<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER 33-36374-01
DEL MONTE FOODS COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-3542950
- ------------------------------------------------------------- --------------------------------
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>
ONE MARKET, SAN FRANCISCO, CALIFORNIA 94105
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (415) 247-3000
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of January 31, 2000, 52,182,244 shares of Common Stock, par value
$.01 per share, were outstanding.
<PAGE> 2
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
December 31, 1999 and June 30, 1999 1
Consolidated Statements of Operations
Three and Six Months Ended December 31, 1999 and 1998 2
Consolidated Statements of Cash Flows
Six Months Ended December 31, 1999 and 1998 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share Data)
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
---------- ---------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10.0 $ 6.9
Trade accounts receivable, net of allowance 159.8 138.0
Inventories 570.9 343.0
Prepaid expenses and other current assets 11.7 13.6
---------- --------
TOTAL CURRENT ASSETS 752.4 501.5
Property, plant and equipment, net 322.6 312.5
Intangibles 42.5 43.2
Other assets 13.6 14.8
---------- --------
TOTAL ASSETS $ 1,131.1 $ 872.0
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 335.8 $ 267.1
Short-term borrowings 190.0 15.7
Current portion of long-term debt 33.5 31.4
---------- --------
TOTAL CURRENT LIABILITIES 559.3 314.2
Long-term debt 484.7 496.3
Other noncurrent liabilities 175.9 179.9
Stockholders' equity (deficit):
Common stock ($.01 par value per share, 500,000,000 shares authorized; issued and
outstanding: 52,179,599 at December 31, 1999 and 52,171,537 at June 30, 1999) 0.5 0.5
Paid-in capital 399.3 399.4
Retained earnings (deficit) (488.6) (518.3)
---------- -------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (88.8) (118.4)
---------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,131.1 $ 872.0
========== =========
</TABLE>
See Notes to Consolidated Financial Statements.
1
<PAGE> 4
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In Millions, Except Share Data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
December 31, December 31,
-------------------- -------------------
1999 1998 1999 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net sales $ 455.4 $ 427.5 $ 789.1 $ 745.1
Cost of products sold 284.5 282.5 496.0 500.3
Selling, administrative and general expenses 117.6 106.8 211.8 187.1
Special charges related to plant consolidation 4.4 5.3 7.4 12.3
Acquisition expense -- 0.2 -- 0.7
------- ------- ------- -------
OPERATING INCOME 48.9 32.7 73.9 44.7
Interest expense 18.3 22.4 34.6 43.1
Other expense -- -- -- 2.1
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES 30.6 10.3 39.3 (0.5)
Provision for income taxes 7.8 0.1 9.6 0.1
------- ------- ------- -------
NET INCOME (LOSS) $ 22.8 $ 10.2 $ 29.7 $ (0.6)
======= ======= ======= =======
Basic net income (loss) per common share $ 0.44 $ 0.24 $ 0.57 $ (0.10)
======= ======= ======= =======
Diluted net income (loss) per common share $ 0.43 $ 0.24 $ 0.56 $ (0.10)
======= ======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 5
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Millions)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
--------------------
1999 1998
------ -------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 29.7 $ (0.6)
Adjustments to reconcile net income (loss) to net cash flows
(used in) operating activities:
Depreciation and amortization 22.0 25.6
Loss on disposal of assets 1.0 3.5
Changes in operating assets and liabilities:
Accounts receivable (21.8) (20.7)
Inventories (227.9) (195.8)
Prepaid expenses and other current assets 1.5 7.7
Accounts payable and accrued expenses 68.7 74.5
Other non-current liabilities 2.2 1.5
------ ------
NET CASH USED IN OPERATING ACTIVITIES (124.6) (104.3)
------ ------
INVESTING ACTIVITIES:
Capital expenditures (19.9) (11.4)
Acquisition of plant (11.0) --
Acquisition of business -- (31.8)
Proceeds from sale of assets 0.1 0.3
Other -- (0.1)
------ ------
NET CASH USED IN INVESTING ACTIVITIES (30.8) (43.0)
------ ------
FINANCING ACTIVITIES:
Short-term borrowings 339.7 324.3
Payments on short-term borrowings (165.4) (161.3)
Principal payments on long-term borrowings (15.7) (18.2)
Other (0.1) 0.3
------ ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 158.5 145.1
------ ------
NET CHANGE IN CASH AND CASH EQUIVALENTS 3.1 (2.2)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6.9 6.9
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10.0 $ 4.7
====== ======
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 6
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
(In Millions, Except Share Data)
NOTE 1 -- BASIS OF FINANCIAL STATEMENTS
Business and Basis of Presentation: Del Monte Foods Company ("Del
Monte") and its wholly-owned subsidiary, Del Monte Corporation ("DMC"), (Del
Monte together with DMC, "the Company") operate in one business segment: the
manufacturing and marketing of processed foods, primarily canned vegetables,
fruit and tomato products.
In the second quarter of fiscal 2000, the financial statements were
reformatted to extend dollars in millions out to one decimal place. All prior
periods have been conformed to the current presentation. Minor rounding
differences may result in prior periods due to this change in presentation.
The accompanying consolidated financial statements at December 31, 1999
and for the three-month and six-month periods ended December 31, 1999 and 1998,
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, 1999, and notes thereto, included in the
Annual Report on Form 10-K.
Depreciation and amortization: Depreciation and amortization for the
three and six months ended December 31, 1999 and 1998 consisted of depreciation
of plant and equipment and leasehold amortization (including acceleration of
depreciation resulting from the adjustment of certain assets' remaining useful
lives to match the period of use prior to plant closure), amortization of
deferred debt issuance costs including original issue discount and amortization
of intangible assets.
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
December 31, December 31,
----------------- ----------------
1999 1998 1999 1998
------ ----- ----- -----
<S> <C> <C> <C> <C>
Depreciation of plant and equipment and
leasehold amortization (excluding accelerated
depreciation) $ 8.2 $ 8.1 $16.4 $16.2
Accelerated depreciation 1.7 3.2 3.2 6.7
Amortization of deferred debt issuance costs 0.7 1.0 1.5 1.9
Amortization of intangibles 0.5 0.7 0.9 0.8
----- ----- ----- -----
Depreciation and amortization $11.1 $13.0 $22.0 $25.6
===== ===== ===== =====
</TABLE>
Reclassifications: Certain prior year balances have been reclassified to
conform to current year presentation.
4
<PAGE> 7
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
December 31, 1999
(In Millions, Except Share Data)
NOTE 2 -- INVENTORIES
The major classes of inventory are as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
-------- ------
<S> <C> <C>
Finished product $513.0 $219.1
Raw materials and supplies 12.6 17.7
Other, principally packaging material 45.3 106.2
------ ------
$570.9 $343.0
====== ======
</TABLE>
During the three and six months ended December 31, 1999 and 1998
respectively, and the twelve months ended June 30, 1999, 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, 1999 and June 30, 1999, or on results of operations for the
three and six months ended December 31, 1999 and 1998, respectively.
NOTE 3 -- EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
---------------------------- --------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE
Numerator:
Net income (loss) $ 22.8 $ 10.2 $ 29.7 $ (0.6)
Preferred stock dividends -- (1.5) -- (2.9)
-------------- -------------- -------------- --------------
Numerator for basic earnings (loss) per share -
income (loss) attributable to common shares $ 22.8 $ 8.7 $ 29.7 $ (3.5)
============== ============== ============== ==============
Denominator:
Denominator for basic earnings per share -
weighted average shares 52,179,457 35,496,943 52,177,002 35,496,313
Basic income (loss) per common share $ 0.44 $ 0.24 $ 0.57 $ (0.10)
</TABLE>
5
<PAGE> 8
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
December 31, 1999
(In Millions, Except Share Data)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
---------------------------------- ---------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
DILUTED EARNINGS PER SHARE
Numerator:
Net income (loss) $ 22.8 $ 10.2 $ 29.7 $ (0.6)
Preferred stock dividends -- (1.5) -- (2.9)
-------------- -------------- -------------- --------------
Numerator for diluted earnings (loss) per share -
income (loss) attributable to common shares $ 22.8 $ 8.7 $ 29.7 $ (3.5)
============== ============== ============== ==============
Denominator:
Denominator for diluted earnings per share -
weighted average shares 53,147,088 36,597,507 53,360,861 35,496,313
Diluted income (loss) per common share $ 0.43 $ 0.24 $ 0.56 $ (0.10)
</TABLE>
For the three months ended December 31, 1999 and 1998 and the six months
ended December 31, 1999, differences between the denominator for basic earnings
per share and the denominator for diluted earnings per share was due to the
effect of dilutive stock options. For the six months ended December 31, 1998,
the effect of outstanding stock options was not included in the computation of
diluted earnings per share as the result was antidilutive due to a net operating
loss.
NOTE 4 -- PLANT CONSOLIDATION
In fiscal 1998, management committed to a plan to consolidate processing
operations. In connection with this plan, the Company established an accrual of
$6.6 in fiscal 1998 relating to severance and benefit costs for employees to be
terminated. At December 31, 1999, a balance of $6.4 remained in this accrual.
For the six months ended December 31, 1999, cash expenditure reductions to this
accrual totaled $0.1.
NOTE 5 --- COMPREHENSIVE INCOME
The Company has no items of other comprehensive income in any period
presented. Therefore, net income (loss) as presented in the Consolidated
Statements of Operations equals comprehensive income.
NOTE 6 -- INCOME TAXES
Income tax expense was calculated using an effective tax rate, which is
the Company's best estimate of the effective tax rate expected to be applicable
for the full year. The rate so determined has been computed taking into
consideration the utilization of net operating loss carryforwards and the
applicable limitations on their use under the tax laws, but excludes
consideration of changes to the valuation allowance based on a reassessment of
the realizability of the deferred tax assets in future years.
6
<PAGE> 9
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
December 31, 1999
(In Millions, Except Share Data)
NOTE 7 -- SUBSEQUENT EVENT
On January 14, 2000, the Company amended its senior credit agreement
with respect to its revolving credit facility (the "Revolver") and term loan
facility (Term A Loan and Term B Loan, collectively the "Term Loan"). The
amendment provides for additional borrowing capacity (up to $100.0) under either
the Revolver or Term B Loan. The amendment also adjusted certain financial
covenants to reflect changes in the Company's recent financial performance. The
amendment did not change the Revolver's expiration date, the Term Loan maturity
dates or the terms of the Pricing Schedule.
NOTE 8 -- NEW ACCOUNTING STANDARDS
Effective July 1, 1999, the Company adopted Statement of Position
("SOP") No. 98-1 "Accounting for the Cost of Computer Software Developed or
Obtained for Internal Use." This SOP provides guidance with respect to the
recognition, measurement and disclosure of costs of computer software developed
or obtained for internal use.
In fiscal 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
SFAS No. 133 (as amended by SFAS No. 137) is required to be adopted for all
fiscal quarters and fiscal years beginning after June 15, 2000 and relates to
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, and hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities and measure those
instruments at fair value. The Company is currently reviewing the effect of
adoption of this statement on its financial statements.
7
<PAGE> 10
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
December 31, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED DECEMBER 31, 1999 VS. THREE AND SIX MONTHS ENDED
DECEMBER 31, 1998
Net Sales. Consolidated net sales increased by $27.9 million, or 6.5%,
and $44.0 million, or 5.9%, for the three and six months ended December 31,
1999, respectively, compared to the prior year periods, primarily due to new
products and packaging and growth in vegetable and fruit product sales in the
club and mass merchandisers channel, as well as growth in the retail grocery
channel. Total club and mass merchandisers sales increased by approximately 36%
and 46% for the three and six months ended December 31, 1999 compared to the
same periods in fiscal 1999 due to expanded distribution, WalMart Supercenter
new store growth, new products and improved packaging. In addition to growth
from new products and packaging, tomato product net sales increased in the
current periods as compared to prior year periods due to the impact of price
increases on selected retail products and increased sales of certain retail
items. The increased vegetable, fruit and tomato product sales were partially
offset by decreases in the foodservice channel. The decline in foodservice sales
resulted from continued implementation of the Company's strategy to shift
emphasis to sales of higher margin products, expand penetration of high growth
distribution channels and reduce emphasis on lower margin commodity items.
Cost of Products Sold. Cost of products sold as a percent of net sales
was 62.5% and 62.9% for the three and six months ended December 31, 1999 and
66.1% and 67.1% for the three and six months ended December 31, 1998.
Manufacturing costs are favorable in the current year due to continued cost
savings from capital spending initiatives and other cost reductions. Also
contributing to the decrease in cost of products sold was a favorable sales mix,
due in part to the shift away from foodservice sales.
Selling, Administrative and General Expenses. Selling, administrative
and general expenses increased by $10.8 million and $24.7 million for the three
and six month periods ended December 31, 1999 versus the same periods of the
prior year. For the three and six months ended December 31, 1999, this increase
was due to selling and promotion costs associated with higher volumes of retail
products, as well as increased marketing spending for consumer programs in the
six-month period ended December 31, 1999.
Special Charges Related to Plant Consolidation. The Company incurred
charges representing accelerated depreciation of $1.7 million and $3.2 million
during the three and six months ended December 31, 1999 and $3.2 million and
$6.7 million during the three and six months ended December 31, 1998. This
acceleration results from the effects of adjusting the remaining useful lives of
certain tomato and fruit processing assets to match the period of use prior to
the closures of these plants. Also included in special charges during the three
and six months ended December 31, 1999 were $2.7 million and $4.2 million,
respectively, of ongoing fixed costs and other period costs incurred in
connection with plant closures compared to $2.1 million and $5.6 million of such
costs in the same three and six-month periods of the prior year.
Interest expense. Interest expense decreased by $4.1 million and $8.5
million for the three and six-month periods ended December 31, 1999,
respectively, compared to the prior year due to lower debt balances. These lower
debt balances resulted from the application of the proceeds of the February 1999
public equity offering.
Provision for Income Taxes. Income tax expense increased in the current
year due to an increase in income before taxes and the impact of the annual
limitation on the use of net operating loss carryforwards under applicable tax
laws.
8
<PAGE> 11
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
December 31, 1999
The Company's net deferred tax assets are currently fully reserved.
Management believes that in the fourth quarter of the current fiscal year, the
Company will have established a pattern of profitability such that the Company
will be able to realize a portion of its net deferred tax assets. The effect of
this realization will result in a credit to income tax expense, and a
corresponding increase to net income, of approximately $50 to $60 million in the
fourth quarter of the current fiscal year.
Net income (loss). Net income for the three and six months ended
December 31, 1999 was $22.8 million and $29.7 million, respectively, compared to
net income of $10.2 million and a net loss of $0.6 million for the three and six
months ended December 31, 1998, respectively. The increase in earnings in the
current year was primarily due to increased sales and lower cost of products
sold due to cost savings from capital spending initiatives, as well as lower
interest expense, and lower special charges related to the plant consolidation
plan. In addition, prior year earnings were affected by the inventory step-up
cost related to acquisitions and costs of the public equity offering that was
withdrawn in July 1998.
OTHER PERFORMANCE MEASURES
Adjusted EBITDA. The Company believes EBITDA, as adjusted, is a measure
widely-used by the financial community to evaluate the Company's operating
performance without certain non-cash expense items and its ability to provide
cash flows to service debt. The Company believes that this measure presents a
meaningful measure of operating cash flow (excluding the effects of working
capital changes and capital expenditures) by eliminating the effects of one-time
charges or credits. Adjusted EBITDA represents EBITDA (income (loss) before
income taxes and extraordinary item, and depreciation and amortization expense,
plus interest expense) before special charges and other one-time and non-cash
charges. Adjusted EBITDA should not be considered in isolation from, and is not
presented as an alternative measure of, operating income or cash flow from
operations (as determined in accordance with GAAP). Adjusted EBITDA as presented
may not be comparable to similarly titled measures reported by other companies.
Adjusted EBITDA increased by 31.1% to $62.0 million in the current year
quarter as compared to $47.3 million for the three months ended December 31,
1998. For the three months ended December 31, 1999, income before income taxes,
plus interest expense was $48.9 million before adjusting for special charges and
non-cash charges of $13.1 million. The special charges and non-cash charges
consisted of special charges related to plant consolidation of $4.4 million and
depreciation and amortization of $8.7 million (excluding accelerated
depreciation of $1.7 million and amortization of deferred debt issuance costs
and original issue discount of $0.7 million).
Adjusted EBITDA increased by 27.4% in the current six-month period to
$98.6 million as compared to $77.4 million for the six months ended December 31,
1998. For the six months ended December 31, 1999, income before income taxes,
plus interest expense was $73.9 million before adjusting for special charges and
other one-time and non-cash charges of $24.7 million. The special charges and
other one-time and non-cash charges consisted of special charges related to
plant consolidation of $7.4 million and depreciation and amortization of $17.3
million (excluding accelerated depreciation of $3.2 million and amortization of
deferred debt issuance costs and original issue discount of $1.5 million).
YEAR 2000
The Company has substantially completed the evaluation, modification and
implementation of key information technology ("IT") and non-IT systems for Year
2000 compliance. Testing and unforeseen issues resolution will be ongoing
through early calendar 2000. Due to the Company's production cycle, most non-IT
equipment will not be in full use until mid-calendar 2000. Therefore, testing on
this equipment and resolution of any unforeseen issues are expected
9
<PAGE> 12
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
December 31, 1999
to continue through early calendar 2000. At this time, the Company has not
experienced any material Year 2000 compliance related issues.
FINANCIAL CONDITION - 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 facility are
the Company's primary sources of liquidity.
The Company's quarterly operating results have varied in the past and
are likely to vary in the future based upon a number of factors. The working
capital requirements of the Company are 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. Accordingly,
working capital requirements fluctuate significantly. The Company's historical
net sales have exhibited seasonality, with net sales in the first fiscal quarter
affected by lower levels of promotional activity, the availability of fresh
produce and other factors. This situation impacts operating results as sales
volumes, revenues and profitability decline during this period. Historically,
the second and third fiscal quarters reflect increased sales of the Company's
products, and related increased cost of products sold and selling and
promotional expenses, during the holiday period extending from late November
through December, as well as sales associated with the Easter holiday. Quarterly
gross profit primarily reflects fluctuations in sales volumes and sales mix.
The increase in inventories at December 31, 1999 from June 30, 1999
reflects the seasonal inventory buildup and depletion. The increase in accounts
payable and accrued expenses from June 30, 1999 to December 31, 1999 primarily
reflects accrued expenses resulting from the peak production period.
To finance working capital requirements, the Company relies on its
revolving credit facility, which had a maximum availability of $350.0 million,
subject to an asset-based borrowing base. As of December 31, 1999, $190.0
million was outstanding under the revolving credit facility, compared to $15.7
million at June 30, 1999 reflecting the Company's need to finance its seasonal
inventory production.
On January 14, 2000, the Company's credit agreement with respect to its
revolving credit facility and its term loan facility, consisting of Term A Loan
and Term B Loan, was amended to provide for additional borrowing capacity (up to
$100.0 million) under the revolving credit facility and/or Term B Loan.
As of December 31, 1999, 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
currently is minimum EBITDA (as defined in the agreements). The Company was in
compliance with all such covenants for the second quarter of fiscal 2000.
FACTORS THAT MAY AFFECT FUTURE RESULTS
This quarterly report contains forward-looking statements, including
those in the sections captioned "Financial Statements" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Statements that are not historical facts, including statements about the
Company's beliefs or expectations, are forward-looking statements. These
statements are based on plans, estimates and projections at the time the Company
makes the
10
<PAGE> 13
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
December 31, 1999
statements, and you should not place undue reliance on them. The Company does
not undertake to update any of these statements in light of new information or
future events.
Forward-looking statements involve inherent risks and uncertainties. The
Company cautions you that a number of important factors could cause actual
results to differ materially from those contained in any forward-looking
statement. These factors include, among others: general economic and business
conditions; weather conditions; crop yields; competition; raw material costs and
availability; the loss of significant customers; availability of qualified
personnel; market acceptance of new products; successful integration of acquired
businesses; consolidation of processing plants; changes in business strategy or
development plans; availability, terms and deployment of capital; Year 2000
issues; changes in, or the failure or inability to comply with, governmental
regulations, including, without limitation, environmental regulations; industry
trends; production capacity constraints and other factors referenced in this
quarterly report.
Del Monte had anticipated that sales for the second quarter would be
approximately one to two million cases higher than would otherwise have been
expected, primarily as a result of Y2K. While it is not possible to say exactly
how much of net sales during the quarter were exclusively due to Y2K, the
Company believes that one million cases, or approximately $15 million in net
sales were a result of Y2K and will likely result in a similar decrease in sales
for the third quarter ending March 31, 2000.
Please see the Company's Annual Report on Form 10-K for the year ended
June 30, 1999 filed with the Securities and Exchange Commission on September 7,
1999 for a more detailed discussion of factors that may affect future results.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to the discussion of Del Monte Foods Company's
Financial Instruments and Risk Management Policies in "Management's Discussion
and Analysis of Operations and Financial Condition and Results of Operations" in
Del Monte's Annual Report on Form 10-K for the year ended June 30, 1999. As of
December 31, 1999, there were no material changes to the information presented.
11
<PAGE> 14
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. 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 and other employee claims, tort and other general
liability, for which the Company carries insurance or is self-insured, as well
as trademark, copyright and related litigation. While it is not feasible to
predict or determine the ultimate outcome of these matters, the Company believes
that none of these legal proceedings will have a material adverse effect on the
Company's financial position.
ITEM 2. CHANGES IN SECURITIES. None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company's Annual Meeting of Stockholders was held on November 11,
1999 in San Francisco, California. Two matters were submitted to a vote of
stockholders: election of three Class II directors to hold office for a 3-year
term and ratification of KPMG LLP as the Company's independent auditors for the
fiscal year ending June 30, 2000.
Patrick Foley, Jeffrey A. Shaw and Wesley J. Smith were nominated as
Class II directors. 44,212,543 votes were cast for Patrick Foley and 3,610,291
votes were withheld. 47,501,866 votes were cast for Jeffrey A. Shaw and 320,968
votes were withheld. 47,504,477 votes were cast for Wesley J. Smith and 318,357
votes were withheld. The other directors whose term of office as a director
continued after the meeting were: Richard W. Boyce, Al Carey, Richard G.
Wolford, Denise M. O'Leary, Timothy G. Bruer, Brian E. Haycox, William S. Price
III.
47,811,501 votes were cast in favor of the ratification of KPMG LLP,
5,941 votes were cast against, and 5,392 votes abstained.
ITEM 5. OTHER INFORMATION. None.
12
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(10.1) Second Amended and Restated Credit Agreement, dated as of
January 14, 2000, among Del Monte Corporation, various financial
institutions, Bank of America, N.A., as Administrative Agent,
Bankers Trust Company, as Documentation Agent, and Fleet
Business Credit Corporation and General Electric Capital
Corporation, an Co-Agents. (Confidential Treatment has been
requested as to portions of this Exhibit)
(10.2) Del Monte Foods Company 1997 Stock Incentive Plan (as Amended
October 21, 1999).
(10.3) Del Monte Foods Company 1998 Stock Incentive Plan (as Amended
October 21, 1999).
(10.4) Del Monte Foods Company Non-Employee Director and Independent
Contractor 1997 Stock Incentive Plan (as Amended October 21,
1999)
(10.5) Office Lease dated October 7, 1999 between TMG/One Market, L.P
and Crossmarket, LLC (Landlord) and Del Monte Corporation
(Tenant). (Confidential Treatment has been requested as to
portions of this Exhibit)
(27) Financial Data Schedule
(b) Reports on Form 8-K
No Reports on Form 8-K were required to be filed during the quarter for
which this report is filed.
13
<PAGE> 16
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
DEL MONTE FOODS COMPANY
By: /s/ RICHARD G. WOLFORD Date: February 10, 2000
-------------------------
Richard G. Wolford
President and Chief Executive Officer
By: /s/ DAVID L. MEYERS Date: February 10, 2000
-------------------------
David L. Meyers
Executive Vice President, Administration
and Chief Financial Officer
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--- -----------
<S> <C>
(10.1) Second Amended and Restated Credit Agreement, dated as of
January 14, 2000, among Del Monte Corporation, various financial
institutions, Bank of America, N.A., as Administrative Agent,
Bankers Trust Company, as Documentation Agent, and Fleet
Business Credit Corporation and General Electric Capital
Corporation, an Co-Agents. (Confidential Treatment has been
requested as to portions of this Exhibit)
(10.2) Del Monte Foods Company 1997 Stock Incentive Plan (as Amended
October 21, 1999).
(10.3) Del Monte Foods Company 1998 Stock Incentive Plan (as Amended
October 21, 1999).
(10.4) Del Monte Foods Company Non-Employee Director and Independent
Contractor 1997 Stock Incentive Plan (as Amended October 21,
1999)
(10.5) Office Lease dated October 7, 1999 between TMG/One Market, L.P
and Crossmarket, LLC (Landlord) and Del Monte Corporation
(Tenant). (Confidential Treatment has been requested as to
portions of this Exhibit)
(27) Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1
================================================================================
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF JANUARY 14, 2000
AMONG
DEL MONTE CORPORATION,
VARIOUS FINANCIAL INSTITUTIONS,
BANK OF AMERICA, N.A.,
AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY,
AS DOCUMENTATION AGENT,
AND
FLEET BUSINESS CREDIT CORPORATION
AND
GENERAL ELECTRIC CAPITAL CORPORATION,
AS CO-AGENTS
ARRANGED BY
BANC OF AMERICA SECURITIES LLC
================================================================================
***Indicates confidential material that has been omitted pursuant to a request
for confidential treatment and filed separately with the Securities and
Exchange Commission.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS.....................................1
1.1 Certain Defined Terms.........................................................1
1.2 Other Interpretive Provisions................................................37
1.3 Accounting Principles........................................................38
ARTICLE II
THE CREDITS....................................39
2.1 Amounts and Terms of Commitments.............................................39
(a) The Term A Credit...............................................39
(b) The Term B Credit...............................................39
(c) The Revolving Credit............................................39
2.2 Loan Accounts................................................................39
2.3 Procedure for Borrowing......................................................40
2.4 Conversion and Continuation Elections........................................41
2.5 Swingline Loans..............................................................42
2.6 Termination or Reduction of Revolving Commitments............................45
2.7 Optional Prepayments.........................................................45
2.8 Mandatory Prepayments of Loans...............................................46
2.9 Repayment....................................................................49
(a) The Term A Credit...............................................49
(b) The Term B Credit...............................................49
(c) The Revolving Credit............................................50
2.10 Interest.....................................................................50
2.11 Fees.........................................................................51
(a) Arranger and Agency Fees........................................51
(b) Commitment Fees.................................................51
2.12 Computation of Fees and Interest.............................................51
2.13 Payments by the Company......................................................52
2.14 Payments by the Lenders to the Administrative Agent..........................52
2.15 Sharing of Payments, Etc.....................................................53
2.16 Optional Increase............................................................54
ARTICLE III
THE LETTERS OF CREDIT...............................56
3.1 The Letter of Credit Subfacility.............................................56
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
3.2 Issuance, Amendment and Extension of Letters of Credit.......................58
3.3 Risk Participations, Drawings and Reimbursements.............................60
3.4 Repayment of Participations..................................................61
3.5 Role of the Issuing Lender...................................................62
3.6 Obligations Absolute.........................................................63
3.7 Cash Collateral Pledge.......................................................64
3.8 Letter of Credit Fees........................................................64
3.9 Uniform Customs and Practice.................................................64
3.10 Non-Dollar Letters of Credit................................................64
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY.....................67
4.1 Taxes........................................................................67
4.2 Illegality...................................................................68
4.3 Increased Costs and Reduction of Return......................................69
4.4 Funding Losses...............................................................69
4.5 Inability to Determine Rates.................................................70
4.6 Certificates of Lenders......................................................71
4.7 Substitution of Lenders......................................................71
4.8 Survival.....................................................................71
ARTICLE V
CONDITIONS PRECEDENT................................71
5.1 Conditions to Effectiveness. ...............................................71
(a) Credit Agreement................................................71
(b) Incumbency......................................................72
(c) Organization Documents; Good Standing...........................72
(d) Legal Opinions..................................................72
(e) Notes...........................................................72
(f) Payment of Fees.................................................72
(g) Confirmation....................................................72
(h) Certificate.....................................................72
(i) Other Documents.................................................73
5.2 Conditions to All Credit Extensions..........................................73
(a) Notice, Application.............................................73
(b) Continuation of Representations and Warranties..................73
(c) No Existing Default.............................................73
ARTICLE VI
REPRESENTATIONS AND WARRANTIES...........................74
6.1 Corporate Existence and Power................................................74
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
6.2 Corporate Authorization; No Contravention....................................74
6.3 Governmental Authorization...................................................75
6.4 Binding Effect...............................................................75
6.5 Litigation...................................................................75
6.6 No Default...................................................................75
6.7 ERISA Compliance.............................................................75
6.8 Use of Proceeds; Margin Regulations..........................................76
6.9 Title to Properties..........................................................76
6.10 Taxes.......................................................................76
6.11 Financial Condition.........................................................77
6.12 Regulated Entities..........................................................77
6.13 No Burdensome Restrictions..................................................77
6.14 Copyrights, Patents, Trademarks and Licenses, etc...........................77
6.15 Subsidiaries................................................................78
6.16 Insurance...................................................................78
6.17 Solvency, etc...............................................................78
6.18 Real Property...............................................................78
6.19 Swap Obligations............................................................78
6.20 Senior Indebtedness.........................................................79
6.21 Environmental Warranties....................................................79
6.22 Year 2000...................................................................80
6.23 Full Disclosure.............................................................80
ARTICLE VII
AFFIRMATIVE COVENANTS..............................81
7.1 Financial Statements.........................................................81
7.2 Certificates; Other Information..............................................82
7.3 Notices......................................................................82
7.4 Preservation of Corporate Existence, Etc.....................................84
7.5 Maintenance of Property......................................................84
7.6 Insurance....................................................................84
7.7 Payment of Obligations.......................................................84
7.8 Compliance with Laws.........................................................84
7.9 Compliance with ERISA........................................................85
7.10 Inspection of Property and Books and Records................................85
7.11 Interest Rate Protection....................................................85
7.12 Environmental Covenant......................................................86
7.13 Use of Proceeds.............................................................86
7.14 Further Assurances..........................................................86
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE VIII
NEGATIVE COVENANTS................................88
8.1 Limitation on Liens..........................................................88
8.2 Disposition of Assets........................................................90
8.3 Consolidations and Mergers...................................................91
8.4 Loans and Investments........................................................91
8.5 Limitation on Indebtedness...................................................93
8.6 Transactions with Affiliates.................................................95
8.7 Use of Proceeds..............................................................95
8.8 Contingent Obligations.......................................................95
8.9 Joint Ventures...............................................................95
8.10 Lease Obligations...........................................................96
8.11 Minimum Fixed Charge Coverage...............................................96
8.12 Minimum Adjusted Net Worth..................................................96
8.13 Maximum Senior Debt Ratio...................................................97
8.14 Maximum Total Debt Ratio....................................................97
8.15 Maximum Capital Expenditures................................................97
8.16 Restricted Payments.........................................................98
8.17 ERISA......................................................................100
8.18 Limitations on Sale and Leaseback Transactions.............................100
8.19 Limitation on Restriction of Subsidiary Dividends and Distributions........100
8.20 Inconsistent Agreements....................................................101
8.21 Change in Business.........................................................101
8.22 Amendments to Certain Documents............................................101
8.23 Fiscal Year................................................................101
8.24 Limitation on Issuance of Guaranty Obligations.............................101
ARTICLE IX
EVENTS OF DEFAULT................................102
9.1 Event of Default............................................................102
(a) Non-Payment....................................................102
(b) Representation or Warranty.....................................102
(c) Specific Defaults..............................................102
(d) Other Defaults.................................................102
(e) Cross-Default..................................................103
(f) Insolvency; Voluntary Proceedings..............................103
(g) Involuntary Proceedings........................................103
(h) ERISA..........................................................104
(i) Monetary Judgments.............................................104
(j) Non-Monetary Judgments.........................................104
(k) Change of Control..............................................104
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C> <C>
(l) Guarantor Defaults.............................................104
(m) Collateral Documents, etc......................................104
9.2 Remedies....................................................................105
9.3 Rights Not Exclusive........................................................105
ARTICLE X
THE AGENTS...................................105
10.1 Appointment and Authorization..............................................105
10.2 Delegation of Duties.......................................................106
10.3 Liability of Administrative Agent..........................................106
10.4 Reliance by Administrative Agent...........................................107
10.5 Notice of Default..........................................................107
10.6 Credit Decision............................................................108
10.7 Indemnification of Agents..................................................108
10.8 Administrative Agent in Individual Capacity................................108
10.9 Successor Administrative Agent.............................................109
10.10 Withholding Tax...........................................................109
10.11 Collateral Matters........................................................111
ARTICLE XI
MISCELLANEOUS..................................113
11.1 Amendments and Waivers.....................................................113
11.2 Notices....................................................................115
11.3 No Waiver; Cumulative Remedies.............................................116
11.4 Costs and Expenses.........................................................116
11.5 Company Indemnification....................................................116
11.6 Payments Set Aside.........................................................117
11.7 Successors and Assigns.....................................................117
11.8 Assignments, Participations, etc...........................................118
11.9 Confidentiality............................................................120
11.10 Set-off...................................................................120
11.11 Automatic Debits of Fees..................................................121
11.12 Notification of Addresses, Lending Offices, Etc...........................121
11.13 Counterparts..............................................................121
11.14 Severability..............................................................121
11.15 No Third Parties Benefited................................................121
11.16 Governing Law and Jurisdiction............................................121
11.17 Waiver of Jury Trial......................................................122
11.18 Entire Agreement..........................................................122
</TABLE>
-v-
<PAGE> 7
<TABLE>
<S> <C>
SCHEDULES
Pricing Schedule
Schedule 1.1 Commitments, Total Percentages, Revolving Percentages,
Term A Percentages, Term B Percentages
Schedule 2.8 Assets Held For Sale
Schedule 6.5 Litigation
Schedule 6.11 Permitted Liabilities
Schedule 6.14 Material Intellectual Property
Schedule 6.15(a) Subsidiaries of the Company
Schedule 6.15(b) Equity Investments of the Company
Schedule 6.16 Insurance Matters
Schedule 6.18 Real Property
Schedule 6.21 Environmental Matters
Schedule 8.1 Liens
Schedule 8.4 Permitted Investments
Schedule 8.5(d) Existing Indebtedness
Schedule 8.8 Contingent Obligations
Schedule 11.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Promissory Note
Exhibit E-1 Form of Security Agreement (Company and Parent)
Exhibit E-2 Form of Subsidiary Security Agreement
Exhibit F-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 J [Reserved]
Exhibit K Form of Assignment and Acceptance
</TABLE>
-vi-
<PAGE> 8
<TABLE>
<S> <C>
Exhibit L Form of Lender Certificate
Exhibit M Form of Borrowing Base Certificate
Exhibit N Form of Bailee's Consent
Exhibit O Form of Landlord's Consent
Exhibit P Form of Warehouseman's Consent
Exhibit Q Intercreditor Agreement
Exhibit R Form of Intellectual Property License
Exhibit S Form of Environmental Indemnity
Exhibit T Form of Confirmation
</TABLE>
-vii-
<PAGE> 9
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
January 14, 2000, among DEL MONTE CORPORATION, the several financial
institutions from time to time party to this Agreement, BANK OF AMERICA, N.A.
