . . . . . . . . . . . . . . . . . . 104.688%
2004 . . . . . . . . . . . . . . . . . . . . . . . 103.125%
2005 . . . . . . . . . . . . . . . . . . . . . . . 101.563%
2006 and thereafter . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Optional Redemption Upon Public Equity Offerings. At
any time, or from time to time, on or prior to December 15, 2000, the Company
may, at its option, use the Cash Net Proceeds of one or more Public Equity
Offerings (as defined in the Indenture) to redeem up to 35% of the aggregate
principal amount at maturity of Notes originally issued at a Redemption Price
equal to 112.5% of Accreted Value as of the Redemption Date; provided that at
least 65% of the principal amount at maturity 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 December 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 of Control)
at a Redemption Price equal to 100% of the Accreted Value thereof plus the
Applicable Premium (as defined below) as of Redemption Date (the "Change of
Control Redemption Date").
B-4
<PAGE> 116
(d) Mandatory Redemption. The Notes are subject to
mandatory redemption (a "Mandatory Redemption") upon the occurrence of a
Triggering Event. If a Triggering Event occurs, the Company will be required
to redeem the Notes at a Redemption Price equal to 101% of the Accreted Value
to and including the date of redemption, or 102% of Accreted Value to and
including the date of redemption if the Company has exercised the Extended
Closing Option. The Mandatory Redemption must occur no later than the earlier
of (i) February 23, 1998 (or June 1, 1998, if the Company has exercised the
Extended Closing Option) and (ii) 20 days after such earlier date that the
Company determines in good faith that the Contadina Acquisition will not occur
as set forth in this Indenture. Notice of Mandatory Redemption will be mailed
at least 20 days before the Redemption Date to each Holder of Notes to be
redeemed at its registered address.
In the event of a Mandatory Redemption, the Trustee will
release to the Paying Agent for the Notes an amount of Collateral in cash equal
to the aggregate Redemption Price of the Notes for payment to holders of the
Notes on the Redemption Date.
6. Notice of Redemption. Notice of redemption will be
mailed at least 30 days but not more than 60 days (exactly 20 days in the case
of a Mandatory Redemption) 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 principal amount at maturity 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.
7. 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.
8. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 principal amount
at maturity and integral multiples thereof. 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.
B-5
<PAGE> 117
9. Persons Deemed Owners. The registered Holder of a
Note shall be treated as the owner of it for all purposes.
10. 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.
11. 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).
12. 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 at maturity 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 at
maturity 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.
13. 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 must annually
report to the Trustee on compliance with such limitations.
14. 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.
15. 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 at maturity 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
B-6
<PAGE> 118
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 at maturity 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.
16. 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.
17. 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.
18. Authentication. This Note shall not be valid until
the Trustee or an Authenticating Agent manually signs the certificate of
authentication on this Note.
19. 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.
20. 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).
21. 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.
22. 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 Foods Company, One Market Street, San Francisco,
California 94119.
B-7
<PAGE> 119
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:
___________________________________
B-8
<PAGE> 120
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state
the amount you elect to have purchased:
$___________________
Dated: _________________ _____________________________________
NOTICE: The signature on this
assignment must correspond with the
name as it appears upon the face of
the within Note in every particular
without alteration or enlargement or
any change whatsoever and be
guaranteed by the endorser's bank or
broker.
Signature Guarantee:
B-9
<PAGE> 121
EXHIBIT C
Bankers Trust Company, as Registrar
Dear Sirs:
In connection with our proposed purchase of $_____ principal amount at
maturity of 12 1/2% Senior Discount Notes due 2007 (the "Notes") of Del Monte
Foods Company (the "Issuer"), we confirm that:
1. We acknowledge that we have been informed that the Notes were
originally issued and sold to purchasers who have received a copy of the
Offering Memorandum dated December __, 1997, relating to the Notes and
understand that the Notes have not been, and will not be, registered under the
Securities Act of 1933, as amended (the "Securities Act") and may not be sold
except as permitted in the following sentence. We agree, on our own behalf and
on behalf of any accounts for which we are acting as hereinafter stated, that
if we should sell, pledge or otherwise transfer any Notes prior to the second
anniversary of the later of the original issuance of the Notes or the sale
thereof by the Issuer or an affiliate (within the meaning of Rule 144 under the
Securities Act or any successor rule thereto, an "Affiliate") of the issuer
(computed in accordance with paragraph (d) of Rule 144 under the Securities
Act) or if we are at the proposed date of such transfer or were during the
three months preceding such proposed date of transfer an Affiliate of the
Issuer, we will do so in compliance with any applicable state securities or
"Blue Sky" laws and only (A) to Issuer, (B) in accordance with Rule 144A under
the Securities Act (as indicated by the box checked by the transferor on the
form of assignment on the reverse of the Note), (C) pursuant to any exemption
from registration in accordance with Regulation S under the Securities Act (as
indicated by the box checked by the transferor on the form of assignment on the
reverse of the Note), (D) to an institutional investor that is an "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act which delivers a certificate in the form hereof to the trustee
under the Indenture dated as of December 17, 1997 between Issuer and Marine
Midland Bank, as trustee (the "Indenture Trustee"), or (E) pursuant to any
other applicable exemption under the securities laws, and we further agree, in
the capacities stated above, to provide to any person purchasing any of the
Notes from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
In addition, we understand that, upon any proposed resale of any Note
prior to the second anniversary of the later of the original issuance of such
Note (or any predecessor Note thereof) or the sale of such Note (or any
predecessor Note thereof) by Issuer or an Affiliate of Issuer (computed in
accordance with paragraph (d) of Rule 144 under the Securities Act) or if we
are at the proposed date of such transfer or were during the three months
preceding such proposed date of transfer an Affiliate of the Issuer, we will be
required to furnish to the Indenture Trustee, such certification and
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<PAGE> 122
other information (including, without limitation, an opinion of counsel) as the
Indenture Trustee, or Issuer may reasonably require to confirm that the proposed
sale complies with the foregoing restrictions. We further understand that
certificates evidencing Notes purchased by us will bear a legend to the
foregoing effect until the second anniversary of the later of the original
issuance of the Notes (or any predecessor Notes thereof) or the sale thereof by
Issuer or an Affiliate of Issuer (computed in accordance with paragraph (d) of
Rule 144 under the Securities Act) and for so long as we are or during the
preceding three months have been an Affiliate of the Issuer.
2. We are an institutional investor and an "accredited investor"
(within the meaning of Rule 501(a)(1), (2),(3) or (7) under the Securities Act)
and have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the Notes,
and we and any account for which we are acting are each able to bear the
economic risk of our or its investment and can afford the complete loss of such
investment.
3. We are acquiring the Notes purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion and for
each of which we are acquiring not less than $250,000 aggregate Accreted Value.
4. We have received such information as we deem necessary in
order to make our investment decision.
You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to an interested
party in any administrative or legal proceeding or official inquiry with
respect to the matter covered hereby.
Very truly yours,
[Purchaser]
By:______________________________________
Name:
Title:
C-2
<PAGE> 123
SCHEDULE 1 TO INDENTURE
ASSETS HELD FOR SALE/REAL PROPERTY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Anticipated Estimated Net Expected
Location Size Sales Price Proceeds Book Value Close of Escrow
- -------- ---- ----------- -------- ---------- ---------------
San Jose 262,000 $7,446,000 $5,900,000 $4,000,000 April 1998
Plant #51 8.17 acres
San Jose 457,850 $11,000,000 $9,500,000 $14,700,000 TBD
Plant #3 17.0 acres
Melnick Farm 55.5 acres $195,000 $179,000 $195,000 TBD
New Jersey
</TABLE>
<PAGE> 1
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
Dated as of December 17, 1997
By and Among
DEL MONTE FOODS COMPANY
and
BEAR, STEARNS & CO. INC.,
BANCAMERICA ROBERTSON STEPHENS,
and
BT ALEX. BROWN INCORPORATED,
as Initial Purchasers
12 1/2 Senior Discount Notes due 2007
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated
as of December 17, 1997, by and between DEL MONTE FOODS COMPANY, a Maryland
corporation (the "Company"), on the one hand, and BEAR, STEARNS & CO. INC.,
BANCAMERICA ROBERTSON STEPHENS and BT ALEX. BROWN INCORPORATED (the "Initial
Purchasers") on the other hand.
This Agreement is entered into in connection with the Purchase
Agreement, dated as of December 9, 1997, by and among the Company and the
Initial Purchasers (the "Purchase Agreement"), which provides for the sale by
the Company to the Initial Purchasers of $230,000,000 aggregate principal
amount at maturity of its 12 1/2% Senior Discount Notes due 2007 (the "Notes").
The Notes will be issued pursuant an Indenture, dated as of December 17, 1997,
among the Company and Marine Midland Bank, as trustee (the "Trustee"). In
order to induce the Initial Purchasers to enter into the Purchase Agreement and
the Company has 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 parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Acquisition Date: The date, prior to May 12, 1998, on which
the Contadina Acquisition is closed.
Advice: See the last paragraph of Section 5 hereof.
Affiliate: An affiliate of any specified person shall mean
any other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the purposes
of this definition, "control," when used with respect to any person, means the
power to direct the management and polices of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
Agreement: See the introductory paragraphs hereto.
<PAGE> 3
Applicable Period: See Section 2(b) hereof.
Business Day: A day other than a Saturday, a Sunday, a day on
which the banking institutions in the State and City of New York are authorized
or obligated by law or executive order to close or a day that is declared a
national or New York state holiday.
Company: See the introductory paragraphs hereto.
Contadina Acquisition: Shall have the meaning set forth in
the Final Memorandum.
Effectiveness Date: The 150th day after the Acquisition Date.
Effectiveness Period: See Section 3(a) hereof.
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: The 75th day after the Acquisition Date.
Final Memorandum: The Final Offering Memorandum dated
December 9, 1997, pursuant to which the Company originally offered and sold the
Notes.
Holder: Any holder of a Registrable Note or Registrable
Notes.
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.
2
<PAGE> 4
Inspectors: See Section 5(n) hereof.
Issue Date: December 17, 1997, the date of original issuance
of the Notes.
Liquidated Damages: See Section 4(a) hereof.
NASD: See Section 5(s) hereof.
Notes: See the introductory paragraphs hereto.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2(b) hereof.
Person: An individual, corporation, partnership, joint
venture, joint stock company, 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(n) 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
3
<PAGE> 5
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 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 post-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 or regulation
hereafter adopted by the SEC providing for offers and sales of securities made
in compliance therewith resulting in offers and sales by subsequent holders
that are not Affiliates of the Company 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 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(c) 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 and in effect
on the date of the Indenture.
Trustee: The trustee under the Indenture.
4
<PAGE> 6
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 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 at maturity of notes (the "Exchange
Notes") of the Company 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 shall use its 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) consummate
the Exchange Offer on or prior to the 30th 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 who 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 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 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 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
5
<PAGE> 7
hereof. No securities other than the Exchange Notes shall be included in the
Exchange Offer Registration Statement.
(b) The Company 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 shall use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirements of the
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 30 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 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 at maturity of
notes (the "Private Exchange Notes") of the Company 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 shall use its
best efforts to cause the Private Exchange Notes to bear the same CUSIP number
as the Exchange Notes. Notwithstanding the foregoing, the Company shall not be
obligated to issue and deliver the Private Exchange Notes if it is not possible
for the Company, notwithstanding its 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 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
6
<PAGE> 8
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.
In connection with the Exchange Offer, the Company 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);
(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:
(l) 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 va1idly 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
at maturity 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 to proceed with the Exchange
Offer or
7
<PAGE> 9
the Private Exchange, and no material adverse development shall have occurred in
any existing action or proceeding with respect to the Company and (iii) all
governmental approvals shall have been obtained, which approvals the Company
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 is
not permitted to effect the Exchange Offer, (ii) the Exchange Offer is not
consummated within 180 days of the Acquisition Date, (iii) the 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 shall
promptly deliver to the Holders and the Trustee written notice thereof (the
"Shelf Notice") and shall file a Shelf Registration Statement 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 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 shall
use its 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-1 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). The
Company shall not permit any securities other than the Registrable Notes to be
included in the Initial Shelf Registration or any Subsequent Shelf Registration
(as defined below).
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<PAGE> 10
The Company shall use its 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 two
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
two-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 the Company in writing,
within 15 Business Days after receipt of a request therefor, such information
as the Company 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 Liquidated
Damages 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 all information required to be disclosed in
order to make information previously furnished to the Company 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 shall use its 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 shall use its 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.
9
<PAGE> 11
(c) Supplements and Amendments. The Company
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 at
maturity 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 shall use its best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof.
4. Liquidated Damages
(a) The Company and the Initial Purchasers agree
that the Holders will suffer damages if the Company fails to fulfill its
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 certain amounts as liquidated damages ("Liquidated
Damages") 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 or (B)
notwithstanding that the Company has consummated or will consummate
the Exchange Offer, the Company is 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 such Filing
Date, Liquidated Damages shall accrue on the Accreted Value
(determined as of the more recent of June 1 or December 1 immediately
preceding the relevant Event Date (as defined below) or if prior to
June 1, 1998, as of the Issue Date) of the Notes at a rate of 0.50%
per annum for the first 90 days immediately following such applicable
Filing Date, and such Liquidated Damages shall increase by an
additional 0.50% per annum at the beginning of each subsequent 90-day
period; and
(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 or (B) notwithstanding that the Company has consummated or
will consummate the Exchange Offer, the Company is 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 such Effectiveness
Date, Liquidated Damages shall accrue on the Accreted Value
(determined as of the more recent of June 1 or December 1 immediately
preceding the relevant Event Date (as defined below) or if prior to
June 1, 1998, as of the Issue Date) of the Notes at a rate of 0.50%
per annum for the first 90 days immediately following the day after
such Effec-
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<PAGE> 12
tiveness Date, and such Liquidated Damages shall increase by an
additional 0.50% per annum at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Company has not exchanged
Exchange Notes for all Notes validly tendered in accordance with the
terms of the Exchange Offer on or prior to the 30th 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 Liquidated Damages
shall accrue on the Accreted Value (determined as of the more recent of
June 1 or December 1 immediately preceding the relevant Event Date (as
defined below) or if prior to June 1, 1998, as of the Issue Date) of
the Notes at a rate of 0.50% per annum for the first 90 days commencing
on the (x) 30th 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 Liquidated Damages shall increase by an
additional 0.50% per annum at the beginning of each such subsequent 90-
day period;
provided, however, that the Liquidated Damages payable on the Notes may not
exceed in the aggregate 1.0% per annum; provided, further, however, that (x)
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), (y) upon the effectiveness of the Exchange Offer
Registration Statement or the applicable Shelf Registration Statement as
required hereunder (in the case of clause (ii) of this Section 4), or (z) 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), Liquidated Damages 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 shall notify the Trustee within
one Business Day after each and every date on which an event occurs in respect
of which Liquidated Damages are required to be paid (an "Event Date") . Any
amounts of Liquidated Damages due pursuant to (a) (i), (a) (ii) or (a) (iii) of
this Section 4 will be payable in cash semi-annually on each June l5 and
December 15 (to the holders of record on the June 1 and December 1 immediately
preceding such dates), commencing with the first such date occurring after any
such Liquidated Damages commence to accrue. The amount of Liquidated Damages
will be determined by multiplying the applicable Liquidated Damages by the
Accreted Value (determined as of the relevant date as set forth above) of the
Registrable Notes, multiplied by a fraction, the numerator of which is the
number of days such Liquidated Damages were 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.
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<PAGE> 13
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Company 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 hereunder the
Company 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 its 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 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 shall not file any Registration
Statement or Prospectus or any amendments or supplements thereto if the Holders
of a majority in aggregate principal amount at maturity of the 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 shall be deemed not to have used its 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
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
12
<PAGE> 14
such Registrable Notes or such Exchange Notes during that period, unless (i)
such action is required by applicable law, or (ii) the Company complies 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 has 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, 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 of Exchange Notes by
Participating Broker-Dealers the representations and warranties of the Company
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 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
determination that a post-effective amendment to a Registration Statement would
be otherwise necessary or appropriate.
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<PAGE> 15
(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 at maturity 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 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.
(f) If (l) 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, 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 (l) 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, 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 hereby consents 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
14
<PAGE> 16
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 Pro spectus contained in the Exchange Offer
Registration Statement by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, to use its 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 agrees to cause its 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 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 the Company shall not 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) 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 its 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 will cooperate in all reasonable
respects with the filing of such Registration Statement and the granting of such
approvals.
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<PAGE> 17
(k) If (l) 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, 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.
(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 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, DMC 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; (ii)
obtain the written opinions of counsel to the Company 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, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company 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 under-
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<PAGE> 18
written 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 at maturity
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 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, DMC 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, DMC 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 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 further to 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 allow the Company to
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<PAGE> 19
undertake appropriate action to prevent disclosure of the Records or any such
information deemed confidential at the Company's 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 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 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 at maturity 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").
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<PAGE> 20
(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 may require each seller of Registrable Notes as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Notes as the Company may, from time to time, reasonably request. The Company
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 all information
required to be disclosed in order to make the information previously furnished
to the Company 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 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 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 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 shall be borne by the Company
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
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<PAGE> 21
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 at maturity 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, 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 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 desires such insurance, (vii) fees and expenses of all other
Persons retained by the Company, (viii) internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees of the Company 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 agrees 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 primarily by, arise primarily out of or are based
primarily upon any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating
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<PAGE> 22
to any Participant furnished to the Company in writing by such Participant
expressly for use therein; provided, however, that the Company will not be so
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 with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not
jointly, to indemnify and hold harmless the Company and its directors, its
officers who sign the Registration Statement and each Person who controls the
Company 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
to each Participant, but only with reference to information relating to such
Participant furnished to the Company 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 so to 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
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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
and its directors, its officers and such control Persons of the Company shall
be designated in writing by the Company 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 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
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<PAGE> 24
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 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 December 9, 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 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 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 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 and its directors, officers,
23
<PAGE> 25
employees or agents or any person controlling the Company 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
The Company 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 is not permitted to file such reports, the Company 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. The Company
further covenants for so long as any Registrable Notes 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 at
maturity of such Registrable Notes included in such offering and shall be
reasonably acceptable to the Company.
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. The Company has
not 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
24
<PAGE> 26
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, the Company has not 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 pursuant to this Agreement.
(b) Adjustments Affecting Registrable Notes. The
Company shall not 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 (II) (A) the Holders of not
less than a majority in aggregate principal amount at maturity 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 at maturity of
the Exchange Notes held by all Participating Broker-Dealers; provided, however,
that Section 7 and this Section 10(d) may not be amended, modified or
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 at maturity 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:
Bear, Stearns & Co. Inc.,
As representative of the Initial Purchasers
245 Park Avenue
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<PAGE> 27
New York, New York 10167
Facsimile No: (212) 272- 6594
Attention: General Counsel
(ii) if to the Initial Purchasers, at the address
specified in Section 10 (e) (i);
(iii) if 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-Lega1 Affairs
Facsimile No. : (415) 247-3263
and to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
Attention: Gregg Vignos, Esq.
Facsimile No. : 415-983-1200
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.
(a) 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.
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(b) 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.
(b) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(c) 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.
(d) 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.
(e) Entire Agreement. This Agreement,
together with the Indenture, the Notes and the Purchase Agreement, is intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Registrable Notes. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
(f) Securities Held by the Company or its
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Registrable Notes is required hereunder, Registrable Notes held by
the Company, or any of its 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.