(formerly known as Bank of America National Trust and Savings Association), as
administrative agent for the Lenders, BANKERS TRUST COMPANY, as documentation
agent for the Lenders, and FLEET BUSINESS CREDIT CORPORATION and GENERAL
ELECTRIC CAPITAL CORPORATION, as co-agents 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 Amended and Restated Credit Agreement dated as of
December 17, 1997 (the "Existing Credit Agreement"), which amended and restated
a Credit Agreement, dated as of April 18, 1997 (the "Original Credit
Agreement"); and
WHEREAS, the Company, the Administrative Agent and the Lenders desire
that the Existing Credit Agreement be amended and restated on the terms and
conditions set forth herein to, among other things, provide for, at the option
of the Company, at any time during the term of this Agreement, one or more
increases in the aggregate amount of the Revolving Commitments, or the creation
of commitments to make Additional Term B Loans, with the aggregate amount of all
such increases and additional commitments not to exceed $100,000,000 and set
forth the terms and conditions under which the Lenders hereafter will extend
credit to the Company; it being the intention of the Company, the Administrative
Agent and the Lenders that this Agreement and the execution and delivery of any
substituted promissory notes not effect a novation of the obligations of the
Company to the Lenders under the Existing Credit Agreement but merely a
restatement and, where applicable, a substitution of the terms governing and
evidencing such obligations hereafter;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the Existing Credit Agreement is amended and
restated to read in its entirety, and the parties agree, as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. In this Agreement, including the foregoing
preamble and recitals, the following terms have the following meanings:
<PAGE> 10
Account Debtor means any Person who is obligated to the Company or any
Domestic Subsidiary under, with respect to, or on account of an Account
Receivable.
Account Receivable means, with respect to any Person, any right of such
person to payment for goods sold or leased or for services rendered, whether or
not evidenced by an instrument or chattel paper and whether or not yet earned by
performance.
Acquired Indebtedness means mortgage Indebtedness or Indebtedness with
respect to capital leases of a Person existing at the time such Person became a
Subsidiary or assumed by the Company or a Subsidiary in an Acquisition permitted
hereunder (and not created or incurred in connection with or in anticipation of
such Acquisition); provided that such Indebtedness is purchase money
Indebtedness or Indebtedness with respect to a capital lease, as the case may
be, and was incurred by such Person to finance the acquisition of property or,
in either case, such Indebtedness was incurred to refinance such Indebtedness,
and the principal amount of such Indebtedness does not exceed the purchase price
of such property.
Acquisition means any transaction or series of related transactions for
the purpose of, or resulting directly or indirectly in, (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Company or a Subsidiary is the surviving
entity.
Acquisition Prospect means each Person whose stock or assets is
intended to be acquired in an Acquisition permitted under subsection 8.4(i)
including, in each case, the assets and the liabilities thereof.
Additional Term B Loan - see subsection 2.1(b).
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.
-2-
<PAGE> 11
Agent-Related Persons means the Agent and any successor administrative
agent arising under Section 10.9, the Issuing Lender and any successor Issuing
Lender, and the Swingline Lender and any successor Swingline Lender, whether or
not acting in such capacities, together with their respective Affiliates
(including the Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
Agent's Payment Office means the address for payments set forth on
Schedule 11.2 in relation to the Administrative Agent, or such other address as
the Administrative Agent may from time to time specify.
Agents means the Administrative Agent, the Documentation Agent and the
Co- Agents.
Agreement means this Second Amended and Restated Credit Agreement.
Agreement Currency - see subsection 3.10(f).
Applicable Base Rate Margin - see the Pricing Schedule.
Applicable Offshore Rate Margin - see the Pricing Schedule.
Arranger means Banc of America Securities LLC, a Delaware limited
liability company.
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 reasonable disbursements
of internal counsel.
Bailee's Consent means a document substantially in the form of Exhibit
N, with appropriate insertions, or such other form as shall be acceptable to the
Administrative Agent or Required Revolving Lenders.
Bankruptcy Code means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, et seq.).
-3-
<PAGE> 12
Base Rate means, for any day, the higher of: (a) 0.50% per annum above
the latest Federal Funds Rate; and (b) the rate of interest in effect for such
day as publicly announced from time to time by BofA in San Francisco, California
as its "reference rate." (The "reference rate" is a rate set by BofA based upon
various factors including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such announced rate.) Any change
in the reference rate announced by BofA shall take effect at the opening of
business on the day specified in the public announcement of such change.
Base Rate Loan means a Loan that bears interest based on the Base Rate.
BofA means Bank of America, N.A., 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 and in accordance with its
customary commercial lending practices) of all Eligible Accounts Receivable plus
(b) 70% of the value of all Eligible Inventory consisting of finished goods
(whether labeled or unlabeled) or bulk tomato paste, valued at the lower of cost
or market (net of such reserves and allowances as the Administrative Agent deems
necessary in its sole reasonable discretion and in accordance with its customary
commercial lending practices) plus (c) 20% of the value of all other Eligible
Inventory, valued at the lower of cost and market (net of such reserves and
allowances as the Administrative Agent deems necessary in its sole reasonable
discretion and in accordance with its customary commercial lending practices)
plus (d) an amount equal to (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 each such
Acquisition (to the extent the same would have been eligible for inclusion in
the Borrowing Base assuming such Acquisition had occurred a year earlier) for
the year preceding such Acquisition, as it shall be reasonably determined
by a Responsible Officer, in each case multiplied by the applicable advance
rate, less (e) the net aggregate payables owing to growers or other suppliers of
crops or produce at such time, to the extent that such payables are subject to
statutory liens, trusts or priority claims (provided, that if the Company is
holding
-4-
<PAGE> 13
any Inventory at premises leased by the Company or with a bailee or
warehouseman and with respect to which the Company shall not have obtained a
Landlord's Consent, Bailee's Consent or Warehouseman's Consent, as applicable,
the Company may request that a reserve equal to all rent payable by the Company
with respect to such property for one year from the date of determination of the
reserve (in the case of leased premises) or such other reserve in respect of
storage, transportation and other charges as shall be acceptable to the
Administrative Agent or Required Revolving Lenders (in the case of Inventory
with a bailee or warehouseman) be established, in which case such reserve shall
be, if any Inventory located at such premises is to be included in the Borrowing
Base, deducted from the Borrowing Base and such Inventory shall not, solely by
virtue of clause (3), clause (4) or clause (6) of the definition of "Eligible
Inventory," be deemed ineligible). Nothing in this definition providing for
reserves on Accounts Receivable or Inventory shall be construed as requiring the
Company to set up reserves for financial reporting purposes.
Borrowing Base Certificate means a certificate substantially in the
form of Exhibit M.
Borrowing Date means any date on which a Borrowing occurs under Section
2.3.
BTCo. means Bankers Trust Company, a New York banking corporation.
Business Day means any day other than a Saturday, Sunday or other day
on which commercial banks in New York City or San Francisco are authorized or
required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable offshore Dollar interbank market.
Capital Adequacy Regulation means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, of any central bank or
Governmental Authority in each case regarding capital adequacy of any bank or of
any Person controlling a bank.
Capital Expenditures means all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of the 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
-5-
<PAGE> 14
pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the Issuing Lender (which documents are hereby
consented to by the Lenders). Derivatives of such term shall have corresponding
meanings. The Company hereby grants the Administrative Agent, for the benefit of
the Administrative Agent, the Issuing Lender and the Revolving Lenders, a
security interest in all such cash and deposit account balances. Cash collateral
shall be maintained in blocked, non-interest bearing deposit accounts at BofA.
Cash Equivalent Investments shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities of
not more than three years from the date of acquisition, (ii) marketable direct
obligations issued by any State of the United States of America or any local
government or other political subdivision thereof rated (at the time of
acquisition of such security) at least AA by Standard & Poor's Ratings Service,
a division of The McGraw-Hill Companies, Inc. ("S&P") or the equivalent thereof
by Moody's Investors Service, Inc. ("Moody's") having maturities of not more
than one year from the date of acquisition, (iii) time deposits (including
eurodollar time deposits), certificates of deposit (including eurodollar
certificates of deposit) and bankers' acceptances of (x) any Lender or any
Affiliate of any Lender, (y) any commercial bank of recognized standing either
organized under the laws of the United States (or any State or territory
thereof) or another country (or a political subdivision thereof) which is a
member of the Organization for Economic Cooperation and Development and acting
through a branch or agency located in the United States, in either case having
capital and surplus in excess of $250,000,000 or (z) any bank whose short-term
commercial paper rating (at the time of acquisition of such security) by S&P is
at least A-1 or the equivalent thereof (any such bank, an "Approved Bank"), in
each case with maturities of not more than six months from the date of
acquisition, (iv) commercial paper and variable or fixed rate notes issued by
any Lender or Approved Bank or by the parent company of any Lender or Approved
Bank and commercial paper and variable rate notes issued by, or guaranteed by,
any industrial or financial company with a short-term commercial paper rating
(at the time of acquisition of such security) of at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Moody's, or
guaranteed by any industrial company with a long-term unsecured debt rating (at
the time of acquisition of such security) of at least AA or the equivalent
thereof by S&P or at least Aa or the equivalent thereof by Moody's and in each
case maturing within one year after the date of acquisition and (v) repurchase
agreements with any Lender or any primary dealer maturing within one year from
the date of acquisition that are fully collateralized by investment instruments
that would otherwise be Cash Equivalent Investments; provided 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.
-6-
<PAGE> 15
CERCLA means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
CERCLIS means the Comprehensive Environmental Response Compensation
Liability Information System List.
Change of Control means (i) (A) any Person or group of related persons
for purposes of Section 13(d) of the Exchange Act (a "Group") (other than TPG
Partners or its Affiliates) shall become the owner, directly or indirectly,
beneficially or of record, of shares representing 30% or more of the aggregate
ordinary voting power represented by the issued and outstanding capital stock
(the "Voting Stock") of the Parent and (B) TPG Partners and its Affiliates shall
beneficially own, directly or indirectly, in the aggregate a lesser percentage
of the Voting Stock of the Parent than such Person or Group, (ii) the
replacement of a majority of the Board of Directors of the Parent over a
two-year period from the directors who constituted the Board of Directors of the
Parent at the beginning of such period, and such replacement shall not have been
approved by a vote of at least a majority of the Board of Directors of the
Parent then still in office who either were members of such Board of Directors
at the beginning of such period or whose election as a member of such Board of
Directors was previously so approved, (iii) the failure of the Parent to own
100% of the issued and outstanding capital stock of the Company free and clear
of all Liens (other than Permitted Liens of the type described in subsection
8.1(b), (c) or (g)), (iv) while any Subordinated Notes are outstanding, any
"Change of Control" as defined in the Subordinated Indenture or, while any
Qualified Notes are outstanding, any "Change of Control" as defined in any
Qualified Indenture or any other similar event, regardless of how designated, if
the occurrence of such event would require the Company to redeem or repurchase
any Qualified Notes prior to their expressed maturity or (v) while any Parent
Discount Notes are outstanding, any "Change of Control" as defined in the Parent
Discount Indenture or in any other instrument governing the 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 General Electric Capital Corporation and Fleet Business
Credit Corporation in their capacities as co-agents for the Lenders.
Code means the Internal Revenue Code of 1986.
-7-
<PAGE> 16
Collateral means any property of Parent, the Company or any Domestic
Subsidiary upon which a security interest in favor of the Administrative Agent
for the benefit of the Lender Parties is purported to be granted pursuant to any
Collateral Document.
Collateral Document means the Security Agreements, each Copyright
Security Agreement, the Intellectual Property License, each Trademark Security
Agreement, each Patent Security Agreement, each Pledge Agreement, each Mortgage
and any other document pursuant to which collateral securing the liabilities of
the Company, Parent or any Subsidiary under any Loan Document is granted or
pledged to the Administrative Agent for the benefit of itself and the Lenders.
Commercial Letter of Credit means any Letter of Credit which is
drawable upon presentation of a sight draft and other documents evidencing the
sale or shipment of goods purchased by the Company in the ordinary course of
business.
Commitment means, as to each Lender, such Lender's Revolving Commitment
and any Term B Commitment as may from time to time be committed to pursuant to
Section 2.16.
Commitment Date - see subsection 2.16(b).
Commitment Fee Rate - see the Pricing Schedule.
Commitment Increase - see subsection 2.16(a).
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
-8-
<PAGE> 17
historical cost of the Person or assets acquired, as required or permitted by
Accounting Principles Board Opinion Nos. 16 and 17.
Contadina Acquisition means the acquisition by the Company in December
1997 of the assets constituting the Contadina canned tomato business of Nestle
USA.
Contingent Obligation means, as to any Person, any direct or indirect
liability of such Person, whether or not contingent, with or without recourse:
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligation") of another Person (the "primary obligor"),
including any obligation of such Person (i) to purchase, repurchase or otherwise
acquire such primary obligation or any security therefor, (ii) to advance or
provide funds for the payment or discharge of any primary obligation, or to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet item, level of income
or financial condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
primary obligation of the ability of the primary obligor to make payment of such
primary obligation, or (iv) otherwise to assure or hold harmless the holder of
any primary obligation against loss in respect thereof (each, a "Guaranty
Obligation"); (b) with respect to any Surety Instrument (other than any Letter
of Credit) issued for the account of such Person or as to which such Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered; or (d) in respect of any Swap 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.
-9-
<PAGE> 18
Copyright Security Agreement means a copyright security agreement in
the form attached to a Security Agreement.
Designated Proceeds - see subsection 2.8(a).
Documentation Agent means BTCo., in its capacity as documentation agent
for the Lenders.
Dollar Amount means, in relation to any Indebtedness (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 (provided that in
the event cash expenditures are made in such Computation Period to reduce any
non-cash charges established in such Computation Period or a prior Computation
Period, such cash expenditures shall be deducted to calculate EBITDA for such
Computation Period), minus
(c) to the extent reflected in determining Consolidated Net Income and
without duplication, non-cash credits and gains of such Person from sales of
assets other than Inventory sold in the ordinary course of business (provided
that in the event cash payments are received in such Computation Period to
offset any non-cash credits established in such Computation
-10-
<PAGE> 19
Period or a prior Computation Period, such cash payments shall be added to
calculate EBITDA for such Computation Period), plus
(d) in the case of Parent, to the extent deducted in determining
Consolidated Net Income of Parent and without duplication, management incentive
payments in connection with the DMFC Recapitalization (as defined in the
Existing Credit Agreement) and other fees and expenses in connection with the
DMFC Recapitalization, the Contadina Acquisition, the amendment and restatement
of the Existing Credit Agreement and Acquisitions permitted under subsection
8.4(i);
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 such fiscal year have been provided to the Administrative Agent and the
Lenders and have been reported on without a qualification arising from the scope
of the audit or a "going concern" or like qualification or exception or (y) such
other financial information furnished to the Lenders with respect to such period
and such acquisition has been found acceptable by the Required Lenders and (ii)
either (x) any subsequent unaudited financial statements for such Person for the
period prior to the acquisition of such Person were prepared on a basis
consistent with such audited financial statements, have been provided to the
Administrative Agent and the Lenders and have been reported on without a
qualification arising from the scope of the audit or a "going concern" or like
qualification or (y) such other financial information furnished to the Lenders
with respect to such period and such acquisition has been found acceptable by
the Required Lenders.
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
-11-
<PAGE> 20
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 (provided, that in the event
any counterclaim, credit, allowance, rebate or adjustment is asserted, or
discount is granted, the Account Receivable shall only be ineligible pursuant to
this clause (3) to the extent of the same);
(4) there is no Insolvency Proceeding by or against the Account Debtor
with respect thereto;
(5) the Account Debtor with respect thereto is a resident or citizen
of, and is located within, the United States or a province of Canada in which
the Personal Property Security Act is in effect, unless (x) the sale of goods
giving rise to such Account 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 Revolving Lenders;
(6) it is not an Account Receivable arising from a "sale on approval,"
"sale or return," "consignment" or "bill and hold" or subject to any other
repurchase or return agreement (provided, that "bill and hold" Accounts
Receivable shall not be ineligible solely by virtue of this
-12-
<PAGE> 21
clause (6) if subject to a written agreement reasonably 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 (i) the Company may grant exceptions to such
credit limits consistent with past practice and in the ordinary course of
business and (ii) only the amount in excess of the credit limit shall be
ineligible under this clause (10));
(11) if the Account Receivable is evidenced by chattel paper or an
instrument, the originals of such chattel paper or instrument shall have been
endorsed and/or assigned and delivered to the Administrative Agent in a manner
reasonably satisfactory to the Administrative Agent;
(12) such Account Receivable is not more than (a) 60 days past the due
date thereof or (b) 120 days past the original invoice date thereof, in each
case according to the original terms of sale;
(13) it is not an Account Receivable with respect to an Account Debtor
that is located in any jurisdiction which has adopted a statute or other
requirement with respect 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
-13-
<PAGE> 22
Company is exempt from filing such report and has provided the Administrative
Agent with satisfactory evidence of such exemption; and
(14) it is not owed by an Account Debtor if (x) 30% or more of the
aggregate Dollar amount of outstanding Accounts Receivable owed at such time by
such Account Debtor is classified as ineligible under clause (12) of this
definition or (y) the aggregate Dollar amount of all Accounts Receivable owed by
the Account Debtor thereon exceeds 20% of the aggregate amount of all Accounts
Receivable at such time (but only, in the case of this clause (y), to the extent
of such excess).
An Account Receivable which is at any time an Eligible Account Receivable, but
which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Account Receivable. Further, with respect to
any Account Receivable, if the Administrative Agent or the Required Revolving
Lenders at any time hereafter determine in its or their reasonable discretion
and in accordance with its or their customary commercial lending practices that
the prospect of payment or performance by the Account Debtor with respect
thereto is materially impaired for any reason whatsoever, such Account
Receivable shall cease to be an Eligible Account Receivable after notice of such
determination is given to the Company.
Eligible Assignee means (i) an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D under the Securities Act of 1933 (other
than the Company or an Affiliate of the Company), (ii) a Lender, (iii) an
Affiliate of a Lender (provided such Affiliate is an "accredited investor"),
(iv) any fund that invests in bank loans that is managed by the same investment
adviser as another Lender that is such a fund (provided such assignee fund is an
"accredited investor") or (v) any investment adviser of any Lender which is a
fund (provided that (A) such investment adviser is an "accredited investor" and
is acting with discretion, or (B) if such investment adviser is not acting with
discretion, then each of such investment adviser and such fund shall be an
"accredited investor").
Eligible Inventory means Inventory which meets the following
requirements:
(1) it (a) is subject to a perfected Lien in favor of the
Administrative Agent and (b) is not subject to any other assignment, claim or
Lien (other than Permitted Liens of the type described in subsections 8.1(c) and
(g) and statutory nonconsensual Liens in favor of growers) (provided, that if
the Company has not delivered any Bailee's Consent, Warehouseman's Consent or
Landlord's Consent but the Administrative Agent has established adequate
reserves in respect thereof under the definition of "Borrowing Base" any claim
or Lien of the related bailee, warehouseman or landlord, if it is a Permitted
Lien, shall not cause the Inventory kept at such location to be ineligible
solely by virtue of this clause (1));
-14-
<PAGE> 23
(2) it is (except as the Required Revolving Lenders may otherwise
consent in writing) salable;
(3) except as provided in clause (4) below or as the Required Revolving
Lenders may otherwise consent, it is in the possession and control of the
Company or the relevant Domestic Subsidiary and it is stored and held in
facilities owned by the Company or the relevant Domestic Subsidiary or, if such
facilities are not so owned, leased to the Company or the relevant Domestic
Subsidiary and with respect to which the Administrative Agent has received a
Landlord's Consent (unless a reserve with respect thereto has been established
by the Administrative Agent in accordance with the proviso in the definition of
"Borrowing Base") (provided that no Landlord's Consents shall be required with
respect to Inventory acquired in any Acquisition permitted under subsection
8.4(i) for the first 60 days after the closing of such Acquisition);
(4) if it is in the possession or control of a bailee, warehouseman or
processor, the Administrative Agent is in possession of a Bailee's Consent,
Warehouseman's Consent or such other agreements, instruments and documents as
the Administrative Agent may reasonably require in good faith, including
warehouse receipts in the Administrative Agent's name covering such Inventory
(unless a reserve with respect thereto has been established by the
Administrative Agent in accordance with the proviso in the definition of
"Borrowing Base") (provided that no Bailee's Consents shall be required with
respect to Inventory acquired in any Acquisition permitted under subsection
8.4(i) for the first 60 days after the closing of such Acquisition);
(5) it is not Inventory produced in violation of the Fair Labor
Standards Act and subject to the "hot goods" provisions contained in Title 29
U.S.C. Section 215;
(6) it is not subject to any agreement which would restrict the
Administrative Agent's ability to sell or otherwise dispose of such Inventory
(provided, that if the Company has not delivered any Bailee's Consent,
Warehouseman's Consent or Landlord's Consent and has established adequate
reserves in respect thereof under the definition of "Borrowing Base", any
agreement entered into in the ordinary course of business with such bailee,
warehouseman or landlord shall not render the Inventory kept at such location to
be ineligible solely by virtue of this clause (6));
(7) it is located in the United States or in any territory or
possession of the United States that has adopted Article 9 of the Uniform
Commercial Code or as may be approved by the Administrative Agent or Required
Revolving Lenders;
(8) it is not "in transit" to the Company or the relevant Domestic
Subsidiary or held by the Company or the relevant Domestic Subsidiary on
consignment; and
-15-
<PAGE> 24
(9) the Administrative Agent (or Required Revolving Lenders) shall not
have determined (which determination shall be effective upon notice to the
Company) in its (or their) reasonable discretion and in accordance with its (or
their) customary commercial lending practices that it is unacceptable due to
age, type, category, quality, quantity and/or any other reason whatsoever.
Inventory which is at any time Eligible Inventory but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be Eligible
Inventory.
Environmental Claims means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability under any
Environmental Law or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
Environmental Indemnity means an unsecured environmental indemnity in
the form of Exhibit S in favor of the Administrative Agent.
Environmental Laws means CERCLA, the Resource Conservation and Recovery
Act and all other federal, state or local laws, statutes, common law duties,
rules, regulations, ordinances and codes relating to pollution or protection of
public or employee health or the environment, together with all administrative
orders, consent decrees, licenses, authorizations and permits of any
Governmental Authority implementing them.
ERISA means the Employee Retirement Income Security Act of 1974.
ERISA Affiliate means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
ERISA Event means: (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
substantial cessation of operations which is treated as such a withdrawal; (c) a
complete or partial withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Pension Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f)
-16-
<PAGE> 25
the imposition of any material liability under Title IV of ERISA, other than
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the
Company or any ERISA Affiliate.
Event of Default means any of the events or circumstances specified in
Section 9.1.
Excess Cash Flow means, for any period, the remainder of
(a) EBITDA of Parent for such period (without giving effect to any
amount included in such EBITDA on a pro forma basis solely by virtue of the
proviso to the definition of "EBITDA"), less
(b) the sum, without duplication, of
(i) repayments of principal of Term Loans pursuant to Section
2.9, regularly scheduled principal payments arising with respect to any
other long-term Indebtedness of the Company and its Subsidiaries, and
the portion of any regularly scheduled payments with respect to capital
leases allocable to principal, in each case made during such period,
plus
(ii) voluntary prepayments of the Term Loans pursuant to
Section 2.7 during such period (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 dividends of the Company permitted under subsection
8.16(e) or (f) made in such period, plus
(vii) cash payments made by the Company and its Subsidiaries
in respect of pension liability, workers' compensation and other
post-employment benefits to the
-17-
<PAGE> 26
extent such payments exceed book expenses for such items reflected in
the calculation of EBITDA, plus
(viii) cash payments made by Parent and its Subsidiaries
during such period in respect of fees and expenses in connection with
Acquisitions permitted under subsection 8.4(i) and the amendment and
restatement of the Existing Credit Agreement.
Exchange Act means the Securities Exchange Act of 1934.
Excluded Taxes - see the definition of "Taxes."
Existing Credit Agreement - see the recitals.
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 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).
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.
-18-
<PAGE> 27
FRB means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.
Further Taxes means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including net income taxes and franchise taxes), and all liabilities with
respect thereto, imposed by any jurisdiction on account of amounts paid or
payable pursuant to Section 4.1 other than Excluded Taxes (as defined below
under the definition of "Taxes").
GAAP means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
Governmental Authority means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
Guarantor means Parent and each Subsidiary that from time to time
executes and delivers a counterpart of the Subsidiary Guaranty.
Guaranty means the Parent Guaranty or the Subsidiary Guaranty, as
applicable.
Guaranty Obligation has the meaning specified in the definition of
Contingent Obligation.
Hazardous Material means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous or toxic
chemical, material or substance within the meaning of any other
Environmental Law.
-19-
<PAGE> 28
Honor Date - see subsection 3.3(b).
Increase Date - see subsection 2.16(a).
Increasing Lender - see subsection 2.16(c).
Indebtedness of any Person means, without duplication: (a) all
indebtedness of such Person for borrowed money; (b) all obligations issued,
undertaken or assumed by such Person as the deferred purchase price of property
or services (other than trade payables entered into and accrued expenses arising
in the ordinary course of business on ordinary terms); (c) all non-contingent
reimbursement or payment obligations with respect to Surety Instruments; (d) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments; (e) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement, or incurred as financing,
in either case with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property); (f) all
obligations of such Person with respect to capital leases; (g) all indebtedness
referred to in clauses (a) through (f) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including Accounts Receivable and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness; and (h) all Guaranty
Obligations of such Person in respect of indebtedness or obligations of others
of the kinds referred to in clauses (a) through (g) above.
Indemnified Liabilities - see Section 11.5.
Indemnified Person - see Section 11.5.
Independent Auditor - see subsection 7.1(a).
Insolvency Proceeding means, with respect to any Person, (a) any case,
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors or (b)
any general assignment for the benefit of creditors, composition, 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.
-20-
<PAGE> 29
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 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
-21-
<PAGE> 30
(iv) no Interest Period for any Revolving Loan shall extend
beyond the Revolving Termination Date.
Inventory means any and all of the goods of the Company or a Domestic
Subsidiary, wheresoever located, that are held for sale or held as raw
materials, work in process or materials used or consumed in the business of the
Company or the applicable Domestic Subsidiary.
IRS means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.
Issuance Date - see subsection 3.1(a).
Issue means, with respect to any Letter of Credit, to issue or amend
such Letter of Credit; and the terms "Issued," "Issuing" and "Issuance" have
corresponding meanings.
Issuing Lender means BofA in its capacity as issuer of one or more
Letters of Credit hereunder, together with any replacement letter of credit
issuer arising under subsection 10.1(b) or Section 10.9, or any successor
thereto acceptable to the Company, the Administrative Agent and the predecessor
Issuing Lender.
Joint Venture means a corporation, partnership, limited liability
company, joint venture or other similar legal arrangement (whether created by
contract or conducted through a separate legal entity) which is not a Subsidiary
of the Company or any of its Subsidiaries and which is now or hereafter formed
by the Company or any of its Subsidiaries with another Person in order to
conduct a common venture or enterprise with such Person.
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.
-22-
<PAGE> 31
L/C Application means an application form for issuances of a standby or
commercial documentary letter of credit as shall at any time be in use at the
Issuing Lender, as the Issuing Lender shall request.
L/C Borrowing means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the date when
made nor converted into a Borrowing of Revolving Loans under subsection 3.3(c).
L/C Commitment means the commitment of the Issuing Lender to Issue, and
the commitments of the Revolving Lenders severally to participate in, Letters of
Credit from time to time Issued or outstanding under Article III, in an
aggregate amount not to exceed on any date the lesser of $70,000,000 and the
amount of the aggregate amount of all Revolving Commitments; it being understood
that the L/C Commitment is a part of the Revolving Commitments, rather than a
separate, independent commitment.
L/C Fee Rate -- see the Pricing Schedule.
L/C Obligations means at any time the sum of (a) the aggregate undrawn
amount of all Letters of Credit then outstanding, plus (b) the amount of all
unreimbursed drawings under all Letters of Credit, including all outstanding L/C
Borrowings.
L/C-Related Documents means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the Issuing Lender's standard form
documents for letter of credit issuances.
Lenders means the several financial institutions from time to time
party to this Agreement. References to the "Lenders" shall include BofA in its
capacity as the Issuing Lender and BofA in its capacity as Swingline Lender; for
purposes of clarification only, to the extent that the Swingline Lender or the
Issuing Lender may have any rights or obligations in addition to those of the
other Lenders due to its status as Swingline Lender or Issuing Lender, its
status as such will be specifically referenced. For purposes of 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.
-23-
<PAGE> 32
Letters of Credit means any letters of credit (whether standby letters
of credit or commercial documentary letters of credit) Issued by the Issuing
Lender pursuant to Article III.
Liabilities means (i) all Obligations owing by the Company, Parent or
any Subsidiary (including post-petition interest) and (ii) all Permitted Swap
Obligations (monetary or otherwise) of the Company under any Swap Contract with
a Lender Party (other than Swap Contracts that, by their terms, are unsecured);
provided, however, that the term "Liabilities" shall not include any obligations
arising under any Environmental Indemnity.
Lien means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, or any financing lease having
substantially the same economic effect as any of the foregoing, but not
including the interest of a lessor under an operating lease).
Loan means an extension of credit by a Lender to the Company under
Article II or Article III in the form of a Revolving Loan, Term Loan, Swingline
Loan or L/C Advance. Each Revolving Loan and each Term Loan may be divided into
tranches which are Base Rate Loans or Offshore Rate Loans (each a "Type" of
Loan). For purposes of greater clarity, a conversion of one Type of Loan to the
other Type or the continuation of an Offshore Rate Loan into a different
Interest Period is not the making of a "Loan" hereunder.
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
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
-24-
<PAGE> 33
the rights, powers and remedies of the Administrative Agent or any Lender under
any Loan Document.
Material Subsidiary means a Subsidiary of the Company that meets any of
the following criteria:
(i) the assets of such Subsidiary and its Subsidiaries exceed
3% of the consolidated assets (giving effect to intercompany
eliminations) of the Company and its Subsidiaries;
(ii) the revenues of such Subsidiary and its Subsidiaries for
any fiscal quarter exceed 3% of the consolidated revenues (giving
effect to intercompany eliminations) of the Company and its
Subsidiaries for such period; or
(iii) the investments of the Company and its other
Subsidiaries in and advances to such Subsidiary and its Subsidiaries
exceed 3% of the consolidated assets (giving effect to intercompany
eliminations) of the Company and its Subsidiaries.
Mike Mac means Mike Mac IHC, Inc., a Delaware corporation and
a Subsidiary.
Mortgage means a mortgage, leasehold mortgage, deed of trust
or similar document granting a Lien on real property in appropriate
form for filing or recording in the applicable jurisdiction and
otherwise reasonably satisfactory to the Administrative Agent.
Multiemployer Plan means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, with respect to which the
Company or any ERISA Affiliate may have any liability.
Net Cash Proceeds means:
(a) with respect to the sale, transfer, or other disposition by
the Company or any Subsidiary of any asset (including any
stock of any Subsidiary or any Accounts Receivable pursuant to
a Permitted Receivables Facility), the aggregate cash proceeds
(including cash proceeds received by way of deferred payment
of principal pursuant to a note, installment receivable or
otherwise, but only as and when received) received by the
Company or any Subsidiary pursuant to such sale, transfer or
other disposition, net of (i) the direct costs relating to
such sale, transfer or other disposition (including sales
commissions and legal, accounting and investment banking
fees), (ii) taxes paid or reasonably estimated by the Company
to be payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing
arrangements), (iii) amounts required to be applied to the
repayment of any Indebtedness secured by a
-25-
<PAGE> 34
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 Parent, the
Company or any Subsidiary pursuant to such issuance, net of
the direct costs relating to such issuance (including sales
and underwriter's commissions, private placement fees and
legal, accounting and investment banking fees).
Net Worth means Parent's consolidated stockholders' equity,
but excluding therefrom (i) changes in cumulative translation
adjustments since January 3, 2000, which would otherwise be included
therein, and (ii) the effects arising from any purchase accounting
valuation adjustments incurred from and after January 3, 2000, over
historical cost of the Person or assets acquired, as required or
permitted by Accounting Principles Board Opinion Nos. 16 and 17.
New Lender - see subsection 2.16(e).
Non-Dollar Letter of Credit - see Section 3.10.
Note means a promissory note executed by the Company in favor
of a Lender pursuant to subsection 2.2(b), in substantially the form of
Exhibit D.
Notice of Borrowing means a notice in substantially the form
of Exhibit A.
Notice of Conversion/Continuation means a notice in
substantially the form of Exhibit B.
Obligations means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document owing
by the Company, Parent or any Subsidiary to any Lender, the
Administrative Agent, or any Indemnified Person, whether 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.
-26-
<PAGE> 35
Offshore Rate means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward, if necessary, to the next 1/16th of
1%) determined by the Administrative Agent as follows:
Offshore Rate = IBOR
-----------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward, if necessary, to the next 1/100th of
1%) in effect on such day (whether or not applicable to any
Lender) under regulations issued from time to time by the FRB
for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"IBOR" means the rate of interest per annum determined on the
basis of the rate for deposits in Dollars for a period equal
to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen
as of 11:00 a.m., London time, two Business Days prior to the
beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Telerate Service (or
otherwise on such service), "IBOR" for purposes of this
definition shall be determined by the Administrative Agent as
the rate at which Dollar deposits in the approximate amount of
BofA's Offshore Rate Loan for such Interest Period would be
offered by BofA's Grand Cayman Branch, Grand Cayman B.W.I. (or
such other office as may be designated for such purpose by
BofA), to major banks in the offshore dollar interbank market
at their request at approximately 11:00 a.m. (New York City
time) two Business Days prior to the commencement of such
Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
Offshore Rate Loan means a Loan that bears interest based on
the Offshore Rate.
Organization Documents means, (a) for any domestic
corporation, the certificate or articles of incorporation, the bylaws,
any certificate of determination or instrument relating to the rights
of preferred shareholders of such corporation, any shareholder rights
agreement, and all applicable resolutions of the board of directors (or
any
-27-
<PAGE> 36
committee thereof) of such corporation and (b) for any foreign
corporation, the equivalent documents.
Original Credit Agreement - see the recitals.
Other Debt means debt securities of Parent, the Company and
its Subsidiaries, other than as expressly permitted by (i) Section 8.5
or, (ii) with respect to Parent, the Parent Guaranty.
Other Taxes means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Document.
Overnight Rate - see subsection 3.10(g).
Parent means Del Monte Foods Company, a Delaware corporation.
Parent Discount Indenture means the indenture governing the
Parent Discount Notes, as amended from time to time in accordance with
Section 8.22.
Parent Discount Notes means the $149,500,000 aggregate face
amount of 12.5% Senior Discount Notes due 2007 of Parent.
Parent Guaranty means the amended and restated guaranty, dated
as of December 17, 1997, made by Parent in favor of the Administrative
Agent for the benefit of the Lender Parties, a copy of which is
attached as Exhibit F-1.
Parent Pledge Agreement means the Parent Pledge Agreement,
dated as of the Closing Date, between the Parent and the Administrative
Agent, a copy of which is attached as Exhibit G-1.
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.
-28-
<PAGE> 37
Pension Plan means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA with respect to which the
Company or any ERISA Affiliate may have any liability other than a
Multiemployer Plan.
Permitted Liens - see Section 8.1.
Permitted Liability Management Swap means one or more Swap
Contracts, in form and substance reasonably satisfactory to the
Administrative Agent, with a term not beyond April 15, 2002, which are
entered into when no Event of Default or Unmatured Event of Default
exists or would result therefrom, whereby (x) the Company enters into
an interest rate protection agreement with respect to not more than
$35,000,000 of Subordinated Notes or Qualified Notes whereby the
effective interest rate on such principal amount of Subordinated Notes
or Qualified Notes is set at a floating rate, rather than a fixed rate
and (y) the Company and the related swap counterparty enter into a
"total return" swap with respect to not more than $35,000,000 of
Subordinated Notes or Qualified Notes (that is, the related swap
counterparty purchases the principal amount of Subordinated Notes or
Qualified Notes subject to such swap transaction, and the Company
agrees to pay such counterparty for losses caused to such counterparty
by any depreciation in the market price of the Subordinated Notes or
Qualified Notes subject to such Swap Contracts during the period from
the time such Swap Contracts were entered into to the time such Swap
Contracts are terminated and such counterparty agrees to pay the
Company the amount of any gain caused by any appreciation in the market
price of the of the Subordinated Notes or Qualified Notes subject to
such Swap Contracts during the period from the time such Swap Contracts
were entered into to the time such Swap Contracts are terminated);
provided that in the event the Company has repurchased or redeemed any
Subordinated Notes or Qualified Notes under subsection 8.16(g), the
maximum Dollar amounts set forth above in this definition shall be
reduced by the amount of Subordinated Notes or Qualified Notes so
repurchased or redeemed.
Permitted Receivables Facility means any receivables financing
facility arrangement entered into by the Company providing for the
discount, sale or other transfer of its Accounts Receivable on a
nonrecourse basis for a transfer price at least equivalent to the
advance rate on such Accounts Receivable hereunder and otherwise on
terms and conditions (including repurchase provisions) satisfactory to
the Required Lenders.
Permitted Security Agreements means the Intellectual Property
Security Agreements and Assignments between the Company and Wafer
Limited and the 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
-29-
<PAGE> 38
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" (provided that
obligations in respect of a Permitted Liability Management Swap shall
not be excluded from the definition of "Permitted Swap Obligations" by
virtue of this clause (a)); and (b) such Swap Contracts do not contain
(i) any provision ("walk-away" provision) exonerating the
non-defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party or (ii) if the
counterparty is not a Lender Party, any provision creating or
permitting the declaration of an event of default, termination event or
similar event upon the occurrence of an Event of Default hereunder
(other than an Event of Default under subsection 9.1(a)).
Person means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
Plan means an employee benefit plan (as defined in Section
3(3) of ERISA) with respect to which the Company may have any
liability.
Pledge Agreement means the Parent Pledge Agreement, the
Company Pledge Agreement and each Subsidiary Pledge Agreement.
Proposed New Lender - see subsection 2.16(b).
Public Offering means an offering of equity securities or
Indebtedness registered under the Securities Act of 1933.
Qualified Indenture means a trust indenture entered into by
the Company with an indenture trustee with terms and provisions no more
restrictive to the Company than the 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 8.22.
-30-
<PAGE> 39
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 8.22.
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 the Parent Discount Indenture, as amended from time to time in
accordance with Section 8.22.
Qualified Parent Notes means notes of Parent in an aggregate
principal amount not to exceed the amount necessary to pay all
principal, interest and 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 the Parent Discount
Notes and which are issued pursuant to a Qualified Parent Indenture, as
amended from time to time in accordance with Section 8.22.
Qualified Parent Refinancing means a refinancing of the 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 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(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC or administrative
pronouncements.
Required Lenders means, at any time, Lenders having an
aggregate Total Percentage of more than 50%.
-31-
<PAGE> 40
Required Revolving Lenders means, at any time, Revolving
Lenders having an aggregate Revolving Percentage of more than 50%.
Required Term A Lenders means, at any time, Term A Lenders
having an aggregate Term A Percentage of more than 50%.
Required Term B Lenders means, at any time, Term B Lenders
having an aggregate Term B Percentage of more than 50%.
Requirement of Law means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to
or binding upon 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 amount of each Revolving Lender's Revolving Commitment on the date
hereof is set forth across from such Lender's name on Schedule 1.1.
Revolving Lender means, at any time, a Lender with a Revolving
Commitment at such time or which then holds any Revolving Loan.
Revolving Loan - see subsection 2.1(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.
-32-
<PAGE> 41
Revolving Termination Date means the earlier to occur of:
(a) March 31, 2003; and
(b) the date on which the Revolving Commitments
terminate in accordance with the provisions of this
Agreement.
Sale/Leaseback Transaction - see Section 8.18.
SEC means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
Security Agreement means either the Security Agreement
(Company and Parent) or the Subsidiary Security Agreement.
Security Agreement (Company and Parent) means the Security
Agreement, dated as of the Closing Date, among the Company, Parent and
the Administrative Agent in the form of Exhibit E-1 hereto.
Senior Debt Ratio means for each Computation Period the ratio
of
(i) the sum of (A) the outstanding principal amount
of all Total Debt (other than Subordinated Debt and Revolving
Loans) on the last day of such Computation Period plus (B) the
quotient of (1) the sum of the aggregate outstanding principal
amount of all Revolving Loans as of the last day of each of
the twelve fiscal months during such Computation Period
divided by (2) twelve, to
(ii) EBITDA of Parent for such Computation Period.
Standby Letter of Credit means any Letter of Credit that is
not a Commercial Letter of Credit.
Subordinated Debt means the Subordinated Notes and any
Qualified Notes and all other unsecured Indebtedness of the Company for
borrowed money which is subject to, and is only entitled to the
benefits of, terms and provisions (including maturity, amortization,
acceleration, interest rate, sinking fund, covenant, default and
subordination provisions) satisfactory in form and substance to the
Required Lenders, as evidenced by their written approval thereof (which
may be granted or withheld in their sole discretion).
Subordinated Indenture means the indenture governing the
Subordinated Notes, as amended from time to time in accordance with
Section 8.22.
-33-
<PAGE> 42
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 8.22.
Subordinated Notes means the 12-1/4% Series B 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 8.22.
Subsidiary of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests
or other equity interests is owned or controlled directly or indirectly
by such Person, or one or more of the Subsidiaries of such Person, or a
combination thereof. Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refer to a Subsidiary of the
Company.
Subsidiary Guaranty means the guaranty, substantially in the
form of Exhibit F-2, which may be executed from time to time by certain
Subsidiaries of the Company.
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 Restatement Date by other Subsidiaries.
Subsidiary Security Agreement means the security agreement,
substantially in the form of Exhibit E-2, which may be executed from
time to time by certain Subsidiaries of the Company.
Surety Instruments means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, surety
bonds and similar instruments.
Swap Contract means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity
index swap or option, bond, note or bill option, interest rate option,
forward foreign exchange transaction, cap, collar or floor transaction,
currency swap, cross-currency rate swap, swaption, currency option or
any other, similar transaction (including any option to enter into any
of the foregoing) or any combination of the foregoing, and, unless the
context otherwise clearly requires, any master agreement relating to or
governing any or all of the foregoing.
Swap Termination Value means, in respect of any one or more
Swap Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts, (a) for
any date on or after the date such Swap Contracts have been closed out
and
-34-
<PAGE> 43
termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date referenced
in clause (a) the amount(s) determined as the mark-to-market value(s)
for such Swap Contracts, as determined based upon one or more
mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include any
Lender).
Swingline Lender means BofA in its capacity as lender of
Swingline Loans together with any replacement lender of Swingline Loans
arising under Section 10.9.
Swingline Loan has the meaning specified in subsection 2.5(a).
Tax Sharing Agreement means the Tax Sharing Agreement dated as
of January 9, 1990 by and between Parent and the Company, as the same
may be amended from time to time in accordance with Section 8.22.
Taxes means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, charges or withholdings, fees
or similar charges and all liabilities with respect thereto, excluding,
in the case of each Lender and the Administrative Agent, such taxes
(including income taxes, branch profit taxes or franchise taxes) as are
imposed on or measured by such Lender's or the Administrative Agent's,
as the case may be, net income by the jurisdiction (or any political
subdivision thereof) under the laws of which 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 Lender means, at any time, a Lender 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 principal amount of such Lender's Term A Loan is of (b)
the aggregate principal amount of all Term A Loans. The Term A
Percentage as in effect on the Restatement Date 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 an Additional Term B Loan pursuant to subsection
2.1(b).
Term B Lender means, at any time, a Lender which then holds
any Term B Loan.
Term B Loan - see subsection 2.1(b).
-35-
<PAGE> 44
Term B Percentage means, as to any Lender, the percentage
which (a) the aggregate amount of such Lender's commitment to make
Additional Term B Loans plus the outstanding principal amount of such
Lender's Term B Loans is of (b) the aggregate amount of the commitments
to make Additional Term B Loans of all Lenders plus the outstanding
principal amount of all Term B Loans. The Term B Percentage of each
Lender as in effect on the Restatement Date is set forth across from
such Lender's name on Schedule 1.1.
Term 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 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
Additional 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 Additional Term B Loans of all Term B Lenders
plus the outstanding principal amount of all Term B Loans; provided
that, after the Revolving Commitments and any Term B Commitments have
been terminated, "Total Percentage" shall mean as to any Lender the
percentage which the aggregate principal amount of such Lender's Loans
is of the aggregate principal amount of all Loans. The initial Total
Percentage of each Lender is set forth opposite such Lender's name on
Schedule 1.1.
TPG Acquisition means TPG Shield Acquisition Corporation, a
Maryland corporation.
TPG Acquisition Preferred Stock means the 14% Series A
Redeemable Preferred Stock, original liquidation preference $1,000 per
share, of Parent.
-36-
<PAGE> 45
TPG Agreements means (i) the Management Advisory Agreement,
dated as of April 18, 1997, between the Company and TPG Partners and
(ii) the Transaction Advisory Agreement, dated as of April 18, 1997,
between the Company and TPG Partners, in each case as amended from time
to time in accordance with Section 8.22.
TPG Partners means TPG Partners, L.P., a Delaware limited
partnership.
Trademark Security Agreement means a trademark security
agreement in the form attached to a Security Agreement.
Type has the meaning specified in the definition of "Loan."
United States and U.S. each means the United States of
America.
Unmatured Event of Default means any event or circumstance
which, with the giving of notice, the lapse of time, or both, would (if
not cured or otherwise remedied during such time) constitute an Event
of Default.
Warehouseman's Consent means a document substantially in the
form of Exhibit P, with appropriate insertions, or such other form as
shall be acceptable to the Administrative Agent or Required Revolving
Lenders.
Wholly-Owned Subsidiary means any corporation in which (other
than directors' qualifying shares or due to native ownership
requirements) 100% of the capital stock of each class is owned
beneficially and of record by the Company or by one or more other
Wholly-Owned Subsidiaries.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar
words refer to this Agreement as a whole and not to any particular
provision of this Agreement; and Article, subsection, Section, Schedule
and Exhibit references are to this Agreement unless otherwise
specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
-37-
<PAGE> 46
(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."
(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.
-38-
<PAGE> 47
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments. (a) The Term A Credit. Each Term
A Lender has heretofore extended a "Term A Loan" to the Company (each such loan,
a "Term A Loan"). Amounts borrowed as Term A Loans which are repaid or prepaid
by the Company may not be reborrowed.
(b) The Term B Credit. Each Term B Lender has heretofore
extended one or more "Term B Loans" to the Company. Following the effectiveness
of any Commitment Increase which creates obligations to make Term B Loans, each
Term B Lender that has made a Term B Commitment in respect of such Commitment
Increase severally agrees, on the related Increase Date, to make a loan to the
Company (an "Additional Term B Loan") in the amount of such Lender's Term B
Commitment. All such Loans referred to in the two immediately preceding
sentences (including any Additional 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 Additional
Term B Loans on the Increase Date, the Term B Commitments made with respect to
such Increase Date shall 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 Restatement Date to the Revolving Termination
Date, in an aggregate amount not to exceed at any time outstanding such
Revolving Lender's Revolving Percentage of the aggregate amount of the Revolving
Commitments; provided that, 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 prima facie
evidence as to the amount of the Loans made by the Lenders to the Company and
the Letters of Credit Issued for the account of the Company, and the interest
and payments thereon. Any failure to record
-39-
<PAGE> 48
or any error in doing so shall not, however, limit or otherwise affect the
obligation of the Company hereunder to pay any amount owing with respect to any
Loan or any Letter of Credit.
(b) Upon the request of any Lender made through the
Administrative Agent, the Loans made by such Lender may be evidenced by one or
more Notes in addition to loan accounts. Each such Lender is hereby authorized
to endorse on the schedules annexed to its Note(s) the date, amount and maturity
of each Loan made by it and the amount of each payment of principal made by the
Company with respect thereto. Each such Lender is irrevocably authorized by the
Company to endorse its Note(s) and each Lender's record shall be conclusive
absent manifest error; provided that the failure of a Lender to make, or an
error in making, a notation thereon with respect to any Loan shall not limit or
otherwise affect the obligations of the Company hereunder or under any Note to
such Lender.
2.3 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Administrative Agent in
the form of a Notice of Borrowing (which notice must be received by the
Administrative Agent (i) prior to 11:00 a.m. (Chicago time) three Business Days
prior to the requested Borrowing Date, in the case of Offshore Rate Loans and
(ii) prior to 11:00 a.m. (Chicago time) one Business Day prior to the requested
Borrowing Date, in the case of Base Rate Loans), specifying:
(A) the amount of the Borrowing, which shall be in an amount
of $5,000,000 or a higher integral multiple of $100,000;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Borrowing; and
(D) in the case of Offshore Rate Loans, the duration of the
Interest Period applicable to such Loans included in such notice.
(b) The Administrative Agent will promptly notify each Lender
of its receipt of any Notice of Borrowing and of the amount of such Lender's
share of the related Borrowing based upon such Lender's Revolving Percentage,
Term A Percentage or Term B Percentage, as applicable. Notwithstanding the
immediately preceding sentence, any Borrowing of Additional Term B Loans
pursuant to a Commitment Increase shall be made by the Term B Lenders holding
Term B Commitments in respect of such Commitment Increase in accordance with
their respective Term B Commitments, and any Term B Lender that does not hold a
Term B Commitment in respect of such Commitment Increase shall have no
obligation to make any Additional Term B Loan.
(c) Each Lender will make the amount of its share of each
Borrowing available to the Administrative Agent for the account of the Company
at the Agent's Payment Office by 1:00 p.m.
-40-
<PAGE> 49
(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;
(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
-41-
<PAGE> 50
(D) in the case of conversions into Offshore Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable
to Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans, the Company shall be deemed
to have elected to convert such Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such Interest Period.
(d) The Administrative Agent will promptly notify each Lender
of its receipt of a Notice of Conversion/Continuation or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each
Lender of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans held by each Lender with respect to which the
notice was given.
(e) Unless the Required Lenders otherwise agree, during the
existence of an Event of Default or Unmatured Event of Default, the Company may
not elect to have a Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, there may not be more than twelve different Interest Periods in effect.
2.5 Swingline Loans.
(a) Subject to the terms and conditions hereof, the Swingline
Lender may, in its sole discretion (subject to subsection 2.5(b)), make a
portion of the Revolving Commitments available to the Company by making
swingline loans (each such loan, a "Swingline Loan") to the Company on any
Business Day during the period from the Restatement Date to the Revolving
Termination Date in accordance with the procedures set forth in this Section 2.5
in an aggregate principal amount at any one time outstanding not to exceed the
lesser of (x) the lesser of (1) the aggregate available amount of the Revolving
Commitments and (2) the Borrowing Base and (y) $25,000,000, notwithstanding the
fact that such Swingline Loans, when aggregated with the Swingline Lender's
outstanding Revolving Loans, may exceed the Swingline Lender's Revolving
Percentage of the aggregate amount of the Revolving Commitments; provided that
at no time shall the sum of the Effective Amount of all Swingline Loans,
Revolving Loans and L/C Obligations exceed the lesser of (1) the aggregate
amount of the Revolving Commitments and (2) the Borrowing Base. Subject to the
other terms and conditions hereof, the Company may borrow under this subsection
2.5(a), prepay pursuant to subsection 2.5(d) and reborrow pursuant to this
subsection 2.5(a) from time to time; provided that the Swingline Lender shall
not be obligated to make any Swingline Loan.
(b) The Company shall provide the Administrative Agent and the
Swingline Lender irrevocable written notice (or notice by a telephone call
confirmed promptly by facsimile) of any
-42-
<PAGE> 51
Swingline Loan requested hereunder (which notice must be received by the
Swingline Lender and the Administrative Agent prior to 12:00 p.m. (Chicago time)
on the requested Borrowing Date) specifying (i) the amount to be borrowed and
(ii) the requested Borrowing Date, which must be a Business Day. Upon receipt of
such notice, the Swingline Lender will promptly confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has received a
copy of such notice from the Company and, if not, the Swingline Lender will
provide the Administrative Agent with a copy thereof. If and only if the
Administrative Agent notifies the Swingline Lender on the proposed Borrowing
Date that it may make available to the Company the amount of the requested
Swingline Loan, then, subject to the terms and conditions hereof, the Swingline
Lender may make the amount of the requested Swingline Loan available to the
Company by crediting the account of the Company on the books of BofA with the
amount of such Swingline Loan. The Administrative Agent will not so notify the
Swingline Lender if the Administrative Agent has knowledge that (A) the
limitations set forth in the proviso set forth in the first sentence of
subsection 2.5(a) are being violated or would be violated by such Swingline Loan
or (B) one or more conditions specified in Article V is not then satisfied. Each
Swingline Loan shall be in an aggregate principal amount equal to $500,000 or a
higher integral multiple of $100,000. The Swingline Lender will promptly notify
the Administrative Agent of the amount of each Swingline Loan.
(c) Principal of and accrued interest on each Swingline Loan
shall be due and payable (i) on demand made by the Swingline Lender at any time
upon one Business Day's prior notice to the Company with a copy to the
Administrative Agent furnished at or before 10:45 a.m. (Chicago time), and (ii)
in any event on the Revolving Termination Date. Interest on Swingline Loans
shall be for the sole account of the Swingline Lender (except to the extent that
the other Lenders have funded the purchase of participations therein pursuant to
subsection 2.5(e)).
(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
-43-
<PAGE> 52
payment received later than such time shall be deemed to have been received on
the next Business Day). The Swingline Lender will promptly notify the
Administrative Agent of the amount of each prepayment of Swingline Loans.
(e) If (i) any Swingline Loan shall remain outstanding at
11:00 a.m. (Chicago time) on the Business Day immediately prior to a Business
Day on which Swingline Loans are due and payable pursuant to subsection 2.5(c)
and by such time on such Business Day the Administrative Agent shall have
received neither (A) a Notice of Borrowing delivered pursuant to Section 2.3
requesting that Revolving Loans be made pursuant to subsection 2.1(c) on such
following Business Day in an amount at least equal to the aggregate principal
amount of such Swingline Loans, nor (B) any other notice indicating the
Company's intent to repay such Swingline Loans with funds obtained from other
sources, or (ii) any Swingline Loans shall remain outstanding during the
existence of an Unmatured Event of Default or Event of Default and the Swingline
Lender shall in its sole discretion notify the Administrative Agent that the
Swingline Lender desires that such Swingline Loans be converted into Revolving
Loans, then the Administrative Agent shall be deemed to have received a Notice
of Borrowing from the Company pursuant to Section 2.3 requesting that Base Rate
Loans be made pursuant to subsection 2.1(c) on the following Business Day in an
amount equal to the aggregate amount of such Swingline Loans, and the procedures
set forth in subsections 2.3(b) and 2.3(c) shall be followed in making such Base
Rate Loans; provided that such Base Rate Loans shall be made notwithstanding the
Company's failure to comply with Section 5.2; and provided, further, that if a
Borrowing of Revolving Loans becomes legally impracticable and if so required by
the Swingline Lender at the time such Revolving Loans are required to be made by
the Revolving Lenders in accordance with this subsection 2.5(e), each Revolving
Lender agrees that in lieu of making Revolving Loans as described in this
subsection 2.5(e), such Revolving Lender shall purchase a participation from the
Swingline Lender in the applicable Swingline Loans in an 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.