(g) Third Party Beneficiaries. Beneficial and
registered 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> 29
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
DEL MONTE FOODS COMPANY
By: /s/ WILLIAM R. SAWYERS
---------------------------------
Name. William R. Sawyers
Title: Vice President and
Secretary
BEAR, STEARNS & CO. INC.
as Initial Purchaser
By: /s/ J. ANDREW BUGAS
---------------------------------
Name. J. Andrew Bugas
Title: Senior Managing Director
BANCAMERICA ROBERTSON STEPHENS,
as Initial Purchaser
By: /s/ BRUCE R. THOMPSON
---------------------------------
Name. Bruce R. Thompson
Title: Managing Director
BT ALEX. BROWN INCORPORATED
as Initial Purchaser
By: /s/ [ILLEGIBLE]
---------------------------------
Name.
Title:
<PAGE> 1
EXHIBIT 4.4
================================================================================
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF DECEMBER 17, 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
BANKBOSTON, N.A.,
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 ROBERTSON STEPHENS
================================================================================
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<TABLE>
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS........................................2
1.1 Certain Defined Terms...............................................................2
1.2 Other Interpretive Provisions......................................................44
1.3 Accounting Principles..............................................................45
ARTICLE II
THE CREDITS.......................................45
2.1 Amounts and Terms of Commitments...................................................45
(a) The Term A Credit..................................................45
(b) The Term B Credit..............................................45
(c) The Revolving Credit...........................................46
2.2 Loan Accounts......................................................................46
2.3 Procedure for Borrowing............................................................47
2.4 Conversion and Continuation Elections..............................................48
2.5 Swingline Loans....................................................................50
2.6 Termination or Reduction of Revolving Commitments..................................52
2.7 Optional Prepayments...............................................................53
2.8 Mandatory Prepayments of Loans.....................................................54
2.9 Repayment ........................................................................59
(a) The Term A Credit..................................................59
(b) The Term B Credit..............................................59
(c) The Revolving Credit...........................................59
2.10 Interest ........................................................................59
2.11 Fees ........................................................................60
(a) Arranger and Agency Fees.......................................60
(b) Commitment Fees................................................60
2.12 Computation of Fees and Interest..................................................61
2.13 Payments by the Company...........................................................61
2.14 Payments by the Lenders to the Administrative Agent...............................62
2.15 Sharing of Payments, Etc..........................................................63
ARTICLE III
THE LETTERS OF CREDIT..................................64
3.1 The Letter of Credit Subfacility...................................................64
3.2 Issuance, Amendment and Extension of Letters of Credit.............................65
3.3 Risk Participations, Drawings and Reimbursements...................................68
3.4 Repayment of Participations........................................................70
3.5 Role of the Issuing Lender.........................................................70
3.6 Obligations Absolute...............................................................71
3.7 Cash Collateral Pledge.............................................................72
3.8 Letter of Credit Fees..............................................................72
3.9 Uniform Customs and Practice.......................................................73
3.10 Non-Dollar Letters of Credit......................................................73
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ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY..........................76
4.1 Taxes ........................................................................76
4.2 Illegality ........................................................................78
4.3 Increased Costs and Reduction of Return............................................79
4.4 Funding Losses.....................................................................80
4.5 Inability to Determine Rates.......................................................80
4.6 Certificates of Lenders............................................................81
4.7 Substitution of Lenders............................................................81
4.8 Survival ........................................................................81
ARTICLE V
CONDITIONS PRECEDENT...................................82
5.1 Conditions to Effectiveness. .....................................................82
(a) Credit Agreement...............................................82
(b) Resolutions and Incumbency.....................................82
(c) Organization Documents; Good Standing..........................82
(d) Legal Opinions.................................................83
(e) Notes..........................................................83
(f) Payment of Fees................................................83
(g) Parent Guaranty................................................83
(h) Confirmation...................................................83
(i) Certificate....................................................83
(j) Other Documents................................................84
(k) Other Documents................................................84
5.2 [Intentionally Left Blank]..........................................................84
5.3 Conditions to All Credit Extensions................................................84
(a) Notice, Application............................................84
(b) Continuation of Representations and
Warranties.....................................................84
(c) No Existing Default............................................84
5.4 Conditions to New Term B Loans.....................................................85
ARTICLE VI
REPRESENTATIONS AND WARRANTIES..............................86
6.1 Corporate Existence and Power......................................................86
6.2 Corporate Authorization; No Contravention..........................................87
6.3 Governmental Authorization.........................................................87
6.4 Binding Effect.....................................................................87
6.5 Litigation ........................................................................88
6.6 No Default ........................................................................88
6.7 ERISA Compliance...................................................................88
6.8 Use of Proceeds; Margin Regulations................................................89
6.9 Title to Properties................................................................89
6.10 Taxes ........................................................................89
6.11 Financial Condition...............................................................90
6.12 Regulated Entities................................................................91
6.13 No Burdensome Restrictions........................................................91
</TABLE>
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<TABLE>
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6.14 Copyrights, Patents, Trademarks and Licenses, etc.................................91
6.15 Subsidiaries......................................................................92
6.16 Insurance ........................................................................92
6.17 Solvency, etc.....................................................................92
6.18 Merger, Subordinated Notes, etc...................................................93
6.19 Real Property.....................................................................93
6.20 Swap Obligations..................................................................93
6.21 Senior Indebtedness...............................................................94
6.22 Environmental Warranties..........................................................94
6.23 Full Disclosure...................................................................95
6.24 Contadina Acquisition, Parent Bridge Notes, etc...................................96
ARTICLE VII
AFFIRMATIVE COVENANTS..................................97
7.1 Financial Statements...............................................................97
7.2 Certificates; Other Information....................................................98
7.3 Notices ........................................................................99
7.4 Preservation of Corporate Existence, Etc..........................................100
7.5 Maintenance of Property...........................................................100
7.6 Insurance .......................................................................100
7.7 Payment of Obligations............................................................100
7.8 Compliance with Laws..............................................................101
7.9 Compliance with ERISA.............................................................101
7.10 Inspection of Property and Books and Records.....................................101
7.11 Interest Rate Protection.........................................................102
7.12 Environmental Covenant...........................................................102
7.13 Use of Proceeds..................................................................102
7.14 Further Assurances...............................................................103
ARTICLE VIII
NEGATIVE COVENANTS...................................105
8.1 Limitation on Liens...............................................................105
8.2 Disposition of Assets.............................................................107
8.3 Consolidations and Mergers........................................................108
8.4 Loans and Investments.............................................................109
8.5 Limitation on Indebtedness........................................................111
8.6 Transactions with Affiliates......................................................112
8.7 Use of Proceeds...................................................................113
8.8 Contingent Obligations............................................................113
8.9 Joint Ventures....................................................................113
8.10 Lease Obligations................................................................114
8.11 Minimum Fixed Charge Coverage....................................................114
8.12 Minimum EBITDA...................................................................114
8.13 Minimum Adjusted Net Worth.......................................................115
8.14 Maximum Senior Debt Ratio........................................................116
8.15 Maximum Total Debt Ratio.........................................................116
8.16 Maximum Capital Expenditures.....................................................116
8.17 Restricted Payments..............................................................117
8.18 ERISA .......................................................................119
</TABLE>
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8.19 Limitations on Sale and Leaseback Transactions...................................119
8.20 Limitation on Restriction of Subsidiary Dividends and
Distributions..........................................................119
8.21 Inconsistent Agreements..........................................................120
8.22 Change in Business...............................................................120
8.23 Amendments to Certain Documents..................................................120
8.24 Fiscal Year......................................................................121
8.25 Limitation on Issuance of Guaranty Obligations...................................121
ARTICLE IX
EVENTS OF DEFAULT...................................122
9.1 Event of Default..................................................................122
(a) Non-Payment...................................................122
(b) Representation or Warranty....................................122
(c) Specific Defaults.............................................122
(d) Other Defaults................................................122
(e) Cross-Default.................................................122
(f) Insolvency; Voluntary Proceedings.............................123
(g) Involuntary Proceedings.......................................123
(h) ERISA.........................................................124
(i) Monetary Judgments............................................124
(j) Non-Monetary Judgments........................................124
(k) Change of Control.............................................124
(l) Guarantor Defaults............................................124
(m) Collateral Documents, etc.....................................124
9.2 Remedies .......................................................................125
9.3 Rights Not Exclusive..............................................................125
ARTICLE X
THE AGENTS.......................................126
10.1 Appointment and Authorization....................................................126
10.2 Delegation of Duties.............................................................127
10.3 Liability of Administrative Agent................................................127
10.4 Reliance by Administrative Agent.................................................127
10.5 Notice of Default................................................................128
10.6 Credit Decision..................................................................128
10.7 Indemnification of Agents........................................................129
10.8 Administrative Agent in Individual Capacity......................................129
10.9 Successor Administrative Agent...................................................130
10.10 Withholding Tax.................................................................130
10.11 Collateral Matters..............................................................132
ARTICLE XI
MISCELLANEOUS.....................................135
11.1 Amendments and Waivers...........................................................135
11.2 Notices .......................................................................137
11.3 No Waiver; Cumulative Remedies...................................................138
11.4 Costs and Expenses...............................................................138
</TABLE>
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11.5 Company Indemnification..........................................................138
11.6 Payments Set Aside...............................................................139
11.7 Successors and Assigns...........................................................140
11.8 Assignments, Participations, etc.................................................140
11.9 Confidentiality..................................................................142
11.10 Set-off .......................................................................143
11.11 Automatic Debits of Fees........................................................144
11.12 Notification of Addresses, Lending Offices, Etc. ...............................144
11.13 Counterparts....................................................................144
11.14 Severability....................................................................144
11.15 No Third Parties Benefited......................................................144
11.16 Governing Law and Jurisdiction..................................................145
11.17 Waiver of Jury Trial............................................................145
11.18 Entire Agreement................................................................145
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULES
Pricing Schedule
<S> <C>
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 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 Amended and Restated Parent Guaranty
Exhibit F-2 Form of Subsidiary Guaranty
Exhibit G-1 Form of Parent Pledge Agreement
Exhibit G-2 Form of Company Pledge Agreement
Exhibit G-3 Form of Subsidiary Pledge Agreement
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 I-3 Form of Opinion of Maryland special counsel to
Parent
Exhibit J [Reserved]
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
</TABLE>
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<TABLE>
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Exhibit Q Intercreditor Agreement
Exhibit R Form of Intellectual Property License
Exhibit S Form of Environmental Indemnity
Exhibit T Form of Confirmation
</TABLE>
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<PAGE> 9
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
December 17, 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 BANKBOSTON, N.A.,
CITICORP USA, INC., GENERAL ELECTRIC CAPITAL CORPORATION and THE LONG-TERM
CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY, as coagents for the Lenders.
W I T N E S S E T H:
WHEREAS, the Company, the Administrative Agent and the Lenders are
parties to that certain Credit Agreement, dated as of April 18, 1997 (the
"Original Credit Agreement");
WHEREAS, the parties hereto desire to amend and restate the Original
Credit Agreement and certain other Loan Documents in certain respects in
connection with the Company's proposed acquisition (the "Contadina Acquisition")
of certain assets constituting the business of Contadina Services, Inc. (the
"Seller") pursuant to an Asset Purchase Agreement dated November 12, 1997 among
Seller, Nestle USA, Inc., the Company and Parent (as amended from time to time
in accordance with the provisions hereof and thereof, the "Contadina Purchase
Agreement");
WHEREAS, in connection with the Contadina Acquisition, Parent intends to
issue new equity in an amount of $40,000,000 (the "New Parent Equity") and
intends to incur $60,000,000 of Parent Bridge Notes (the "Bridge Financing") or
Parent Discount Notes in lieu of such Bridge Financing and to contribute the net
proceeds received from the New Parent Equity and the Bridge Financing (or such
Parent Discount Notes) to the Company to enable the Company to pay a portion of
the purchase price (and related fees and expenses) in connection with the
Contadina Acquisition;
WHEREAS, also in connection with the Contadina Acquisition, the Company
has requested that the Lenders amend and restate the Original Credit Agreement
to, among other things, increase the aggregate principal amount of Term B Loans
by up to $85,000,000, with the proceeds of such incremental Term B Loans to be
used by the Company to fund that portion of the purchase price (and related fees
and expenses) in connection with the Contadina Acquisition not financed by the
New Parent Equity, Bridge Financing (or Parent Discount Notes issued in lieu of
such Bridge Financing) and the proceeds of Revolving Loans; and
<PAGE> 10
WHEREAS, the Company, the Administrative Agent and the Lenders desire
that the Original Credit Agreement be amended and restated on the terms and
conditions set forth herein to, among other things, set forth the terms and
conditions under which the Lenders hereafter will extend credit to the Company;
it being the intention of the Company, the Administrative Agent and the Lenders
that this Agreement and the execution and delivery of any substituted promissory
notes not effect a novation of the obligations of the Company to the Lenders
under the Original Credit Agreement but merely a restatement and, where
applicable, a substitution of the terms governing and evidencing such
obligations hereafter;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the Original Credit Agreement is amended and
restated to read in its entirety, and the parties agree, as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. 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.
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Acquisition means any transaction or series of related
transactions for the purpose of, or resulting directly or indirectly in,
(a) the acquisition of all or substantially all of the assets of a
Person, or of any business or division of a Person, (b) the acquisition
of in excess of 50% of the capital stock, partnership interests,
membership interests or equity of any Person, or otherwise causing any
Person to become a Subsidiary or (c) a merger or consolidation or any
other combination with another Person (other than a Person that is a
Subsidiary) provided that the Company or a Subsidiary is the surviving
entity.
Acquisition Prospect means each Person whose stock or assets is
intended to be acquired in an Acquisition permitted under subsection
8.4(i) including, in each case, the assets and the liabilities thereof.
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.
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<PAGE> 12
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 Robertson Stephens, a Delaware
corporation.
Assets Held For Sale means assets of the Company and its
Subsidiaries listed on Schedule 2.8.
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.
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<PAGE> 13
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 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
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<PAGE> 14
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.
Bridge Financing - see the recitals.
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 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
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<PAGE> 15
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
McGrawHill 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
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<PAGE> 16
case maturing within one year after the date of acquisition and (v)
repurchase agreements with any Lender or any primary dealer maturing
within one year from the date of acquisition that are fully
collateralized by investment instruments that would otherwise be Cash
Equivalent Investments; provided that the terms of such repurchase
agreements comply with the guidelines set forth in the Federal Financial
Institutions Examination Council Supervisory Policy -- Repurchase
Agreements of Depository Institutions With Securities Dealers and
Others, as adopted by the Comptroller of the Currency on October 31,
1985.
CERCLA means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
CERCLIS means the Comprehensive Environmental Response
Compensation Liability Information System List.
Change of Control means (i) 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)),(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
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<PAGE> 17
require the Company to redeem or repurchase any Qualified Notes prior to
their expressed maturity or (iv) while any Parent Bridge Notes or Parent
Discount Notes are outstanding, any "Change of Control" as defined in
the Parent Bridge Note Agreement or Parent Discount Indenture or in any
other instrument governing the Parent Bridge Notes or Parent Discount
Notes or, while any Qualified Parent Notes are outstanding, any "Change
of Control" as defined in any Qualified Parent Indenture or any other
similar event, regardless of how designated, if the occurrence of such
event would require Parent, pursuant to any Qualified Parent Indenture,
to redeem or repurchase any Qualified Parent Notes prior to their
expressed maturity.
Closing Date means April 18, 1997.
Co-Agents means BankBoston, N.A., 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.
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.
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<PAGE> 18
Common Stock means the common stock, par value $1.00 per share,
of the Company.
Company means Del Monte Corporation, a New York corporation and a
Wholly-Owned Subsidiary of Parent.
Company Pledge Agreement means the Company Pledge Agreement,
dated as of the Closing Date, between the Company and the Agent, in the
form of Exhibit G-2.
Compliance Certificate means a certificate substantially in the
form of Exhibit C.
Computation Period means, 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. Notwithstanding
the foregoing, "Consolidated Net Income" shall be calculated without
giving effect to any charges arising from any purchase accounting
valuation adjustments over historical cost of the Person or assets
acquired, as required or permitted by Accounting Principles Board
Opinion Nos. 16 and 17.
Contadina Acquisition - see the recitals.
Contadina Purchase Agreement - see the recitals.
Contingent Obligation means, as to any Person, any direct or
indirect liability of such Person, whether or not contingent, with or
without recourse: (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligation") of
another Person (the "primary obligor"), including any obligation of such
Person (i) to purchase, repurchase or otherwise acquire such primary
obligation or any security therefor, (ii) to advance or provide funds
for the payment or discharge of any primary obligation, or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring
the owner of any primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or (iv) otherwise to
assure or hold harmless the holder of any primary obligation against
loss in respect thereof (each, a "Guaranty Obligation"); (b) with
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<PAGE> 19
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),
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<PAGE> 20
and the dividend by the Company to Parent permitted by
subsection 8.17(f).
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, as to any Person for any Computation
Period, the sum of
(a) Consolidated Net Income of such Person for such period
excluding, to the extent reflected in determining such Consolidated Net
Income, extraordinary gains and losses for such period,
plus
(b) to the extent deducted in determining Consolidated Net Income
and without duplication, Interest Expense, income tax expense,
depreciation and amortization (including amortization of goodwill and
other intangible assets) of such Person for such period, non-cash
charges and losses from sales of assets other than Inventory sold in the
ordinary course of business,
minus
(c) to the extent reflected in determining Consolidated Net
Income and without duplication, non-cash
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<PAGE> 21
credits and gains of such Person from sales of assets other than
Inventory sold in the ordinary course of business,
plus
(d) in the case of Parent, to the extent deducted in determining
Consolidated Net Income of Parent and without duplication, management
incentive payments in connection with the DMFC Recapitalization and
other fees and expenses in connection with the DMFC Recapitalization and
the Contadina Acquisition;
provided that for purposes of calculating EBITDA of Parent for any
period, the EBITDA (as calculated pursuant to clauses (a), (b), (c) and
(d) above) of any Person, or attributable to any assets, acquired by the
Company or any Subsidiary during such period shall be included on a pro
forma basis for such period (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period, but
without any adjustment for expected cost savings or other synergies) if
(i) either (x) the audited consolidated balance sheet of such acquired
Person and its consolidated Subsidiaries as at the end of the fiscal
year of such Person preceding the acquisition of such Person and the
related audited consolidated statements of income, stockholders' equity
and cash flows for the such fiscal year have been provided to the
Administrative Agent and the Lenders and have been reported on without a
qualification arising from the scope of the audit or a "going concern"
or like qualification or exception or (y) such other financial
information furnished to the Lenders with respect to such period and
such acquisition has been found acceptable by the Required Lenders (it
being acknowledged that the information provided with respect to the
Seller in connection with the Contadina Acquisition has been found
acceptable by the Required Lenders) and (ii) either (x) any subsequent
unaudited financial statements for such Person for the period prior to
the acquisition of such Person were prepared on a basis consistent with
such audited financial statements, have been provided to the
Administrative Agent and the Lenders and have been reported on without a
qualification arising from the scope of the audit or a "going concern"
or like qualification or (y) such other financial information furnished
to the Lenders with respect to such period and such acquisition has been
found acceptable by the Required Lenders (it being acknowledged that the
information provided with respect to the Seller in connection with the
Contadina Acquisition has been found acceptable by the Required
Lenders).
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<PAGE> 22
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;
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<PAGE> 23
(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 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);
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<PAGE> 24
(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 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
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<PAGE> 25
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 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);
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<PAGE> 26
(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.