-44-
<PAGE> 53
(a) The Company may, upon not less than three Business Days'
prior written notice to the Administrative Agent, permanently reduce the
Revolving Commitments to an amount which is not less than the sum of the
Effective Amount of all Revolving Loans plus the Effective Amount of all
Swingline Loans plus the Effective Amount of all L/C Obligations. Any such
reduction shall be in an aggregate amount of $10,000,000 or a higher integral
multiple of $5,000,000. The Company may at any time on like notice terminate the
Revolving Commitments upon payment in full of all Revolving Loans and Swingline
Loans and Cash Collateralization in full of all L/C Obligations.
(b) In addition, after (and to the extent not applied to) the
payment in full of all Term Loans pursuant to subsection 2.8(a), upon the
occurrence of any Mandatory Prepayment Event, the Revolving Commitments shall be
reduced by the amount of all Designated Proceeds resulting from such Mandatory
Prepayment Event, with each such reduction effective at the time required in
subsection 2.8(a) for a prepayment of Term Loans resulting from such Mandatory
Prepayment Event; provided, that upon any Mandatory Prepayment Event arising
from the transfer of Accounts Receivable under a Permitted Receivables Facility
under clause (viii) of subsection 2.8(a), (i) the Revolving Loans shall be
repaid in an amount equal to the Designated Proceeds from such transfer, (ii)
the Revolving Commitments shall be reduced by the full amount of all Designated
Proceeds from such transfer until the Revolving Commitments have been reduced to
zero and (iii) no such Designated Proceeds shall be applied to the Term Loans
until the Revolving Commitments have so been reduced to zero.
(c) Once reduced in accordance with this Section, the
Revolving Commitments may not be increased (including pursuant to Section 2.16).
Any reduction of the Revolving Commitments shall be applied to the Revolving
Commitment of each Revolving Lender according to its Revolving Percentage. All
accrued commitment fees to, but not including, the effective date of any
reduction or termination of the Revolving Commitments shall be paid on the
effective date of such reduction or termination.
2.7 Optional Prepayments.
(a) Subject to Section 4.4, (i) the Company may, from time to
time, upon irrevocable written notice to the Administrative Agent (which notice
must be received by 11:00 a.m. (Chicago time) one Business Day prior to the
requested day of prepayment in the case of Base Rate Loans and 11:00 a.m.
(Chicago time) three Business Days prior to the date of prepayment in the case
of Offshore Rate Loans), prepay any Borrowing of Revolving Loans in whole or in
part, without premium or penalty, in an aggregate amount of $5,000,000 or a
higher integral multiple of $100,000 and (ii) the Company may, from time to
time, upon not less than three Business Days' irrevocable notice to the
Administrative Agent, prepay any Borrowing of Term Loans in whole or in part,
without premium or penalty, in an aggregate amount of $5,000,000 or a higher
integral multiple of $100,000.
(b) Each notice of prepayment shall specify the date and
amount of such prepayment and the Loans to be prepaid. The Administrative Agent
will promptly notify each Lender
-45-
<PAGE> 54
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"):
(i) Within 180 days after any sale, transfer or other
disposition by the Company or any Subsidiary of any asset (other than
assets described in clause (ii) below), other than sales of Inventory,
Assets Held for Sale and transfers of Accounts Receivable pursuant to a
Permitted Receivables Facility and dispositions of obsolete, unused,
surplus or unnecessary equipment, in each case in the ordinary course
of business, to a Person other than the Company or a Subsidiary, in an
amount equal to 100% of the Net Cash Proceeds of such sale, transfer or
other disposition; provided that the foregoing shall not apply (x) to
sales, transfers or other dispositions of such assets the proceeds (or
an amount equal to anticipated proceeds) of which are used or committed
to be used by the Company for the financing of the replacement or
substitution of such assets being sold prior to or within 180 days
after any such sale, (y) to the
-46-
<PAGE> 55
extent that the Net Cash Proceeds of all such sales, transfers or other
dispositions in any fiscal year is less than $5,000,000 or (z) to
proceeds of Sale/Leaseback Transactions permitted under Section 8.18.
(ii) Within 30 days after any sale, transfer or other
disposition (including by way of merger or consolidation) by the
Company or any Subsidiary of any of the capital stock of any of the
Company's operating Subsidiaries to a Person other than the Company or
a Subsidiary, in an amount equal to 100% of the Net Cash Proceeds of
such sale, transfer or other disposition.
(iii) Within 180 days after the receipt of any insurance or
condemnation proceeds (or other similar recoveries) by Parent, the
Company or any Subsidiary or by the Administrative Agent (to the extent
the Administrative Agent is holding the insurance or condemnation
proceeds as additional Collateral pursuant to Section 6 of a Security
Agreement or any provision of any Mortgage) from any casualty loss
incurred by Parent, the Company or any Subsidiary or condemnation of
property, in an amount equal to 100% of such insurance or condemnation
proceeds (or other similar recoveries) net of any collection expenses;
provided that no such prepayment shall be required (x) to the extent
such proceeds (or an amount equal to anticipated proceeds) are used by
the Company, or will be so used prior to or within 180 days after the
date of receipt of such proceeds for the financing of the replacement,
substitution or restoration of the assets sustaining such casualty loss
or condemnation or (y) to the extent that all such insurance or
condemnation proceeds received in any fiscal year is less than
$1,000,000.
(iv) Promptly, and in any event within 15 days, after the
receipt of any Net Cash Proceeds from any issuance of equity securities
of Parent, the Company or any Subsidiary (including a Public Offering,
but excluding (x) any issuance of shares of capital stock pursuant to
any employee or director stock option program, benefit plan or
compensation program and (y) issuances of equity securities (the Net
Cash Proceeds of which are used within 90 days of receipt thereof to
finance Acquisitions permitted under subsection 8.4(i)), in an amount
equal to 50% of such Net Cash Proceeds.
(v) Promptly, and in any event within 15 days, after the
receipt of any Net Cash Proceeds from the issuance of any Other Debt of
Parent, the Company or any Subsidiary, in an amount equal to 100% of
such Net Cash Proceeds.
(vi) If the amount of net proceeds received on issuance of any
Qualified Notes exceeds the amount of net proceeds received by the
Company upon the issuance of the Subordinated Notes or upon any prior
issuance of Qualified Notes, promptly, and in any event within 15 days,
after the receipt of the proceeds of such notes by the Company in an
amount equal to such excess.
-47-
<PAGE> 56
(vii) Within 95 days after the end of each fiscal year
(commencing with the fiscal year ending June 30, 2000), in an amount
equal to 50% of Excess Cash Flow for such fiscal year (provided that if
the aggregate unpaid principal amount of the Term Loans as of the end
of such fiscal year is less than $150,000,000, then no prepayment shall
be required pursuant to this clause (vii)).
(viii) Subject to the proviso to subsection 2.6(b),
immediately following any transfer by the Company or any Subsidiary of
Accounts Receivable pursuant to a Permitted Receivables Facility, in an
amount equal to the Net Cash Proceeds of such transfer (provided, that
if the Permitted Receivables Facility is a revolving program, the
Designated Proceeds available for application to the Loans and/or
Revolving Commitments from such Permitted Receivables Facility under
this clause (viii) shall not exceed the maximum outstanding amount of
such Permitted Receivables Facility (without giving effect to any
reduction in such amount but giving effect to any increase in such
amount)).
(ix) Concurrently with the receipt of any proceeds from the
issuance of any Indebtedness by Parent (other than Other Debt), in an
amount equal to 100% of the Net Cash Proceeds thereof; provided,
however, that the Parent may retain any portion or all of the Net Cash
Proceeds of any Qualified Parent Notes to the extent such amount is
immediately used to pay in full (including all principal of and
interest and premium, if any, on) and discharge the Parent Discount
Notes or a prior issuance of Qualified Parent Notes, as applicable.
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.
(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
-48-
<PAGE> 57
Loans and/or Swingline Loans or Cash Collateralize the outstanding Letters of
Credit, or do a combination of the foregoing, in an amount sufficient to
eliminate such excess.
(c) If on any date the Effective Amount of L/C Obligations exceeds the
amount of the L/C Commitment, the Company shall Cash Collateralize on such date
the outstanding Letters of Credit in an amount equal to the excess of the L/C
Obligations over the amount of the L/C Commitment.
2.9 Repayment. (a) The Term A Credit. The Company shall repay the Term
A Loans in quarterly installments on the last Business Day of each fiscal
quarter commencing on March 24, 2000, in the amount set forth opposite the
period below in which such quarterly date occurs:
<TABLE>
<CAPTION>
Payment Date Payment Amount
------------ --------------
<S> <C>
03/24/00 $7,363,100.00
06/30/00 $7,363,100.00
09/29/00 $8,415,000.00
12/29/00 $8,415,000.00
03/30/01 $8,415,000.00
06/30/01 $8,415,000.00
09/28/01 $9,466,800.00
12/28/01 $9,466,800.00
03/29/02 $9,466,800.00
06/28/02 $9,466,800.00
09/27/02 $14,024,966.66
12/27/02 $14,024,966.66
03/28/03 $14,023,290.26
</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 24, 2000, in the amount set forth opposite the period below
in which such quarterly date occurs:
<TABLE>
<CAPTION>
Payment Date Payment Amount
------------ --------------
<S> <C>
03/24/00 $483,900.00
06/30/00 $483,900.00
09/29/00 $483,900.00
</TABLE>
-49-
<PAGE> 58
<TABLE>
<S> <C>
12/29/00 $483,900.00
03/30/01 $483,900.00
06/30/01 $483,900.00
09/28/01 $483,900.00
12/28/01 $483,900.00
03/29/02 $483,900.00
06/30/02 $483,900.00
09/27/02 $483,900.00
12/27/02 $483,900.00
03/28/03 $483,900.00
06/30/03 $483,900.00
09/26/03 $483,900.00
12/26/03 $483,900.00
03/26/04 $483,900.00
06/30/04 $45,438,000.00
09/24/04 $45,438,000.00
12/24/04 $45,438,000.00
03/25/05 $45,436,400.89 plus the
amount of any Additional
Term B Loans made hereunder.
</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 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.
-50-
<PAGE> 59
(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 for its own account 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 and the
Administrative Agent dated December 3, 1999.
(b) Commitment Fees. The Company shall pay to the
Administrative Agent for the account of each Revolving Lender a commitment fee
calculated at a rate per annum equal to the Commitment Fee Rate on the average
daily unused portion of such Revolving Lender's Revolving Commitment, computed
on a quarterly basis in arrears on the last Business Day of each fiscal quarter
based upon the daily utilization for that quarter as calculated by the
Administrative Agent. For purposes of calculating utilization under this
subsection, the Revolving Commitments shall be deemed used to the extent of the
Effective Amount of all Revolving Loans then outstanding (but Swingline Loans
shall not constitute usage of any Revolving Lender's Revolving Commitment) plus
the Effective Amount of all L/C Obligations then outstanding. Such commitment
fee shall accrue from the Restatement Date to the Revolving Termination Date and
shall be due and payable quarterly in arrears on the last Business Day of each
fiscal quarter, with the final payment to be made on the Revolving Termination
Date. The commitment fees provided in this subsection shall accrue at all times
after the Restatement Date, including at any time during which one or more
conditions in Article V are not met.
2.12 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of interest and fees shall be made
on the basis of a 360-day year and actual days elapsed. Interest and fees shall
-51-
<PAGE> 60
accrue during each period during which interest or such fees are computed from
the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the
Administrative Agent shall be prima facie evidence thereof. The Administrative
Agent will, at the request of the Company or any Lender, deliver to the Company
or such Lender, as the case may be, a statement showing the quotations used by
the Administrative Agent in determining any interest rate and the resulting
interest rate.
2.13 Payments by the Company. (a) All payments to be made by the
Company shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Company shall be made
to the Administrative Agent for the account of the Lenders at the Agent's
Payment Office, and shall be made in Dollars and in immediately available funds,
no later than 1:00 p.m. (Chicago time) on the date specified herein. Except as
expressly provided herein, the Administrative Agent will promptly distribute, in
like funds as received, to each Lender its Revolving Percentage of any portion
of such payment related to the Revolving Loans, its Term A Percentage of any
portion of such payment relating to the Term A Loans or its Term B Percentage of
any portion of such payment relating to the Term B Loans. Any payment received
by the Administrative Agent later than 1:00 p.m. (Chicago time) shall be deemed
to have been received on the following Business Day and any applicable interest
or fee shall continue to accrue.
(b) Whenever any payment is due on a day other than a Business
Day, such payment shall be made on the preceding Business Day, and such
shortening of time shall in such case be reflected in the computation of
interest or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the
Company prior to the date on which any payment is due to the Lenders that the
Company will not make such payment in full as and when required, the
Administrative Agent may assume that the Company has made such payment in full
to the Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Company has not made such
payment in full to the Administrative Agent, each Lender shall repay to the
Administrative Agent on demand such amount distributed to such Lender, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
2.14 Payments by the Lenders to the Administrative Agent. (a) Unless
the Administrative Agent receives notice from a Lender at least one Business Day
prior to the date of a Borrowing, that such Lender will not make available as
and when required hereunder to the
-52-
<PAGE> 61
Administrative Agent for the account of the Company the amount of such Lender's
Revolving Percentage, or proportionate commitment to make Additional 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 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
-53-
<PAGE> 62
manifest error) of participations purchased under this Section and will in each
case notify the Lenders following any such purchases or repayments.
2.16 Optional Increase. (a) The Company may, at any time or times
during the term of this Agreement, by written notice to the Administrative
Agent, make one or more requests that the aggregate amount of the Revolving
Commitments be increased, or that Commitments to make Additional Term B Loans be
committed to, in an aggregate amount (for all such increases) not to exceed
$100,000,000 (each, a "Commitment Increase"), with any such Commitment Increase
to be effective as of a date (the "Increase Date") specified in the related
notice to the Administrative Agent that is at least 30 Business Days after the
date of such notice; provided, however, that (i) no Event of Default or
Unmatured Event of Default shall have occurred and be continuing and (ii) the
Company shall be in compliance with all financial covenants set forth in
Sections 8.11, 8.12, 8.13 and 8.14 on a pro forma basis for the period of four
consecutive fiscal quarters ending on the last day of the last completed fiscal
quarter immediately preceding the date the Commitment Increase is proposed to
become effective (on the assumption that the full amount of Indebtedness
represented by the Commitment Increase was outstanding for the entire such
period).
(b) The Administrative Agent shall promptly notify the Lenders
(as well as any other financial institution specified by the Company and
reasonably acceptable to the Administrative Agent (each such financial
institution that is not a Lender, a "Proposed New Lender")) of the request by
the Company for the Commitment Increase, which notice shall include (A) the
proposed amount of the requested Commitment Increase, (B) the proposed Increase
Date and (C) the date by which Lenders and Proposed New Lenders wishing to
participate in the Commitment Increase must commit to participate in such
Commitment Increase (the "Commitment Date"), which date shall be no later than
five Business Days prior to the Increase Date.
(c) Each Lender and Proposed New Lender that is willing to
participate in such Commitment Increase (each, an "Increasing Lender") shall
give written notice to the Administrative Agent no later than 10:00 a.m. (San
Francisco time) on the Commitment Date of the amount by which it is willing to
participate in such Commitment Increase, which amount shall not exceed the
amount of the requested Commitment Increase. It shall be in each Lender's sole
discretion whether to offer to participate in such Commitment Increase in
connection with the proposed Commitment Increase. If the Lenders and Proposed
New Lenders notify the Administrative Agent that they are willing to increase
the amount of their respective Commitments by an aggregate amount that exceeds
the amount of the requested Commitment Increase, the Commitment Increase shall
be allocated among the Lenders and Proposed New Lenders willing to participate
therein in the manner specified by the Company and the Administrative Agent.
(d) Promptly following (but in no event later than two
Business Days after) the Commitment Date with respect to any Commitment
Increase, the Administrative Agent shall notify the
-54-
<PAGE> 63
Company as to the amount, if any, of the requested Commitment Increase in which
the Lenders and Proposed New Lenders are willing to participate.
(e) On the Increase Date, each Proposed New Lender that
accepts an offer to participate in the requested Commitment Increase as a Lender
shall become a Lender party to this Agreement as of the Increase Date (each a
"New Lender"), with a Revolving Commitment and/or Term B Commitment, and the
Revolving Commitment of each Increasing Lender for the requested Commitment
Increase shall be increased, or, if applicable, each Increasing Lender shall
have a Term B Commitment, in each case as of the Increase Date in the amount set
forth in its notice delivered to the Administrative Agent in accordance with
subsection 2.16(c) (or by the amount allocated to such Lender or Proposed New
Lender pursuant to the last sentence of subsection 2.16(c)); provided, however,
that the Administrative Agent shall have received on or before noon (San
Francisco time) on the Increase Date the following, each dated such date:
(i) (A) a certificate of a Responsible Officer of the Company
stating that no Event of Default or Unmatured Event of Default has occurred and
is continuing, or would result from the Commitment Increase, (B) certified
copies of resolutions of the board of directors of the Company approving the
Commitment Increase and the corresponding modifications to this Agreement and
the Notes, (C) opinions of counsel to the Company, in form and substance
reasonably satisfactory to the Administrative Agent, (D) instruments executed by
each Guarantor reaffirming its respective obligations under the Loan Documents
after giving effect to the Commitment Increase, (E) in the event that, after
giving effect to such Commitment Increase, the principal amount of the Term
Loans outstanding plus the aggregate Revolving Commitments would exceed the
maximum principal amount secured by the Mortgages, if the Administrative Agent
requests, amendments to the Mortgages in form and substance satisfactory to the
Administrative Agent, increasing the maximum principal amount secured by the
Mortgages so that such amount is not less than the principal amount of the Term
Loans and Revolving Commitments, after giving effect to such Commitment
Increase, together with such endorsements to the related title insurance
policies held by the Administrative Agent as the Administrative Agent may
request and (F) such other approvals, opinions or documents as any Lender
through the Administrative Agent may reasonably request in connection with the
Commitment Increase;
(ii) a counterpart of this Agreement duly executed by each New
Lender;
and
(iii) confirmation from each Increasing Lender of the increase
in the amount of its Revolving Commitment or, if applicable, its Term B
Commitment, in a writing satisfactory to the Company and the Administrative
Agent.
(f) On the Increase Date, upon fulfillment of the conditions set forth
in subsection 2.16(e), the Administrative Agent shall notify the Lenders and the
Company, on or before 1:00 p.m. (San Francisco time) by facsimile of the
occurrence of the Commitment Increase to be effected on the Increase Date. Each
Increasing Lender and each New Lender shall, before 2:00 p.m. (San Francisco
-55-
<PAGE> 64
time) on the Increase Date, make available to the Administrative Agent in
immediately available funds, (A) in the case of any New Lender, an amount equal
to (x) in the case of an increase to the Revolving Commitments, such New
Lender's Revolving Percentage (after giving effect to the Commitment Increase)
of all Revolving Loans then outstanding and (y) in the case of the creation of
Term B Commitments, in the amount of such New Lender's Term B Commitment and (B)
in the case of any Increasing Lender, an amount equal to (x) in the case of an
increase to the Revolving Commitments, the excess of (1) such Increasing
Lender's Revolving Percentage (after giving effect to the Commitment Increase)
of all Revolving Loans then outstanding over (2) such Increasing Lender's
Revolving Percentage (immediately prior to giving effect to the Commitment
Increase) of all Revolving Loans then outstanding and (y) in the case of the
creation of Term B Commitments, in the amount of such Increasing Lender's Term B
Commitment. After the Administrative Agent's receipt of such funds from each
Increasing Lender and each New Lender, the Administrative Agent will promptly
thereafter cause to be distributed like funds to the other Lenders holding
Revolving Loans or Term B Loans, as applicable, in an amount to each such Lender
such that the aggregate amount owing to each Lender after giving effect to such
distribution equals such Lender's ratable share of all Loans then outstanding
(calculated after giving effect to the Commitment Increase). If the Increase
Date shall occur on a date that is not the last day of the Interest Period for
all Revolving Loans or Term B Loans bearing interest based on the Offshore Rate
then outstanding (x) the Company shall pay any amounts owing pursuant to Section
4.4 to any Lender whose proportionate share of any outstanding Offshore Rate
Loan is decreased as a result of the distributions to Lenders under this
subsection 2.16(f), and (y) for each outstanding Borrowing of Offshore Rate
Loans, each Offshore Rate Loan made by the respective Increasing Lenders and New
Lenders pursuant to this subsection 2.16(f) shall be deemed to be funded at the
applicable Offshore Rate for such Borrowing.
ARTICLE III
THE LETTERS OF CREDIT
3.1 The Letter of Credit Subfacility. (a) On the terms and conditions
set forth herein: (i) the Issuing Lender agrees, (A) from time to time on any
Business Day during the period from the Restatement Date to the Revolving
Termination Date to issue Letters of Credit for the account of the Company, and
to amend Letters of Credit previously issued by it, in accordance with
subsections 3.2(c) and 3.2(d), and (B) to honor drawings which comply with the
terms of the Letters of Credit Issued by it; and (ii) the Revolving Lenders
severally agree to participate in Letters of Credit Issued for the account of
the Company; provided that the Issuing Lender shall not be obligated to Issue,
and no Revolving Lender shall be obligated to participate in, any Letter of
Credit if as of the date of Issuance of such Letter of Credit (the "Issuance
Date") (1) the sum of the Effective Amount of all L/C Obligations plus the
Effective Amount of all Revolving Loans plus the Effective Amount of all
Swingline Loans exceeds the lesser of (x) the aggregate amount of all Revolving
Commitments and (y) the Borrowing Base, (2) the Effective Amount of all L/C
Obligations exceeds the amount of the L/C
-56-
<PAGE> 65
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 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
-57-
<PAGE> 66
Administrative Agent at least four Business Days (or such shorter time as the
Issuing Lender and the Administrative Agent may agree in a particular instance
in their sole discretion) prior to the proposed date of issuance. Each such
request for issuance of a Letter of Credit shall be by facsimile, confirmed
immediately in an original writing, in the form of an L/C Application, and shall
specify in form and detail satisfactory to the Issuing Lender: (i) the face
amount of the Letter of Credit; (ii) the expiry date of the Letter of Credit;
(iii) the name and address of the beneficiary thereof; (iv) the documents to be
presented by the beneficiary of the Letter of Credit in case of any drawing
thereunder; (v) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and (vi) such other matters as
the Issuing Lender may require.
(b) At least two Business Days prior to the Issuance of any
Letter of Credit, the Issuing Lender will confirm with the Administrative Agent
(by telephone or in writing) that the Administrative Agent has received a copy
of the L/C Application or L/C Amendment Application from the Company and, if
not, the Issuing Lender will provide the Administrative Agent with a copy
thereof. If and only if the Administrative Agent notifies the Issuing Lender on
or before the Business Day immediately preceding the proposed date of Issuance
of a Letter of Credit that the Issuing Lender may Issue such Letter of Credit,
then, subject to the terms and conditions hereof, the Issuing Lender shall, on
the requested date, Issue such Letter of Credit for the account of the Company
in accordance with the Issuing Lender's usual and customary business practices.
The Administrative Agent shall not give such notice if the Administrative Agent
has knowledge that (A) such Issuance is not then permitted under subsection
3.1(a) as a result of the limitations set forth in clause (1) or (2) thereof or
(B) the Issuing Lender has received a notice described in subsection 3.1(b)(ii).
The Administrative Agent will promptly notify the Lenders of any Letter of
Credit Issuance hereunder.
(c) From time to time while a Letter of Credit is outstanding
and prior to the Revolving Termination Date, the Issuing Lender will, upon the
written request of the Company received by the Issuing Lender (with a copy sent
by the Company to the Administrative Agent) at least four Business Days (or such
shorter time as the Issuing Lender and the Administrative Agent may agree in a
particular instance in their sole discretion) prior to the proposed date of
amendment, amend any Letter of Credit issued by it. Each such request for
amendment of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, made in the form of an L/C Amendment
Application and shall specify in form and detail satisfactory to the Issuing
Lender: (i) the Letter of Credit to be amended; (ii) the proposed date of
amendment of such Letter of Credit (which shall be a Business Day); (iii) the
nature of the proposed amendment; and (iv) such other matters as the Issuing
Lender may require. The Issuing Lender shall not have any obligation to amend
any Letter of Credit if the Issuing Lender would have no
obligation at such time to Issue such Letter of Credit in its amended form under
the terms of this Agreement.
(d) The Issuing Lender and the Lenders agree that, while a
Standby Letter of Credit is outstanding and prior to the Revolving Termination
Date, at the option of the Company and upon the written request of the Company
received by the Issuing Lender (with a copy sent by the
-58-
<PAGE> 67
Company to the Administrative Agent) at least four Business Days (or such
shorter time as the Issuing Lender and the Administrative Agent may agree in a
particular instance in their sole discretion) prior to the proposed date of
notification of extension, the Issuing Lender shall be entitled, with the
approval of the Administrative Agent, to authorize the automatic extension of
any Standby Letter of Credit issued by it. Each such request for extension of a
Standby Letter of Credit shall be made by facsimile, confirmed immediately in an
original writing, in the form of an L/C Amendment Application, and shall specify
in form and detail satisfactory to the Issuing Lender: (i) the Letter of Credit
to be extended; (ii) the proposed date of notification of extension of such
Letter of Credit (which shall be a Business Day); (iii) the revised expiry date
of such Letter of Credit (which, unless all Lenders otherwise consent in
writing, shall be prior to the Revolving Termination Date); and (iv) such other
matters as the Issuing Lender may require. The Issuing Lender shall not be under
any obligation to extend any Letter of Credit if: (A) the Issuing Lender would
have no obligation at such time to Issue or amend such Letter of Credit in its
extended form under the terms of this Agreement; or (B) the beneficiary of such
Letter of Credit does not accept the proposed extension of such Letter of
Credit. If any outstanding Letter of Credit shall provide that it shall be
automatically extended unless the beneficiary thereof receives notice from the
Issuing Lender that such Letter of Credit shall not be extended, and if at the
time of extension the Issuing Lender would be entitled to authorize the
automatic extension of such Letter of Credit in accordance with this subsection
3.2(d) upon the request of the Company but the Issuing Lender shall not have
received any L/C Amendment Application from the Company with respect to such
extension or other written direction by the Company with respect thereto, the
Issuing Lender shall nonetheless be permitted to allow such Letter of Credit to
be extended, subject to the approval of the Administrative Agent, and the
Company and the Lenders hereby authorize such extension, and, accordingly, the
Issuing Lender shall be deemed to have received an L/C Amendment Application
from the Company requesting such extension.
(e) The Issuing Lender may, at its election (or as required by
the Administrative Agent at the direction of the Required Lenders), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be, in the case of Standby Letters of Credit, a
date not later than the Revolving Termination Date, and in the case of
Commercial Letters of Credit, a date not later than 15 days prior to the
Revolving Termination Date.
(f) This Agreement shall control in the event of any conflict
with any L/C- Related Document (other than, as between the beneficiary and the
Issuing Lender, any Letter of Credit).
(g) The Issuing Lender will deliver to the Administrative
Agent, concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or extension of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or extension of a Letter of Credit.
-59-
<PAGE> 68
(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 5.2 other than subsection 5.2(a). Any notice given by the Issuing Lender
or the Administrative Agent pursuant to this subsection 3.3(b) may be oral if
immediately confirmed in writing (including by facsimile); provided that the
lack of such an immediate confirmation shall not affect the conclusiveness or
binding effect of such notice.
(c) Each Revolving Lender shall upon any notice pursuant to
subsection 3.3(b) make available to the Administrative Agent for the account of
the Issuing Lender an amount in Dollars and in immediately available funds equal
to its Revolving Percentage of the amount of the drawing, whereupon the
participating Revolving Lenders shall (subject to subsection 3.3(d)) each be
deemed to have made a Revolving Loan consisting of a Base Rate Loan to the
Company in such amount. If any Revolving Lender so notified fails to make
available to the Administrative Agent for the account of the Issuing Lender the
amount of such Revolving Lender's Revolving Percentage of the amount of such
drawing by no later than 1:00 p.m. (Chicago time) on the Honor Date, then
interest shall accrue on such Revolving Lender's obligation to make such
payment, from the Honor Date to the date such Revolving Lender makes such
payment, at a rate per annum equal to the Federal Funds Rate in effect from time
to time during such period. The Administrative Agent will promptly give notice
of the occurrence of the
-60-
<PAGE> 69
Honor Date, but failure of the Administrative Agent to give any such notice on
the Honor Date or in sufficient time to enable any Revolving Lender to effect
such payment on such date shall not relieve such Revolving Lender from its
obligations under this Section 3.3.
(d) With respect to any unreimbursed drawing that is not
converted into Revolving Loans consisting of Base Rate Loans in whole or in
part, because of the Company's failure to satisfy the conditions set forth in
Section 5.2 (other than subsection 5.2(a), which need not be satisfied) or for
any other reason, the Company shall be deemed to have incurred from the Issuing
Lender an L/C Borrowing in the amount of such drawing, which L/C Borrowing shall
be due and payable on demand (together with interest) and shall bear interest at
a rate per annum equal to the Base Rate plus the Applicable Base Rate Margin
then in effect for Revolving Loans plus 2% per annum, and each Revolving
Lender's payment to the Issuing Lender pursuant to subsection 3.3(c) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Revolving Lender in satisfaction of its
participation obligation under this Section 3.3.
(e) Each Revolving Lender's obligation in accordance with this
Agreement to make Revolving Loans or L/C Advances, as contemplated by this
Section 3.3, as a result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the Issuing Lender and shall
not be affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Revolving Lender may have against
the Issuing Lender, the Company or any other Person for any reason whatsoever,
(ii) the occurrence or continuance of an Event of Default, an Unmatured Event of
Default or a Material Adverse Effect or (iii) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing; provided
that each Revolving Lender's obligation to make Revolving Loans under this
Section 3.3 is subject to the conditions set forth in Section 5.2.
3.4 Repayment of Participations. (a) Upon (and only upon) receipt by
the Administrative Agent for the account of the Issuing Lender of immediately
available funds from the Company (i) in reimbursement of any payment made by the
Issuing Lender under a Letter of Credit with respect to which any Revolving
Lender has paid the Administrative Agent for the account of the Issuing Lender
for such Revolving Lender's participation in such Letter of Credit pursuant to
Section 3.3 or (ii) in payment of interest thereon, the Administrative Agent
will pay to each Revolving Lender, in like funds as those received by the
Administrative Agent for the account of the Issuing Lender, the amount of such
Revolving Lender's Revolving Percentage of such funds, and the Issuing Lender
shall receive the amount of the Revolving Percentage of such funds of any
Revolving Lender that did not so pay the Administrative Agent for the account of
the Issuing Lender.
(b) If the Administrative Agent or the Issuing Lender is
required at any time to return to the Company, or to a trustee, receiver,
liquidator or custodian, or to any official in any Insolvency Proceeding, any
portion of any payment made by the Company to the Administrative Agent for the
account of the Issuing Lender pursuant to subsection 3.4(a) in reimbursement of
a payment
-61-
<PAGE> 70
made under a Letter of Credit or interest or fee thereon, each Revolving Lender
shall, on demand of the Administrative Agent, forthwith return to the
Administrative Agent or the Issuing Lender the amount of its Revolving
Percentage of any amount so returned by the Administrative Agent or the Issuing
Lender plus interest thereon from the date such demand is made to the date such
amount is returned by such Revolving Lender to the Administrative Agent or the
Issuing Lender, at a rate per annum equal to the Federal Funds Rate in effect
from time to time.
3.5 Role of the Issuing Lender. (a) Each Lender and the Company agree
that, in honoring any drawing under a Letter of Credit, the Issuing Lender shall
not have any responsibility to obtain any document (other than any sight draft
and certificate expressly required by such Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.
(b) No Agent-Related Person, Issuing Lender nor any of their
respective correspondents, participants or assignees shall be liable to any
Lender for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Lenders (including the Required Lenders, as
applicable); (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Company hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter
of Credit; provided that this assumption is not intended to, and shall not,
preclude the Company's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under this Agreement or any other
agreement. No Agent-Related Person, Issuing Lender nor any of their respective
correspondents, participants or assignees shall be liable or responsible for any
of the matters described in clauses (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
-62-
<PAGE> 71
repay any L/C Borrowing and any drawing under a Letter of Credit converted into
Revolving Loans, shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and each such other
L/C-Related Document under all circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement
or any L/C- Related Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Company in
respect of any Letter of Credit or any other amendment or waiver of or
any consent to departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Company may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Lender
or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C-Related Documents or any
unrelated transaction;
(iv) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect or any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit;
(v) any payment by the Issuing Lender under any Letter of
Credit against presentation of a draft or certificate that does not
strictly comply with the terms of such Letter of Credit; or any payment
made by the Issuing Lender under any Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any 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.
-63-
<PAGE> 72
3.7 Cash Collateral Pledge. If any Letter of Credit remains outstanding
and partially or wholly undrawn as of the Revolving Termination Date, then the
Company shall immediately Cash Collateralize the L/C Obligations in an amount
equal to the maximum amount then available to be drawn under all Letters of
Credit.
3.8 Letter of Credit Fees. (a) The Company shall pay to the
Administrative Agent for the account of each Revolving Lender a letter of credit
fee with respect to each Letter of Credit equal to the L/C Fee Rate per annum of
the daily maximum amount available to be drawn on such Letter of Credit,
computed for each day such Letter of Credit is outstanding in arrears on the
last Business Day of each fiscal quarter; provided that, during the existence of
any Event of Default, the L/C Fee Rate shall be increased by 2% per annum.
(b) The Company shall pay to the Issuing Lender a letter of
credit fronting fee for each Letter of Credit Issued equal to 0.25% per annum of
the daily maximum amount available to be drawn on such Letter of Credit,
computed for each day such Letter of Credit is outstanding, on the last Business
Day of each fiscal quarter and on the Revolving Termination Date (or such later
date on which such Letter of Credit shall expire or be fully drawn).
(c) The letter of credit fees payable under subsection 3.8(a)
and the fronting fees payable under subsection 3.8(b) shall be due and payable
quarterly in arrears on the last Business Day of each fiscal quarter during
which Letters of Credit are outstanding, commencing on the first such quarterly
date to occur after the Restatement Date, to the Revolving Termination Date (or
such later date upon which all outstanding Letters of Credit shall expire or be
fully drawn), with the final payment to be made on the Revolving Termination
Date (or such later date). For purposes of calculating the fees payable under
subsection 3.8(a) and subsection 3.8(b), any undrawn Commercial Letter of Credit
shall be considered outstanding and available to be drawn upon for 15 days after
its expiry date.
(d) The Company shall pay to the Issuing Lender from time to
time on demand the normal issuance, payment, amendment and other processing
fees, and other standard costs and charges, of the Issuing Lender relating to
letters of credit as from time to time in effect.
3.9 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in such Letter of Credit) apply to each Letter of Credit.
3.10 Non-Dollar Letters of Credit. The Company, the Administrative
Agent, the Issuing Lender and all of the Lenders (i) agree that, upon the
request of the Company, the Issuing Lender may (in its sole discretion) issue
Letters of Credit ("Non-Dollar Letters of Credit") in currencies other than
Dollars and (ii) further agree as follows with respect to such Non-Dollar
Letters of Credit:
-64-
<PAGE> 73
(a) The Company agrees that its reimbursement obligation under
subsection 3.3(b) and any resulting L/C Borrowing, in each case in
respect of a drawing under any Non-Dollar Letter of Credit, (i) shall
be payable in Dollars at the Dollar Equivalent of such obligation in
the currency in which such Non-Dollar Letter of Credit was issued
(determined on the date of payment) and (ii) shall bear interest at a
rate per annum equal to the sum of the Overnight Rate plus the
Applicable Offshore Rate Margin for Revolving Loans plus 3% for each
day from and including the Honor Date to but excluding the date such
obligation is paid in full (it being understood that any payment
received after 10:30 a.m., Chicago time, on any day shall be deemed
received on the following Business Day).
(b) Each Lender agrees that its obligation to make Revolving
Loans under subsection 3.3(b) and to make L/C Advances for any unpaid
reimbursement obligation or L/C Borrowing in respect of a drawing under
any Non-Dollar Letter of Credit shall be payable in Dollars at the
Dollar Equivalent of such obligation in the currency in which such
Non-Dollar Letter of Credit was issued (calculated on the date of
payment) (and any such amount which is not paid when due shall bear
interest at a rate per annum equal to the Overnight Rate plus,
beginning on the third Business Day after such amount was due, the
Applicable Offshore Rate Margin for Revolving Loans).
(c) For purposes of determining whether there is availability
for the Company to request, continue or convert any Loan, or request,
extend or increase the face amount of any Letter of Credit, the Dollar
Equivalent of the Effective Amount of each Non- Dollar Letter of Credit
shall be calculated on the date such Loan is to be made, continued or
converted or such Letter of Credit is to be issued, extended or
increased.
(d) For purposes of determining (i) the amount of the unused
portion of the Revolving Commitments under subsection 2.11(b), (ii) the
letter of credit fee under subsection 3.8(a) and (iii) the letter of
credit fronting fee under subsection 3.8(b), the Dollar Equivalent of
the Effective Amount of any Non-Dollar Letter of Credit shall be
determined on each of (1) the date of an issuance, extension or change
in the stated amount of such Non-Dollar Letter of Credit, (2) the date
of any payment by the Issuing Lender in respect of a drawing under such
Non-Dollar Letter of Credit, (3) the last day of each calendar month
and (4) each day on which the aggregate amount of the Revolving
Commitments and/or L/C Commitment is reduced.
(e) If, on the last day of any calendar month or any day on
which the aggregate amount of the Revolving Commitments and/or L/C
Commitment is reduced, the sum of the Effective Amount of all Revolving
Loans plus the Effective Amount of all Letters of Credit plus the
Effective Amount of all Swingline Loans (valuing the Effective Amount
of, and all reimbursement obligations and L/C Borrowings of the Company
in respect of, any Non-Dollar Letter of Credit at the Dollar Equivalent
thereof as of such day) would exceed the aggregate
-65-
<PAGE> 74
amount of the Revolving Commitments, then the Company will immediately
eliminate such excess by prepaying Revolving Loans and/or Swingline
Loans and/or causing one or more Letters of Credit to be reduced or
terminated.
(f) If, for the purposes of obtaining judgment in any court,
it is necessary to convert a sum due in respect of any Non-Dollar
Letter of Credit in one currency into another currency, the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Issuing Lender could purchase the first currency with
such other currency on the Business Day preceding that on which final
judgment is given. The obligation of the Company in respect of any such
sum due from it to the Administrative Agent, the Issuing Lender or any
Lender hereunder shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in which such sum is denominated
in accordance with the applicable provisions of the applicable
Non-Dollar Letter of Credit (the "Agreement Currency"), be discharged
only to the extent that on the Business Day following receipt by the
Issuing Lender of any sum adjudged to be so due in the Judgment
Currency, the Issuing Lender may in accordance with normal banking
procedures purchase the Agreement Currency with the Judgment Currency.
If the amount of the Agreement Currency so purchased is less than the
sum originally due to the Issuing Lender in the Agreement Currency, the
Company agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Administrative Agent, the Issuing Lender or
the Lender to whom such obligation was owing against such loss. If the
amount of the Agreement Currency so purchased is greater than the sum
originally due to the Issuing Lender in such currency, the Issuing
Lender agrees to return the amount of any excess to the Company (or to
any other Person who may be entitled thereto under applicable law).
(g) For purposes of this Section, "Overnight Rate" means, for
any day, the rate of interest per annum at which overnight deposits in
the applicable currency, in an amount approximately equal to the amount
with respect to which such rate is being determined, would be offered
for such day by the London Branch of BofA to major banks in the London
or other applicable offshore interbank market. The Overnight Rate for
any day which is not a Business Day (or on which dealings are not
carried on in the applicable offshore interbank market) shall be the
Overnight Rate for the immediately preceding Business Day.
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.
-66-
<PAGE> 75
(b) Subject to subsection 4.1(g), the Company agrees to
indemnify and hold harmless each Lender and the Administrative Agent for the
full amount of Taxes, Other Taxes and Further Taxes paid by such Lender in the
amount necessary to preserve the amount such Lender would have received
hereunder if such Taxes, Other Taxes or Further Taxes had not been imposed, and
any liability (including penalties, interest, additions to tax and reasonable
out-of-pocket expenses) arising therefrom or with respect thereto, whether or
not such Taxes, Other Taxes or Further Taxes were correctly or legally asserted;
provided, however, that the Company shall not have to indemnify any Lender or
the Administrative Agent for Taxes, Other Taxes, Further Taxes, penalties,
additions to tax or expenses arising as a result of the gross negligence or
wilful misconduct of such Person. Payment under this subsection 4.1(b) shall be
made within 30 days from the date such Lender or the Administrative Agent makes
written demand therefor and provides reasonable evidence of the payment of such
Taxes, Other Taxes or Further Taxes.
(c) If the Company shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum
payable hereunder to any Lender or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section), such Lender or the Administrative Agent, as the case may
be, receives and retains an amount equal to the sum it would have
received and retained had no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
and
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law.
(d) Within 10 days after the date the Company receives any
receipt for the payment of Taxes, Other Taxes or Further Taxes, the Company
shall furnish to the Administrative Agent the original or a certified copy of
such receipt evidencing payment thereof, or other evidence of payment
satisfactory to the Administrative Agent and the Administrative Agent will
promptly provide a copy thereof to all interested Lenders.
(e) If the Company is required to pay additional amounts to
any Lender or the Administrative Agent pursuant to subsection (b) of this
Section or Section 4.3, then such Lender 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.
-67-
<PAGE> 76
(f) If any Lender or the Administrative Agent receives a
refund in respect of any Taxes, Other Taxes or Further Taxes as to which it has
been indemnified by the Company pursuant to this Section 4.1, it shall repay
such refund (to the extent of amounts that have been paid by the Company under
this Section 4.1 with respect to such refund and not previously reimbursed) to
the Company, net of all out-of-pocket expenses of such Lender or the
Administrative Agent and without any interest.
(g) The Company shall not be required to pay additional
amounts to the Administrative Agent or any Lender pursuant to this Section 4.1
to the extent that the obligation to pay such additional amounts would not have
arisen but for a failure by the Administrative Agent or such Lender to comply
with Section 10.10.
4.2 Illegality. (a) After the date hereof, if any Lender determines
that the introduction of any Requirement of Law, or any change in any
Requirement of Law, or in the interpretation or administration of any
Requirement of Law, has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for such Lender or its
applicable Lending Office to make Offshore Rate Loans, then, on notice thereof
by the Lender to the Company through the Administrative Agent, any obligation of
such Lender to make Offshore Rate Loans shall be suspended until such Lender
notifies the Administrative Agent and the Company that the circumstances giving
rise to such determination no longer exist.
(b) After the date hereof, if a Lender determines that it is
unlawful to maintain any Offshore Rate Loan, the Company shall, upon its receipt
of notice of such fact and demand from such Lender (with a copy to the
Administrative Agent), prepay in full such Offshore Rate Loan, together with
interest accrued thereon and any amount required under Section 4.4, either on
the last day of the Interest Period thereof, if such Lender may lawfully
continue to maintain such Offshore Rate Loan to such day, or on such earlier
date on which such Lender may no longer lawfully continue to maintain such
Offshore Rate Loan (as determined by such Lender). If the Company is required to
so prepay any Offshore Rate Loan, then concurrently with such prepayment, the
Company shall borrow from the affected Lender, in the amount of such repayment,
a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain
Offshore Rate Loans has been terminated or suspended pursuant to subsection (a)
or (b) above, all Loans which would otherwise be made by such Lender as Offshore
Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Administrative Agent or
demand upon the Company under this Section, the affected Lender shall designate
a different Lending Office with respect to its Offshore Rate Loans if such
designation will avoid the need for giving such notice or making such demand and
will not, in the sole judgment of such Lender, be illegal or otherwise
disadvantageous to such Lender.
-68-
<PAGE> 77
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.
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;
-69-
<PAGE> 78
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.7;
(d) the prepayment (including pursuant to Section 2.8) or other
payment (including after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under subsection 2.4(a) of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of the
relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Lenders under this Section and
under subsection 4.3(a), each Offshore Rate Loan made by a Lender (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the IBOR used in determining the Offshore Rate for
such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
4.5 Inability to Determine Rates. If the Administrative Agent
determines that for any reason adequate and reasonable means do not exist for
determining the Offshore Rate for any requested Interest Period with respect to
a proposed Offshore Rate Loan, or the Required Lenders determine (and notify the
Administrative Agent) that the Offshore Rate applicable pursuant to subsection
2.10(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to such Lenders of
funding such Loan, the Administrative Agent will promptly so notify the Company
and each Lender. Thereafter, the obligation of the Lenders to make or maintain
Offshore Rate Loans hereunder shall be suspended until the Administrative Agent,
with the consent of the Required Lenders, revokes such notice in writing. Upon
receipt of such notice, the Company may revoke any Notice of Borrowing or Notice
of Conversion/Continuation then submitted by it. If the Company does not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by the Company, in the amount specified in the applicable notice submitted by
the Company, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans.
4.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article IV shall deliver to the Company (with a copy to
the Administrative Agent) a certificate setting forth in reasonable detail the
basis for such claim and a calculation of the amount payable to such Lender and
such certificate shall be prima facie evidence thereof.
4.7 Substitution of Lenders. In the event the Company becomes obligated
to pay additional amounts to any Lender pursuant to Section 4.3 or the
circumstances described in Section 4.2 exist with
-70-
<PAGE> 79
respect to any Lender, the Company may designate another Lender (with such other
Lender's consent) which is acceptable to the Administrative Agent, the Issuing
Lender and the Swingline Lender in their sole discretion (such other Lender
being herein called a "Replacement Lender") to purchase the Loans of such Lender
and such Lender's rights hereunder, without recourse to or warranty by, or
expense to, such Lender for a purchase price equal to the outstanding principal
amount of the Loans payable to such Lender plus any accrued but unpaid interest
on such Loans and accrued but unpaid commitment fees in respect of such Lender's
Commitments and any other amounts payable to such Lender under this Agreement,
and to assume all the obligations of such Lender hereunder, and, upon such
purchase, such Lender shall no longer be a party hereto or have any rights
hereunder (other than indemnities and other similar rights applicable to such
Lender prior to the date of such assignment and assumption) and shall be
relieved from all obligations to the Company hereunder, and the Replacement
Lender shall succeed to the rights and obligations of such Lender hereunder;
without limiting the generality of the foregoing, the Replacement Lender or the
Company shall bear the processing fee referred to in subsection 11.8(a) in any
such substitution.
4.8 Survival. The agreements and obligations of the Company in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Effectiveness. This Agreement shall become effective
on the date (the "Restatement Date") each of the conditions precedent set forth
in this Section 5.1 has been satisfied or waived with the consent of the
Required Lenders (or, with respect to subsection 5.1(f), with the consent of the
Persons entitled to receive payment). The effectiveness of this Agreement is
subject to the conditions that the Administrative Agent shall have received all
of the following, in form and substance satisfactory to each Agent and each
Lender, and (except for the Notes) in sufficient copies for the Administrative
Agent and each Lender:
(a) Credit Agreement. This Agreement executed by the Company and
the Required Revolving Lenders, the Required Term A Lenders and the Required
Term B Lenders.
(b) Incumbency. A certificate of the Secretary or an Assistant
Secretary of the Company, Parent and Mike Mac certifying the names and true
signatures of the officers of such Person authorized to execute, deliver and
perform this Agreement and all other Loan Documents to be delivered by it
hereunder.
(c) Organization Documents; Good Standing. Each of the following
documents:
-71-
<PAGE> 80
(i) for the Company, Parent and Mike Mac, the articles or
certificate of incorporation and the bylaws of each such Person, as the
case may be, as in effect on the Restatement Date, certified by the
Secretary or Treasurer of such Person, as of the Restatement Date; and
(ii) a good standing certificate for the Company, Parent and
Mike Mac from the Secretary of State (or similar applicable
Governmental Authority) of the jurisdiction of its organization.
(d) Legal Opinions.
(i) An opinion of Gibson, Dunn & Crutcher LLP, special counsel
to the Company, Parent and Mike Mac, substantially in the form of
Exhibit I-1, and
(ii) An opinion of William R. Sawyers, General Counsel to the
Company and Parent and counsel to Mike Mac, substantially in the form
of Exhibit I-2.
(e) Notes. Notes payable to the order of each of the Lenders who
have requested a Note under subsection 2.2(b) (collectively, the "New Notes").
(f) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Restatement Date, together with Attorney Costs of the Administrative
Agent and 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) Confirmation. A confirmation from Parent and Mike Mac,
substantially in the form of Exhibit T hereto.
(h) Certificate. A certificate signed by a Responsible Officer,
dated as of the Restatement Date, stating that:
(i) the representations and warranties contained in Article VI
are true and correct in all material respects on and as of such date,
as though made on and as of such date;
(ii) no Event of Default or Unmatured Event of Default exists
or will result from the effectiveness of this Agreement; and
-72-
<PAGE> 81
(iii) no event or circumstance has occurred since June 30,
1999 that has resulted, or would reasonably be expected to result, in a
Material Adverse Effect.
(i) Other Documents. Such other approvals, opinions, documents or
materials as any Agent or any Lender may reasonably request.
5.2 Conditions to All Credit Extensions. The obligation of each Lender
to make any Loan to be made by it and the obligation of the Issuing Lender to
Issue any Letter of Credit is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or Issuance Date:
(a) Notice, Application. In the case of any Loan, the
Administrative Agent shall have received a Notice of Borrowing and, in the case
of any Issuance of any Letter of Credit, the Issuing Lender and the
Administrative Agent shall have received an L/C Application or L/C Amendment
Application, as required under Section 3.2.
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct in all
material respects on and as of such Borrowing Date or Issuance Date with the
same effect as if made on and as of such Borrowing Date or Issuance Date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date).
(c) No Existing Default. No Event of Default or Unmatured Event
of Default shall exist or shall result from such Borrowing or Issuance.
Each Notice of Borrowing and L/C Application or L/C Amendment Application
submitted by the Company hereunder shall constitute a representation and
warranty by the Company hereunder, as of the date of such notice and as of the
applicable Borrowing Date or Issuance Date, that the conditions in this Section
5.2 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
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;
-73-
<PAGE> 82
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals (i) to own its assets and to carry on its
business and (ii) to execute, deliver and perform its obligations under the Loan
Documents;
(c) is duly qualified as a foreign corporation and is licensed
and in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification or license; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (b)(i), (c) or (d), to the extent
that the failure to do so would not reasonably be expected to have a Material
Adverse Effect.
6.2 Corporate Authorization; No Contravention. The execution and
delivery by the Company of this Agreement and each other Loan Document to which
it is a party, the Borrowings hereunder, the execution and delivery by Parent
and each Subsidiary of each Loan Document to which it is a party, the
performance by each of the Company, Parent and each Subsidiary of its
obligations under each Loan Document to which it is a party and the incurrence
of the Obligations (i) are within the corporate powers of the Company, Parent
and each Subsidiary, as applicable, (ii) have been duly authorized by all
necessary corporate action on the part of the Company, Parent and each
Subsidiary (including any necessary shareholder action) and (iii) do not and
will not:
(a) contravene the terms of any of the Organization Documents of
the Company, Parent or any Subsidiary;
(b) conflict with or result in a breach or contravention of, or
the creation of any Lien (other than Liens in favor of the Administrative Agent)
under, any document evidencing any Contractual Obligation to which the Company,
Parent or any Subsidiary is a party or any order, injunction, writ or decree of
any Governmental Authority to which the Company, Parent, any Subsidiary or any
of their properties are subject; or
(c) violate any Requirement of Law.
6.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required for the execution, delivery or
performance by, or enforcement against, (i) the Company 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.
-74-
<PAGE> 83
6.4 Binding Effect. This Agreement and each other Loan Document to
which the Company is a party constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability; and with respect to Parent and
each Subsidiary, each Loan Document to which such Person is a party constitutes
the legal, valid and binding obligation of such Person, enforceable against such
Person in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally and by equitable principles relating to
enforceability.
6.5 Litigation. Except as specifically disclosed in Schedule 6.5, there
are no actions, suits, proceedings, claims or disputes pending or, to the best
knowledge of the Company, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against Parent, the Company or
any Subsidiary or any of their respective properties which: (a) purport to
affect or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby or thereby; or (b) would reasonably be expected
to have a Material Adverse Effect. No injunction, writ, temporary restraining
order or other order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution, delivery
or performance of this Agreement or any other Loan Document, or directing that
the transactions provided for herein or therein not be consummated as herein or
therein provided.
6.6 No Default. No Event of Default or Unmatured Event of Default
exists or would result from the incurring of any Obligations by the Company. As
of the 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.
(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
-75-
<PAGE> 84
no prohibited transaction or violation of the fiduciary responsibility rules
with respect to any Plan which has resulted or would reasonably be expected to
result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur that would reasonably be expected to have a Material Adverse Effect; (ii)
no contribution failure has occurred with respect to a Pension Plan sufficient
to give rise to a Lien under Section 302(f) of ERISA; and (iii) except for
liability the Company has incurred under the agreement between the Company and
the PBGC, dated April 7, 1997, as amended, neither the Company nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any material liability
to the PBGC under Title IV of ERISA with respect to any Pension Plan.
6.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Sections 7.13
and 8.7. Neither the Company nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.9 Title to Properties. Each of the Company and each Subsidiary has
good record and marketable title in fee simple to, or a valid leasehold interest
in, all real property necessary or used in the ordinary conduct of its
businesses, except for such defects in title as would not, individually or in
the aggregate, have a Material Adverse Effect. Each of the Company and each
Subsidiary has good title to all their other respective material properties and
assets (except for those assets disposed of not in violation of this Agreement
and the other Loan Documents and except for encumbrances and title defects that
would not be reasonably likely to have a Material Adverse Effect). As of the
Restatement Date, the property of the Company and its Subsidiaries is subject to
no Liens, other than Permitted Liens.
6.10 Taxes. Parent, the Company and its Subsidiaries have filed all
Federal and State income tax returns and all other material tax returns and
reports required to be filed, and have paid all Federal and State income taxes
and all other material taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP. There is no proposed tax assessment against Parent, the Company or
any Subsidiary that would, if made, have a Material Adverse Effect. The Tax
Sharing Agreement is the only agreement among Parent, the Company and its
Subsidiaries regarding tax sharing, tax reimbursement or tax indemnification.
6.11 Financial Condition. (a) The audited consolidated financial
statements of Parent dated June 30, 1997, June 30, 1998 and June 30, 1999, and
the related consolidated statements of income or operations, shareholders'
equity and cash flows for the fiscal periods ended on such dates:
-76-
<PAGE> 85
(i) were prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, except as otherwise expressly
noted therein;
(ii) present fairly the financial condition of Parent and its
Subsidiaries as of the dates thereof and results of operations for the
periods covered thereby; and
(iii) except as specifically disclosed in Schedule 6.11, show
all material indebtedness and other liabilities, direct or contingent,
of Parent and its Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent Obligations,
to the extent required by GAAP to be shown on such financial
statements.
(b) Since June 30, 1999, 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 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,
-77-
<PAGE> 86
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 Restatement Date (or, in the case of any
Person that becomes a party to any Loan Document after the Restatement Date, on
the date such Person becomes such a party), and immediately prior to and after
giving effect to the Issuance of each Letter of Credit and each Borrowing
hereunder and the use of the proceeds thereof, (a) each of the Company, Parent
and each Material Subsidiary will not have an unreasonably small capital, (b)
each of the Company'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 liabilities,
respectively, of each of the Company, Parent and each Material Subsidiary.
6.18 Real Property. Set forth on Schedule 6.18 is a complete and
accurate list, as of the Restatement Date, of the address and legal description
of any real property owned by the Company or any Subsidiary.
6.19 Swap Obligations. Neither the Company nor any of its Subsidiaries
has incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations. The Company has undertaken its own independent
assessment of its consolidated assets, liabilities and commitments and has
considered appropriate means of mitigating and managing risks associated with
such matters and has not relied on any swap counterparty or any Affiliate of any
swap counterparty in determining whether to enter into any Swap Contract.
6.20 Senior Indebtedness. The Company's obligation to pay the
Obligations, including interest thereon and all fees, costs, expenses and
indemnities related thereto, constitutes "Designated Senior Debt" of the Company
as such term is defined in the 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
-78-
<PAGE> 87
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.
6.21 Environmental Warranties. Except as set forth in Schedule 6.21:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Company or any of its Subsidiaries are in
compliance with all Environmental Laws, except for such non-compliance as would
not reasonably be expected to result in a Material Adverse Effect;
(b) there are no pending or, to the best knowledge of the
Company, threatened Environmental Claims, except for such Environmental Claims
that are not reasonably likely, either singly or in the aggregate, to result in
a Material Adverse Effect;
(c) there have been no Releases of Hazardous Materials at, on or
under any property now or, to the best of the Company's knowledge, previously
owned or leased by the Company or any of its Subsidiaries that, singly or in the
aggregate, have, or may reasonably be expected to have, a Material Adverse
Effect;
(d) the Company and its Subsidiaries have been issued and are in
compliance with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters and necessary or desirable for
their businesses, except to the extent that the failure to have or comply with
such permits, certificates, approvals, licenses and other authorizations
relating to environmental matters would not be reasonably likely to have a
Material Adverse Effect;
(e) no property now or, to the best of the Company's knowledge,
previously owned or leased by the Company or any of its Subsidiaries is listed
or proposed for listing (with respect to owned property only) on the National
Priorities List pursuant to CERCLA, or, to the best of the Company's knowledge,
is on the CERCLIS or on any similar state list of sites requiring investigation
or clean-up, except, in each case, for any such listing that, singly or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
and
(f) to the best of the Company's knowledge, neither the Company
nor any Subsidiary of the Company has directly transported or directly arranged
for the transportation of any Hazardous Material to any location which is listed
or proposed for listing on the National Priorities List pursuant to CERCLA, or
which is the subject of Federal, state or local enforcement actions or other
investigations which may lead to Environmental Claims against the Company or
such Subsidiary except, in each case, to the extent that the foregoing would not
reasonably be expected to have a Material Adverse Effect.
-79-
<PAGE> 88
6.22 Year 2000. The Company has reviewed the areas within the business
and operations of the Company and each Subsidiary which could be adversely
affected by, and have developed programs to address on a timely basis, the "Year
2000 Problem" (that is, the risk that computer applications, as well as embedded
microchips in non-computing devices, used by the Company or any Subsidiary may
be unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999). Based on such
review and program, the Company reasonably believes that the "Year 2000 Problem"
will not result in 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 prepared (it
being understood that projections are subject to significant uncertainties and
contingencies, many of which are beyond the Company's control, and that no
assurance can be given that the projections will be realized).
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
-80-
<PAGE> 89
year and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, and accompanied by
(i) the opinion of a nationally-recognized independent public accounting firm
(the "Independent Auditor"), which report (x) shall state that such consolidated
financial statements present fairly the consolidated financial position of
Parent and its Subsidiaries for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years and (y) shall not be qualified or
limited because of a restricted or limited examination by the Independent
Auditor of any material portion of Parent's or any of its Subsidiary's records
and (ii) a comparison with the budget for such fiscal year;
(b) Promptly when available, and in any event within 30 days
after the end of each month that is not the end of a fiscal quarter, and within
45 days after the end of each month that is the end of a fiscal quarter (other
than the last month of each fiscal year), a copy of the unaudited consolidated
balance sheet of Parent and its Subsidiaries as of the end of such month and the
related consolidated statements of income, shareholders' equity and cash flows
for the period commencing on the first day and ending on the last day of such
month, including a comparison with the corresponding month and period of the
previous fiscal year and a comparison with the budget for such month and for
such period of the current fiscal year, together with a certificate of a
Responsible Officer of the Company that each such statement fairly presents the
financial condition and results of operations (subject to normal year-end audit
adjustments) of Parent and its Subsidiaries and has been prepared in accordance
with GAAP consistently applied; and
(c) Not later than 60 days after the end of each fiscal year, a
copy of the projections of Parent of the consolidated operating budget and cash
flow budget of Parent and its Subsidiaries for the succeeding fiscal year
(including an explanation of the assumptions used in preparing such budgets),
such projections to be accompanied by a certificate of a Responsible Officer of
the Company to the effect that (i) such projections were prepared by the Company
in good faith, (ii) the Company has a reasonable basis for the assumptions
contained in such projections and (iii) such projections have been prepared
according to such assumptions.