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
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<PAGE> 27
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 of Parent for such period (without giving effect to
any amount included in such EBITDA on a pro forma basis solely by virtue
of the proviso to the definition of "EBITDA"),
less
(b) the sum, without duplication, of
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<PAGE> 28
(i) repayments of principal of Term Loans pursuant to
Section 2.9, regularly scheduled principal payments arising with
respect to any other long-term Indebtedness of the Company and
its Subsidiaries, and the portion of any regularly scheduled
payments with respect to capital leases allocable to principal,
in each case made during such period,
plus
(ii) voluntary prepayments of the Term Loans pursuant to
Section 2.7 during such period (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 of Parent, cash payments (other than
payments of principal) made by the Company in connection with
prepayments and repayments of Term Loans under clauses (b)(i) and
(b)(ii) above,
plus
(vi) cash 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, and
plus
(vii) cash payments made by Parent and its Subsidiaries
during such period in respect of fees and expenses in connection
with the Contadina Acquisition.
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<PAGE> 29
Excess Proceeds - see subsection 2.8(a).
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 as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Business
Day opposite the caption "Federal Funds (Effective)"; or, if for any
relevant day such rate is not so published on any such preceding
Business Day, the rate for such day will be the arithmetic mean as
determined by the Administrative Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Administrative
Agent.
Fee Letter - see subsection 2.11(a).
Fixed Charge Coverage Ratio means, for the Computation Period
most recently ended on or before such date, the ratio of (a) EBITDA of
Parent for such Computation Period to (b) the sum of (i) Interest
Expense of Parent for such Computation Period (excluding, for purposes
of this definition, any Interest Expense attributable to the Parent
Bridge Notes, Parent Discount Notes or any Qualified Parent Notes) 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 of
Parent and scheduled installments of principal of the Term Loans shall
be measured from the
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period from April 1, 1997 through the end of any such Computation Period
and annualized as follows: with respect to the Computation Period ending
December 28, 1997, Interest Expense of Parent 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 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.
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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 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).
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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 Q.
Interest Expense means as to any Person for any period the
consolidated interest expense of such Person and its Subsidiaries for
such period (including all imputed interest on capital leases) excluding
amortization or write-off of deferred financing costs.
Interest Payment Date means (i) as to any Offshore Rate Loan, the
last day of each Interest Period applicable to such Loan and, in the
case of any Offshore Rate Loan with a six-month Interest Period, the
three-month anniversary of the first day of such Interest Period, and
(ii) as to any Base Rate Loan, the last Business Day of each fiscal
quarter.
Interest Period means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending one, two, three or six
months thereafter, as selected by the Company in its Notice of Borrowing
or Notice of Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be
extended to the following Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month, in which
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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
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through a separate legal entity) which is not a Subsidiary of the
Company or any of its Subsidiaries and which is now or hereafter formed
by the Company or any of its Subsidiaries with another Person in order
to conduct a common venture or enterprise with such Person.
Judgment Currency - see subsection 3.10(f).
Landlord's Consent means a document substantially in the form of
Exhibit O, with appropriate insertions, or such other form as shall be
acceptable to the Administrative Agent or Required Revolving Lenders.
L/C Advance means each 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
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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 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
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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 fee letter delivered to BofA in connection with this Agreement, 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 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
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(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.
Maximum New Term B Commitment Amount - see subsection 2.1(b).
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 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
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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).
New Parent Equity - see the recitals.
New Term B Funding Date - see Section 5.4.
New Term B Lender means each financial institution signatory
hereto as a "New Term B Lender."
New Term B Loan - see subsection 2.1(b).
New Term B Percentage means, as to any New Term B Lender, the
percentage set forth opposite its signature hereto as a "New Term B
Lender", as such percentage may be adjusted after the date hereof by
assignment in accordance with subsection 11.8(a).
Non-Dollar Letter of Credit - see Section 3.10.
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Note means a promissory note executed by the Company in favor of
a Lender pursuant to subsection 2.2(b), in substantially the form of
Exhibit D.
Note and Warrant Escrow Agreement means an escrow agreement, in
form and substance satisfactory to the Administrative Agent, among the
lenders in the Bridge Financing, if any, and an escrow agent, to handle
the escrow of exchange notes and warrants as amended from time to time
in accordance with Section 8.23.
Notice of Borrowing means a notice in substantially the form of
Exhibit A.
Notice of Conversion/Continuation means a notice in substantially
the form of Exhibit B.
Obligations means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the
Company, Parent or any Subsidiary to any Lender, the Administrative
Agent, or any Indemnified Person, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become
due, or now existing or hereafter arising; provided, that "Obligations"
shall not include any obligations under any Environmental Indemnity.
Offering Memorandum means the Offering Memorandum of Parent dated
December 9, 1997 with respect to the Parent Discount Notes.
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
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(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 thereof) of such corporation and (b) for any foreign
corporation, the equivalent documents.
Original Credit Agreement - see the recitals.
Original Term B Loans - see subsection 2.4(d).
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
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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 Bridge Note Agreement means a securities purchase
agreement among Parent and certain financial institutions, and
acceptable to the Administrative Agent, that definitively documents the
issuance and sale of Parent Bridge Notes, as amended from time to time
in accordance with Section 8.23.
Parent Bridge Notes means (i) the $60,000,000 Senior Unsecured
Increasing Rate Loans made to Parent due one year after issuance thereof
and (ii) the exchange notes to be issued by Parent upon exchange of the
loans described in clause (i) above upon maturity thereof.
Parent Discount Indenture means a trust indenture entered into by
Parent with an indenture trustee with respect to the Parent Discount
Notes with terms and provisions no more restrictive to the Parent and no
less advantageous to the Lenders than those described in the Offering
Memorandum, as amended from time to time in accordance with Section
8.23.
Parent Discount Notes means the $125,524,000 gross proceeds 12.5%
Senior Discount Notes due 2007 of Parent having the terms and conditions
set forth in the Offering
Memorandum.
Parent Guaranty means the amended and restated guaranty,
substantially in the form of Exhibit F-1, which will be executed by
Parent on the Restatement Date.
Parent Pledge Agreement means the Parent Pledge Agreement, dated
as of the Closing Date, between the Parent and the Administrative Agent,
in the form of Exhibit G-1.
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.
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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 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
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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 has the meaning assigned thereto in
the Original Credit Agreement.
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.
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 Parent Indenture means a trust indenture entered into
by Parent with an indenture trustee with terms and provisions no more
restrictive to the Parent and no less advantageous to the Lenders than
those described in the Offering Memorandum with respect to the Parent
Discount Notes, as amended from time to time in accordance with Section
8.23.
Qualified Parent Notes means notes of Parent in an
aggregate principal amount not to exceed the amount
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necessary to pay all principal, interest, premium, if any, of the Parent
Discount Notes or, if applicable, a prior issuance of Qualified Parent
Notes, plus customary fees and expenses incurred in connection with the
issuance of the refinancing notes, which shall not require scheduled
payments of principal prior to April 15, 2007 and shall not require
payments of interest in cash thereon prior to June 15, 2003, with terms
and provisions not materially more restrictive to the Parent and not
materially less advantageous to the Lenders than those described in the
Offering Memorandum with respect to the Parent Discount Notes and which
are issued pursuant to a Qualified Parent Indenture, as amended from
time to time in accordance with Section 8.23.
Qualified Parent Refinancing means a refinancing of the Parent
Bridge Notes or Parent Discount Notes with Qualified Parent Notes or a
refinancing of Qualified Parent Notes with a subsequent issuance of
Qualified Parent Notes.
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%.
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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
such Person or any of its property or to which such Person or any of its
property is subject.
Resource Conservation and Recovery Act means the
Resource Conservation and Recovery Act, 42 U.S.C. Section
690, et seq.
Responsible Officer means the chief executive officer, chief
operating officer 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.
Restatement Date - see Section 5.1.
Revolving Commitment means, as to any Lender, the commitment of
such Lender to make Revolving Loans pursuant to subsection 2.1(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 all of the Revolving Lenders' Revolving Commitments and (b)
after the termination of the Revolving Commitments, (x) the amount of
such Lender's Revolving Loans is of (y) the aggregate amount of all
Revolving Loans of all Revolving Lenders.
Revolving Termination Date means the earlier to occur of:
(a) March 31, 2003; and
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(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.
Secured Proceeds Account means an account maintained by Parent
pursuant to the Parent Discount Indenture in which Parent has granted to
the trustee for the Parent Discount Notes, if any, a security interest
in, and into which Parent has deposited with such trustee, an amount in
cash equal to the amount required to redeem the Parent Discount Notes as
contemplated by the Offering Memorandum.
Security Agreement means either the Security Agreement (Company
and Parent) or the Subsidiary Security Agreement.
Security Agreement (Company and Parent) means the Security
Agreement, dated as of the Closing Date, among the Company, Parent and
the Administrative Agent in the form of Exhibit E-1 hereto.
Seller - see the recitals.
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 of Parent 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
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
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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.
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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.
Subsidiary Pledge Agreement means the Subsidiary Pledge
Agreement, dated as of the Closing Date, between Mike Mac and the
Administrative Agent in the form of Exhibit G-3; 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).
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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").
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).
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).
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 aggregate amount of such Lender's commitment to make New Term B
Loans plus the outstanding
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principal amount of such Lender's Term B Loans is of (b) the aggregate
amount of the commitments to make New Term B Loans of all Lenders plus
the outstanding principal amount of all Term B Loans. The Term B
Percentage in effect on the date hereof 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 an unmatured payment obligation determined at such time less (iii)
Indebtedness of the type described in clauses (g) and (h) of the
definition of "Indebtedness" in respect of Indebtedness at such time
described in clause (ii) above less (iv) any amounts outstanding under
any Parent Bridge Notes or Parent Discount Notes and any Qualified
Parent Notes.
Total Debt Ratio means as of June 30 of each year the ratio of
(i) the aggregate outstanding principal amount of
all Total Debt as of such day
to
(ii) EBITDA of Parent 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) the outstanding principal amount of such Lender's Term A Loans plus
(iii) the aggregate amount of such Lender's commitment to make New Term
B Loans plus 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 outstanding principal amount of all Term A
Loans plus (iii) the aggregate amount of the commitments to make New
Term B Loans of all New Term B Lenders plus 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.
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TPG Acquisition means TPG Shield Acquisition Corporation, a
Maryland corporation.
TPG Acquisition Preferred Stock means the 14% Series C Redeemable
Preferred Stock, liquidation preference $1,000 per share, of Parent.
TPG Agreements means (i) the Management Advisory Agreement, dated
as of April 18, 1997, between the Company and TPG Partners and (ii) the
Transaction Advisory Agreement, dated as of April 18, 1997, between the
Company and TPG Partners, in each case as amended from time to time in
accordance with Section 8.23.
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.
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.
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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.
(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."
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(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. On the
Closing Date, each Term A Lender a party to the Original Credit Agreement on
such date made 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 (determined as of such date) 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 expired concurrently with the making of the Term A Loans
on the Closing Date.
(b) The Term B Credit. On the Closing Date, each Term B Lender a
party to the Original Credit Agreement on such date made a loan to the Company
in an amount equal such Term B Lender's Term B Percentage (determined as of such
date) of $180,000,000. Each New Term B Lender severally agrees, on the terms and
conditions set forth herein, to make on the New Term B Funding Date a loan (a
"New Term B Loan") to the Company equal to
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such New Term B Lender's New Term B Percentage of an amount not to exceed
$85,000,000 (the "Maximum New Term B Commitment Amount"); the Maximum New Term B
Commitment Amount shall be reduced by the amount (rounded, if necessary, to the
nearest whole integral multiple of $1,000,000) by which the gross proceeds of
the Parent Bridge Notes or Parent Discount Notes exceeds $90,524,800; the
Maximum New Term B Commitment Amount also may be reduced (i) at the Company's
option, by the first $30,000,000 of Excess Proceeds in the manner described in
subsection 2.8(a) and (ii) upon written notice to the Administrative Agent, in
such amount as may be specified by the Company in such notice. All such loans
referred to in the two immediately preceding sentences (including the New Term B
Loans) are collectively referred to herein as the "Term B Loans". Amounts
borrowed as Term B Loans which are repaid or prepaid by the Company may not be
reborrowed. After the making of the New Term B Loans on the New Term B Funding
Date, the commitments of the Lenders to make New Term B Loans shall be deemed to
be zero.
(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. 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.
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(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 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. Notwithstanding the immediately
preceding sentence, any Borrowing of New Term B Loans shall be made by the New
Term B Lenders in accordance with their respective New Term B Percentages, and
any Term B Lender that is not a New Term B Lender shall have no obligation to
make any New Term B Loan.
(c) Each Lender will make the amount of its share of each
Borrowing available to the Administrative Agent for the
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account of the Company at the Agent's Payment Office by 1:00 p.m. (Chicago time)
on the Borrowing Date requested by the Company in funds immediately available to
the Administrative Agent. The proceeds of all Loans will then be made available
to the Company by the Administrative Agent at such office by crediting the
account of the Company on the books of BofA with the aggregate of the amounts
made available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
(d) After giving effect to any Borrowing, there may not be more
than twelve different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) The Company
may, upon irrevocable written notice to the Administrative Agent
in accordance with subsection 2.4(b):
(i) elect to convert, on any Business Day, any Base Rate Loans
(in an aggregate amount of $5,000,000 or a higher integral multiple of
$100,000) into Offshore Rate Loans;
(ii) elect to convert, on the last day of the applicable Interest
Period, any Offshore Rate Loans (or any part thereof in an aggregate
amount of $5,000,000 or a higher integral multiple of $100,000) into
Base Rate Loans; or
(iii) elect to continue, as of the last day of the applicable
Interest Period, any Offshore Rate Loans having Interest Periods
expiring on such day (or any part thereof in an aggregate amount of
$5,000,000 or a higher integral multiple of $100,000);
provided that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing shall have been reduced, by payment, prepayment or
conversion of part thereof, to be less than $5,000,000, such Offshore Rate Loans
shall automatically convert into Base Rate Loans.
(b) The Company shall deliver a Notice of Conversion/Continuation
to be received by the Administrative Agent 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;
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(B) the aggregate principal amount of Loans to be
converted or continued;
(C) the Type of Loans resulting from the proposed
conversion or continuation; and
(D) in the case of conversions into Offshore Rate Loans,
the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans, the Company shall be deemed
to have elected to convert such Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such Interest Period.
(d) The Administrative Agent will promptly notify each Lender of
its receipt of a Notice of Conversion/Continuation or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each
Lender of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans held by each Lender with respect to which the
notice was given. Notwithstanding the immediately preceding sentence, for a
period of 30 days after the New Term B Funding Date, the Company may effect
conversions and continuations of New Term B Loans, on the one hand, and Term B
Loans that are not New Term B Loans ("Original Term B Loans"), on the other
hand, on the following basis: (a) all conversions and continuations of New Term
B Loans shall be made ratably according to the respective outstanding principal
amounts of the New Term B Loans held by each Lender with respect to which the
applicable Notice of Conversion/Continuation was given; and (b) all conversions
and continuations of Original Term B Loans shall be made ratably according to
the respective outstanding principal amounts of the Original Term B Loans held
by each lender with respect to which the applicable Notice of
Conversion/Continuation 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.
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2.5 Swingline Loans.
(a) Subject to the terms and conditions hereof, the Swingline
Lender may, in its sole discretion (subject to subsection 2.5(b)), make a
portion of the Revolving Commitments available to the Company by making
swingline loans (each such loan, a "Swingline Loan") to the Company on any
Business Day during the period from the 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.
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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)).
(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
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(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
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,
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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.
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
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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 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"):
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(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,
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but excluding (w) any issuance of shares of capital stock pursuant to
any employee or director stock option program, benefit plan or
compensation program, (x) any such Net Cash Proceeds from equity
issuances of Parent to the extent used to redeem the TPG Acquisition
Preferred Stock, (y) Net Cash Proceeds in an aggregate amount not to
exceed $40,000,000 of New Parent Equity to the extent such proceeds are
concurrently either (A) contributed by Parent to the Company to fund a
portion of the purchase price of the Contadina Acquisition or (B)
deposited in the Secured Proceeds Account pending either the
consummation of the Contadina Acquisition or the redemption of the
Parent Discount Notes from the Secured Proceeds Account in the manner
contemplated by the Parent Discount Indenture and (z) if any Parent
Bridge Notes are outstanding, any Net Cash Proceeds from any issuance of
equity securities by Parent to the extent such proceeds are used
concurrently upon receipt by Parent to pay in full and discharge such
Parent Bridge Notes), in an amount equal to 50% of such Net Cash
Proceeds.
(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, then 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
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Facility under this clause (viii) shall not exceed the maximum
outstanding amount of such Permitted Receivables Facility (without
giving effect to any reduction in such amount but giving effect to any
increase in such amount)).
(ix) Concurrently with the receipt of any proceeds from the
issuance of any Indebtedness by Parent (other than Other Debt), in an
amount equal to (A) in the case of Parent Bridge Notes or Parent
Discount Notes, 100% of the gross proceeds thereof and (B) in the case
of Qualified Parent Notes, 100% of the Net Cash Proceeds thereof;
provided, however, that Parent may retain up to $60,000,000 of the Net
Cash Proceeds of the Parent Bridge Notes (or any Parent Discount Notes
issued in lieu of the Parent Bridge Notes) if the Parent concurrently
contributes such portion to the Company in order to fund a portion of
the purchase price for the Contadina Acquisition; and provided, further,
that (1) the Parent may retain a portion of the Net Cash Proceeds of any
Qualified Parent Notes to the extent such portion is immediately used to
pay in full (including all principal of and interest and premium, if
any, on) and discharge the Parent Bridge Notes or Parent Discount Notes
or a prior issuance of Qualified Parent Notes, as applicable, and (2) no
Mandatory Prepayment Event shall occur under this clause (ix) with
respect to gross proceeds of Parent Discount Notes that are deposited
upon issuance into the Secured Proceeds Account unless and until such
funds are released to Parent or one of its Subsidiaries.
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),
(vi) and (ix) and (y) pro rata, in the case of prepayments pursuant to clauses
(i), (ii), (iii), (iv), (vii) and (viii); provided, that Designated Proceeds
arising under clause (viii) shall only be applied to the Term Loans after the
Revolving Commitments have been reduced to zero pursuant to subsection 2.6(b);
provided, further, that, if the Company offers to any Lender holding Term 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;
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; and provided, further, that as to (A) gross proceeds of any
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issuance of Parent Bridge Notes (or Parent Discount Notes issued in lieu of
Parent Bridge Notes) in excess of $60,524,800 or (B) Net Cash Proceeds of any
Qualified Parent Notes issued in a Qualified Parent Refinancing in excess of the
amount necessary to pay in full the Indebtedness refinanced thereby (including
principal of, and interest and premium, if any, on, such refinanced
Indebtedness) (any such excess (rounded, if necessary, to the nearest whole
integral multiple of $1,000,000) referred to in the foregoing clauses (A) and
(B) being collectively referred to as "Excess Proceeds"), (x) as to the first
$30,000,000 of Excess Proceeds, the Company shall apply such Excess Proceeds to
either (at the Company's election) (i) if no New Term B Loans have been made, to
reduce the Maximum New Term B Commitment Amount pursuant to subsection 2.1(b),
or if New Term B Loans have been made, to prepay the New Term B Loans of all New
Term B Lenders, with application to remaining installments thereof pro rata (or,
if no New Term B Loans are outstanding, pro rata among the Term A Loans and Term
B Loans of all Lenders, with application to the remaining installments of each
in inverse order of maturity) or (ii) to repay Revolving Loans (provided, that
such prepayment only to the extent the amount so required to be repaid is in
excess of the amount of Revolving Loans being concurrently borrowed to fund the
Contadina Acquisition) and (y) to the extent that the aggregate amount of Excess
Proceeds is greater than the sum of (i) the aggregate amount of reductions to
the Maximum New Term B Commitment Amount prior to the New Term B Funding Date
plus (ii) the amount of Loans repaid or prepaid pursuant to the foregoing clause
(x) (including for this purpose Loans that would have been repaid but for the
proviso to clause (x)(ii)), the Company shall prepay the New Term B Loans of all
New Term B Lenders in an amount equal to such excess, with application to
remaining installments thereof pro rata (or, if no New Term B Loans are
outstanding, pro rata among the Term A Loans and Term B Loans of all Lenders,
with application to the remaining installments of each in inverse order of
maturity); and provided, further that any such Excess Proceeds shall only be
available to be applied to the prepayment of the Term Loans after the Maximum
New Term B Commitment Amount has been reduced to zero.
(b) If on any day the Effective Amount of all Revolving Loans plus the
Effective Amount of all Swingline Loans plus the Effective Amount of all L/C
Obligations exceeds the lesser of (x) the Borrowing Base and (y) the Revolving
Commitments, the Company shall immediately prepay Revolving Loans and/or
Swingline Loans or Cash Collateralize the 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
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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:
<TABLE>
<CAPTION>
Quarterly
Period Amounts
------ --------
<S> <C>
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.
</TABLE>
(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:
<TABLE>
<CAPTION>
Quarterly
Period Amounts
------ ---------
<S> <C>
3/27/98 through 9/25/98 $450,000
9/26/98 through 3/31/04 $450,000 plus 0.25% of the amount of the
New Term B Loans funded on the New Term B
Funding Date
4/01/04 through 3/31/05 $42,187,500 plus 23.625% of the New Term B
Loans funded on the New Term B Funding Date.
</TABLE>
(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 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
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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
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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 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.
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(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.
2.14 Payments by the Lenders to the Administrative Agent. (a) Unless the
Administrative Agent receives notice from a Lender at least one Business Day
prior to the date of 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, or proportionate
commitment to make New Term B Loans, as applicable, of such Borrowing, the
Administrative Agent may assume that each Lender has made such amount available
to the Administrative Agent in immediately available funds on the Borrowing Date
and the Administrative Agent may (but shall not be required to), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Lender shall not have made its full amount
available to the Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to the Company
such amount, such Lender shall on the Business Day following such Borrowing Date
make such amount available to the Administrative Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the
Administrative Agent submitted to any Lender with respect to amounts owing under
this subsection (a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Administrative Agent shall constitute
such Lender's Loan on the date of Borrowing for all purposes of this Agreement.
If such amount is not made available to the Administrative Agent on the Business
Day following the Borrowing Date, the Administrative Agent will notify the
Company of such failure to fund and, upon demand by the Administrative Agent,
the
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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 (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.
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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 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
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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
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or L/C Amendment Application from the Company and, if not, the Issuing Lender
will provide the Administrative Agent with a copy thereof. If and only if the
Administrative Agent notifies the Issuing Lender on or before the Business Day
immediately preceding the proposed date of Issuance of a Letter of Credit that
the Issuing Lender may Issue such Letter of Credit, then, subject to the terms
and conditions hereof, the Issuing Lender shall, on the requested date, Issue
such Letter of Credit for the account of the Company in accordance with the
Issuing Lender's usual and customary business practices. The Administrative
Agent shall not give such notice if the Administrative Agent has knowledge that
(A) such Issuance is not then permitted under subsection 3.1(a) as a result of
the limitations set forth in clause (1) or (2) thereof or (B) the Issuing Lender
has received a notice described in subsection 3.1(b)(ii). The Administrative
Agent will promptly notify the Lenders of any Letter of Credit Issuance
hereunder.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, the Issuing Lender will, upon the
written request of the Company received by the Issuing Lender (with a copy sent
by the Company to the Administrative Agent) at least four Business Days (or such
shorter time as the Issuing Lender and the Administrative Agent may agree in a
particular instance in their sole discretion) prior to the proposed date of
amendment, amend any Letter of Credit issued by it. Each such request for
amendment of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, made in the form of an L/C Amendment
Application and shall specify in form and detail satisfactory to the Issuing
Lender: (i) the Letter of Credit to be amended; (ii) the proposed date of
amendment of such Letter of Credit (which shall be a Business Day); (iii) the
nature of the proposed amendment; and (iv) such other matters as the Issuing
Lender may require. The Issuing Lender shall not have any obligation to amend
any Letter of Credit if the Issuing Lender would have no obligation at such time
to Issue such Letter of Credit in its amended form under the terms of this
Agreement.
(d) The Issuing Lender and the Lenders agree that, while a 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
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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
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
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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 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 3.3(b) make available to the
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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
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to make Revolving Loans under this Section 3.3 is subject to the conditions set
forth in Section 5.3.
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
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action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Company hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided that this assumption is not intended to, and shall not,
preclude the Company's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under this Agreement or any other
agreement. No Agent-Related Person, Issuing Lender nor any of their respective
correspondents, participants or assignees shall be liable or responsible for any
of the matters described in clauses (i) through (vii) of Section 3.6; provided
that, anything in such clauses to the contrary notwithstanding, the Company may
have a claim against the Issuing Lender, and the Issuing Lender may be liable to
the Company, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Company which the Company
proves were caused by the Issuing Lender's willful misconduct or gross
negligence or the Issuing Lender's willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of such Letter
of Credit. In furtherance and not in limitation of the foregoing: (i) the
Issuing Lender may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Issuing Lender shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
3.6 Obligations Absolute. The obligations of the Company under this
Agreement and any L/C-Related Document to reimburse the Issuing Lender for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into Revolving Loans, shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:
(i) any lack of validity or enforceability of this
Agreement or any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Company in
respect of any Letter of Credit or any other amendment or waiver of or
any consent to departure from all or any of the L/C-Related Documents;
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(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 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
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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.
(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
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(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 of such Non-Dollar Letter of
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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).
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(g) For purposes of this Section, "Overnight Rate" means, for any
day, the rate of interest per annum at which overnight deposits in the
applicable currency, in an amount approximately equal to the amount with
respect to which such rate is being determined, would be offered for
such day by the London Branch of BofA to major banks in the London or
other applicable offshore interbank market. The Overnight Rate for any
day which is not a Business Day (or on which dealings are not carried on
in the applicable offshore interbank market) shall be the Overnight Rate
for the immediately preceding Business Day.
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
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Further Taxes were correctly or legally asserted; provided, however, that the
Company shall not have to indemnify any Lender or the Administrative Agent for
Taxes, Other Taxes, Further Taxes, penalties, additions to tax or expenses
arising as a result of the gross negligence or wilful misconduct of such Person.
Payment under this subsection 4.1(b) shall be made within 30 days from the date
such Lender or the Administrative Agent makes written demand therefor.
(c) If the Company shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section), such Lender or the Administrative Agent, as the case may
be, receives and retains an amount equal to the sum it would have
received and retained had no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings; and
(iii) the Company shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law.
(d) Within 10 days after the date the Company receives any
receipt for the payment of Taxes, Other Taxes or Further Taxes, the Company
shall furnish to the Administrative Agent the original or a certified copy of
such receipt evidencing payment thereof, or other evidence of payment
satisfactory to the Administrative Agent and the Administrative Agent will
promptly provide a copy thereof to all interested Lenders.
(e) If the Company is required to pay additional amounts to any
Lender or the Administrative Agent pursuant to subsection (b) of this Section or
Section 4.3, then such Lender 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
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Section 4.1, it shall repay such refund (to the extent of amounts that have been
paid by the Company under this Section 4.1 with respect to such refund and not
previously reimbursed) to the Company, net of all out-of-pocket expenses of such
Lender or the Administrative Agent and without any interest.
(g) The Company shall not be required to pay additional amounts
to the Administrative Agent or any Lender pursuant to this Section 4.1 to the
extent that the obligation to pay such additional amounts would not have arisen
but for a failure by the Administrative Agent or such Lender to comply with
Section 10.10.
4.2 Illegality. (a) After the date hereof, if any Lender determines that
the introduction of any Requirement of Law, or any change in any Requirement of
Law, or in the interpretation or administration of any Requirement of Law, has
made it unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for such Lender or its applicable Lending Office
to make Offshore Rate Loans, then, on notice thereof by the Lender to the
Company through the Administrative Agent, any obligation of such Lender to make
Offshore Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Company that the circumstances giving rise to such
determination no longer exist.
(b) After the date hereof, if a Lender determines that it is
unlawful to maintain any Offshore Rate Loan, the Company shall, upon its receipt
of notice of such fact and demand from such Lender (with a copy to the
Administrative Agent), prepay in full such Offshore Rate Loan, together with
interest accrued thereon and any amount required under Section 4.4, either on
the last day of the Interest Period thereof, if such Lender may lawfully
continue to maintain such Offshore Rate Loan to such day, or on such earlier
date on which such Lender may no longer lawfully continue to maintain such
Offshore Rate Loan (as determined by such Lender). If the Company is required to
so prepay any Offshore Rate Loan, then concurrently with such prepayment, the
Company shall borrow from the affected Lender, in the amount of such repayment,
a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain Offshore
Rate Loans has been terminated or suspended pursuant to subsection (a) or (b)
above, all Loans which would otherwise be made by such Lender as Offshore Rate
Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Administrative Agent or
demand upon the Company under this Section, the affected Lender shall designate
a different Lending Office with respect to its Offshore Rate Loans if such
designation will avoid the need
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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.
(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.
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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
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Lenders, revokes such notice in writing. Upon receipt of such notice, the
Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation
then submitted by it. If the Company does not revoke such Notice, the Lenders
shall make, convert or continue the Loans, as proposed by the Company, in the
amount specified in the applicable notice submitted by the Company, but such
Loans shall be made, converted or continued as Base Rate Loans instead of
Offshore Rate Loans.
4.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article IV shall deliver to the Company (with a copy to
the Administrative Agent) a certificate setting forth in reasonable detail the
basis for such claim and a calculation of the amount payable to such Lender and
such certificate shall be 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.
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ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Effectiveness. This Agreement shall become effective
on the date (the "Restatement Date") each of the conditions precedent set forth
in this Section 5.1 has been satisfied or waived with the consent of the
Required Lenders (or, with respect to subsection 5.1(f), with the consent of the
Persons entitled to receive payment). The effectiveness of this Agreement is
subject to the conditions that the Administrative Agent shall have received all
of the following, in form and substance satisfactory to each Agent and each
Lender, and (except for the Notes) in sufficient copies for the Administrative
Agent and each Lender:
(a) Credit Agreement. This Agreement executed by the
Company, the New Term B Lenders, the Required Lenders, the
Required Revolving Lenders, the Required Term A Lenders and the
Required Term B Lenders.
(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 Restatement 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 Restatement Date, certified by the
Secretary or Treasurer of such Person, as of the Restatement Date; and
(ii) a good standing certificate for the Company, Parent and Mike
Mac from the Secretary of State (or similar applicable Governmental
Authority) of the jurisdiction of its organization.
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(d) Legal Opinions.
(i) An opinion of Pillsbury, Madison & Sutro LLP, special counsel
to the Company, Parent and Mike Mac, substantially in the form of
Exhibit I-1,
(ii) An opinion of William R. Sawyers, General Counsel to the
Company, Parent and Mike Mac, substantially in the form of Exhibit I-2,
and
(iii) An opinion of Ballard, Spahr, Andrews & Ingersoll, special
Maryland counsel to Parent, substantially in the form of Exhibit I-3.
(e) Notes. New Notes, substantially in the form of Exhibit D,
payable to the order of each of the Lenders party hereto who have executed this
Amendment as a "New Term B Lender" and have requested a Note under subsection
2.2(b) (collectively, the "New Notes").
(f) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Restatement Date, together with Attorney Costs of the Administrative
Agent and the Arranger to the extent invoiced at least three Business Days prior
to the Restatement Date, plus such additional amounts of Attorney Costs as shall
constitute the Administrative Agent's reasonable estimate of Attorney Costs
incurred or to be incurred by it or the Arranger through the Restatement Date
(provided that such estimate shall not thereafter preclude final settling of
accounts between the Company and the Administrative Agent), including such
costs, fees and expenses arising under or referenced in Section 11.4.
(g) Parent Guaranty. The Parent Guaranty executed by
Parent.
(h) Confirmation. A confirmation from Parent and Mike Mac,
substantially in the form of Exhibit T hereto.
(i) Certificate. A certificate signed by a Responsible Officer,
dated as of the Restatement Date, stating that:
(i) the representations and warranties contained in Article VI
are true and correct in all material respects on and as of such date, as
though made on and as of such date;
(ii) no Event of Default or Unmatured Event of Default exists or
will result from the effectiveness of this Agreement; and
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(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.
(j) Other Documents. A copy, certified as true and correct by the
Secretary or the Treasurer of the Company, of each of (a) the Contadina Purchase
Agreement (including all exhibits and schedules thereto), (b) the Parent Bridge
Note Agreement, if any, (c) the Note and Warrant Escrow Agreement, if any, and
(d) the Parent Discount Indenture, if any.
(k) Other Documents. Such other approvals, opinions,
documents or materials as any Agent or any Lender may reasonably
request.
5.2 [Intentionally Left Blank]
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 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.
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5.4 Conditions to New Term B Loans. The obligation of each New Term B
Lender to make its New Term B Loan is, in addition to the conditions precedent
specified in Section 5.3, subject to the following conditions precedent:
(a) Bridge Financing/Permanent Financing. The Parent shall have
issued the Parent Bridge Notes (or Parent Discount Notes in lieu thereof) on
terms and conditions satisfactory to the Administrative Agent for gross proceeds
of not less than $60,000,000 and shall have contributed the net cash proceeds of
such issuance to the Company.
(b) New Parent Equity. The Parent shall have received a
$40,000,000 cash equity investment from TPG Partners and others on terms and
conditions satisfactory to the Administrative Agent, and shall have contributed
the proceeds of such investment to the Company.
(c) Contadina Acquisition. The Contadina Purchase Agreement shall
not have been modified or any of the provisions thereof waived in any way that
could be adverse to the Lenders. All conditions precedent to the Contadina
Acquisition (other than the payment of the purchase price under the Contadina
Purchase Agreement) shall have been satisfied or, with the consent of the
Administrative Agent, waived.
(d) No Material Adverse Change. Since June 30, 1997, there shall
have occurred no material adverse change in the condition (financial or
otherwise), business, assets, liabilities, properties, results of operations or
prospects of the Company.
(e) Subordinated Indenture. The amount of the New Term B Loans
actually funded shall be permitted to be incurred by the Subordinated Indenture,
and the Company shall have delivered to the Administrative Agent evidence, in
form and substance satisfactory to the Administrative Agent and the New Term B
Lenders, that the incurrence of such New Term B Loans is so permitted.
(f) Financial Information. The Company shall have delivered to
the Lenders all financial and operating information with respect to the Seller
required to be provided by such Seller under the Contadina Purchase Agreement
and otherwise to the extent provided by such Seller.
(g) Approvals and Agreements. All governmental and third party
approvals required under the Contadina Purchase Agreement or otherwise necessary
in connection with the New Term B Loans, the incurrence of the Parent Bridge
Notes (or Parent Discount Notes in lieu thereof) and the equity issued by Parent
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described in subsection 5.4(b) shall have been obtained and be in full force and
effect, and all applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions or the Contadina Acquisition or
the financing thereof, in each case except for such governmental and third party
approvals which the failure to obtain would not, individually or in the
aggregate, have a Material Adverse Effect.
(h) Collateral Documents. The Administrative Agent shall have
received such documents as it may reasonably request to ensure that Section 7.14
will be complied with immediately after giving effect to the Contadina
Acquisition.
(i) Date. The borrowing of the New Term B Loans by the Company
shall have occurred on or prior to January 31, 1998; provided, that if the
Contadina Acquisition shall not have been consummated on or prior to such date
solely due to the failure to obtain early termination or clearance under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, then the New
Term B Loans may be borrowed by the Company on any date on or prior to March 3,
1998.
The date of making the New Term B Loans is referred to as the "New Term
B Funding Date".
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
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(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, the
performance by each of the Company, Parent and each Subsidiary of its
obligations under each Loan Document to which it is a party and the incurrence
of the Obligations (i) are within the corporate powers of the Company, Parent
and each Subsidiary, as applicable, (ii) have been duly authorized by all
necessary corporate action on the part of the Company, Parent and each
Subsidiary (including any necessary shareholder action) and (iii) do not and
will not:
(a) contravene the terms of any of the Organization
Documents of the Company, Parent or any Subsidiary;
(b) conflict with or result in a breach or contravention of, or
the creation of any Lien (other than Liens in favor of the Administrative Agent)
under, any document evidencing any Contractual Obligation to which the Company,
Parent or any Subsidiary is a party or any order, injunction, writ or decree of
any Governmental Authority to which the Company, Parent, any Subsidiary or any
of their properties are subject; or
(c) violate any Requirement of Law.
6.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required 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
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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
Restatement 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
Restatement Date, create an Event of Default under subsection 9.1(e).
6.7 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. To the
best knowledge of the Company, nothing has occurred which would cause any Plan
which is intended to qualify under Section 401(a) of the Code to fail to be so
qualified. The Company and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made within the last five years with respect to
any Plan.
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(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, if made, have a Material Adverse Effect. The Tax
Sharing Agreement is the only agreement among Parent, the Company and its
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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) The Company has furnished to each Agent and each Lender an
estimated consolidated pro forma balance sheet of Parent and its Subsidiaries as
of December 31, 1997 (giving effect to the Contadina Acquisition, the incurrence
of the New Term B Loans and the Bridge Financing (or the issuance of Parent
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Discount Notes issued in lieu thereof) and the consummation of all other
transactions contemplated to occur on the New Term B Funding Date, assuming all
such transactions had occurred on December 31, 1997), prepared by the Company
and the Company hereby certifies that the same is true and correct in all
material respects; it being understood that, information with respect to the
business to be acquired on the Contadina Acquisition is based solely on
information provided by the Seller, which, to the best knowledge of the Company,
is true and correct.
(e) The Company has furnished to each Agent and each Lender
financial projections dated the Restatement Date and covering the period from
July 1, 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).
(f) 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.
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
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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 Restatement Date, the Company has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
6.15 hereto and has no equity investments in any other corporation or entity
other than those specifically disclosed in part (b) of Schedule 6.15. As of the
Restatement Date, the Company has no Material Subsidiaries.
6.16 Insurance. Except as specifically disclosed in Schedule 6.16, the
properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Company or such Subsidiary operates.
6.17 Solvency, etc. On the 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 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
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liabilities, respectively, of each of the Company, Parent and
each Material Subsidiary.
6.18 Merger, Subordinated Notes, etc.
(a) The Merger has been consummated in accordance with the terms
of the Merger Agreement, without waiver of any of the conditions thereof.
(b) 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 were true and correct in all material respects
as of the Closing Date.
(f) All of the representations and warranties of the Company set
forth in the Subordinated Note Purchase Agreement were true and correct in all
material respects as of the Closing Date.
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
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Swap Contracts, other than Permitted Swap Obligations. The Company has
undertaken its own independent assessment of its consolidated assets,
liabilities and commitments and has considered appropriate means of mitigating
and managing risks associated with such matters and has not relied on any swap
counterparty or any Affiliate of any swap counterparty in determining whether to
enter into any Swap Contract.