7.2 Certificates; Other Information. The Company shall furnish to the
Administrative Agent (and the Administrative Agent will promptly distribute
copies of the same to the Lenders):
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Event of Default or Unmatured Event of Default, except as
specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a) and each set of quarterly statements referred
to in subsection 7.1(b), a Compliance Certificate executed by a Responsible
Officer;
-81-
<PAGE> 90
(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
(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:
-82-
<PAGE> 91
(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) other than payments permitted by subsection 8.16(g), any
proposed payment of principal of Subordinated Debt prior to the making thereof;
and
(g) upon the request from time to time of the Administrative
Agent, the Swap Termination Values, together with a description of the method by
which such values were determined, relating to any then-outstanding Swap
Contracts to which the Company or any of its Subsidiaries is party.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 7.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or any other Loan Document that have been breached
or violated.
7.4 Preservation of Corporate Existence, Etc. The Company shall, 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.
-83-
<PAGE> 92
7.5 Maintenance of Property. The Company shall, and shall cause each
Subsidiary to, maintain and preserve all property material to the normal conduct
of its business in good working order and condition, ordinary wear and tear
excepted, other than obsolete, worn out or surplus equipment.
7.6 Insurance. The Company shall, and shall cause each Subsidiary to,
maintain with financially sound and reputable independent insurers, insurance
with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.
7.7 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable,
unless the same are being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained by the Company or
such Subsidiary in respect thereof, all of its obligations and liabilities,
including:
(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
-84-
<PAGE> 93
equipment, to perform appraisals of any of their equipment, and to inspect,
audit, check and make copies and/or extracts from the books, records, computer
data and records, computer programs, journals, orders, receipts, correspondence
and other data relating to Inventory, Accounts Receivable, contract rights,
general intangibles, equipment and any other Collateral, or relating to any
other transactions between the parties hereto; at such reasonable times during
normal business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Company; provided, however, that when an Event of Default
exists, the Administrative Agent or any Lender may do any of the foregoing
without advance notice. After the occurrence and during the continuance of an
Event of Default, any such inspection shall be at the Company's expense.
7.11 Interest Rate Protection. The Company shall either (i) maintain in
effect the interest rate protection agreements put in place in connection with
Section 7.11 of the Original Credit Agreement and Section 7.11 of the Existing
Credit Agreement for the remainder of their respective terms or (ii) enter into
and thereafter maintain one or more Permitted Swap Obligations in replacement of
the Swap Obligations referred to in clause (i) for a notional amount at least
equal to the notional amount of the Swap Obligations replaced, on terms no less
favorable to the Company than those pertaining to the Swap Obligations replaced,
for a term at least equal to the remaining terms of the Swap Obligations
replaced, and on an ISDA standard form with one or more Lenders or Affiliates
thereof or with counterparties reasonably acceptable to the Administrative
Agent; provided that nothing in this Section shall require the Company to obtain
or maintain any interest rate protection mechanism beyond the term of the
Permitted Swap Obligations referred to in clause (i) above in effect on the
Restatement Date.
7.12 Environmental Covenant. The Company will, and will cause each of
its Subsidiaries to,
(a) use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance therewith, and
handle all Hazardous Materials in material compliance with all applicable
Environmental Laws;
(b) promptly notify the Administrative Agent and provide copies
of all written material Environmental Claims, and act in a diligent and prudent
fashion to address such Environmental Claims, including Environmental Claims
that allege that the Company or any of its Subsidiaries is not in compliance
with Environmental Laws; and
(c) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to evidence
compliance with this Section 7.12.
7.13 Use of Proceeds. The Company shall use the proceeds of the Loans
and the Letters of Credit for working capital and other general corporate
purposes not in contravention of any Requirement of Law or of any Loan Document;
provided that Revolving Loans may be used to finance Acquisitions permitted in
accordance with subsection 8.4(i).
-85-
<PAGE> 94
7.14 Further Assurances. (a) The Company shall, and shall cause each
Subsidiary to, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register, any and all such further acts, deeds, conveyances,
security agreement, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments the
Administrative Agent or the Required Lenders, as the case may be, may reasonably
request from time to time in order (1) to ensure that (i) the obligations of the
Company 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 all leasehold interests of the Company or any
Subsidiary of real property that is used for distribution or warehousing and has
aggregate improvements of 100,000 square feet or greater and such other leased
properties as the Administrative Agent may reasonably request; provided,
however, that such best efforts obligation shall not require the Company or any
Subsidiary to make any payment of money or property.
(b) If at any time (x) there are Subsidiaries that are not
parties to the Subsidiary Security Agreement or the Subsidiary Guaranty and (y)
(i) the aggregate assets of such Subsidiaries exceed 5% of the consolidated
assets of the Company and its Subsidiaries, (ii) the aggregate revenues of such
Subsidiaries for any fiscal quarter exceed 5% of the consolidated revenues of
the Company and its Subsidiaries for such period or (iii) the aggregate
investments of the Company and its other Subsidiaries in and advances to such
Subsidiaries exceed 5% of the consolidated assets of the Company and its
Subsidiaries, then the Company shall cause one or more Subsidiaries that are not
then parties to the Subsidiary Security Agreement and/or the Subsidiary Guaranty
to execute and deliver to the Administrative Agent counterparts to such
agreements and become parties thereto such that the
-86-
<PAGE> 95
circumstances described in the foregoing clauses (y)(i), (y)(ii) and (y)(iii) do
not exist, and in connection with such execution and delivery the Company shall
cause to be delivered to the Administrative Agent such opinions of counsel and
other supporting documentation in respect thereof as the Administrative Agent
shall reasonably request.
(c) The Company shall cause each financial institution at which
Parent, the Company or any Domestic Subsidiary maintains any lockbox, deposit
account or other similar account to deliver to the Administrative Agent and the
Company a writing, in form and substance satisfactory to the Administrative
Agent, acknowledging and consenting to the security interest of the
Administrative Agent in such lockbox or account and all cash, checks, drafts and
other instruments or writings for the payment of money from time to time
therein, confirming such financial institution's agreement to follow the
instructions of the Administrative Agent with respect to all such cash, checks,
drafts and other instruments or writings for the payment of money following the
occurrence of any Event of Default or Unmatured Event of Default of the type
specified in subsection 9.1(f) or (g) and waiving all rights of setoff and
banker's lien on all items held in any such lockbox or account. With respect to
each of the accounts held at First State Bank Lake Lillian and listed on
Schedule V of the Security Agreement (Company and Parent), the Company shall not
be obligated to obtain an agreement from such bank covering such account and
satisfying the requirements of the immediately preceding sentence so long as the
amount in such account is less than $5,000; provided, however, that
notwithstanding the foregoing, upon the occurrence of an Event of Default or
Unmatured Event of Default or at the request of Administrative Agent, the
Company shall have 30 days to obtain an agreement covering each of the accounts
referred to in this sentence and satisfying the requirements of the immediately
preceding sentence.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Required Lenders waive compliance in
writing:
8.1 Limitation on Liens. The Company 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;
-87-
<PAGE> 96
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 7.7, provided that no
notice of lien has been filed or recorded under the Code;
(d) growers', carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which are not delinquent or which are being contested in good faith
and by appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on property of the Company or any Subsidiary securing
(i) the non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, (ii) surety bonds (excluding
appeal bonds and other bonds posted in connection with court proceedings or
judgments) and (iii) other non-delinquent obligations of a like nature, in each
case, incurred in the ordinary course of business, provided that all such Liens
in the aggregate would not (even if enforced) cause a Material Adverse Effect;
(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 $***;
-88-
<PAGE> 97
(j) Liens securing obligations in respect of capital leases on
assets subject to such leases (and secured by only the assets subject to such
leases) (provided that such capital leases are otherwise permitted hereunder) or
Liens on property sold in a Sale/Leaseback Transaction provided that such Liens
shall cover only the property subject to such Sale/Leaseback Transaction and the
amount of Indebtedness secured thereby shall not exceed the fair market value of
the property sold;
(k) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution, provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution;
(l) Liens in connection with a Permitted Receivables Facility;
(m) Liens under Permitted Security Agreements;
(n) Liens securing Acquired Indebtedness permitted by subsection
8.5(k), provided that such Liens were in existence prior to the contemplation of
the related Acquisition and do not extend to any assets other than the property
financed with such Acquired Indebtedness;
(o) Liens, defects and other matters specifically disclosed on
the title insurance policies delivered to and accepted by the Administrative
Agent on the Closing Date in connection with properties subjected to a Mortgage
on the Closing Date;
(p) extensions, renewals and replacements of Liens referred to in
clauses (a) through (o) above, provided that any such extension, renewal or
replacement Lien is limited to the property or assets covered by the Lien
extended, renewed or replaced and does not secure any Indebtedness in addition
to that secured immediately prior to such extension, renewal or replacement; and
(q) Liens securing other Indebtedness of the Company and its
Subsidiaries not expressly permitted by clauses (a) through (p) above; provided
that the aggregate amount of the Indebtedness secured by Liens permitted
pursuant to this clause (q) does not exceed $*** in the aggregate outstanding at
any time.
8.2 Disposition of Assets. The Company shall not, and shall not permit
any Subsidiary to, directly or indirectly, sell, assign, lease, convey, transfer
or otherwise dispose of (whether in one or a series of transactions) any
property (including accounts and notes receivable, with or without recourse) or
enter into any agreement to do any of the foregoing, except:
-89-
<PAGE> 98
(a) dispositions of Inventory, or worn-out or surplus equipment,
all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment, unless such equipment is not
needed in the Company's or such Subsidiary's business;
(c) transfers of Accounts Receivable under a Permitted
Receivables Facility;
(d) dispositions not otherwise permitted hereunder (including the
disposition of all of the capital stock of any operating Subsidiary by sale of
stock or by merger of such Subsidiary with or into another Person but excluding
any Sale/Leaseback Transaction) which are made for fair market value if the fair
market value of all assets so disposed of by the Company and its Subsidiaries
under this clause (d) since the Closing Date does not exceed $*** in the
aggregate; provided that (i) at the time of any disposition, no Event of Default
or Unmatured Event of Default shall exist or will result from such disposition,
(ii) at least 75% of the consideration received by the Company or such
Subsidiary from such disposition is in cash or Cash Equivalent Investments,
(iii) the proceeds thereof are applied as provided in subsection 2.8(a) and (iv)
the fair market value of the Company's Arlington Plant #113 and Stockton Plant
#33 shall not count towards the foregoing $*** amount;
(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 (including by means of a Sale/Leaseback
Transaction) of Assets Held for Sale which are made for fair market value;
(g) dispositions of assets for not less than fair market value in
Sale/Leaseback Transactions permitted under Section 8.18 (provided that the fair
market value of all property sold pursuant to this clause (g) may not exceed
$***); and
(h) dispositions of assets not exceeding $*** 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
-90-
<PAGE> 99
is the survivor of such merger) and (iii) any Subsidiary may be merged with or
into any other Person in a transaction permitted by subsection 8.2(d).
8.4 Loans and Investments. The Company shall not, and shall not permit
any Subsidiary to, purchase or acquire, or make any commitment to purchase or
acquire, any capital stock, equity interest or other obligations or securities
of, or any interest in, any other Person, or make or commit to make any
Acquisition, or make or commit to make any advance, loan, extension of credit or
capital contribution to or any other investment in, any other Person, except
for:
(a) investments in Cash Equivalent Investments;
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(c) investments by the Company in its Wholly-Owned Subsidiaries
or by any Subsidiary in any Wholly-Owned Subsidiary, in the form of
contributions to capital or loans or advances; provided that, immediately before
and after giving effect to such investment, no Event of Default or Unmatured
Event of Default shall have occurred and be continuing and the aggregate amount
invested in Foreign Subsidiaries after the Closing Date shall not exceed $***;
(d) loans or advances made by any Subsidiary to the Company;
(e) loans and advances to employees in the ordinary course of
business (such as travel advances) in an aggregate amount not at any time
exceeding $***;
(f) investments by the Company and its Subsidiaries in Joint
Ventures in the form of contributions of capital, loans, advances or Contingent
Obligations; provided that, immediately before and after giving effect to such
investment, (x) no Event of Default or Unmatured Event of Default shall have
occurred and be continuing, including pursuant to Section 8.9, and (y) the
aggregate amount of all investments pursuant to this clause (f) shall not exceed
$*** in the aggregate (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 $***
during the term of this Agreement (with all such investments valued at the time
of investment at the cash amount thereof, if in cash, the fair market value
thereof as determined by the board of directors of the Company, if in property,
and at the maximum amount thereof if in Contingent Obligations);
-91-
<PAGE> 100
(i) Acquisitions, provided that
(i) the Company shall have delivered to the Administrative
Agent evidence in form and substance satisfactory to the
Administrative Agent that the financial conditions referred to in
clause (ii) below with respect to such Acquisition will be
satisfied, together with a statement of a Responsible Officer of
the Company detailing all amounts required to consummate the
prospective Acquisition and a business description and summary of
terms of the prospective Acquisition,
(ii) the Company shall be in compliance with all financial
covenants in Sections 8.11, 8.12, 8.13 and 8.14 on a pro forma
basis for the period of four consecutive fiscal quarters ending
on the last day of the last completed fiscal quarter immediately
preceding the proposed date of consummation of the prospective
Acquisition (on the assumption such Acquisition occurred on the
first day of such four fiscal quarter period and using historical
results of the Company and its Subsidiaries and the related
Acquisition Prospect for such period, 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
(vi) the total consideration for all such Acquisitions
(including cash and noncash purchase price, liabilities assumed,
deferred or financed purchase price, purchase price characterized
as noncompetition payments and the like), together with the
amount of all investments made pursuant to subsection 8.4(j),
does not exceed in the aggregate during the term of this
Agreement an amount equal to the sum of (x) $*** plus (y) an
amount equal to the aggregate amount received by the Company as
capital contributions from Parent after the Closing Date;
-92-
<PAGE> 101
(j) investments in Subsidiaries acquired in Acquisitions
permitted under subsection 8.4(i) that are not Wholly-Owned Subsidiaries,
provided that the amount of all such investments, together with the aggregate
total consideration paid in connection with all Acquisitions permitted by
subsection 8.4(i) (calculated in the manner set forth in subsection 8.4(i)(vi)),
does not exceed in the aggregate during the term of this Agreement an amount
equal to the sum of (x) $*** plus (y) an amount equal to the aggregate amount
received by the Company as capital contributions from Parent after the Closing
Date; and
(k) Investments in existence on the Restatement Date which are
set forth on Schedule 8.4.
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 any Qualified Notes issued in a
Qualified Refinancing and related Guaranty Obligations by Subsidiaries of the
Company;
(c) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 8.8;
(d) Indebtedness existing on the Closing Date, as set forth in
Schedule 8.5(d), and extensions, renewals or replacements of such Indebtedness
to the extent that the principal amount of such Indebtedness is not increased;
(e) Indebtedness of Subsidiaries to the Company or Wholly-Owned
Subsidiaries; provided, that the aggregate amount of all such Indebtedness of
Foreign Subsidiaries and other investments by the Company and its Subsidiaries
in Foreign Subsidiaries shall not exceed $***;
(f) Indebtedness up to $*** outstanding at any time secured by
Liens permitted by subsection 8.1(i);
(g) Indebtedness incurred in connection with leases permitted
pursuant to Section 8.10;
(h) Indebtedness of the Company or any Subsidiary of the Company
in connection with guaranties resulting from endorsement of negotiable
instruments in the ordinary course of business;
-93-
<PAGE> 102
(i) surety bonds and appeal bonds required in the ordinary course
of business or in connection with the enforcement of rights or claims of the
Company or in connection with judgments that do not result in an Unmatured Event
of Default or an Event of Default;
(j) any Indebtedness arising under a Permitted Receivables
Facility;
(k) up to $*** of Acquired Indebtedness assumed in Acquisitions
permitted under subsection 8.4(i);
(l) Indebtedness incurred in a Sale/Leaseback Transaction
permitted under Section 8.18; and
(m) other Indebtedness in an aggregate amount not at any time
exceeding $***.
It is understood that any Indebtedness borrowed in a foreign currency shall
continue to be permitted under this Section, notwithstanding any fluctuation in
the Dollar Amount of such Indebtedness, as long as the outstanding principal
balance of such Indebtedness (denominated in its original currency) does not
exceed the maximum amount of such Indebtedness (denominated in such currency)
permitted to be outstanding on the date such Indebtedness was incurred.
8.6 Transactions with Affiliates. The Company shall not, and shall not
permit any Subsidiary to, enter into any transaction with any Affiliate of the
Company (other than a Material Subsidiary), except upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would be
obtainable in a comparable arm's-length transaction with a Person not an
Affiliate of the Company; provided that the TPG Agreements and the Tax Sharing
Agreement shall not violate this Section.
8.7 Use of Proceeds. The Company shall not, and shall not permit any
Subsidiary to, use any portion of the proceeds of any Loan or any Letter of
Credit, directly or indirectly, (i) to 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;
-94-
<PAGE> 103
(c) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed on Schedule 8.8 and Guaranty
Obligations by the Company relating to Indebtedness of Wholly-Owned
Subsidiaries, provided, that all Contingent Obligations permitted by this
subsection 8.8(c) shall not exceed $*** at any one time;
(d) Contingent Obligations arising under the Loan Documents;
(e) Guaranty Obligations with respect to or constituting
obligations of the Company or a Wholly-Owned Subsidiary that are permitted by
the Loan Documents; 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 $***; provided,
however, that for purposes of determining the aggregate amount invested in Joint
Ventures hereunder (x) any return of principal or equity received in cash on any
amount invested hereunder and (y) the fair market value of any other property
received in exchange for any amount invested hereunder shall be deducted.
8.10 Lease Obligations. The Company shall not, and shall not permit any
Subsidiary to, create or suffer to exist any obligations for the payment of rent
for any property under lease or agreement to lease, except for:
(a) leases of the Company and its Subsidiaries in existence on
the Closing Date and any renewal, extension or refinancing thereof;
(b) operating leases entered into by the Company or any
Subsidiary after the Closing Date in the ordinary course of business;
(c) capital leases entered into by the Company or any Subsidiary,
provided that no Event of Default or Unmatured Event of Default has occurred and
is continuing or will result from the incurrence of the obligations contemplated
thereby; and
(d) operating leases entered into by the Company or any
Subsidiary in connection with any Sale/Leaseback Transaction permitted under
Section 8.18, provided that no Event of Default
-95-
<PAGE> 104
or Unmatured Event of Default has occurred and is continuing or will result
from the incurrence of the obligations contemplated thereby.
8.11 Minimum Fixed Charge Coverage. The 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>
Restatement Date - 3/26/00 ***:1.00
6/30/00 - 3/31/01 ***:1.00
6/30/01 - 3/31/02 ***:1.00
6/30/02 - 3/31/03 ***:1.00
6/30/03 - 3/31/04 ***:1.00
6/30/04 and thereafter ***:1.00.
</TABLE>
8.12 Minimum Adjusted Net Worth. The Company will not permit at
any time (i) Net Worth at such time plus $*** to be less than (ii) (a) $*** plus
(b) ***% of cumulative Consolidated Net Income of Parent for the period
beginning on January 3, 2000 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), plus (c) ***% of
the Net Cash Proceeds of any issuance of any equity securities of Parent, the
Company or any Subsidiary after the Restatement Date; provided that no Event of
Default shall arise by reason of clause (i) above being less than clause (ii)
above if, within ten days of the occurrence of any such deficiency, Parent
receives a capital contribution from its shareholders at least equal to the
amount of such deficiency and Parent in turn makes a capital contribution of
such amount to the Company.
8.13 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:
-96-
<PAGE> 105
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Restatement Date - 3/26/00 ***:1.00
6/30/00 - 3/31/01 ***:1.00
6/30/01 - 3/31/02 ***:1.00
6/30/02 - 3/31/03 ***:1.00
6/30/03 and thereafter ***:1.00.
</TABLE>
8.14 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>
6/30/00 ***:1.00
6/30/01 ***:1.00
each fiscal year thereafter ***:1.00.
</TABLE>
8.15 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:
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------
<S> <C>
6/30/00 $***
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) ***% 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.
8.16 Restricted Payments. The Company shall not, and shall not permit
any Subsidiary to, (1) declare or make any dividend payment or other
distribution of assets, properties, cash, rights,
-97-
<PAGE> 106
obligations or securities on account of any shares of any class of its capital
stock, or purchase, redeem or otherwise acquire for value any shares of its
capital stock or any warrants, rights or options to acquire such shares, now or
hereafter outstanding, or (2) make any redemptions, prepayments, defeasances or
repurchases of any Subordinated Debt except that:
(a) any Subsidiary may declare and pay dividends to the Company
or a Wholly-Owned Subsidiary;
(b) the Company may declare and make dividend payments or other
distributions payable solely in Common Stock;
(c) the Subordinated Notes may be repaid using the Net Cash
Proceeds of a Qualified Refinancing;
(d) the Company or any of its Subsidiaries may purchase (or may
pay a dividend to Parent to enable Parent to purchase) (i) capital stock or
options with respect to capital stock held by employees or management of Parent
or any of its Subsidiaries in connection with the termination of employment of
any such employees or management and (ii) capital stock for the purpose of
holding such capital stock for future issuance under an employee stock plan,
provided that all such payments in the aggregate for clauses (i) and (ii) do not
exceed $*** in any fiscal year or $*** in the aggregate from and after the
Closing Date;
(e) so long as no Event of Default or Unmatured Event of Default
has occurred and is continuing or would result therefrom, the Company may pay a
dividend to Parent not more than 10 days in advance of June 15 and December 15
of each year commencing in 2003, with each such dividend to be in an amount no
greater than the amount Parent is required to pay in respect of the next
scheduled payment of cash interest on the Parent Discount Notes which is to
become due on such June 15 or December 15, provided, that the Company may only
pay any dividend pursuant to this clause (e) if, after giving effect thereto (as
well as to all dividends made under clause (f) below), the Company's pro forma
Senior Debt Ratio for the last four full fiscal quarters immediately preceding
the date of such dividend (determined as if all such dividends had been made on
the first day of such period), would be less than ***:1;
(f) so long as no Event of Default or Unmatured Event of Default
has occurred and is continuing or would result therefrom, the Company may pay
dividends to Parent; provided, that the Company may only pay dividends pursuant
to this clause (f) if, after giving effect thereto (as well as to all dividends
made under clause (e) above), the Company's pro forma Senior Debt Ratio for the
last four fiscal quarters immediately preceding the date of such dividend
(determined as if such all dividends had been made on the first day of such
period), would be less than ***:1;
-98-
<PAGE> 107
(g) ***;
(h) so long as no Event of Default or Unmatured Event of Default
has occurred and is continuing or would result therefrom, the Company may
repurchase or redeem Subordinated Notes or Qualified Notes in an amount not to
exceed the portion of Net Cash Proceeds of an issuance of equity securities of
Parent, the Company or any Subsidiary which is not used to finance Acquisitions
under subsection 8.4(i) or required to be used to repay Term Loans under
subsection 2.8(a)(iv);
(i) the Company may make payments to Parent at the times and in
the amounts provided in the Tax Sharing Agreement;
(j) the Company may make payments to TPG Partners of fees and
expenses at the times and in the amounts provided in the TPG Agreements; and
(k) the Company may make payments to Parent in amounts not to
exceed $*** per fiscal year to reimburse Parent for expenses incurred by Parent
in the ordinary course of business.
8.17 ERISA. The Company shall not, and shall not permit any of its
ERISA Affiliates to: (a) engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted or
would reasonably be expected to result in a Material Adverse Effect; or (b)
engage in a transaction that could reasonably be expected to be subject to
Section 4069 or 4212(c) of ERISA.
8.18 Limitations on Sale and Leaseback Transactions. The Company shall
not, and shall not permit any Subsidiary to, enter into any arrangement with any
Person providing for the leasing by the Company or any Subsidiary of any real or
personal property, which property is or has been sold or transferred by the
Company or any Subsidiary to such Person in contemplation of taking back a lease
thereof (a "Sale/Leaseback Transaction"); provided, however, that the Company or
any Subsidiary may enter into Sale/Leaseback Transactions if, with respect to
each such Sale/Leaseback Transaction (i) the Company or such Subsidiary is
permitted to incur or suffer to exist the Lien resulting therefrom and the
Indebtedness related thereto under subsection 8.1(j), (ii) the Company or such
Subsidiary is permitted to dispose of the property disposed of in such
Sale/Leaseback Transaction under subsection 8.2(f) or (g), and (iii) the Company
or such Subsidiary is permitted to lease the property relating thereto under
Section 8.10.
-99-
<PAGE> 108
8.19 Limitation on Restriction of Subsidiary Dividends and
Distributions. The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary to (a)
pay dividends or make other distributions on its capital stock owned by the
Company or any Subsidiary, or pay any Indebtedness owed to the Company or any
Subsidiary, (b) make loans or advances to the Company or (c) transfer any of its
assets or properties to the Company, except for such encumbrances or
restrictions existing by reason of or under (i) applicable law, (ii) this
Agreement and the other Loan Documents, (iii) customary non- assignment
provisions of any contract or lease governing a leasehold or ownership interest
of any Subsidiary, (iv) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person or the properties or assets of the
Person so acquired, (v) customary net worth provisions contained in leases and
other agreements entered into by a Subsidiary in the ordinary course of
business, (vi) customary restrictions with respect to a Subsidiary pursuant to
an agreement that has been entered into for the sale or disposition of all or
substantially all of the capital stock of such Subsidiaries, (vii) customary
provisions in joint venture agreements and other similar agreements relating
solely to the securities, assets and revenues of such joint venture or other
business venture and (viii) an agreement governing Indebtedness incurred to
refinance the Indebtedness issued, assumed or incurred pursuant to an agreement
referred to in clause (iv) above; provided, however, that the provisions
relating to such encumbrance or restriction contained in any such Indebtedness
are not, in the aggregate, materially less favorable to the Company as
determined by the Board of Directors of the Company in its reasonable and good
faith judgment than the provisions relating to such encumbrance or restriction
contained in the agreements referred to in such clause (iv).
8.20 Inconsistent Agreements. The Company will not, and will not permit
any Subsidiary to, enter into any agreement containing any provision which would
be violated or breached by any borrowing by the Company hereunder or by the
performance by the Company or any Subsidiary of their respective obligations
hereunder or under any other Loan Document. The Company will not, and will not
permit any of its Subsidiaries to, enter into any agreement (other than this
Agreement and the other Loan Documents) prohibiting the creation or assumption
of any Lien upon its properties, revenues or assets, whether now owned or
hereafter acquired, or the ability of the Company and its Subsidiaries to amend
or modify this Agreement or any other Loan Document, other than an agreement in
connection with Permitted Liens described in subsections 8.1(i) and (j) if such
prohibition is by its terms effective only against the assets subject to such
Permitted Lien.
8.21 Change in Business. The Company shall not, and shall not permit
any Subsidiary to, engage in any material business other than production,
processing and related distribution of food and beverage products and other
related businesses.
8.22 Amendments to Certain Documents. The Company and Parent shall not
make or agree to any amendment to or modification of, or waive any of its rights
under, any of the terms of (a) the Merger Agreement, (b) the Subordinated Note
Purchase Agreement, (c) the Subordinated Indenture,
-100-
<PAGE> 109
(d) any Qualified Indenture, (e) any other instrument evidencing Subordinated
Debt, (f) the Tax Sharing Agreement, (g) the TPG Agreements, (h) any Qualified
Parent Indenture or the Parent Discount Indenture or (i) any other instrument
evidencing Qualified Parent Notes or Parent Discount Notes unless any such
amendment, modification or waiver is not adverse in any respect to the Lenders.
8.23 Fiscal Year. The Company shall not, and shall not permit the
Parent or any Material Subsidiary to, change the fiscal year of the Parent, the
Company or of any Material Subsidiary; provided, that any Material Subsidiary
acquired in an Acquisition permitted hereunder may change its fiscal year to end
on June 30.
8.24 Limitation on Issuance of Guaranty Obligations. The Company will
not permit any Subsidiary to create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to any
Guaranty Obligation of such Subsidiary relating to any Indebtedness of the
Company unless
(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.
-101-
<PAGE> 110
ARTICLE IX
EVENTS OF DEFAULT
9.1 Event of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment. The Company fails to pay, when and as required
to be paid herein, any amount of principal of any Loan or of any L/C Obligation,
or, within three days after the same becomes due, any amount of interest or any
fees or other amounts payable hereunder or under any other Loan Document.
(b) Representation or Warranty. Any representation or warranty by
Parent, the Company or any Subsidiary made or deemed made herein or in any other
Loan Document, or which is contained in any certificate, document or financial
or other statement by Parent, the Company, any Subsidiary or any Responsible
Officer furnished at any time under this Agreement or any other Loan Document,
is incorrect in any material respect on or as of the date made or deemed made.
(c) Specific Defaults. The Company fails to perform or observe
any term, covenant or agreement contained in any of Section 7.3 or Article VIII
(other than Section 8.1, 8.5, 8.6, 8.16(1) or 8.18).
(d) Other Defaults. The Company fails to perform or observe any
term or covenant contained in Section 8.1, 8.5, 8.6, 8.16(1) or 8.18 (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
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
-102-
<PAGE> 111
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.
(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
-103-
<PAGE> 112
(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), or any Guarantor (or any Person acting by, through or on
behalf of such Guarantor) shall contest in any manner the validity, binding
nature or enforceability of any Guaranty with respect to such Guarantor.
(m) Collateral Documents, etc. Any Collateral Document shall
cease to be in full force and effect with respect to the Company, Parent or any
Subsidiary (other than pursuant to its terms or as expressly permitted
hereunder), or the Company, Parent or any Subsidiary (or any Person acting by,
through or on behalf of the Company, Parent or any Subsidiary) shall contest in
any manner the validity, binding nature or enforceability of any Collateral
Document.
9.2 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Required Lenders do
any or all of the following:
(a) declare the commitment of each Lender to make Loans and any
obligation of the Issuing Lender to Issue Letters of Credit to be terminated,
whereupon such commitments and obligations shall be terminated (provided, that
if any Event of Default occurs after the making of the Term Loans, the Revolving
Commitments shall, at the request of, or may, with the consent of, the Required
Revolving Lenders (and not the Required Lenders), be terminated);
(b) declare an amount equal to the maximum aggregate amount that
is or at any time thereafter may become available for drawing under any
outstanding Letter of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letter of Credit) to be immediately due
and payable, and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be
-104-
<PAGE> 113
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.
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
General Electric Capital Corporation and Fleet Business Credit Corporation, as
Co-Agents for the Lenders. The Documentation Agent and the Co-Agents, in their
capacities as such, shall have no rights or duties hereunder or under any other
Loan Document. Notwithstanding any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document, the Administrative Agent shall
not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" in this Agreement and in the other Loan Documents
with reference to the Administrative Agent is not intended to connote any
fiduciary or other implied (or express) obligation arising under agency doctrine
of any applicable law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative relationship
between independent contracting parties.