6.21 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
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authorizations relating to environmental matters would not be reasonably likely
to have a Material Adverse Effect;
(e) no property now or, to the best of the Company's knowledge,
previously owned or leased by the Company or any of its Subsidiaries is listed
or proposed for listing (with respect to owned property only) on the National
Priorities List pursuant to CERCLA, or, to the best of the Company's knowledge,
is on the CERCLIS or on any similar state list of sites requiring investigation
or clean-up, except, in each case, for any such listing that, singly or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
and
(f) to the best of the Company's knowledge, neither the Company
nor any Subsidiary of the Company has directly transported or directly arranged
for the transportation of any Hazardous Material to any location which is listed
or proposed for listing on the National Priorities List pursuant to CERCLA, or
which is the subject of Federal, state or local enforcement actions or other
investigations which may lead to Environmental Claims against the Company or
such Subsidiary except, in each case, to the extent that the foregoing would not
reasonably be expected to have a Material Adverse Effect.
6.23 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).
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6.24 Contadina Acquisition, Parent Bridge Notes, etc.
(a) As of the New Term B Funding Date, the Contadina Acquisition
will have been consummated in accordance with the terms of the Contadina
Purchase Agreement, without waiver of any of the conditions thereof.
(b) As of the New Term B Funding Date, the Contadina Acquisition
and the issuance and sale of the Parent Bridge Notes (or, if applicable, Parent
Discount Notes issued in lieu thereof) will have 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 Contadina Acquisition and the issuance and sale of the
Parent Bridge Notes (or, if applicable, Parent Discount Notes issued in lieu
thereof) will have been, prior to the consummation thereof, duly obtained and in
full force and effect. As of the New Term B Funding Date, all applicable waiting
periods with respect to the Contadina Acquisition and the issuance and sale of
the Parent Bridge Notes (or, if applicable, Parent Discount Notes issued in lieu
thereof) will 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 Contadina Purchase
Agreement did not, and the consummation of the Contadina Acquisition and the
issuance and sale of the Parent Bridge Notes (or, if applicable, Parent Discount
Notes issued in lieu thereof) will not, violate any Requirement of Law, or
result in a breach of, or constitute a default under, any Contractual Obligation
affecting the Parent 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
Contadina Acquisition and the issuance and sale of the Parent Bridge Notes (or,
if applicable, Parent Discount Notes issued in lieu thereof).
(e) All of the representations and warranties of the Company
contained in the Contadina Purchase Agreement are true and correct in all
material respects as of the Restatement Date.
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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 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
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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;
(e) forthwith upon any Qualified Refinancing or Qualified Parent
Refinancing, a copy of the related Qualified Indenture or Qualified Parent
Indenture, certified as true and correct by the Secretary or an Assistant
Secretary of the Company or Parent, as applicable;
(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
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(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
(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,
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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
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become due and payable, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Company or such Subsidiary in respect thereof, all of its
obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets; and
(b) all lawful claims which, if unpaid, would by law become a
Lien upon its property.
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,
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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. (a) 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.
(b) The Company shall, not later than 90 days after the New Term B
Funding 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 one-half of the principal
amount of the New Term B Loans made on such date 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,
(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 Contadina Acquisition, and (ii) for
working capital and other general corporate purposes not in contravention of any
Requirement of Law or of any Loan Document; provided that
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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 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
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(#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)(i), (y)(ii) and (y)(iii) do not exist, and in
connection with such execution and delivery the Company shall cause to be
delivered to the Administrative Agent such opinions of counsel and other
supporting documentation in respect thereof as the Administrative Agent shall
reasonably request.
(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 Wells Fargo Bank, Mellon
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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
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preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on property of the Company or any Subsidiary securing
(i) the non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, (ii) surety bonds (excluding
appeal bonds and other bonds posted in connection with court proceedings or
judgments) and (iii) other non-delinquent obligations of a like nature, in each
case, incurred in the ordinary course of business, provided that all such Liens
in the aggregate would not (even if enforced) cause a Material Adverse Effect;
(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
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other funds maintained with a creditor depository institution, provided that (i)
such deposit account is not a dedicated cash collateral account and is not
subject to restrictions against access by the Company in excess of those set
forth by regulations promulgated by the FRB and (ii) such deposit account is not
intended by the Company or any Subsidiary to provide collateral to the
depository institution;
(l) Liens in connection with a Permitted Receivables Facility;
(m) Liens under Permitted Security Agreements;
(n) Liens securing Acquired Indebtedness permitted by subsection
8.5(k), provided that such Liens were in existence prior to the contemplation of
the related Acquisition and do not extend to any assets other than the property
financed with such Acquired Indebtedness;
(o) Liens, defects and other matters specifically disclosed on
the title insurance policies delivered to and accepted by the Administrative
Agent on the Closing Date in connection with properties subjected to a Mortgage
on the Closing Date;
(p) extensions, renewals and replacements of Liens referred to in
clauses (a) through (o) above, provided that any such extension, renewal or
replacement Lien is limited to 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;
(q) the Lien on the Secured Proceeds Account and amounts on
deposit therein pursuant to the Parent Discount Indenture; and
(r) Liens securing other Indebtedness of the Company and its
Subsidiaries not expressly permitted by clauses (a) through (q) above; provided
that the aggregate amount of the Indebtedness secured by Liens permitted
pursuant to this clause (r) 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:
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(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;
(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).
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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 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
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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 (other than the Contadina Acquisition), 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;
(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; and
(l) the Contadina Acquisition.
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
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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);
(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.
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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;
(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.
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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:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
12/28/97 - 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 thereafter 1.50:1.0.
</TABLE>
8.12 Minimum EBITDA. The Company will not permit EBITDA of Parent for
any Computation Period to be less than the amount set forth below opposite the
period in which such Computation Period ends:
(a) from the date hereof until consummation of the Contadina
Acquisition:
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<TABLE>
<CAPTION>
Period EBITDA
------ ------
<S> <C>
12/28/97 - 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; and
</TABLE>
(b) from and after the consummation of the Contadina Acquisition:
<TABLE>
<CAPTION>
Period EBITDA
------ ------
<S> <C>
12/28/97 - 3/29/98 $110,000,000
6/30/98 - 9/27/98 $115,000,000
12/27/98 - 3/28/99 $120,000,000
6/30/99 - 3/26/00 $125,000,000
6/30/00 - 4/01/01 $135,000,000
6/30/01 - 3/31/02 $145,000,000
6/30/02 and thereafter $155,000,000.
</TABLE>
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
$380,000,000 plus, to the extent the same have been expensed for purposes of
calculating Net Worth, fees and expenses related to the Contadina Acquisition to
be less than (ii) (a) $115,000,000 plus the gross proceeds of the New Parent
Equity issued by Parent, plus (b) 80% of cumulative Consolidated Net Income of
Parent 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
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least equal to 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:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
12/28/97 - 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.
</TABLE>
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:
<TABLE>
<CAPTION>
Fiscal Year Ending Ratio
------------------ -----
<S> <C>
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 3.50:1.0.
thereafter
</TABLE>
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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<PAGE> 125
(a) from the date hereof until consummation of the Contadina
Acquisition:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
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 $40,000,000;
year thereafter
</TABLE>
(b) from and after the consummation of the Contadina Acquisition:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
ending 6/30/97 $15,000,000
ending 6/30/98 $45,000,000
ending 6/30/99 $50,000,000
ending 6/30/00 $55,000,000
ending 6/30/01 and each fiscal $40,000,000;
year thereafter
</TABLE>
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
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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 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;
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(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;
(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; and
(j) the Company may make a payment to Parent in an amount not to
exceed $7,500,000 if the Contadina Acquisition is not consummated and the
amounts in the Secured Proceeds Account are disbursed to redeem outstanding
Parent Discount Notes in accordance with the terms of the Parent Discount
Indenture.
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 Person or
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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 and Parent 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, (f) the TPG Agreements, (g) the Contadina Purchase Agreement, (h) the
Parent Bridge Note Agreement, (i) any Qualified Parent Indenture or Parent
Discount Indenture or (j) any other instrument evidencing Qualified Parent Notes
or Parent Discount Notes or Parent Bridge
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<PAGE> 129
Notes, 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 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.
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ARTICLE IX
EVENTS OF DEFAULT
9.1 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Company fails to pay, when and as required
to be paid herein, any amount of principal of any Loan or of any L/C Obligation,
or, within three days after the same becomes due, any amount of interest or any
fees or other amounts payable hereunder or under any other Loan Document.
(b) Representation or Warranty. Any representation or warranty by
Parent, the Company or any Subsidiary made or deemed made herein or in any other
Loan Document, or which is contained in any certificate, document or financial
or other statement by Parent, the Company, any Subsidiary or any Responsible
Officer furnished at any time under this Agreement or any other Loan Document,
is incorrect in any material respect on or as of the date made or deemed made.
(c) Specific Defaults. The Company fails to perform or observe
any term, covenant or agreement contained in any of Section 7.3 or Article VIII
(other than Section 8.1, 8.5, 8.6, 8.17(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 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
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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, 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.
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(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.
(l) Guarantor Defaults. Any Guaranty shall cease to be in full
force and effect with respect to any Guarantor (other than as expressly
permitted hereunder), 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,
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Parent or any Subsidiary (or any Person acting by, through or on behalf of the
Company, Parent or any Subsidiary) shall contest in any manner the validity,
binding nature or enforceability of any Collateral Document.
9.2 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Required Lenders do
any or all of the following:
(a) declare the commitment of each Lender to make Loans and any
obligation of the Issuing Lender to Issue Letters of Credit to be terminated,
whereupon such commitments and obligations shall be terminated (provided, that
if any Event of Default occurs after the making of the Term Loans, the Revolving
Commitments shall, at the request of, or may, with the consent of, the Required
Revolving Lenders (and not the Required Lenders), be terminated);
(b) declare an amount equal to the maximum aggregate amount that
is or at any time thereafter may become available for drawing under any
outstanding Letter of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letter of Credit) to be immediately due
and payable, and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any Event of Default specified in
subsection 9.1(f) or (g), the obligation of each Lender to make Loans and the
obligation of the Issuing Lender to Issue Letters of Credit shall automatically
terminate and the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of the Administrative Agent, the Issuing Lender or
any other Lender.
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.
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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
BankBoston, N.A., Citicorp USA, Inc., General Electric Capital Corporation and
The Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency as CoAgents for the
Lenders. The Documentation Agent and the CoAgents, 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
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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 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
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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 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
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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
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Administrative Agent shall be under no obligation to provide such information to
them. With respect to its Loans, BofA and any Affiliate thereof shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though BofA were not the Administrative Agent.
10.9 Successor Administrative Agent. The Administrative Agent may, and
at the request of the Required Lenders shall, resign as Administrative Agent
upon 30 days' notice to the Lenders and the Company. If the Administrative Agent
resigns under this Agreement, the Required Lenders shall have the right, with
the consent of the Company so long as no Event of Default or Unmatured Event of
Default has occurred and is continuing (which consent shall not be unreasonably
withheld or delayed), to appoint from among the Lenders a successor agent for
the Lenders. If no successor agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders and the Company, a successor agent
from among the Lenders. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Administrative Agent and the term "Administrative
Agent" shall mean such successor agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article X and Sections 11.4 and
11.5 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
agent has accepted appointment as Administrative Agent by the date which is 30
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. Notwithstanding the foregoing, however,
BofA may not be removed as the Administrative Agent at the request of the
Required Lenders unless BofA and any Affiliate thereof acting as the Issuing
Lender or Swingline Lender hereunder shall also simultaneously be replaced as
the Issuing Lender and Swingline Lender pursuant to documentation in form and
substance reasonably satisfactory to BofA (and, if applicable, such Affiliate).
10.10 Withholding Tax. (a) If any Lender is 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:
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(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;
(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
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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 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
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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.
(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:
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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,
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after giving effect to any netting of payments to which the Company is entitled
with respect to such Swap Contract vis-a-vis the Company's counterparty to such
Swap Contract.
(iii) Payments of proceeds of Collateral or of any realization on 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,
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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 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, Section 2.3, 2.4 (as it
relates to conversions and continuations of Revolving Loans), 2.6, 2.7 (as it
relates to an optional prepayment of Revolving Loans), 2.8(b) or 2.9(c) or
Article III may be amended, or the rights or privileges thereunder waived, with
the written consent of the Required Revolving Lenders (or, in the case of
Section 2.9(c), all of the Revolving Lenders), the Company and the
acknowledgment of the Administrative Agent;
(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;
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(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;
(l) 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 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
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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
(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
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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
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Insolvency Proceeding or otherwise, then (a) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred and (b) each Lender severally agrees to pay to the
Administrative Agent upon demand its pro rata share of any amount so recovered
from or repaid by the Administrative Agent.
11.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent and each Lender.
11.8 Assignments, Participations, etc. (a) Any Lender may, with the
written consent of the Company at all times other than during the existence of
an Event of Default and with the written consents of the Administrative Agent
and, in case of an assignment of a Revolving Commitment or L/C Obligations, the
Issuing Lender and the Swingline Lender, which consents shall not be
unreasonably withheld or delayed, at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of the Company, the
Administrative Agent, the Issuing Lender or the Swingline Lender shall be
required in connection with any assignment and delegation by a Lender to a
Person described in clause (ii), (iii) 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
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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 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
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hereunder (provided, with respect to Sections 4.1 and 4.3, the Company shall not
be required to pay any amount which it would not have been required to pay if no
participating interest had been sold), and if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, the Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. Each Lender which sells a participation will maintain a book
entry record of ownership identifying the Participant(s) and the amount of such
participation(s) owned by such Participant(s). Such book entry record of
ownership shall be maintained by the Lender as agent for the Company and the
Administrative Agent. This provision is intended to comply with the registration
requirements in Treasury Regulation Section 5f.103-1 so that the Loans and Notes
are considered to be in "registered form" pursuant to such regulation. Each
Lender may furnish any information concerning the Company and its Subsidiaries
in the possession of such Lender from time to time to participants and
prospective participants and may furnish information in response to credit
inquiries consistent with general banking practice.
(d) Notwithstanding any other provision in this Agreement, (i)
any Lender may at any time assign all or any portion of its rights under and
interest in this Agreement and any Note held by it to any Affiliate of such
Lender that is an "Eligible Assignee" or create a security interest in, or
pledge all or any portion of its rights under and interest in this Agreement and
any Note held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR ss.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 non-public information provided to it by the
Company or any Subsidiary, or by the Administrative Agent on the Company's or
any Subsidiary's behalf, under this Agreement or any other Loan Document, and
neither such Lender nor any of its Affiliates shall use any such information
other than in connection with or in enforcement of this Agreement and the other
Loan Documents or in
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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 (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
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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.
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11.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND ANY NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE
STATE OF NEW YORK; PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
DEL MONTE CORPORATION
By: /s/ T.C. GIBBONS
-------------------------------------
Title: Senior Vice President & Treasurer
----------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent, Issuing Lender, Swingline Lender
and Lender
By: /s/ WILLIAM I. STAFEIL
-------------------------------------
William I. Stafeil
Title: Vice President
----------------------------------
BANKERS TRUST COMPANY, as
Documentation Agent and as a Lender
By: /s/ MARY JO JOLLY
-------------------------------------
Mary Jo Jolly
Title: Assistant Vice President
----------------------------------
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BANKBOSTON, N.A., as Co-Agent and as a
Lender
By: /s/ GREGORY R. D. CLARK
-------------------------------------
Gregory R. D. Clark
Title: Managing Director
----------------------------------
CITICORP USA, INC., as Co-Agent and as
a Lender
By: /s/ MICHAEL M. LEYLAND
-------------------------------------
Michael M. Leyland
Title: Attorney-in fact
----------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as Co-Agent and as a Lender
By: /s/ J. K. WILLIAMS
-------------------------------------
J. K. Williams
Title: Duly Authorized Signatory
----------------------------------
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY, as Co-Agent
and as a Lender
By: /s/ NOBORU AKAHANE
-------------------------------------
Title: Deputy General Manager
----------------------------------
ABN AMRO BANK N.V., as a Lender
By: /s/ GINA M. BRUSATORI
-------------------------------------
Gina M. Brusatori
Title: Vice President
----------------------------------
By: /s/ DIANNE D. BARKLEY
-------------------------------------
Dianne D. Barkley
Title: Group Vice President
----------------------------------
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ALLSTATE LIFE INSURANCE COMPANY, as a
Lender
By:
-------------------------------------
Title:
----------------------------------
By:
-------------------------------------
Title:
----------------------------------
BHF-BANK AKTIENGESELLSCHAFT, as a
Lender
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Assistant Vice President
----------------------------------
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Assistant Treasurer
----------------------------------
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE, as a Lender
By: /s/ BRIAN O'LEARY
-------------------------------------
Brian O'Leary
Title: Vice President
----------------------------------
By: /s/ ANTHONY ROCK
-------------------------------------
Anthony Rock
Title: Vice President
----------------------------------
CREDIT LYONNAIS LOS ANGELES BRANCH, as
a Lender
By:
-------------------------------------
Title:
----------------------------------
FLEET NATIONAL BANK, as a Lender
By:
-------------------------------------
Title:
----------------------------------
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GOLDMAN SACHS CREDIT PARTNERS L.P., as
a Lender
By:
-------------------------------------
Title:
----------------------------------
HELLER FINANCIAL, INC., as a Lender
By: /s/ KATHI J. [ILLEGIBLE]
-------------------------------------
Title: Vice President
----------------------------------
IMPERIAL BANK, a California banking
corporation, as a Lender
By: /s/ RAY VADALMA
-------------------------------------
Ray Vadalma
Title: Senior Vice President
----------------------------------
THE INDUSTRIAL BANK OF JAPAN, Limited,
Los Angeles Agency, as a Lender
By: /s/ CARL-ERIC BENZINGER
-------------------------------------
Carl-Eric Benzinger
Title: SVP & Senior Manager
----------------------------------
THE ING CAPITAL SENIOR SECURED HIGH
INCOME FUND, L.P., as a Lender
By: ING Capital Advisors, Inc., as
Investment Advisor
By: /s/ MICHAEL D. HATLEY
-------------------------------------
Michael D. Hatley
Title: Vice President & Portfolio Manager
-----------------------------------
MARINE MIDLAND BANK, as a Lender
By: /s/ [ILLEGIBLE]
--------------------------------------
Title: Authorized Signatory
-----------------------------------
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MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY, as a Lender
By: /S/ JOHN B. WHALEN
-------------------------------------
John B. Whalen
Title: Managing Director
------------------------------------
MERITA BANK LTD., NEW YORK BRANCH,
as a Lender
By: /S/ FRANK MAFFEI
-------------------------------------
Frank Maffei
Title: Vice President
----------------------------------
By: /S/ CLIFFORD ABRAMSKY
-------------------------------------
Clifford Abramsky
Title: Vice President
----------------------------------
METROPOLITAN LIFE INSURANCE COMPANY,
as a Lender
By: /S/ JAMES R. DINGLER
-------------------------------------
James R. Dingler
Title: Director
----------------------------------
THE MITSUBISHI TRUST AND BANKING
CORPORATION, Los Angeles Agency, as a
Lender
By: /S/ [ILLEGIBLE]
-------------------------------------
Title: Senior Vice President &
Chief Manager
----------------------------------
MITSUI LEASING (U.S.A.) INC., as
a Lender
By: /S/ [ILLEGIBLE]
-------------------------------------
Title: Senior Vice President
----------------------------------
NATIONAL CITY BANK, as a Lender
By: /S/ JOSEPH D. ROBISON
-------------------------------------
Joseph D. Robison
Title: Vice President
----------------------------------
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<PAGE> 159
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (a Unit of The Chase
Manhattan Bank), as a Lender
By: /s/ RICHARD W. STEWART
-------------------------------------
Richard W. Stewart
Title: Managing Director
----------------------------------
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/ SCOTT D. KRASE
-------------------------------------
Scott D. Krase
Title: Vice President
----------------------------------
MORGAN STANLEY SENIOR FUNDING, INC.,
as a Lender
By: /s/ CHRISTOPHER A. PUCILLO
-------------------------------------
Christopher A. Pucillo
Title: Vice President
----------------------------------
PILGRIM AMERICA PRIME RATE TRUST, as a
Lender
By: /s/ MICHAEL L. BACEVICH
-------------------------------------
Michel L. Bacevich
Title: Vice President
----------------------------------
PPM AMERICA, INC., as attorney in
fact, on behalf of Jackson National
Life Insurance Company
By:
-------------------------------------
Title:
----------------------------------
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<PAGE> 160
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND" NEW YORK BRANCH, as a
Lender
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Vice President
----------------------------------
By: /s/ IAN REECE
-------------------------------------
Ian Reece
Title: Senior Credit Officer
----------------------------------
KZH-SOLEIL CORPORATION, as a Lender
By: /s/ VIRGINIA R. CONWAY
-------------------------------------
Virginia R. Conway
Title: Authorized Agent
----------------------------------
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as a Lender
By:
-------------------------------------
Title:
----------------------------------
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST, as a Lender
By:
-------------------------------------
Title:
----------------------------------
THE BANK OF NEW YORK, as a Lender
By:
-------------------------------------
Title:
----------------------------------
CITY NATIONAL BANK, as a Lender
By: /s/ GEORGE HAYRAPETIAN
-------------------------------------
George Hayrapetian
Title: Vice President
----------------------------------
S-7
<PAGE> 161
ORIX USA CORPORATION, as a Lender
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Executive Vice President
----------------------------------
UNION BANK OF CALIFORNIA, N.A., as a
Lender
By: /s/ DAVID TAYLOR
-------------------------------------
David E. Taylor
Title: Vice President
----------------------------------
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR), as a Lender
By: /s/ IAIN WHYTE
-------------------------------------
Name: Iain Whyte
Title: Vice President
----------------------------------
By: /s/ DANIEL TOUFFU
-------------------------------------
Name: Daniel Touffu
------------------------------------
Title: 1st Vice President and
Regional Manager
-----------------------------------
DRESDNER BANK AG, NEW YORK BRANCH and
GRAND CAYMAN BRANCH, as a Lender
By: /s/ BEVERLY G. CASON
-------------------------------------
Beverly G. Cason
Title: Vice President
----------------------------------
By: /s/ BRIGITTE SACIN
-------------------------------------
Brigitte Sacin
Title: Assistant Treasurer
----------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender
By:
-------------------------------------
Title:
----------------------------------
S-8
<PAGE> 162
SANWA BUSINESS CREDIT CORP.,
as a Lender
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Vice President
----------------------------------
THE BANK OF NOVA SCOTIA,
as a Lender
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Relationship Manager
----------------------------------
NEW YORK LIFE INSURANCE COMPANY,
as a Lender
By:
-------------------------------------
Title:
----------------------------------
TCW ASSET MANAGEMENT COMPANY, as
Attorney-In-Fact for United Companies
Life Insurance Company, as a Lender
By:
-------------------------------------
Title:
----------------------------------
TCW ASSET MANAGEMENT COMPANY, as
Attorney-In-Fact for Integon Life
Insurance Corporation, as a Lender
By:
-------------------------------------
Title:
----------------------------------
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
its investment adviser
By:
-------------------------------------
Title:
----------------------------------
S-9
<PAGE> 163
SOUTHERN PACIFIC BANK
By: /s/ [ILLEGIBLE] KELLEHER
-------------------------------------
Title: Vice President
----------------------------------
SWISS BANK CORPORATION
By: /s/ CHRISTINE DALEY
-------------------------------------
Christine Daley
Title: Executive Director
----------------------------------
By: /s/ JAMES [ILLEGIBLE]
-------------------------------------
Title: Executive Director
Distressed Debt
----------------------------------
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By: /s/ ANTHONY R. CLEMENTE
-------------------------------------
Anthony R. Clemente
Title: Authorized Signatory
----------------------------------
PAMCO CAYMAN LTD.