-105-
<PAGE> 114
(b) The Issuing Lender shall act on behalf of the Lenders with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Administrative Agent may
agree at the request of the Required Lenders to act for the Issuing Lender with
respect thereto; provided, however, that the Issuing Lender shall have all of
the benefits and immunities (i) provided to the Administrative Agent in this
Article X with respect to any acts taken or omissions suffered by the Issuing
Lender in connection with Letters of Credit Issued by it or proposed to be
Issued by it and the applications and agreements for letters of credit
pertaining to the Letters of Credit as fully as if the term "Administrative
Agent", as used in this Article X, included the Issuing Lender with respect to
such acts or omissions and (ii) as additionally provided in this Agreement with
respect to the Issuing Lender.
10.2 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
10.3 Liability of Administrative Agent. None of the Agent-Related
Persons shall (a) be liable to any Lender for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct) or (b) be responsible in any manner to any of
the Lenders for any recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or the existence, creation, validity, attachment, perfection,
enforceability, value or sufficiency of any collateral security for the
Obligations or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any of the Company's Subsidiaries
or Affiliates.
10.4 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Company), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other
-106-
<PAGE> 115
Loan Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
10.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Event of Default or Unmatured
Event of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Administrative Agent for the
account of the Lenders, unless the Administrative Agent shall have received
written notice from a Lender or the Company referring to this Agreement,
describing such Event of Default or Unmatured Event of Default and stating that
such notice is a "notice of default". The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Event of Default or Unmatured Event of Default
as may be requested by the Required Lenders in accordance with Article IX;
provided, however, that unless and until the Administrative Agent has received
any such request, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such Event
of Default or Unmatured Event of Default as it shall deem advisable or in the
best interest of the Lenders.
10.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereafter taken, including any review of the
affairs of the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender confirms to the Administrative Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Company and its Subsidiaries, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Company hereunder. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by the Administrative
Agent, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
-107-
<PAGE> 116
10.7 Indemnification of Agents. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agents and the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company to do
so), pro rata, from and against any and all Indemnified Liabilities incurred by
the Agents or the Agent-Related Persons in their capacities as such; provided,
however, that no Lender shall be liable for the payment to any Agent or
Agent-Related Person of any portion of the Indemnified Liabilities resulting
from such Person's gross negligence or willful misconduct. Without limitation of
the foregoing, to the extent the same are not reimbursed by the Company, each
Lender shall reimburse each Agent upon demand for its ratable share of any costs
or out-of-pocket expenses (including Attorney Costs) incurred by such Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that such Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of any Agent.
10.8 Administrative Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Company and its Subsidiaries and Affiliates as though BofA were not the
Administrative Agent hereunder and without notice to or consent of the Lenders.
The Lenders acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Company or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Company or such Affiliates) and acknowledge that the Administrative
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, BofA and any Affiliate thereof shall have the same rights
and powers under this Agreement as any other Lender and may exercise the same as
though BofA were not the Administrative Agent.
10.9 Successor Administrative Agent. The Administrative Agent may, and
at the request of the Required Lenders shall, resign as Administrative Agent
upon 30 days' notice to the Lenders and the Company. If the Administrative Agent
resigns under this Agreement, the Required Lenders shall have the right, with
the consent of the Company so long as no Event of Default or Unmatured Event of
Default has occurred and is continuing (which consent shall not be unreasonably
withheld or delayed), to appoint from among the Lenders a successor agent for
the Lenders. If no successor agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders and the Company, a successor agent
from among the Lenders. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Administrative Agent and the term "Administrative
Agent" shall mean such successor agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring
-108-
<PAGE> 117
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article X and Sections 11.4 and 11.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor agent has accepted
appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. Notwithstanding the foregoing, however, BofA may
not be removed as the Administrative Agent at the request of the Required
Lenders unless BofA and any Affiliate thereof acting as the Issuing Lender or
Swingline Lender hereunder shall also simultaneously be replaced as the Issuing
Lender and Swingline Lender pursuant to documentation in form and substance
reasonably satisfactory to BofA (and, if applicable, such Affiliate).
10.10 Withholding Tax. (a) If any Lender is not a "U.S. person" within
the meaning of the Code, such Lender shall deliver to the Administrative Agent
and the Company either:
(i) properly completed IRS Form 1001 certifying that such
Lender is entitled to benefits under an income tax treaty to which the
United States is a party that reduces the rate of withholding tax on
interest to zero before the payment of any interest in the first
calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this
Agreement;
(ii) two properly completed and executed copies of IRS Form
4224 certifying that income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the
United States before the payment of any interest is due in the first
taxable year of such Lender and in each succeeding taxable year of such
Lender during which interest may be paid under this Agreement, and IRS
Form W-9; or
(iii) if such Lender is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code 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.
Each such Lender further agrees to deliver such other form or forms
from time to time as may be required under the Code or other laws or regulations
of the United States as a condition to exemption from, or reduction of, United
States withholding tax, to the extent legally permitted to do so. Each such
Lender agrees to promptly notify the Administrative Agent and the Company of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
-109-
<PAGE> 118
If any Lender is a United States person, it agrees to complete and
deliver to the Administrative Agent and the Company a statement signed by an
authorized signatory of such Lender to the effect that such Lender is a United
States person together with a duly completed and executed copy of Internal
Revenue Service Form W-9 or a successor form establishing that such Lender is
not subject to U.S. backup withholding tax.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 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 grants a participation in all or part of the Obligations of the Company
to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Administrative Agent or the Company, as the case may be,
may withhold from any interest payment to such Lender an amount equivalent to
the applicable withholding tax after taking into account such reduction. If the
forms or other documentation required by subsection (a) of this Section are not
timely delivered to the Administrative Agent, or the Company, as the case may
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.
-110-
<PAGE> 119
(f) If any Lender claims exemption from, or reduction of,
withholding tax under the Code by providing IRS Form W-8 and a certificate in
the form of Exhibit L and such Lender sells, assigns, grants a participation in,
or otherwise transfers all or part of the Obligations of the Company to such
Lender, such Lender agrees to notify the Administrative Agent and the Company of
the percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Lender. To the extent of such percentage
amount, the Administrative Agent and the Company will treat such Lender's IRS
Form W-8 and certificate in the form of Exhibit L as no longer valid.
10.11 Collateral Matters. (a) The Administrative Agent is authorized on
behalf of all the Lenders, without the necessity of any notice to or further
consent from the Lenders, from time to time to take any action with respect to
any Collateral or the Collateral Documents which may be necessary to perfect and
maintain perfected the security interest in and Liens upon the Collateral
granted pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Administrative Agent,
at its option and in its discretion, to release any Lien granted to or held by
the Administrative Agent upon any Collateral: (i) upon termination of the
Commitments and payment in full of all Loans and all other obligations known to
the Administrative Agent and payable under this Agreement or any other Loan
Document; (ii) constituting property sold or to be sold or disposed of as part
of or in connection with any disposition permitted hereunder; (iii) constituting
property in which the Company or any Subsidiary owned no interest at the time
the Lien was granted or at any time thereafter; (iv) constituting property
leased to the Company or any Subsidiary under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to expire
and which has not been, and is not intended by the Company or such Subsidiary to
be, renewed or extended; (v) consisting of an instrument evidencing Indebtedness
or other debt instrument, if the indebtedness thereby has been paid in full; or
(vi) if approved, authorized or ratified in writing by the Required Lenders or,
if required by subsection 11.1(g), all the Lenders. Upon request by the
Administrative Agent at any time, the Lenders will confirm in writing the
Administrative Agent's authority to release particular types or items of
Collateral pursuant to this subsection 10.11(b).
(c) Each Lender agrees with and in favor of each other (which
agreement shall not be for the benefit of the Company or any Subsidiary) that
any security interest in real property collateral received by a Lender in
connection with the extension of any loan or financial commitment between such
Lender and the Company or any of its Affiliates and not related to the
transactions contemplated hereby shall not constitute collateral for the
Company's obligations under this Agreement or any other Loan Document.
-111-
<PAGE> 120
(d) (i) Any and all proceeds of disposition or other realization
on the Collateral or from any realization on any Guaranty received by the
Administrative Agent in connection with any enforcement, sale, collection
(including judicial or non-judicial foreclosure) or similar proceedings with
respect to the Collateral or a demand or other enforcement or collection with
respect to any Guaranty shall be applied by the Administrative Agent, as
follows:
FIRST: To the payment of the reasonable costs and expenses of
such disposition, collection or other realization, including Attorney
Costs, and all reasonable expenses, liabilities and advances made or
incurred by the Administrative Agent in connection therewith;
SECOND: To the ratable payment of the Liabilities then due and
owing to the Lender Parties; provided that with respect to Liabilities
consisting of the undrawn amounts of outstanding Letters of Credit,
payment shall be made to the Administrative Agent, to be retained as
Cash Collateral, for the ratable portion of the Liabilities consisting
of such undrawn amount of outstanding Letters of Credit (provided that
(A) if any such Letter of Credit is drawn upon, the Administrative
Agent shall distribute (ratably in accordance with subsection 3.4(a))
the Cash Collateral therefor which is allocable to the amount drawn
upon such Letter of Credit to the Issuing Lender and, if any Revolving
Lenders have paid the Administrative Agent for the account of the
Issuing Lender for such Revolving Lender's participation in such Letter
of Credit in accordance with Section 3.3, the Revolving Lenders
entitled to receive such distribution and (B) if and to the extent that
any such Letter of Credit shall expire or terminate, the amount of Cash
Collateral therefor shall be applied in accordance with this subsection
10.11(d)(i)), calculated in accordance with the provisions of
subsection 10.11(d)(ii); and
THIRD: After payment in full of all Liabilities, any surplus then
remaining from such proceeds shall be paid to the Company or to
whomsoever may be lawfully entitled to receive the same or paid as a
court of competent jurisdiction may direct.
Until such proceeds are so applied, the Administrative Agent shall hold
such proceeds in its custody in accordance with its regular procedures for
handling deposited funds.
(ii) Payment of proceeds of Collateral or of any realization on any
Guaranty to any Lender Party shall be based upon the proportion which the amount
of such Liabilities of such Lender Party bears to the total amount of all
Liabilities of all such Lender Parties. For purposes of determining the
proportionate amounts of all Liabilities sharing in any such distribution, (A)
the amount of the outstanding Obligations shall be deemed to be the Effective
Amount of the Loans and Letters of Credit and all accrued interest, fees and
costs with respect thereto and (B) the amount under any outstanding Swap
Contract shall be deemed to be the amount of the Permitted Swap Obligations then
due and payable (including early termination payments then due) in connection
therewith and all accrued interest and fees with respect thereto, after giving
effect to any netting of payments to which the Company is
-112-
<PAGE> 121
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, any Loan without the
written consent of the Lender holding such Loan;
-113-
<PAGE> 122
(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;
(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
-114-
<PAGE> 123
(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 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:
-115-
<PAGE> 124
(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 and each Lender and each of their respective
Affiliates, officers, directors, employees, counsel, agents, investment
advisers, trustees and attorneys-in-fact (each an "Indemnified Person") harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever (excluding costs and
expenses specifically referred to in Section 11.4) which may at any time
(including, at any time following repayment of the Loans, the termination of the
Letters of Credit and the termination, resignation or replacement of the
Administrative Agent or replacement of any Lender) be imposed on, incurred by or
asserted against any such Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby or thereby, or any action taken or omitted by
any such Person under or in connection with any of the foregoing, including with
respect to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding or any investigation, litigation or
proceeding related to any environmental cleanup, audit, compliance or other
matter relating to the protection of the environment or the Release by the
Company or any of its Subsidiaries of any Hazardous Material) related to or
arising out of this Agreement or the Loans or Letters of Credit or the use of
the proceeds thereof, whether or not any Indemnified Person is a party thereto
(all the foregoing, collectively, the "Indemnified Liabilities"); provided that
the Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the gross negligence or
willful misconduct of such Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations. Each Agent-Related Person and
each Lender agrees that in the event that any
-116-
<PAGE> 125
investigation, litigation or proceeding is asserted or threatened in writing or
instituted against it or any other Indemnified Person, or any remedial, removal
or response action which is requested of it or any other Indemnified Person, for
which any Agent-Related Person or Lender may desire indemnity or defense
hereunder, such Agent-Related Person or such Lender shall notify the Company in
writing of such event; provided that failure to so notify the Company shall not
affect the right of any Agent-Related Person or Lender to seek indemnification
under this Section.
11.6 Payments Set Aside. To the extent that the Company makes a payment
to the Administrative Agent or the Lenders, or the Administrative Agent or the
Lenders exercise their right of set-off, and such payment or the proceeds of
such set-off or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee or receiver, or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred and (b) each Lender
severally agrees to pay to the Administrative Agent upon demand its pro rata
share of any amount so recovered from or repaid by the Administrative Agent.
11.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent and each Lender.
11.8 Assignments, Participations, etc. (a) Any Lender may, with the
written consent of the Company at all times other than during the existence of
an Event of Default and with the written consents of the Administrative Agent
and, in case of an assignment of a Revolving Commitment or L/C Obligations, the
Issuing Lender and the Swingline Lender, which consents shall not be
unreasonably withheld or delayed, at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of the Company, the
Administrative Agent, the Issuing Lender or the Swingline Lender shall be
required in connection with any assignment and delegation by a Lender to a
Person described in clause (ii), (iii), (iv) or (v) of the definition of
Eligible Assignee) (each, an "Assignee") all, or any part, of the Loans, the
Revolving Commitment, the L/C Obligations and the other rights and obligations
of such Lender hereunder, in a minimum amount of $5,000,000 (or, if less, all of
such Lender's remaining rights and obligations hereunder or all of such Lender's
rights and obligations with respect to Revolving Commitment and Revolving Loans,
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),
(iv) or (v) 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
-117-
<PAGE> 126
respect to the Assignee shall have been given to the Company and the
Administrative Agent by such Lender and the Assignee, (ii) such Lender and the
Assignee shall have delivered to the Company and the Administrative Agent an
Assignment and Acceptance in the form of Exhibit K (an "Assignment and
Acceptance") together with any Note or Notes subject to such assignment and
(iii) the assignor Lender or the Assignee has paid to the Administrative Agent a
processing fee in the amount of $3,500 and (B) the Company shall not, as a
result of any assignment, delegation or participation by any Lender, incur any
increased liability for Taxes, Other Taxes or Further Taxes pursuant to Section
4.1. The Company designates the Administrative Agent as its agent for
maintaining a book entry record of ownership identifying the Lenders, their
respective addresses and the amount of the respective Loans and Notes which they
own. The foregoing provisions are intended to comply with the registration
requirements in Treasury Regulation Section 5f.103-1 so that the Loans and Notes
are considered to be in "registered form" pursuant to such regulation.
(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 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
-118-
<PAGE> 127
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, the Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement. Each Lender
which sells a participation will maintain a book entry record of ownership
identifying the Participant(s) and the amount of such participation(s) owned by
such Participant(s). Such book entry record of ownership shall be maintained by
the Lender as agent for the Company and the Administrative Agent. This provision
is intended to comply with the registration requirements in Treasury Regulation
Section 5f.103-1 so that the Loans and Notes are considered to be in "registered
form" pursuant to such regulation. Each Lender may furnish any information
concerning the Company and its Subsidiaries in the possession of such Lender
from time to time to participants and prospective participants and may furnish
information in response to credit inquiries consistent with general banking
practice.
(d) Notwithstanding any other provision in this Agreement, (i)
any Lender may at any time assign all or any portion of its rights under and
interest in this Agreement and any Note held by it to any Affiliate of such
Lender that is an "Eligible Assignee" or create a security interest in, or
pledge all or any portion of its rights under and interest in this Agreement and
any Note held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law and (ii) any Lender which is a fund may,
pledge all or any portion of its Loans and Notes to its trustee in support of
its obligations to its trustee.
11.9 Confidentiality. Each Lender agrees to take, and to cause its
Affiliates to take, normal and reasonable precautions and exercise due care to
maintain the confidentiality of all non-public information provided to it by the
Company or any Subsidiary, or by the Administrative Agent on the Company's or
any Subsidiary's behalf, under this Agreement or any other Loan Document, and
neither such Lender nor any of its Affiliates shall use any such information
other than in connection with or in enforcement of this Agreement and the other
Loan Documents or in connection with other business now or hereafter existing or
contemplated with the Company or any Subsidiary, except to the extent such
information (i) was or becomes generally available to the public other than as a
result of disclosure by such Lender or (ii) was or becomes available on a
non-confidential basis from a source other than the Company (provided that such
source is not bound by a confidentiality agreement with the Company or any
Subsidiary known to such Lender); provided, however, that any Lender may
disclose such information (A) at the request or pursuant to any requirement of
any Governmental Authority to which such Lender is subject or in connection with
an examination of such Lender by any such authority, (B) pursuant to subpoena or
other court process, (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law, (D) to the extent reasonably
required in connection with any litigation or proceeding to which the
Administrative Agent or any Lender or any of their respective Affiliates may be
party, (E) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document, (F) to such Lender's
independent auditors and other professional advisors, (G) to any Participant or
Assignee, actual or potential, or to
-119-
<PAGE> 128
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 then due and owing to such Lender, and each
Affiliate of such Lender is hereby irrevocably authorized to permit such set-off
and application. Each Lender agrees promptly to notify the Company and the
Administrative Agent after any such set-off and application made by such Lender;
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
11.11 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, agency fee, letter of credit fee or other fee, or any other
cost or expense (including Attorney Costs) due and payable to the Administrative
Agent, the Swingline Lender or the Issuing Lender under the Loan Documents, 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.
-120-
<PAGE> 129
11.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of which taken together shall constitute but one and the same
instrument.
11.14 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or such instrument or agreement.
11.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Lenders, the
Administrative Agent and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any other Loan Document.
11.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND ANY NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE
STATE OF NEW YORK; PROVIDED THAT THE 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
-121-
<PAGE> 130
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.
-122-
<PAGE> 131
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
DEL MONTE CORPORATION
By:
------------------------------------------
Title:
---------------------------------------
BANK OF AMERICA, N.A.,
as Administrative Agent, Issuing Lender,
Swingline Lender and Lender
By:
------------------------------------------
Title:
---------------------------------------
S-1
<PAGE> 132
BANKERS TRUST COMPANY,
as Documentation Agent and as a Lender
By:
------------------------------------------
Title:
---------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as Co-Agent and as a Lender
By:
------------------------------------------
Title:
---------------------------------------
FLEET BUSINESS CREDIT CORPORATION,
as Co-Agent and as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-2
<PAGE> 133
ABN AMRO BANK N.V.,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
ARCHIMEDES FUNDING II, LTD.,
as a Lender
By: ING Capital Advisors LLC, as Collateral
Manager
By:
------------------------------------------
Title:
---------------------------------------
THE BANK OF NEW YORK,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-3
<PAGE> 134
THE BANK OF NOVA SCOTIA,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
BANQUE NATIONALE DE PARIS,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
BHF (USA) CAPITAL CORPORATION,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Title:
---------------------------------------
S-4
<PAGE> 135
BLACK DIAMOND CLO 1998-1 LTD,
as a Lender
By: Black Diamond Capital Management,
as Investment Adviser
By:
------------------------------------------
Title:
---------------------------------------
CAPTIVA III FINANCE LTD., as a Lender
By: Pacific Investment Management Co.,
as Investment Adviser
By:
------------------------------------------
Title:
---------------------------------------
THE CHASE MANHATTAN BANK, as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-5
<PAGE> 136
CANADIAN IMPERIAL BANK OF COMMERCE,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
THE CIT GROUP,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
CITY NATIONAL BANK, as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-6
<PAGE> 137
COMERICA WEST INCORPORATED,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
CREDIT INDUSTRIEL ET COMMERCIAL,
NEW YORK BRANCH,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
By:
------------------------------------------
Title:
---------------------------------------
S-7
<PAGE> 138
OXFORD STRATEGIC INCOME FUND,
as a Lender
By: Boston Management and Research,
as Investment Adviser
By:
------------------------------------------
Title:
---------------------------------------
SENIOR DEBT PORTFOLIO,
as a Lender
By: Boston Management and Research,
as Investment Adviser
By:
------------------------------------------
Title:
---------------------------------------
EATON VANCE SENIOR INCOME TRUST,
as a Lender
By: Boston Management and Research,
as Investment Adviser
By:
------------------------------------------
Title:
---------------------------------------
S-8
<PAGE> 139
FREMONT INVESTMENT & LOAN,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
GALAXY CLO 1999-1 LTD,
as a Lender
By: Sun America, as Investment Adviser
By:
------------------------------------------
Title:
---------------------------------------
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-9
<PAGE> 140
HARRIS TRUST AND SAVINGS BANK,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
HELLER FINANCIAL, INC.,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
HSBC BANK USA,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-10
<PAGE> 141
IBJ WHITEHALL BANK & TRUST COMPANY,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
THE ING CAPITAL SENIOR SECURED HIGH
INCOME FUND, L.P. as a Lender
By: ING Capital Advisors LLC,
as Collateral Manager
By:
------------------------------------------
Title:
---------------------------------------
S-11
<PAGE> 142
KZH CNC LLC,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
KZH CRESCENT-2 LLC,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
KZH CRESCENT-3 LLC,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-12
<PAGE> 143
KZH CRESCENT LLC,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
KZH ING-2 LLC,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
KZH SOLEIL LLC,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-13
<PAGE> 144
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
MERITA BANK PLC,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
METROPOLITAN LIFE INSURANCE COMPANY,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-14
<PAGE> 145
THE MITSUBISHI TRUST AND BANKING CORPORATION,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
NATEXIS BANQUE - BFCE,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
NATIONAL CITY BANK,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-15
<PAGE> 146
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:
------------------------------------------
Title:
---------------------------------------
OCTAGON INVESTMENT PARTNERS III, LTD.,
as a Lender
By: Octagon Credit Investors, LLC,
as Portfolio Manager
By:
------------------------------------------
Title:
---------------------------------------
COOPERATIVE CENTRAL RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND" NEW YORK BRANCH,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
S-16
<PAGE> 147
ROYALTON COMPANY,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
SEQUILS I, LTD,
as a Lender
By: TCW Advisors, Inc. as its
Collateral Manager
By:
------------------------------------------
Name:
Title:
By:
------------------------------------------
Name:
Title:
S-17
<PAGE> 148
SOUTHERN PACIFIC BANK,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
STB DELAWARE FUNDING TRUST I,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
TCW LEVERAGED INCOME TRUST, L.P.,
as a Lender
By: TCW Advisers (Bermuda) Ltd.,
as General Partner
By:
------------------------------------------
Name: Mark L. Gold
Title: Managing Director
By: TCW Investment Management Company,
as Investment Adviser
By:
------------------------------------------
Name:
Title:
S-18
<PAGE> 149
TRANSAMERICA BUSINESS CREDIT CORPORATION,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By:
------------------------------------------
Title:
---------------------------------------
VAN KAMPEN CLO I, LIMITED,
as a Lender
By: Van Kampen Management Inc.,
as Collateral Manager
By:
------------------------------------------
Title:
---------------------------------------
S-19
<PAGE> 150
PRICING SCHEDULE
Revolving Loans, Term A Loans, L/C Fee Rate and Commitment Fee Rate
The Applicable Base Rate Margin and Applicable Offshore Rate Margin for
Revolving Loans and Term A Loans, the L/C Fee Rate and Commitment Fee Rate shall
be as follows: ***
<PAGE> 151
Term B Loans
The Applicable Base Rate Margin for Term B Loans bearing interest based on the
Base Rate is ***% per annum.
The Applicable Offshore Rate Margin for Term B Loans bearing interest based on
the Offshore Rate is ***% per annum.
<PAGE> 1
EXHIBIT 10.2
DEL MONTE FOODS COMPANY
1997 STOCK INCENTIVE PLAN
(AS AMENDED OCTOBER 21, 1999)
<PAGE> 2
1. Purpose of the Plan
This Del Monte Foods Company 1997 Stock Incentive Plan is intended to
promote the interests of the Company by providing certain employees of the
Company, who are largely responsible for the management, growth and protection
of the business of the Company, with incentives and rewards to encourage them to
continue in the employ of the Company.
2. Definitions
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of Directors of Del Monte
or such committee of the Board of Directors as may be designated by the Board of
Directors.
(b) "Cause," when used in connection with the termination of a
Participant's employment with the Company, shall mean (i) dishonesty; (ii)
deliberate and continual refusal to perform employment duties on substantially a
full-time basis; (iii) failure to act in accordance with any specific lawful
instructions given to the Participant in connection with the performance of his
duties for the Company or any of its subsidiaries or affiliates, unless the
Participant has an existing Permanent Disability, or (iv) deliberate misconduct
which is reasonably likely to be materially damaging to the Company without a
reasonable good faith belief by the Participant that such conduct was in the
best interests of the Company. Notwithstanding the foregoing provisions of this
Section 2(b), "Cause," when used in connection with the termination of the
employment with the Company of a Participant who at the time of such termination
is a party to a written employment or retention agreement with the Company,
shall have the meaning assigned to such term in such agreement.
(c) "Change of Control" shall mean the occurrence of one or more of the
following events:
(1) 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 individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof (a "Person") or group of related Persons
for purposes of Section 13(d) of the Exchange Act (a "Group"), together with any
Affiliates (as defined below) thereof other than to TPG Partners, L.P. ("TPG")
or its Affiliates;
(2) the approval by the holders of 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 the Company ("Capital Stock") of any plan or proposal for the
liquidation or dissolution of the Company;
(3) (i) any Person or Group (other than TPG or its Affiliates)
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 (ii) TPG and its Affiliates shall beneficially own,
directly
2
<PAGE> 3
or indirectly, in the aggregate a lesser percentage of the Voting Stock of the
Company than such other Person or Group; or
(4) the replacement of a majority of the Board of Directors over a
two-year period from the directors who constituted the Board of Directors 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 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 approved
or who were nominated by, or designees of TPG or its Affiliates (any such
individual who was a director at the beginning of such period or is so approved,
nominated or designated being referred to herein as an "Incumbent Director"):
provided, however, that no individual shall be considered an Incumbent Director
if the individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors ( a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(5) a merger or consolidation involving the Company in which the
Company is not the surviving corporation, or a merger or consolidation involving
the Company in which the Company is the surviving corporation but the holders of
shares of Common Stock receive securities of another corporation but the holders
of shares of Common Stock receive securities of another corporation and/or other
property, including cash, or any other similar transaction.
For purposes of this Section 2(c), "Affiliate" shall mean, 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" or "controlled" have meanings
correlative of the foregoing.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" shall mean the Compensation Committee of the Board of
Directors or such other committee as the Board of Directors shall appoint from
time to time to administer the Plan.
(f) "Common Stock" shall mean common stock of Del Monte, $.01 par value
per share.
(g) "Company" shall mean Del Monte and its subsidiaries.
(h) "Del Monte" shall mean Del Monte Foods Company, a Maryland
corporation.
3
<PAGE> 4
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Incentive Stock Option" shall mean an Option that is intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(k) "Option" shall mean an option to purchase shares of Common Stock
granted pursuant to Section 6 hereof.
(l) "Participant" shall mean an employee of the Company who is eligible
to participate in the Plan and to whom an Option is granted pursuant to the
Plan, and upon his death, his successors, heirs, executors and administrators,
as the case may be.
(m) "Permanent Disability" shall mean physical or mental disability as
a result of which the Participant is unable to perform his duties with the
Company on substantially a full-time basis for any period of six (6) consecutive
months. Any dispute as to whether or not the Participant is so disabled shall be
resolved by a physician reasonably acceptable to the Participant and the Company
whose determination shall be final and binding upon both the Participant and the
Company. Notwithstanding the foregoing provisions of this Section 2(m),
"Permanent Disability," when used in connection with the termination of the
employment with the Company of a Participant who at the time of such termination
is a party to a written employment or retention agreement with the Company,
shall have the meaning assigned to such term in such agreement.
(n) "Plan" shall mean this Del Monte Foods Company 1997 Stock Incentive
Plan, as it may be amended from time to time.
(o) A "Public Market" for the Common Stock shall be deemed to exist if
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
or if trading regularly occurs in such Common Stock in, on or through the
facilities of securities exchanges and/or inter-dealer quotation systems in the
United States (within the meaning of Section 902(n) of the Securities Act) or
any designated offshore securities market (within the meaning of Rule 902(a) of
the Securities Act).
(p) "Securities Act" shall mean the Securities Act of 1933, as amended.
3. Stock Subject to the Plan
Subject to adjustment as provided in Section 7 hereof, the Committee
may grant Options to Participants with respect to 9,508 shares of Common Stock.
In the event that any outstanding Option expires, terminates or is cancelled for
any reason, the shares of Common Stock subject to the unexercised portion of
such Option shall again be available for grants under the Plan.
Shares of Common Stock issued under the Plan may be either newly
issued shares or treasury shares, as determined by the Committee.
4
<PAGE> 5
4. Administration of the Plan
The Plan shall be administered by the Committee. The Committee shall
from time to time designate the key employees of the Company who shall be
granted Options, the number of shares subject to each Option and the terms and
conditions on which each Option shall be granted.
The Committee shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and the
terms of any Option issued under it and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Committee
shall be final and binding on all parties and all decisions, determinations,
selections and other actions permitted or required to be taken or made by the
Committee with respect to the Plan shall be subject to the absolute discretion
of the Committee. No member of the Committee shall be liable to any Participant
for any action, omission, or determination relating to the Plan.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Committee.
5. Eligibility
The persons who shall be eligible to receive Options pursuant to the
Plan shall be such employees of the Company who are largely responsible for the
management, growth and protection of the business of the Company as the
Committee shall select from time to time.
6. Options
Each Option granted pursuant to the Plan shall be evidenced by an
agreement in the form attached hereto as Exhibit A or B, as appropriate. Options
shall comply with and be subject to the following terms and conditions:
(a) Identification of Options. All Options shall be clearly identified
in the agreement evidencing their grant as non-qualified stock options that are
not intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Code or as Incentive Stock Options.
(b) Exercise Price. The exercise price per share of each Option shall
be such price as the Committee shall determine at the time at which the Option
is granted; provided, that the exercise price per share of any Incentive Stock
Option granted under the Plan shall be not less than 100% of the fair market
value of a share of Common Stock on the date on which such Incentive Stock
Option is granted.