By: Protective Asset Management
Company, as Collateral Manager
By: /s/ MARK K. OKADA
-------------------------------------
Mark K. Okada
Title: Executive Vice President
----------------------------------
SUMITOMO TRUST & BANKING COMPANY, LTD.
By: /s/ ELEANOR CHAN
-------------------------------------
Eleanor Chan
Title: Manager & Vice President
----------------------------------
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ WILLIAM M. SWENSON
-------------------------------------
William M. Swenson
Title: Authorized Signatory
----------------------------------
DLJ CAPITAL FUNDING, INC.
By: /s/ NANCY C. [ILLEGIBLE]
-------------------------------------
Title: Vice President
----------------------------------
ML CBO IV (Cayman) Ltd.
By: Protective Asset Management
Company, as Collateral Manager
By: /s/ MARK K. OKADA
-------------------------------------
Mark K. Okada
Title: Executive Vice President
----------------------------------
S-10
<PAGE> 164
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ CHARLES B. FEARS
-------------------------------------
Charles B. Fears
Title: Director
----------------------------------
S-11
<PAGE> 165
ROYALTON COMPANY
By: Pacific Investment Management Company
as its investment advisor
By: /s/ RAYMOND KENNEDY
--------------------------------------------
Raymond Kennedy
Title: Vice President
-----------------------------------------
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management,
L.P. as Investment Advisor
By: /s/ ANTHONY R. CLEMENTE
--------------------------------------------
Anthony R. Clemente
Title: Authorized Signatory
-----------------------------------------
FLOATING RATE PORTFOLIO
By: Chancellor LGT Senior Secured
Management, Inc., as Attorney-in-Fact
By: /s/ CHRISTOPHER A. BONDY
--------------------------------------------
Christopher A. Bondy
Title: Managing Director
-----------------------------------------
PAMCO CAYMAN LTD.
By: Protective Asset Management
L.L.C., as Collateral Manager
By:
--------------------------------------------
Title:
-----------------------------------------
S-12
<PAGE> 166
New Term B Percentage: NEW TERM B LENDERS:
38.1250000% BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ WILLIAM J. STAFEIL
-----------------------------------
William J. Stafeil
Title: Vice President
----------------------------------
5.40000000% KZH-SOLEIL CORPORATION
By: /s/ V. CONWAY
-----------------------------------
V. Conway
Title: Authorized Agent
----------------------------------
6.95000000% OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (a Unit of the Chase
Manhattan Bank)
By: /s/ RICHARD W. STEWART
-----------------------------------
Richard W. Stewart
Title: Managing Director
----------------------------------
4.05000000% PILGRIM AMERICA PRIME RATE TRUST
By: /s/ MICHAEL J. BACEVICH
-----------------------------------
Michael J. Bacevich
Title: Vice President
----------------------------------
5.77500000% SWISS BANK CORPORATION
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: Executive Director, Distressed Debt
----------------------------------
By: /s/ JAMES CULLINANE
-----------------------------------
James Cullinane
Title: Executive Director, Distressed Debt
----------------------------------
5.40000000% METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ JAMES R. DINGLER
-----------------------------------
James R. Dingler
Title: Director
----------------------------------
S-13
<PAGE> 167
2.50000000% ROYALTON COMPANY
By: /s/ RAYMOND KENNEDY
-------------------------------------
Raymond Kennedy
Title: Vice President
----------------------------------
2.55000000% FLOATING RATE PORTFOLIO
By: Chancellor LGT Senior Secured
Management, Inc., as Attorney-in-Fact
By: /s/ CHRISTOPHER A. BONDY
-------------------------------------
Christopher A. Bondy
Title: Managing Director
-----------------------------------
2.55000000% MORGAN STANLEY SENIOR FUNDING, INC.
By: /s/ CHRISTOPHER A. PUCILLO
-------------------------------------
Christopher A. Pucillo
Title: Vice President
-----------------------------------
4.05000000% MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: /s/ JOHN B. WHALEN
-------------------------------------
John B. Whalen
Title: Managing Director
-----------------------------------
4.05000000% THE ING CAPITAL SENIOR SECURED HIGH
INCOME FUND, L.P.
By: ING Capital Advisors, Inc., as
Investment Advisor
By: /s/ MICHAEL D. HATLEY
-------------------------------------
Michael D. Hatley
Title: Vice President & Portfolio Manager
-----------------------------------
13.5000000% OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities Gen Par, L.P.,
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By: /s/ SCOTT D. KRASE
-------------------------------------
Scott D. Krase
Title: Vice President
-----------------------------------
S-14
<PAGE> 168
5.10000000% MERRILL LYNCH SENIOR FLOATING RATE
FUND
By: /s/ ANTHONY R. CLEMENTE
-------------------------------------
Anthony R. Clemente
Title: Authorized Signature
-----------------------------------
S-15
<PAGE> 1
EXHIBIT 4.5
AMENDED AND RESTATED PARENT GUARANTY
This AMENDED AND RESTATED PARENT GUARANTY (this "Guaranty"), dated as of
December 17, 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 an
Amended and Restated 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 BankBoston, N.A.,
Citicorp USA, Inc., General Electric Capital Corporation and The LongTerm 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, which
Credit Agreement amends and restates a Credit Agreement among the Company, the
Administrative Agent and certain financial institutions, dated as of April 18,
1997 (the "Original Credit Agreement");
WHEREAS, in connection with the Original Credit Agreement, the Guarantor
issued a Parent Guaranty, dated as of April 18, 1997 (the "Original Guaranty")
in favor of the Administrative Agent;
WHEREAS, as a condition to the effectiveness of the Credit Agreement,
the Original Guaranty must be amended and restated in the form hereof; 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
-1-
<PAGE> 2
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 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
-2-
<PAGE> 3
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.
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 (a) liabilities arising directly as a result of
its ownership of the Company and (b) the Parent Bridge Notes (or Parent Discount
Notes issued in lieu thereof) and any Qualified Parent Notes issued in a
Qualified Parent Refinancing in an aggregate principal amount (or, if issued
with original issue discount, an aggregate issue price) not to exceed the amount
necessary to pay in full all principal, accrued interest, premium, if any, of
the Parent Discount Notes or,
-3-
<PAGE> 4
if applicable, a prior issuance of Qualified Parent Notes, plus customary fees
and expenses incurred with the issuance of such refinancing notes (provided that
(1) the documentation with respect to such refinancing Indebtedness shall not
contain provisions that are more restrictive on the Guarantor than those in
effect with respect to the Parent Bridge Notes and (2) such refinancing
Indebtedness has a stated maturity no earlier than the stated maturity of the
Qualified Parent Notes being refinanced) and in any event will not incur or
suffer to exist any Indebtedness for borrowed money (other than as permitted
above) or Guaranty Obligations (other than 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, 8.15 and 8.23 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 (b) make any
redemptions, prepayments, defeasances or repurchases (collectively,
"Redemptions") of any shares of TPG Acquisition Preferred Stock other than, so
long as no Event of Default or Unmatured Event of Default of the type specified
in Section 9.1((f) or (g) 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 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).
-4-
<PAGE> 5
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 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
-5-
<PAGE> 6
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.
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
-6-
<PAGE> 7
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 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.
Upon the effectiveness of the Credit Agreement, the Original Guaranty
shall be superseded by this Guaranty.
-7-
<PAGE> 8
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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/ WILLIAM R. SAWYERS
-------------------------------
William R. Sawyers
Title: Vice President and Secretary
----------------------------
-8-
<PAGE> 1
EXHIBIT 5.1
PILLSBURY MADISON & SUTRO LLP
235 Montgomery Street
San Francisco, California 94104
(415) 983-1000
March 3, 1998
Del Monte Foods Company
One Market Plaza
Steuart Tower
San Francisco, CA 94105
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
This opinion is being delivered in connection with the proposed offer to
exchange (the "Exchange Offer") by Del Monte Foods Company (the "Company")
their 12-1/2 Senior Discount Notes Due 2007 (the "Exchange Notes") for any and
all of their 12-1/2 Senior Discount Notes Due 2007 (the "Initial Notes"). The
Exchange Notes are to be issued pursuant to a Registration Statement of Form
S-4 (the "Registration Statement"), filed on March 4, 1998 by the Company with
the Securities and Exchange Commission under the Securities Act of 1933. The
Exchange Notes will be issued under an Indenture, dated as of December 17, 1997
(the "Indenture"), between the Company and Marine Midland Bank Trustee (the
"Trustee"), in substantially the form filed as Exhibit 4.1.
We are of the opinion that, when (a) the Indenture, under which the
Exchange Notes will be issued, has been qualified under the Trust Indenture Act
of 1939, as amended, (b) the Exchange Notes have been executed by the Company
and authenticated by the Trustee in accordance with the terms of the Indenture
and (c) the Exchange Notes have been delivered in exchange for the Initial
Notes in the manner and for the consideration stated in the Registration
Statement and the Indenture, the Exchange Notes will be legally issued and
binding obligations of the Company.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
/s/ PILLSBURY MADISON & SUTRO LLP
---------------------------------
<PAGE> 1
EXHIBIT 12.1
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<TABLE>
<CAPTION>
Pro Forma Pro forma
Year Year Year Year Year Year Six Months Six Months
Ended Ended Ended Ended Ended Ended Ended Ended
June 30, June 30, June 30, June 30, June 30, June 30, December 31, December 31,
1993 1994 1995 1996 1997 1997 1997 1997
-------- -------- -------- -------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated pre-tax income
(loss)....................... $(142) $ 11 $ 15 $119 $(14) $(85) $ 3 $(11)
Interest expense............... 68 61 76 67 52 93 36 49
Interest portion of rent
expense...................... 9 9 11 9 11 11 7 7
----- ---- ---- ---- ---- ---- --- ----
Earnings............... $ (65) $ 81 $102 $195 $ 49 $ 19 $46 $ 45
===== ==== ==== ==== ==== ==== === ====
Interest expense............... $ 68 $ 61 $ 76 $ 67 $ 52 $ 93 $36 $ 49
Interest portion of rent
expense(a)................... 9 9 11 9 11 11 7 7
----- ---- ---- ---- ---- ---- --- ----
Fixed charges.......... $ 77 $ 70 $ 87 $ 76 $ 63 $104 $43 $ 56
===== ==== ==== ==== ==== ==== === ====
Ratio of earnings to fixed
charges...................... N/A 1.2x 1.2x 2.6x N/A N/A 1.1x N/A
Surplus (deficiency) of
earnings available to
cover fixed charges.......... $(142) $ 11 $ 15 $119 $(14) $(85) $ 3 $(11)
</TABLE>
(a) Interest portion of rent expense is assumed equal to 33% of operating lease
and rental expense for the period.
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARY OF DEL MONTE FOODS COMPANY
Corporate Entity Jurisdiction
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Del Monte Corporation New York
Del Monte Corporation is 100% owned by Del Monte Foods Company
SUBSIDIARIES OF DEL MONTE CORPORATION
Corporate Entity Jurisdiction
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Mike Mac IHC, Inc. Delaware
HI Continental Corporation California
Oak Grove Trucking Company California
Contadina Foods, Inc. Delaware
All subsidiaries are 100% owned by Del Monte Corporation
<PAGE> 1
EXHIBIT 23.1
Conformed Copy
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and
to the use of our report dated August 29, 1996, with respect to the 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 $230,000,000 at maturity of 12 1/2% Senior Discount Notes Due
2007.
/S/ ERNST & YOUNG LLP
San Francisco, California
March 3, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Del Monte Foods Company:
We consent to the use of our report dated August 22, 1997 with respect to Del
Monte Foods Company included herein and to the reference to our firm under the
heading "Experts" in the Registration Statement (Form S-4) and related
Prospectus of Del Monte Foods Company.
/s/ KPMG Peat Marwick LLP
San Francisco, California
March 3, 1998
<PAGE> 1
Exhibit 23.3
The Board of Directors
Del Monte Foods Company
We consent to the inclusion in the registration statement on Form S-4 of Del
Monte Foods Company of our report dated February 16, 1998, with respect to the
combined balance sheet of Contadina (a division of Nestle USA, Inc.) as of
December 31, 1996 and the related statements of operations, divisional equity,
and cash flows for the year then ended, which report appears in the Form 8-K of
Del Monte Foods Company dated March 3, 1998.
/s/ KPMG Peat Marwick LLP
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Los Angeles, California
March 3, 1998
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
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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
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-1792
(Name, address and telephone number of agent for service)
DEL MONTE FOODS COMPANY
(Exact name of obligor as specified in its charter)
Maryland 13-3542950
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One Market
San Francisco, CA 94105
(415) 247-3000 (Zip Code)
(Address of principal executive offices)
12 1/2% SENIOR DISCOUNT NOTES DUE 2007
(Title of Indenture Securities)
<PAGE> 2
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> 3
Item 16. List of Exhibits.
Exhibit
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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 (December 31, 1998), 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> 4
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 17th day
of February, 1998.
MARINE MIDLAND BANK
By: /s/ Metin Caner
--------------------------------
Metin Caner
Vice President
<PAGE> 5
EXHIBIT T1A (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, 2000
Please refer to page
i, Table of Contents,
for the required
disclosure of
estimated burden.
[ 1 ]
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND
FOREIGN OFFICES--FFIEC 031
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31, 1997
This report is required by law; 12 U.S.C. Section 324 (State member banks); 12
U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
----------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and are
true to the best of my knowledge and believe.
/s/ Gerald A. Ronning
--------------------------------------------
Signature of Officer Authorized to Sign Report
1/26/98
- ----------------------------
Date of Signature
(971231)
-----------
(RCRI 9999)
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it
has been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/ Malcolm Burnett
- ------------------------------------
Director (Trustee)
/s/ Bernard J. Kennedy
- ------------------------------------
Director (Trustee)
/s/ Sal H. Alfiero
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Director (Trustee)
SUBMISSION OF REPORTS
Each Bank must prepare its Reports of Condition and Income either:
(a) in automated formand then file the computer data file directly with the
banking agencies' collection agent, Electronic Data System Corporation
(EDS), by modem or computer diskette; or
(b) in hard-copy (paper) form and arrange for another party to convert the
paper report to automated for. That party (if other than EDS) must
transmit the bank's computer data file to EDS
To fulfill the signature and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page to the
hard-copy f the completed report that the bank places in its files.
FDIC Certificate Number | 0 | 0 | 5 | 8 | 9 |
---------------------
(RCRI 9030)
<PAGE> 6
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the Marine Midland Bank
of Buffalo Name of Bank
City
in the state of New York, at the close of business December 31, 1997
ASSETS
Thousands
of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances
currency and coin.................................... $ 928,754
Interest-bearing balances ........................... 2,571,410
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,968,837
Federal funds sold and securities purchased
under agreements to resell........................... 497,992
Loans and lease financing receivables:
Loans and leases net of unearned income ............. 21,550,115
LESS: Allowance for loan and lease losses ........... 407,355
LESS: Allocated transfer risk reserve ............... 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 21,142,760
Trading assets....................................... 979,454
Premises and fixed assets (including
capitalized leases).................................. 225,646
Other real estate owned................................. 8,092
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 24,795
Intangible assets....................................... 479,713
Other assets............................................ 488,168
Total assets............................................ 31,315,621
<PAGE> 7
LIABILITIES
Deposits:
In domestic offices.................................. 20,072,724
Noninterest-bearing.................................. 4,090,858
Interest-bearing..................................... 15,981,866
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................................. 3,834,827
Noninterest-bearing.................................. 0
Interest-bearing..................................... 3,834,827
Federal funds purchased and securities sold
under agreements to repurchase ...................... 2,007,482
Demand notes issued to the U.S. Treasury ............... 192,186
Trading Liabilities..................................... 215,748
Other borrowed money:
With a remaining maturity of one year or less ....... 1,402,449
With a remaining maturity of more than
one year through three years......................... 63,601
With a remaining maturity of more than
three years ......................................... 61,707
Bank's liability on acceptances
executed and outstanding................................ 24,795
Subordinated notes and debentures....................... 497,774
Other liabilities....................................... 719,423
Total liabilities....................................... 29,092,716
EQUITY CAPITAL
Perpetual preferred stock and related
surplus................................................. 0
Common Stock............................................ 205,000
Surplus................................................. 1,984,326
Undivided profits and capital reserves.................. 8,678
Net unrealized holding gains (losses)
on available-for-sale securities........................ 24,901
Cumulative foreign currency translation
adjustments............................................. 0
Total equity capital.................................... 2,222,905
Total liabilities, limited-life
preferred stock, and equity capital..................... 31,315,621
<PAGE> 1
EXHIBIT 99.1
BANKERS TRUST COMPANY
EXCHANGE AGENT AGREEMENT
Bankers Trust Company
Corporate Trust and Agency Group
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Market Services
Ladies and Gentlemen:
Del Monte Foods Company (the "Company"), is offering to exchange (the
"Exchange Offer") up to $230,000,000 in aggregate principal amount at maturity
of Series B 12-1/2% Senior Discount Notes due 2007 (the "Exchange Notes") for an
equal principal amount of its outstanding 12-1/2% Senior Discount Notes due 2007
(the "Initial Notes" and, together with the Exchange Notes, the "Notes"),
pursuant to a prospectus (the "Prospectus") included in the Company's
Registration Statement on Form S-4 (File No. 333-_______) (the "Registration
Statement"), filed with the Securities and Exchange Commission (the "SEC"). The
Term "Expiration Date" shall mean 5:00 p.m., New York City time, on ______ __,
1998, unless the Exchange Offer is extended as provided in the Prospectus, in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended. Upon execution of this Agreement, Bankers
Trust Company will act as the Exchange Agent for the Exchange Offer (the
"Exchange Agent"). A copy of the Prospectus is attached hereto as EXHIBIT A.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed thereto in the Prospectus.
A copy of each of the form of the letter of transmittal (the "Letter of
Transmittal"), the form of the notice of guaranteed delivery (the "Notice of
Guaranteed Delivery"), the form of letter to brokers and the form of letter of
clients (collectively, the "Tender Documents") to be used by holders of Initial
Notes ("Holders") in order to receive Exchange Notes pursuant to the Exchange
Offer is attached hereto as EXHIBIT B.
The Company hereby appoints you to act as Exchange Agent in connection
with the Exchange Offer. In carrying out your duties as Exchange Agent, you are
to act in accordance with the following provisions of this Agreement:
1. You are to mail the Prospectus and the Tender Documents to all
of the Holders and participants on the day that you are notified by the Company
that the Registration Statement has become effective under the Securities Act of
1933, as amended, or as soon as practicable thereafter, and to make subsequent
mailings thereof to any persons who become
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<PAGE> 2
Holders prior to the Expiration Date and to any persons as may from time to time
be requested by the Company. All mailings pursuant to this Section 1 shall be by
first-class mail, postage prepaid, unless otherwise specified by the Company.
You shall also accept and comply with telephone requests for information
relating to the Exchange Offer provided that such information shall relate only
to the procedures for tendering Initial Notes in (or withdrawing tenders of
Initial Notes from) the Exchange Offer. All other requests for information
relating to the Exchange Offer shall be directed to the Company, Attention: Jon
W. Graves, Assistant Treasurer, One Market, San Francisco, California 94103,
Telephone: (415) 247-3320, Facsimile: (415) 247-3322.
2. You are to examine the Letters of Transmittal and the Initial
Notes and other documents delivered or mailed to you, by or for the Holders,
prior to the Expiration Date, to ascertain whether (i) each Letter of
Transmittal is properly executed and completed in accordance with the
instructions set forth therein, (ii) the Initial Notes are in proper form for
transfer and (iii) any other document required by the instructions accompanying
the Letters of Transmittal is completed and duly executed in accordance with
such instructions. In each case where a Letter of Transmittal or other document
has been improperly executed or completed or, for any other reason, is not in
proper form, or some other irregularity exists, you are authorized to endeavor
to take such action as you consider appropriate to notify the tendering Holder
of such irregularity and as to the appropriate means of resolving the same.
Determination of questions as to the proper completion or execution of the
Letters of Transmittal, or as to the proper form for transfer of the Initial
Notes or as to any other irregularity in connection with the submission of
Lenders of Transmittal and/or Initial Notes and other documents in connection
with the Exchange Offer, shall be made by the officers of, or counsel for, the
Company at their written instructions or oral direction confirmed by facsimile.
Any determination made by the Company on such questions shall be final and
binding.
3. At the written request of the Company or its counsel,
Pillsbury Madison & Sutro LLP, you shall notify tendering Holders in the event
of any extension, termination or amendment of the Exchange Offer. In the event
of any such termination, you will return all tendered Initial Notes to the
persons entitled thereto, at the request and expense of the Company.
4. Tender of the Initial Notes may be made only as set forth in
the Letter of Transmittal. Notwithstanding the foregoing, tenders which the
Company shall approve in writing as having been properly tendered shall be
considered to be properly tendered. Letters of Transmittal and Notices of
Guaranteed Delivery shall be recorded by you as to the date and time of receipt
and shall be preserved and retained by you at the Company's expense for six
years. Exchange Notes are to be issued in exchange for Initial Notes pursuant to
the Exchange Offer only (i) against deposit with you prior to the Expiration
Date or, in the case of a tender in accordance with the guaranteed delivery
procedures outlined in Instruction 1 of the Letter of Transmittal, within three
New York Stock Exchange trading days after the Expiration Date of the Exchange
Offer, together with executed Letters of Transmittal and other documents
required by the Exchange Offer or (ii) in the event that the Holder is a
participant in The Depository Trust Company ("DTC") system, by the utilization
of DTC's
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<PAGE> 3
Automated Tender Offer Program ("ATOP") and any evidence required by the
Exchange Offer.
You are hereby directed to establish an account with respect to the
Initial Notes at DTC (the "Book Entry Transfer Facility") within two business
days after the date of the Prospectus. Any financial institution that is a
participant in the Book Entry Transfer Facility system may, until the Expiration
Date, make book-entry delivery of the Shares by causing the Book Entry Facility
to transfer such Notes into your account in accordance with the procedure for
such transfer established by the Book Entry Transfer Facility. In every case,
however, a Letter of Transmittal (or a manually executed facsimile thereof), or
an Agent's Message, properly completed and duly executed with any required
signature guarantees and any other required documents must be transmitted to and
received by you prior to the Expiration Date or the guaranteed delivery
procedures described in the Prospectus must be complied with.
The term "Agent's Message" means a message transmitted by a participant
of the Book Entry Transfer Facility to and received by DTC and forming a part of
a Book Entry Confirmation, which states that such Book Entry Transfer Facility
has received an express acknowledgment from the participant in such Book Entry
Transfer Facility tendering the Initial Notes that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Company may enforce such agreement against such participant.
5. Upon the oral or written request of the Company (with written
confirmation of any such oral request thereafter), you will transmit by
telephone, and promptly thereafter confirm in writing to Jon W. Graves,
Assistant Treasurer, One Market, San Francisco, California 94105, Telephone:
(415) 247-3320, Facsimile: (415) 247-3322, or such other persons as the Company
may reasonably request the aggregate number and principal amount of Initial
Notes tendered to you and the number and principal amount of Initial Notes
properly tendered that day. In addition, you will also inform the aforementioned
persons, upon oral request made from time to time (with written confirmation of
such request thereafter) prior to the Expiration Date, of such information as
they or any of them may reasonably request.
6. Upon the terms and subject to the conditions of the Exchange
Offer, delivery of Exchange Notes will be made by you promptly after acceptance
of the tendered Initial Notes in accordance with Section 8 hereof. You will hold
all items which are deposited for tender with you after 5:00 p.m., New York City
time, on the Expiration Date pending further instructions from an officer of the
Company.
7. If any Holder shall report to you that his or her failure to
surrender Initial Notes registered in his or her name is due to the loss or
destruction of a certificate or certificates, you shall request such Holder (i)
to furnish to you an affidavit of loss and, if required by the Company, a bond
of indemnity in an amount and evidenced by such certificate or certificates of a
surety, as may be satisfactory to you and the Company, and (ii) to execute and
deliver an agreement to indemnify the Company and you in such form as is
acceptable to you and the Company. The obligees to be named in each such
indemnity
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<PAGE> 4
bond shall include the Company and you. You shall report to the Company the
names of all Holders who claim that their Initial Notes have been lost or
destroyed and the principal amount of such Initial Notes.
8. Upon the expiration of the Exchange Offer, Jon W. Graves,
Assistant Treasurer of the Company, or another designated officer or agent of
the Company will confirm to you orally (oral notice to be promptly confirmed in
writing) or in writing the aggregate principal amount of Initial Notes being
exchanged for Exchange Notes pursuant to the Exchange Offer. The Initial Notes
accepted for exchange are to be delivered to the Trustee with instructions to
cancel such Initial Notes and unless otherwise instructed by the Company to
destroy such canceled Initial Notes and furnish the Company with a certificate
evidencing such destruction.
As soon as practicable after the Company notifies you of its election
to exchange Initial Notes pursuant to the preceding paragraph, you shall either
(i) cause an aggregate principal amount of Exchange Notes equal to be aggregate
principal amount of Initial Notes surrendered with and tendered by each Letter
of Transmittal or Agent's Message and accepted for exchange to be reflected, as
directed in such Letter of Transmittal or Agent's Message, on records maintained
by DTC, or, as applicable, (ii) at the request of the tendering Holder contained
in a Letter of Transmittal which is tendering Initial Notes in definitive form,
cause to be delivered as directed in such Letter of Transmittal Exchange Notes
registered in the name or names specified in such Letter of Transmittal
evidencing an aggregate principal amount equal to the aggregate principal amount
of Initial Notes surrendered with and tendered by such Letter of Transmittal.
Tenders pursuant to the Exchange Offer are irrevocable, except that
Initial Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date as described in the Prospectus.
If, pursuant to the terms of the Exchange Offer, the Company does not
accept and exchange all or any part of the Initial Notes, or Initial Notes are
tendered but withdrawn prior to the Expiration Date, or partial tenders are
made, you shall promptly return to, or, upon the order of, the tendering Holder,
certificates for Initial Notes not exchanged.
Any certificates for unexchanged Notes forwarded by first-class mail
shall be so forwarded under an existing insurance policy protecting you and the
Company from loss or liability arising out of the non-receipt or non-delivery of
such certificates or by registered mail insured separately for the replacement
value of such certificates.
9. For your services as the Exchange Agent hereunder, the Company
shall pay you in accordance with the schedule of fees attached hereto as EXHIBIT
C. The Company also will reimburse you, for your reasonable out-of-pocket
expenses (including, but not limited to, reasonable attorneys' fees and expenses
not previously paid to you) in connection with your services promptly after
submission to the Company of itemized statements.
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<PAGE> 5
10. You are not authorized to pay any concessions, commissions or
solicitation fees to any broker, dealer, bank or other person or to engage or
utilize any person to solicit tenders.
11. As the Exchange Agent hereunder you:
(a) shall have no duties or obligations other than those
specifically set forth herein or in the Exhibits attached hereto or as
may be subsequently requested in writing of you by the Company and
agreed to by you in writing with respect to the Exchange Offer;
(b) will be regarded as making no representations and
having no responsibilities as to the validity, accuracy, sufficiency,
value or genuineness of any Initial Notes deposited with you hereunder
of any Exchange Notes, any tender Documents or other documents prepared
by the Company in connection with the Exchange Offer;
(c) shall not be obligated to take any legal action
hereunder which might in your judgment involve any expense or liability
unless you shall have been furnished with an indemnity reasonably
satisfactory to you;
(d) may rely on, and shall be fully protected and
indemnified as provided in Section 12 hereof in acting upon, the
written or oral instructions with respect to any matter relating to
your acting as Exchange Agent specifically covered by this Agreement or
supplementing or qualifying any such action of any officer or agent of
such other person or persons as may be designated or whom you
reasonably believe have been designated by the Company;
(e) may consult with counsel satisfactory to you,
including counsel for the Company, and the advice of such counsel shall
be full and complete authorization and protection in respect in good
faith and in accordance with such advice of such counsel;
(f) shall not at any time advise any person as to the
wisdom of the Exchange Offer or as to the market value or decline or
appreciation in market value of any Initial Notes or Exchange Notes;
and
(g) shall not be liable for any action which you may do
or refrain from doing in connection with this Agreement except for your
gross negligence, willful misconduct or bad faith;
(h) shall not be required to expend or risk your own
funds or otherwise to incur any liability, financial or otherwise, in
the performance of any of your duties hereunder, or in the exercise of
any of your rights or powers if you shall have reasonable grounds for
believing that repayment of such funds
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<PAGE> 6
or indemnity satisfactory to you against such risk or liability is not
assured to you;
(i) may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval or other paper or document believed by you to be
genuine and to have been signed or presented by the proper party or
parties;
(j) shall be entitled, if in the administration of the
provisions of this Agreement you shall deem it necessary or desirable
that a matter be proved or established prior to taking or suffering any
action to be taken hereunder, to receive and such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in
the absence of gross negligence, willful misconduct or bad faith on
your part be deemed to be conclusively proved and established by a
certificate signed by one of the Company's authorized officers and
delivered to you, and such certificate, in the absence of gross
negligence, willful misconduct or bad faith on your part shall be full
warrant to you for any action taken, suffered or omitted by it under
the provisions of this Agreement upon the faith thereof;
(k) may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
attorneys, custodians or nominees appointed with due care; and
(l) may at any time resign by giving 30 days written
notice of resignation to the Company. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor and, upon
the acceptance by the successor of such appointment, release the
resigning Exchange Agent from its obligations hereunder by written
instrument, a copy of which instrument shall be delivered to each of
the Exchange Agent and the successor. If no successor shall have been
so appointed and have accepted appointment within 45 days after the
giving of such notice of resignation, you may petition any court of
competent jurisdiction for the appointment of a successor.
12. The Company covenants and agrees to indemnify and hold
harmless Bankers Trust Company and its officers, directors, employees, agents
and affiliates (collectively, the "Indemnified Parties" and each an "Indemnified
Party") against any loss, liability or reasonable expense of any nature
(including reasonable attorneys' and other fees and expenses) incurred without
gross negligence, willful misconduct or bad faith on an Indemnified Party's
part, in connection with the administration of the duties of the Indemnified
Parties hereunder in accordance with this Agreement; provided, however, such
Indemnified Party shall use its best effort to notify the Company by letter, or
by cable, telex or facsimile confirmed by letter, of the written assertion of a
claim against such Indemnified Party, or of any action commenced against such
Indemnified Party, promptly after but in any event within 10 days of the date
such Indemnified Party shall have received any such written
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<PAGE> 7
assertion of a claim or shall have been served with a summons, or other legal
process, giving information as to the nature and basis of the claim; provided,
however, that failure to so notify the Company shall not relieve the Company of
any liability which it may otherwise have hereunder except such liability that
is a direct result of such Indemnified Party's failure to so notify the Company.
The Company shall be entitled to participate at its own expense in the defense
of any such claim or legal action and if the Company so elects or if the
Indemnified Party in such notice to the Company so directs, the Company shall
assume the defense of any suit brought to enforce any such claim. In the event
the Company assumes such defense, the Company shall not be liable for any fees
and expenses thereafter incurred by such Indemnified Party, incurred as a result
of the need to have separate representation because of a conflict of interest
between such Indemnified Party and the Company. You shall not enter into a
settlement or other compromise with respect to any indemnified loss, liability
or expense without the prior written consent or the Company, which shall not be
unreasonably withheld or delayed if not adverse to the Company's interests.
Obligations under this Section 12 shall survive the termination of this
Agreement or the earlier resignation or termination of the Exchange Agent.
13. This Agreement and your appointment as the Exchange Agent
shall be construed and enforced in accordance with the laws of the State of New
York (without regard to its conflicts of law principles) and shall inure to the
benefit of, and the obligations created hereby shall be binding upon the
successors and assigns of the parties hereto. No other person shall acquire or
have any rights under or by virtue of this Agreement.
14. The parties hereto hereby irrevocably submit to the venue and
jurisdiction of any New York State or federal court sitting in the Borough of
Manhattan in New York City in any action or proceeding arising out of or
relating to this Agreement, and the parties hereby irrevocably agree that all
claims in respect of such action or proceeding arising out of or relating to
this Agreement shall be heard and determined in such a New York State or federal
court. The parties hereby consent to and grant to any such court jurisdiction
over the persons of such parties and over the subject matter of any such dispute
and agree at delivery or mailing of any process or other papers in the manner
provided herein, or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.
15. This Agreement may not be modified, amended or supplemented
without an express written agreement executed by the parties hereto. Any
inconsistency between this Agreement and the Tender Documents, as they may from
time to time be supplemented or amended, shall be resolved in favor of the
latter, except with respect to the duties, liabilities and indemnification of
you as Exchange Agent.
16. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
17. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or unpaired thereby.
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<PAGE> 8
18. Unless terminated earlier by the parties hereto, this
Agreement shall terminate 90 days following the Expiration Date. Notwithstanding
the foregoing, Sections 9 and 12 shall survive the termination of this
Agreement. Upon any termination of this Agreement, you shall promptly deliver to
the Trustee any certificates for Initial Notes or Exchange Notes, funds or
property then held by you as Exchange Agent under this Agreement.
19. All notices and communications hereunder shall be in writing
and shall be deemed to be duly given if delivered or mailed first class
certified or registered mail, postage prepaid, or sent by facsimile as follows:
If to Company: Del Monte Corporation
One Market
San Francisco, California 94105
Attention: Jon W. Graves
Telephone: (415) 247-3320
Facsimile: (415) 247-3322
and a copy to: Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, Ca 94104
Attention: Gregg Vignos
Telephone: (415) 983-1122
Facsimile: (415) 983-1200
If to you: Bankers Trust Company
Corporate Trust and Agency Group
Four Albany Street - 4th Floor
New York, New York 10006
Attention: Jason Krasilovsky
Telephone: (212) 250-4730
Facsimile: (212) 250-6392
or such other address or telecopy number as any of the above may have finished
to the other parties in writing for such purposes
20. This Agreement and all of the obligations hereunder shall be
assumed by any and all successors and assigns of the Company.
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<PAGE> 9
If the foregoing is in accordance with your understanding, would you
please indicate your agreement by signing and returning the enclosed copy of
this Agreement to the Company.
Very truly yours,
By: _____________________________________
Name: William R. Sawyers
Title: General Counsel, Secretary and
Vice President
Agreed to this ____ day
of _________, 1998
BANKERS TRUST COMPANY,
as Exchange Agent
By: ________________________________
Name: Jason Krasilovsky
Title: Assistant Treasurer
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<PAGE> 1
Exhibit 99.2
FORM OF LETTER OF TRANSMITTAL
DEL MONTE FOODS COMPANY
Offer to Exchange
Series B 12-1/2% Senior Discount Notes due 2007,
which have been registered under the Securities Act of 1933,
as amended, for any and all Outstanding
12-1/2% Senior Discount Notes due 2007
Pursuant to the Prospectus, dated _______ __, 1998.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME,
ON ___________ __, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON
__________ __, 1998.
DELIVERY TO: BANKERS TRUST COMPANY, EXCHANGE AGENT
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Mail or Courier:
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust and Corporate Trust and Agency
P.O. Box 292737 Agency Group Group
Nashville, TN 37229-2737 Receipt & Delivery Reorganization Unit
Window 648 Grassmere Park Road
123 Washington Street, 1st Nashville, TN 37211
Floor
New York, NY 10006
</TABLE>
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.
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<PAGE> 2
The undersigned acknowledges receipt of the Prospectus, dated _______
__, 1998 (the "Prospectus"), of 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 $230,000,000 of Series B 12-1/2% Senior Discount Notes due 2007
(the "Exchange Notes") for an equal principal amount of the outstanding 12-1/2%
Senior Discount Notes due 2007 (the "Initial Notes"). Bankers Trust Company is
the exchange agent for the Exchange Offer (the "Exchange Agent").
For each Initial Note accepted for exchange, the holder of such Initial
Note will receive an Exchange Note having a principal amount at maturity equal
to that of the surrendered Initial Note. The Exchange Notes will accrue interest
at the applicable per annum rate from December 15, 2002. Interest on the
Exchange Notes is payable on June 15 and December 15 of each year commencing
June 15, 2003.
Notwithstanding the foregoing, additional interest ("Additional
Interest") shall become payable in respect of the Initial Notes as follows:
(i) if (A) neither a registration statement with respect to the
Exchange Notes (the "Registration Statement") nor a shelf registration
statement covering resales of the Initial Notes (the "Shelf Registration
Statement") is filed with the Securities and Exchange Commission (the
"Commission") within 75 days following December 19, 1997 (the
"Acquisition Date") or (B) notwithstanding that DMFC has consummated or
will consummate the Exchange Offer, DMFC is 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 December 17, 1997, by and among DMFC and Bear,
Stearns & Co. Inc., BancAmerica Robertson Stephens and BT Alex.Brown
Incorporated, then commencing on the day after either such required
filing date, Additional Interest shall accrue on the Accreted Value of
the Initial 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
150 days following the Acquisition Date or (B) notwithstanding that DMFC
has consummated or will consummate an Exchange Offer, DMFC is required
to file a Shelf Registration Statement and such Shelf Registration
Statement is not declared effective by the Commission on or prior to the
150th day following the Acquisition Date, then, commencing on the day
after either such required effective date, Additional Interest shall
accrue on the Accreted Value of the Initial 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
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<PAGE> 3
(iii) if (A) DMFC has not exchanged Exchange Notes for all
Initial Notes validly tendered in accordance with the terms of the
Exchange Offer on or prior to the 30th 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
second anniversary of the Issue Date (other than after such time as all
Initial Notes have been disposed of thereunder), then Additional
Interest shall accrue on the Accreted Value of the Initial Notes at a
rate of .50% per annum for the first 90 days commencing on (x) the 30th
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 Initial 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 Exchange Notes for all Initial 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 Initial 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 Initial Notes.
DMFC reserves the right (i) to delay acceptance of any Initial Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and not permit
acceptance of Initial 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 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 Initial 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 DMFC to constitute a material change, DMFC
will promptly disclose such amendment in a manner reasonably calculated to
inform the holders of the Initial Notes of such amendment.
Without limiting the manner in which DMFC may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, DMFC shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement.
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<PAGE> 4
This Letter is to be completed by a holder of Initial Notes either if
Initial Notes are to be forwarded herewith or if a tender of Initial 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 Initial Notes whose certificates are not
immediately available, or who are unable to deliver their certificates or
confirmation of the book-entry tender of their Initial 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 Initial 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.
List below the Initial Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Initial Notes should be listed on a separate signed schedule affixed hereto.
-4-
<PAGE> 5
<TABLE>
<CAPTION>
DESCRIPTION OF INITIAL 1 2 3
NOTES
----------------------- ----------- -------- ------------
<S> <C> <C> <C>
Name(s) and Address(es) Amount of
of Registered Holder(s) Certificate Initial Amount
(Please fill in, if blank) Number(s) Note(s) Tendered**
</TABLE>
* Need not be completed if Initial 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 Initial Notes represented by the Initial Notes
indicated in column 2. See Instruction 2. Initial 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 INITIAL 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 INITIAL 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__________________________
-5-
<PAGE> 6
[ ] 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:_______________________________________________________________
_______________________________________________________________________
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 DMFC the aggregate principal amount of Initial
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Initial Notes tendered hereby, the undersigned hereby sells,
assigns and transfers to, or upon the order of, DMFC all right, title and
interest in and to such Initial 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 Initial Notes
tendered hereby and that DMFC 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 DMFC. The undersigned
hereby further represents that any Exchange Notes acquired in exchange for
Initial Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such Exchange Notes, whether or not such person
is the undersigned, that neither the holder of such Initial Notes nor any such
other person is engaged in, or intends to engage in a distribution of such
Exchange Notes, or has an arrangement or understanding with any person to
participate in the distribution of such Exchange Notes, and that neither the
holder of such Initial 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 DMFC.
The undersigned also acknowledges that this Exchange Offer is being made
based on 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 Exchange Notes issued in exchange for the Initial 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 Exchange Notes
directly from 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 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
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<PAGE> 7
Exchange 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 Exchange Notes and has no arrangement with any person to participate in
the distribution of such Exchange Notes. If a holder of Initial Notes is engaged
in or intends to engage in a distribution of the Exchange Notes or has any
arrangement or understanding with respect to the distribution of the Exchange
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 Exchange Notes for its own account in exchange
for Initial Notes, it represents that the Initial Notes to be exchanged for the
Exchange Notes were acquired by it as a result of market-making activities or
other trading activities and acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by DMFC to be necessary or desirable to complete the sale,
assignment and transfer of the Initial Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. 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 Exchange Notes (and, if applicable,
substitute certificates representing Initial Notes for any Initial Notes not
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Initial 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 Exchange
Notes (and, if applicable, substitute certificates representing Initial Notes
for any Initial Notes not exchanged) to the undersigned at the address shown
above in the box entitled "Description of Initial Notes".
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF INITIAL
NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
INITIAL NOTES AS SET FORTH IN SUCH BOX ABOVE.
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<PAGE> 8
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Initial Notes not exchanged
and/or Exchange Notes are to be issued in the name of and sent to someone other
than the person(s) whose signature(s) appear(s) on this Letter above, or if
Initial Notes delivered by book-entry transfer which are not accepted for
exchange are to be returned by credit to an account maintained at the Book-Entry
Transfer Facility other than the account indicated above.
Issue Exchange Notes and/or Initial Notes to:
Name(s):_______________________________________________________________________
(Please Type or Print)
_______________________________________________________________________________
(Please Type or Print)
Address:_______________________________________________________________________
_______________________________________________________________________________
(Including Zip Code)
(Complete accompanying Substitute Form W-9)
Credit unexchanged Initial Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
_______________________________________________________________________________
(Book-Entry Transfer Facility
Account Number, if
applicable)
SPECIAL DELIVERY INSTRUCTION
(See Instructions 3 and 4)
To be completed ONLY if certificates for Initial Notes not exchanged
and/or Exchange Notes are to be sent to someone other than the person(s) whose
signature(s) appear(s) on this Letter above or to such person(s) at an address
other than shown in the box entitled "Description of Initial Notes" on this
Letter above.
Issue Exchange Notes and/or Initial Notes to:
Name(s):_______________________________________________________________________
(Please Type or Print)
_______________________________________________________________________________
(Please Type or Print)
Address:_______________________________________________________________________
_______________________________________________________________________________
(Including Zip Code)
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR
INITIAL 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.
-8-
<PAGE> 9
PLEASE READ THIS LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete accompanying Substitute Form W-9)
Dated: ____________________1998
_______________________________________________________________________________x
_______________________________________________________________________________x
(Signature(s) of Owner) (Date)
Area Code and Telephone Number:___________________________
If a holder is tendering any Initial Notes, this Letter must be signed
by the registered holder(s) as the name(s) appear(s) on the certificate(s) for
the Initial 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:______________________________________________________________
_______________________________________________________________________________
(Including Zip Code)
SIGNATURE GUARANTEE
(if required by Instruction 3)
Signature(s) Guaranteed by an Eligible Institution:
_______________________________________________________________________________
(Authorized Signature)
_______________________________________________________________________________
(Title)
_______________________________________________________________________________
(Name and Firm)
Dated:___________________________________________________________________, 1998
-9-
<PAGE> 10
INSTRUCTIONS
Del Monte Foods Company
Forming Part of the Terms and Conditions of the Offer to Exchange Series B
12-1/2% Senior Discount Notes due 2007, which have been registered under the
Securities Act of 1933, as amended, for any and all Outstanding 12-1/2% Senior
Discount Notes due 2007.
1. Delivery of this Letter and Initial Notes; Guaranteed Delivery
Procedures.
This Letter is to be completed by holders of Initial 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 Initial 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. Initial Notes tendered hereby must be in
denominations of principal amount at maturity of $1,000 and any integral
multiple thereof.
Holders of Initial Notes whose certificates for Initial 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 and deliver an Agent's
Message on a timely basis, may tender their Initial 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 DMFC (by facsimile transmission, mail or
hand delivery), setting forth the name and address of the holder of Initial
Notes and the amount of Initial Notes tendered, stating that the tender is being
made thereby and guaranteeing that within five business days after the
Expiration Date, the certificates for all physically tendered Initial 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 Initial 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 five business days after the Expiration Date.
The method of delivery of this Letter, the Initial 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 Initial Notes are sent by mail, it is suggested that the
mailing be made sufficiently in advance of
-10-
<PAGE> 11
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.
2. Partial Tenders (not applicable to holders of Initial Notes who tender
by book-entry transfer).
If less than all of the Initial Notes evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Initial Notes to be tendered in the box above
entitled "Description of Initial Notes--Principal Amount Tendered." A reissued
certificate representing the balance of nontendered Initial 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 Initial 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 Initial 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 Initial Notes are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Initial 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 Initial Notes
specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the Exchange Notes are to be
issued, or any untendered Initial 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,
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<PAGE> 12
unless waived by DMFC, proper evidence satisfactory to DMFC of their authority
to so act must be submitted.
ENDORSEMENTS ON CERTIFICATES FOR INITIAL 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 INITIAL NOTES ARE TENDERED: (I) BY A REGISTERED HOLDER
OF INITIAL 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 INITIAL 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.
4. Special Issuance and Delivery Instructions.
Tendering holders of Initial Notes should indicate in the applicable box
the name and address to which Exchange Notes issued pursuant to the Exchange
Offer and/or substitute certificates evidencing Initial 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 Initial Notes tendering Initial Notes by book-entry
transfer may request that Initial Notes not exchanged be credited to such
account maintained at the Book-Entry Transfer Facility as such holder of Initial
Notes may designate hereon. If no such instructions are given, such Initial
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
Initial Notes are accepted for exchange must provide DMFC (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 DMFC 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
Exchange 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.
-12-
<PAGE> 13
Exempt holders of Initial 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 Initial 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 Initial Notes is a nonresident alien or foreign entity not
subject to backup withholding, such holder must give DMFC a completed Form W-8,
Certificate of Foreign Status. These forms may be obtained from the Exchange
Agent. If the Initial 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 DMFC within
60 days, backup withholding will begin and continue until such holder furnishes
its TIN to DMFC.
6. Transfer Taxes.
DMFC will pay all transfer taxes, if any, applicable to the transfer of
Initial Notes to it or its order pursuant to the Exchange Offer. If, however,
Exchange Notes and/or substitute Initial 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 Initial Notes tendered hereby, or if tendered Initial
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 Initial Notes to DMFC or its order pursuant to the Exchange Offer,
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
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 INITIAL NOTES
SPECIFIED IN THIS LETTER.
7. Waiver of Conditions.
DMFC reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
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<PAGE> 14
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Initial Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Initial Notes
for exchange.
Neither DMFC, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of Initial
Notes nor shall any of them incur any liability for failure to give any such
notice.
9. Mutilated, Lost, Stolen or Destroyed Initial Notes.
Any holder whose Initial 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.
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<PAGE> 15
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: DEL MONTE FOODS COMPANY
SUBSTITUTE Form W-9 Part 1 -- PLEASE TIN:___________________
PROVIDE YOUR TIN IN (Social Security Number
THE BOX AT RIGHT AND or Employer
CERTIFY BY SIGNING Identification Number)
AND DATING BELOW.
Department of the Part 2 -- TIN Applied For [ ]
Treasury Internal
Revenue Service
Payor's Request for CERTIFICATION: UNDER THE PENALTIES OF
Taxpayer Identification PERJURY, I CERTIFY THAT:
Number ("TIN") and
Certification (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).
(2) I am not subject to backup withholding
Request either because: (a) I am exempt
from Taxpayer backup withholding, or
(b) I have not been notified by the
Internal Revenue Service (the "IRS")
that I am subject to backup withholding
as a result of a failure to report all
interest or dividends, or (c) the IRS
has notified me that I am no longer
subject to backup withholding, 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
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<PAGE> 1
EXHIBIT 99.3
FORM OF NOTICE OF GUARANTEED DELIVERY FOR
DEL MONTE FOODS COMPANY
This form or one substantially equivalent hereto must be used to accept
the Exchange Offer of Del Monte Foods Company ("DMFC") made pursuant to the
Prospectus, dated ________ __, 1998 (the "Prospectus"), and the enclosed Letter
of Transmittal (the "Letter of Transmittal") if certificates for Initial 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 DMFC 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 Initial 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
<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight Mail or Courier:
- -------- -------- -----------------------------
<S> <C> <C>
BT Services Tennessee, Inc. Bankers Trust Company BT Services Tennessee, Inc.
Reorganization Unit Corporate Trust and Agency Corporate Trust and Agency
P.O. Box 292737 Group Group
Nashville, TN Receipt & Delivery Window Reorganization Unit
37229-2737 123 Washington Street, 1st 648 Grassmere Park Road
Floor Nashville, TN 37211
New York, NY 10006
</TABLE>
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.
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<PAGE> 2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to DMFC the
principal amount of Initial Notes set forth below, pursuant to the guaranteed
delivery procedure described in "The Exchange Offer -- Guaranteed Delivery
Procedures" section of the Prospectus.
Principal Amount of Initial Notes Name(s) of Record Holders(s):
Tendered:
$____________________________________ ____________________________________
____________________________________
Certificate Nos. (if available):_____
_____________________________________ Address(es):________________________
If Initial Notes will be delivered by ____________________________________
book-entry transfer to The Depositary
Trust Company, provide account number. Area Code and Telephone Number(s):
Account Number_______________________ ____________________________________
Signature(s):
____________________________________
____________________________________
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED.
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<PAGE> 3
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 Initial 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:_____________________________
Title:______________________________
_____________________________________
Name:_______________________________
Area Code and Telephone Number:______
Date:_______________________________
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<PAGE> 1
EXHIBIT 99.4
FORM OF LETTER
DEL MONTE FOODS COMPANY
Offer to Exchange
Series B 12-1/2% Senior Discount Notes due 2007, which have been
registered under the Securities Act of 1933, as amended, for any and all
outstanding 12-1/2% Senior Discount 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 ______ __, 1998 (the "Prospectus"), and the enclosed Letter of
Transmittal (the "Letter of Transmittal"), an offer to exchange (the "Exchange
Offer") the registered Series B 12-1/2% Senior Discount Notes due 2007 (the
"Exchange Notes") for any and all outstanding 12-1/2% Senior Discount Notes due
2007 (the "Initial 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 Foods Company ("DMFC") contained in the Registration
Rights Agreement, dated as of December 17, 1997, between DMFC and BT Alex.Brown
Incorporated, BancAmerica Robertson Stephens and Bear, Stearns & Co. Inc. (as
the Initial Purchasers).
We are requesting that you contact your clients for whom you hold
Initial Notes regarding the Exchange Offer. For your information and for
forwarding to your clients for whom you hold Initial Notes registered in your
name or in the name of your nominee, or who hold Initial Notes registered in
their own names, we are enclosing the following documents:
1. Prospectus dated _________ __, 1998;
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 Initial 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 Initial 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.
-1-
<PAGE> 2
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., New York City time, on _____________ __, 1998 (the "Expiration Date") (30
calendar days following the commencement of the Exchange Offer), unless extended
by DMFC. Initial Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time before the Expiration Date.
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 Initial 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 Initial Notes wish to tender, but it is impracticable for
them to forward their certificates for Initial 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 FOODS COMPANY
-2-
<PAGE> 1
EXHIBIT 99.5
FORM OF LETTER
DEL MONTE FOODS COMPANY
Offer to Exchange
Series B 12-1/2% Senior Discount Notes due 2007, which have been
registered under the Securities Act of 1933, as amended, for any and all
outstanding 12-1/2% Senior Discount Notes due 2007
To Our Clients:
Enclosed for your consideration is a Prospectus of Del Monte Foods
Company, a Maryland corporation ("DMFC"), dated ______ __, 1998 (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 12-1/2% Senior Discount Notes due 2007 (the "Exchange
Notes") for any and all outstanding 12-1/2% Senior Discount Notes due 2007 (the
"Initial 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 DMFC contained in the Registration
Rights Agreement, dated as of December 17, 1997, between DMFC and BT Alex.Brown
Incorporated, BancAmerica Robertson Stephens and Bear, Stearns & Co. Inc. (as
the Initial Purchasers).
This material is being forwarded to you as the beneficial owner of the
Initial Notes carried by us in your account but not registered in your name. A
TENDER OF SUCH INITIAL 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 Initial 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 Initial 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 ____________ __, 1998 (THE "EXPIRATION DATE") (30
CALENDAR DAYS FOLLOWING THE COMMENCEMENT OF THE EXCHANGE OFFER), UNLESS EXTENDED
BY DMC. ANY INITIAL 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.
-1-
<PAGE> 2
Your attention is directed to the following:
1. The Exchange Offer is for any and all Initial 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 Initial Notes
from the holder to DMFC will be paid by DMFC, except as otherwise provided in
the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time,
on the Expiration Date unless extended by DMFC.
If you wish to have us tender your Initial 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 Initial Notes.
Instructions with Respect to the Exchange Offer
The undersigned acknowledge(s) receipt of your letter enclosing the
Prospectus, dated ______ __, 1998, of Del Monte Foods Company, a Maryland
corporation, and the related specimen Letter of Transmittal.
-2-
<PAGE> 3
This will instruct you to tender the number of Initial 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 Initial Notes held by you for my account.
If I do not wish to tender all of the Initial Notes held by you
for my account, I have identified on a signed schedule attached
hereto the number of Initial Notes that I do not wish tendered.
Box 2 [ ] Please do not tender any Initial Notes held by you for my account.
Date__________________, 1998 ________________________________________
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
INITIAL NOTES.
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<PAGE> 1
Exhibit 99.6
Pursuant to the provisions of Instruction 2 to Item 601, the Registrant
omits the following documents:
1. 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.
2. Retention Agreement between Del Monte Corporation and William J.
Spain, dated January 1, 1992 (the "Spain Retention Agreement"). The Spain
Retention Agreement is substantially similar in all material respects to the
Retention Agreement between Del Monte Corporation and Thomas E. Gibbons, dated
January 1, 1992 (the "Gibbons Retention Agreement") filed as Exhibit 10.5. The
Gibbons Retention Agreement differs from the Spain Retention Agreement only as
to the parties thereto.
3. Retention Agreement between Del Monte Corporation and Brent D. Bailey,
dated January 19, 1998 (the "Bailey Retention Agreement"). The Bailey Retention
Agreement is substantially similar in all material respects to the Retention
Agreement between Del Monte Corporation and Glynn M. Phillips, dated October 5,
1994 (the "Phillips Retention Agreement") filed as Exhibit 10.4. The Bailey
Retention Agreement differs from the Phillips Retention Agreement only as to
the parties thereto.