(c) Term and Exercise of Options. Each Option shall be exercisable on
such date or dates, during such period and for such number of shares of Common
Stock as shall be determined by the Committee on the day on which such Option is
granted and set forth in the Option agreement with respect to such Option;
provided, however, that no Option shall be exercisable after the expiration of
ten (10) years from the date such Option is granted; and
5
<PAGE> 6
provided, further, that each Option shall be subject to earlier expiration,
termination, cancellation or exercisability as provided in this Plan.
(d) Effect of Termination of Employment.
(1) In the event of the termination of the employment of a
Participant with the Company for Cause, each Option then outstanding shall
expire and be cancelled upon such termination.
(2) In the event that the employment of a Participant with the
Company shall be terminated other than by the Company for Cause or on account of
Permanent Disability or death of the Participant (i) Options granted to such
Participant, to the extent that they were exercisable at the time of such
termination, shall remain exercisable until the expiration of ninety (90) days
after such termination, on which date they shall expire, and (ii) Options
granted to such Participant, to the extent that they were not exercisable at the
time of such termination, shall expire at the close of business on the date of
such termination; provided, however, that no Option shall be exercisable after
the expiration of its term. In the event that the employment of a Participant
with the Company shall terminate on account of Permanent Disability or death of
the Participant, (x) Options granted to such Participant, to the extent that
they were exercisable at the time of such termination, shall remain exercisable
until the expiration of one (1) year after such termination, on which date they
shall expire, and (y) Options granted to such Participant, to the extent that
they were not exercisable at the time of such termination, shall expire at the
close of business on the date of such termination; provided, however, that no
Option shall be exercisable after the expiration of its term.
(e) Certain Terms and Conditions
(1) Each Option shall be exercisable in whole or in part with
respect to not less than one share of Common Stock. The partial exercise of an
Option shall not cause the expiration, termination or cancellation of the
remaining portion thereof.
(2) An Option shall be exercised by delivering notice to Del
Monte's principal office in the form attached hereto as Exhibit C, to the
attention of its Chief Financial Officer with a copy to its General Counsel, no
less than three business days in advance of the effective date of the proposed
exercise. Such notice shall specify the number of shares of Common Stock with
respect to which the Option is being exercised and the effective date of the
proposed exercise and shall be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close of business on the business
day immediately preceding the effective date of the proposed exercise. Payment
for shares of Common Stock purchased upon the exercise of an Option shall be
made on the effective date of such exercise in cash, by certified check, bank
cashier's check or wire transfer, or by tender to Del Monte of shares of Common
Stock already owned and held by the Participant for at least six (6) months,
which shares shall be valued as determined by the Board of Directors on the
effective date of the proposed exercise. In the event that, prior to the
existence of a Public Market for the Common Stock, a Participant elects to pay
the exercise price upon the exercise of an Option by the tender of
previously-owned shares, the delivery by Del Monte of certificates representing
the shares of Common Stock purchased upon
6
<PAGE> 7
such exercise shall be deferred pending a determination of the exact number of
the shares of Common Stock required to be tendered by the Participant.
(3) Certificates for shares of Common Stock purchased upon the
exercise of an Option shall be issued in the name of the Participant and
delivered to the Participant as soon as practicable following the effective date
on which the Option is exercised.
(4) During the lifetime of a Participant, each Option granted to
him shall be exercisable only by him. No Option shall be assignable or
transferable otherwise than by will or by the laws of descent and distribution.
Notwithstanding the preceding provisions of this Section 6(e)(4), a Participant
may assign his rights with respect to any Option other than any Incentive Stock
Option granted to him to a trust or custodianship the beneficiaries of which may
include only the Participant, the Participant's spouse, or the Participant's
lineal descendants (by blood or adoption). In the event of any such assignment,
such trust or custodianship shall be subject to all the restrictions,
obligations and responsibilities as apply to the Participant under the Plan and
shall be entitled to all the rights of the Participant under the Plan.
(f) Certain Terms Applicable to Incentive Stock Options
(1) The aggregate fair market value of shares of Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year under the Plan and any other stock option
plan of Del Monte or any "subsidiary corporation" within the meaning of Section
424(f) of the Code shall not exceed $100,000. Such fair market value shall be
determined as of the date on which each such Incentive Stock Option is granted.
In the event that such aggregate fair market value exceeds $100,000, then
Incentive Stock Options granted hereunder to such Participant shall, to the
extent of such excess and in the order in which they were granted, automatically
be deemed not to be Incentive Stock Options, but all other terms and provisions
of such Incentive Stock Options shall remain unchanged.
(2) No Incentive Stock Option may be granted to an individual if,
at the time of the proposed grant, such individual owns stock possessing more
than ten percent of the total combined voting power of all classes of stock of
Del Monte or any of its "subsidiary corporations" within the meaning of Section
424(f) of the Code, unless (i) the exercise price of such Incentive Stock Option
is at least one hundred and ten percent of the fair market value of a share of
Common Stock at the time such Incentive Stock Option is granted and (ii) such
Incentive Stock Option is not exercisable after the expiration of five years
from the date such Incentive Stock Option is granted.
(g) Consequences Upon Certain Transactions. Not more than ten (10) days
prior to a Change of Control, all outstanding Options shall vest and become
immediately exercisable.
7. Adjustment Upon Changes in Common Stock
(a) Subject to any required action by the shareholders of Del Monte, in
the event of any increase or decrease in the number of issued shares of Common
Stock resulting from a subdivision or consolidation of shares of Common Stock or
the payment of a stock dividend (but
7
<PAGE> 8
only on the shares of Common Stock), or any other increase or decrease in the
number of such shares effected by Del Monte without receipt or payment of
consideration, the Committee shall proportionally adjust the number of shares of
Common Stock subject to each outstanding Option and the exercise price per share
of Common Stock of each such Option.
(b) Subject to any required action by the shareholders of Del Monte, in
the event that Del Monte shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Common Stock receive securities of another corporation), each
Option outstanding on the date of such merger or consolidation shall pertain to
and apply to the securities which a holder of the number of shares of Common
Stock subject to such Option would have received in such merger or
consolidation.
(c) In the event of a dissolution or liquidation of Del Monte, or a
sale of all or a substantial portion of the Common Stock held by TPG, the
Committee shall have the power to:
(i) cancel, effective immediately prior to the occurrence of such
event, each Option outstanding immediately prior to such event (whether or not
then exercisable), and, in full consideration of such cancellation, pay to the
Participant to whom such Option was granted an amount in cash, for each share of
Common Stock subject to such Option, equal to the excess of (A) the value, as
determined by the Committee in good faith, of the property (including cash)
received by the holder of a share of Common Stock as a result of such event over
(B) the exercise price of such Option; or
(ii) permit Participants to exercise their Options and participate
in such transaction on a basis no less favorable than that afforded other owners
of Common Stock.
(d) In the event of any change in the capitalization of Del Monte or
corporate change other than those specifically referred to herein, the Committee
will make such adjustments in the number and class of shares subject to Options
outstanding on the date on which such change occurs and in the per share
exercise price of each such Option as the Committee may consider necessary or
appropriate.
(e) Except as expressly provided in the Plan, no Participant shall have
any rights by reason of any subdivision or consolidation of shares of stock of
any class, the payment of any dividend, any increase or decrease in the number
of shares of stock of any class or any dissolution, liquidation, merger or
consolidation of Del Monte or any other corporation. Except as expressly
provided in the Plan, no issuance by Del Monte of shares of stock of any class,
or securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to an Option or the exercise price of any Option.
8. Rights as a Stockholder
(a) No person shall have any rights as a stockholder with respect to
any shares of Common Stock covered by or relating to any Option granted pursuant
to this Plan until the date of the issuance of a stock certificate with respect
to such shares.
8
<PAGE> 9
(b) Notwithstanding anything herein to the contrary, prior to the
existence of a Public Market, Del Monte shall not be obligated to cause to be
issued or delivered to or for the benefit of any Participant any certificates
evidencing shares of Common Stock pursuant to the Plan unless and until such
Participant executes a Stockholders' Agreement in the form attached hereto as
Exhibit D.
9. No Special Employment Rights; No Right to Option
(a) Nothing contained in the Plan or any Option shall confer upon any
Participant any right with respect to the continuation of his employment by the
Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in effect at the time of the grant of an Option.
(b) No person shall have any claim or right to receive an Option
hereunder. The Committee's granting of an Option to a Participant at any time
shall neither require the Committee to grant an Option to such Participant or
any other Participant or other person at any time nor preclude the Committee
from making subsequent grants to such Participant or any other Participant or
other person.
10. Securities Matters
(a) Del Monte shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws. Notwithstanding
anything herein to the contrary, Del Monte shall not be obligated to cause to be
issued or delivered any certificates evidencing shares of Common Stock pursuant
to the Plan unless and until Del Monte is advised by its counsel that the
issuance and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authority and the requirements of any
securities exchange on which shares of Common Stock are traded. The Committee
may require, as a condition of the issuance and delivery of certificates
evidencing shares of Common Stock pursuant to the terms hereof, that the
recipient of such shares make such covenants, agreements and representations,
and that such certificates bear such legends, as the Committee deems necessary
or desirable.
(b) The exercise of any Option granted hereunder shall only be
effective at such time as counsel to Del Monte shall have determined that the
issuance and delivery of shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which shares of Common Stock are
traded. Del Monte may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of shares
of Common Stock pursuant thereto to be made pursuant to registration or an
exemption from registration or other methods for compliance available under
federal or state securities laws. Del Monte shall inform the Participant in
writing of its decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the exercise of
an Option
9
<PAGE> 10
has been deferred, the Participant may, by written notice, withdraw such
exercise and obtain the refund of any amount paid with respect thereto.
(c) In the event that the Committee defers the effectiveness of the
exercise by a Participant of an Option granted hereunder in order to allow the
issuance of shares of Common Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws, such Participant may elect, by
delivery of written notice by the Participant to the Company not later than
thirty (30) days following his receipt of notice of such deferral or the
expiration of such deferral, to surrender the exercisable portion of such Option
(or any portion thereof) to the Company in consideration for a lump sum payment
in cash in an amount equal to the product of (A) the excess of (i) the value of
a share of Common Stock as determined by the Board of Directors as of the date
of surrender over (ii) the per share exercise price of the Option and (B) the
number of shares with respect to which such Participant desires and is entitled
to exercise such Option. Notice shall be delivered in person or by certified
mail, return receipt requested and shall be deemed to have been given when
personally delivered or three (3) days after mailing.
11. Withholding Taxes
(a) Cash Remittance. Whenever shares of Common Stock are to be issued
upon the exercise of an Option, the Company shall have the right to require the
Participant to remit to the Company in cash an amount sufficient to satisfy
federal, state and local withholding tax requirements, if any, attributable to
such exercise prior to the delivery of any certificate or certificates for such
shares. In addition, upon the making of any cash payment pursuant to the Plan,
the Company shall have the right to withhold from such payment an amount
sufficient to satisfy the federal, state and local withholding tax requirements,
if any, attributable to such exercise.
(b) Stock Remittance or Withholding. At the election of the
Participant, when shares of Common Stock are to be issued upon the exercise of
an Option, the Participant may tender to Del Monte a number of shares of Common
Stock previously owned by him, or direct the Company to withhold a number of
shares of Common Stock, the value of which as of the exercise date the Committee
determines to be sufficient to satisfy the federal, state and local withholding
tax requirements, if any, attributable to such exercise (based upon the value of
a share of Common Stock as determined by the Board of Directors as of the
exercise date) and not greater than the Participant's estimated total federal,
state and local tax obligations associated with such exercise. Such election
shall satisfy the Participant's obligations under Paragraph 11(a) hereof. In the
event that a Participant makes an election pursuant to this Section 11(b) prior
to the existence of a Public Market for the Common Stock, the delivery by Del
Monte of certificates representing the shares of Common Stock purchased upon
such exercise shall be deferred pending a determination of the exact number of
the shares of Common Stock required to be tendered or withheld.
10
<PAGE> 11
12. Termination and Amendment of the Plan
The right to grant Options under the Plan will terminate on August 4,
2007. The Board of Directors may at any time suspend or terminate the Plan or
revise or amend it in any respect whatsoever.
13. Transfers Upon Death
Upon the death of a Participant, outstanding Options granted to such
Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Option, or the
right to exercise any Option, shall be effective to bind the Company unless the
Committee shall have been furnished with (a) written notice thereof and with a
copy of the will and/or such evidence as the Committee may deem necessary to
establish the validity of the transfer and (b) an agreement by the transferee to
comply with all the terms and conditions of the Option that are or would have
been applicable to the Participant and to be bound by the acknowledgements made
by the Participant in connection with the grant of the Option.
14. No Obligation to Exercise
The grant to a Participant of an Option shall impose no obligation upon
such Participant to exercise such Option.
15. Expenses and Receipts
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Option will be used for general
corporate purposes.
l6. Failure to Comply
In addition to the remedies of the Company elsewhere provided for
herein, failure by a Participant to comply with any of the terms and conditions
of the Plan or the agreement executed by such Participant evidencing an Option,
unless such failure is remedied by such Participant within ten (10) days after
having been notified of such failure by the Committee, shall be grounds for the
cancellation and forfeiture of such Option, in whole or in part, as the
Committee, in its absolute discretion, may determine.
17. Applicable Law
The Plan will be administered in accordance with the laws of the State
of California, without reference to its principles of conflicts of law.
11
<PAGE> 1
EXHIBIT 10.3
DEL MONTE FOODS COMPANY
1998 STOCK INCENTIVE PLAN
(AS AMENDED OCTOBER 21, 1999)
<PAGE> 2
1. Purpose of the Plan
This Del Monte Foods Company 1998 Stock Incentive Plan is intended to
promote the interests of the Company by encouraging the Company's employees,
nonemployee directors and consultants of the Company to continue in the service
of the Company, and to provide such persons with incentives and rewards for
superior management, growth and protection of the business of the Company.
2. Definitions
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of Directors of Del
Monte.
(b) "Cause," when used in connection with the termination of a
Participant's employment with the Company, shall mean (i) dishonesty; (ii)
deliberate and continual refusal to perform employment duties on substantially a
full-time basis; (iii) failure to act in accordance with any specific lawful
instructions given to the Participant in connection with the performance of his
duties for the Company or any of its Subsidiaries or affiliates, unless the
Participant has an existing Disability; or (iv) deliberate misconduct which is
reasonably likely to be materially damaging to the Company without a reasonable
good faith belief by the Participant that such conduct was in the best interests
of the Company. Notwithstanding the foregoing provisions of this Section 2(b),
"Cause," when used in connection with the termination of the employment with the
Company of a Participant who at the time of such termination is a party to a
written employment or retention agreement with the Company, shall have the
meaning assigned to such term in such agreement.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Committee" shall mean the Compensation Subcommittee of the Board
of Directors or such other committee as the Board of Directors shall appoint
from time to time to administer the Plan.
(e) "Common Stock" shall mean Del Monte's common stock, $0.01 par value
per share.
(f) "Company" shall mean Del Monte and each of its Subsidiaries.
(g) "Consultant" shall mean any consultant, independent contractor, or
other person who provides significant services to the Company, but who is
neither an Employee nor a Director.
(h) "Director" shall mean a member of the Board of Directors, whether
or not such individual also is an Employee.
2
<PAGE> 3
(i) "Disability" shall mean physical or mental disability as a result
of which the Participant is unable to perform his duties with the Company on
substantially a full-time basis for any period of six (6) consecutive months.
Any dispute as to whether or not the Participant is so disabled shall be
resolved by a physician reasonably acceptable to the Participant and the Company
whose determination shall be final and binding upon both the Participant and the
Company. Notwithstanding the foregoing provisions of this Section 2(i),
"Disability," when used in connection with the termination of the employment
with the Company of a Participant who at the time of such termination is a party
to a written employment or retention agreement with the Company, shall have the
meaning assigned to such term in such agreement.
(j) "Employee" shall mean any employee of the Company, whether such
employee is so employed at the time the Plan is adopted or becomes so employed
subsequent to the adoption of the Plan.
(k) the "Fair Market Value" of a share of Common Stock with respect to
any day shall be (i) the average of the high and low sales prices on such day of
a share of Common Stock as reported on the principal securities exchange on
which shares of Common Stock are then listed or admitted to trading or (ii) if
not so reported, the average of the closing bid and ask prices on such day as
reported on the National Association of Securities Dealers Automated Quotation
System or (iii) if not so reported, as furnished by any member of the National
Association of Securities Dealers, Inc. selected by the Committee. In the event
that the price of a share of Common Stock shall not be so reported, the Fair
Market Value of a share of Common Stock shall be determined by the Committee in
its absolute discretion.
(l) "Incentive Award" shall mean an Option, Tandem SAR, Stand-Alone SAR
or Stock Bonus granted pursuant to the terms of the Plan.
(m) "Incentive Stock Option" shall mean an Option which is an
"incentive stock option" within the meaning of Section 422 of the Code and which
is identified as an Incentive Stock Option in the agreement by which it is
evidenced.
(n) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option and which is identified as a Non-Qualified Stock Option
in the agreement by which it is evidenced.
(o) "Del Monte" shall mean Del Monte Foods Company, a Delaware
corporation, and its successors.
(p) "Option" shall mean an option to purchase shares of Common Stock of
Del Monte granted pursuant to Section 6 hereof. Each Option shall be identified
as either an Incentive Stock Option or a Non-Qualified Stock Option in the
agreement by which it is evidenced.
(q) "Participant" shall mean an Employee, Director or Consultant to
whom an Incentive Award is granted pursuant to the Plan, and upon his death, his
successors, heirs, executors and administrators, as the case may be.
3
<PAGE> 4
(r) "Plan" shall mean this Del Monte Foods Company 1998 Stock Incentive
Plan, as it may be amended from time to time.
(s) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, and any future regulation amending,
supplementing or superseding such regulation.
(t) "Section 16 Person" shall mean a person who, with respect to the
Common Stock, is subject to Section 16 of the Securities Exchange Act of 1934,
as amended.
(u) "Stand-Alone SAR" shall mean a stock appreciation right granted
pursuant to Section 8 hereof which is not related to any Option.
(v) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Common Stock pursuant to Section 9 hereof.
(w) "Subsidiary" shall mean any "subsidiary corporation" within the
meaning of Section 424(f) of the Code.
(x) "Tandem SAR" shall mean a stock appreciation right granted pursuant
to Section 7 hereof which is related to an Option. Each Tandem SAR shall be
exercisable only to the extent its related Option is exercisable and only in the
alternative to the exercise of its related Option.
(y) "Change of Control" shall mean the occurrence of one or more of the
following events:
(1) 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 individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof (a "Person") or group of related Persons
for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended
(a "Group"), together with any Affiliates (as defined below) thereof other than
to TPG Partners, L.P. ("TPG") or its Affiliates;
(2) the approval by the holders of 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 the Company ("Capital Stock") of any plan or proposal for the
liquidation or dissolution of the Company;
(3) (i) any Person or Group (other than TPG or its Affiliates)
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 (ii) TPG and its Affiliates 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
4
<PAGE> 5
(4) the replacement of a majority of the Board of Directors over a
two-year period from the directors who constituted the Board of Directors 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 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 approved
or who were nominated by, or designees of TPG or its Affiliates (any such
individual who was a director at the beginning of such period or is so approved,
nominated or designated being referred to herein as an "Incumbent Director");
provided, however, that no individual shall be considered an Incumbent Director
if the individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(5) a merger or consolidation involving the Company in which the
Company is not the surviving corporation, or a merger or consolidation involving
the Company in which the Company is the surviving corporation but the holders of
shares of Common Stock receive securities of another corporation and/or other
property, including cash, or any other similar transaction.
For purposes of this Section 2(y), "Affiliate" shall mean, 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" or "controlled" have meanings
correlative of the foregoing.
(z) A "Public Market" for the Common Stock shall be deemed to exist if
the Common Stock is registered under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended, or if trading regularly occurs in such Common
Stock in, on or through the facilities of securities exchanges and/or
inter-dealer quotation systems in the United States (within the meaning of
Section 902(n) of the Securities Act of 1933, as amended) or any designated
offshore securities market (within the meaning of Rule 902(a) of the Securities
Act of 1933, as amended).
3. Stock Subject to the Plan
(a) Maximum Shares Available for Delivery. Subject to 10 hereof, the
maximum number of shares of Common Stock that may be delivered to Participants
and their beneficiaries under the Plan shall be equal to the sum of (i)
3,195,687, and (ii) any shares of Common Stock that are represented by awards
granted under any prior plan of the Company, which are forfeited, expire or are
canceled without the delivery of shares of Common Stock or which result in the
forfeiture of shares of Common Stock back to the Company; provided, however,
that in no event
5
<PAGE> 6
shall such maximum number of shares of Common Stock exceed a number of shares
which is equal to 30% of the then outstanding shares of Del Monte (any
convertible preferred or convertible senior common shares of Del Monte will be
counted as if on a converted basis). In addition, any shares of Common Stock
granted under the Plan which are forfeited back to the Company because of the
failure to meet an Incentive Award contingency or condition shall again be
available for delivery pursuant to new Incentive Awards granted under the Plan.
Any shares of Common Stock covered by an Incentive Award (or portion of an
Incentive Award) granted under the Plan, which is forfeited or canceled, expires
or is settled in cash, including the settlement of tax withholding obligations
using shares of Common Stock, shall be deemed not to have been delivered for
purposes of determining the maximum number of shares of Common Stock available
for delivery under the respective plan. Likewise, if any Option is exercised by
tendering shares of Common Stock, either actually or by attestation, to the
Company as full or partial payment for such exercise under this Plan or any
prior plan of the Company, only the number of shares of Common Stock issued net
of the shares of Common Stock tendered shall be deemed delivered for purposes of
determining the maximum number of shares of Common Stock available for delivery
under the Plan. Further, shares of Common Stock issued under the Plan through
the settlement, assumption or substitution of outstanding Incentive Awards or
obligations to grant future Incentive Awards as a condition of the Company
acquiring another entity shall not reduce the maximum number of shares of Common
Stock available for delivery under the Plan. Shares of Common Stock issued under
the Plan may be either newly issued shares or treasury shares, as determined by
the Committee.
(b) Payment Shares. Subject to the overall limitation on the number of
shares of Common Stock that may be delivered under the Plan, the Committee may,
in addition to granting Incentive Awards under Section 4, use available shares
of Common Stock as the form of payment for compensation, grants or rights earned
or due under any other compensation plans or arrangements of the Company,
including those of any entity acquired by the Company.
4. Administration of the Plan
The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more persons, each of whom shall be a "nonemployee
director" within the meaning of Rule 16b-3, unless otherwise determined by the
Board of Directors. The Committee shall from time to time designate the key
employees of the Company who shall be granted Incentive Awards and the amount
and type of such Incentive Awards.
The Committee shall have full discretionary authority to administer the
Plan, including authority to interpret and construe any provision of the Plan
and the terms of any Incentive Award issued under it and to adopt such rules and
regulations for administering the Plan as it may deem necessary. The Committee,
in its sole discretion and on such terms and conditions as it may provide, may
delegate all or any part of its authority and powers under the Plan to one or
more Directors. Decisions of the Committee shall be final and binding on all
parties, and shall be given the maximum deference permitted by law.
6
<PAGE> 7
The Committee may, in its absolute discretion, accelerate the date on
which any Option or Stand-Alone SAR granted under the Plan becomes exercisable
or, subject to Section 6(c)(1) hereof, extend the term of any Option or
Stand-Alone SAR granted under the Plan.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Committee.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and Del Monte shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action,
omission or determination was taken or made by such member, director or employee
in bad faith and without reasonable belief that it was in the best interests of
the Company.
5. Eligibility
The persons who shall be eligible to receive Incentive Awards pursuant
to the Plan shall be such Employees, Directors and Consultants as the Committee
shall select from time to time.
6. Options
The Committee may grant Options pursuant to the Plan to Participants,
which Options shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Options shall comply with and be subject to the
following terms and conditions:
(a) Identification of Options. All Options granted under the Plan shall
be clearly identified in the agreement evidencing such Options as either
Incentive Stock Options or as Non-Qualified Stock Options.
(b) Exercise Price. The exercise price of any Non-Qualified Stock
Option granted under the Plan shall be such price as the Committee shall
determine on the date on which such Non-Qualified Stock Option is granted and
shall not be less than 85% of the Fair Market Value of a share of Common Stock
on the date on which such Non-Qualified Stock Option is granted; provided, that
the exercise price of any Non-Qualified Stock Option granted to an individual,
who at the time of the proposed grant owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of Del Monte
or any of its Subsidiaries, shall not be less than 110% of the Fair Market Value
of a share of Common Stock on the date on which such Non-Qualified Stock Option
is granted.
(c) Term and Exercise of Options.
(1) Each Option shall be exercisable on such date or dates, during
such period and for such number of shares of Common Stock as shall be determined
by the Committee on the
7
<PAGE> 8
day on which such Option is granted and set forth in the Option agreement with
respect to such Option; provided, however, that no Option will be exercisable
after the expiration of ten years from the date the Option is granted; and
provided, further, that each Option shall be subject to earlier expiration,
termination, cancellation or exercisability as provided in this Plan. Subject to
earlier termination of the Option as determined by the Committee, each
Participant who is not an officer, Director or Consultant of the Company or of a
Subsidiary shall have the right to exercise an Option at the rate of at least
twenty percent over five years from the date such Option is granted.
(2) Each Option shall be exercisable in whole or in part, subject
to the provisions of the applicable Option agreement. The partial exercise of an
Option shall not cause the expiration, termination or cancellation of the
remaining portion thereof.
(3) An Option shall be exercised by delivering written notice to
Del Monte's principal office, to the attention of the office specified by Del
Monte. Such notice shall specify the number of shares of Common Stock with
respect to which the Option is being exercised and the effective date of the
proposed exercise and shall be signed by the Participant. Payment for shares of
Common Stock purchased upon the exercise of an Option shall be made on the
effective date of such exercise in full in cash or its equivalent. The
Committee, in its sole discretion, also may permit exercise (i) by tendering
previously acquired shares of Common Stock having an aggregate Fair Market Value
at the time of exercise equal to the total exercise price, or (ii) by any other
means which the Committee, in its sole discretion, determines to both provide
legal consideration for the Common Stock, and to be consistent with the purposes
of the Plan. In the event that, prior to the existence of a Public Market for
the Common Stock, a Participant elects to pay the exercise price upon the
exercise of an Option by the tender of previously-owned shares, the delivery by
Del Monte of certificates representing the shares of Common Stock purchased upon
such exercise shall be deferred pending a determination of the exact number of
the shares of Common Stock required to be tendered by the Participant.
(4) Any Option granted under the Plan may be exercised by a
broker-dealer acting on behalf of a Participant if (i) the broker-dealer has
received from the Participant or Del Monte a fully- and duly-endorsed agreement
evidencing such Option and instructions signed by the Participant requesting Del
Monte to deliver the shares of Common Stock subject to such Option to the
broker-dealer on behalf of the Participant and specifying the account into which
such shares should be deposited, (ii) adequate provision has been made with
respect to the payment of any withholding taxes due upon such exercise or, in
the case of an Incentive Stock Option, the disposition of such shares and (iii)
the broker-dealer and the Participant have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR Part 220.
(5) Certificates for shares of Common Stock purchased upon the
exercise of an Option (which may be in book entry form) shall be issued in the
name of the Participant and delivered to the Participant as soon as practicable
following the effective date on which the Option is exercised.
8
<PAGE> 9
(6) During the lifetime of a Participant, each Option granted to
him shall be exercisable only by him. No Option shall be assignable or
transferable other than by will, the laws of descent and distribution, or to the
limited extent provided in Paragraph 17 hereof.
(7) Subject to earlier termination pursuant to Section 7(b)(2) and
10(d), exercise of an Option shall always be subject to the following:
(i) In the event of the termination of the employment of a
Participant with the Company for Cause, each Option then outstanding shall
expire and be cancelled upon such termination.
(ii) In the event that the employment of a Participant with the
Company shall be terminated other than by the Company for Cause or on account of
Disability or death of the Participant (A) Options granted to such Participant,
to the extent that they were exercisable at the time of such termination, shall
remain exercisable until the expiration of ninety (90) days after such
termination, on which date they shall expire, and (B) Options granted to such
participant, to the extent that they were not exercisable at the time of such
termination, shall expire at the close of business on the date of such
termination; provided, however, that no Option shall be exercisable after the
expiration of its term.
(iii) In the event that the employment of a Participant with
the Company shall terminate on account of Disability or death of the
Participant, (A) Options granted to such Participant, to the extent that they
were exercisable at the time of such termination, shall remain exercisable until
the expiration of one (1) year after such termination, on which date they shall
expire, and (B) Options granted to such Participant, to the extent that they
were not exercisable at the time of such termination, shall expire at the close
of the business on the date of such termination; provided, however, that no
Option shall be exercisable after the expiration of its term.
(d) Limitations on Grant of Incentive Stock Options
(1) The aggregate Fair Market Value of shares of Common Stock with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code) are exercisable for the first time by a Participant during any
calendar year under the Plan and any other stock option plan of the Company (or
any "subsidiary" of Del Monte as such term is defined in Section 424 of the
Code) shall not exceed $100,000. Such Fair Market Value shall be determined as
of the date on which each such incentive stock option is granted. In the event
that the aggregate Fair Market Value of shares of Common Stock with respect to
such incentive stock options exceeds $100,000, then Incentive Stock Options
granted hereunder to such Participant shall, to the extent and in the order
required by regulations promulgated under the Code (or any other authority
having the force of regulations), automatically be deemed to be Non-Qualified
Stock Options, but all other terms and provisions of such Incentive Stock
Options shall remain unchanged. In the absence of such Regulations (and
authority), or in the event such Regulations (or authority) require or permit a
designation of the options which shall cease to constitute incentive stock
options, Incentive Stock Options shall, to the extent of such excess and in the
9
<PAGE> 10
order in which they were granted, automatically be deemed to be Non-Qualified
Stock Options, but all other terms and provisions of such Incentive Stock
Options shall remain unchanged.
(2) No Incentive Stock Option may be granted to an individual if,
at the time of the proposed grant, such individual owns stock possessing more
than ten percent of the total combined voting power of all classes of stock of
Del Monte or any of its "subsidiaries" (within the meaning of Section 424 of the
Code), unless (i) the exercise price of such Incentive Stock Option is at least
one hundred and ten percent of the Fair Market Value of a share of Common Stock
at the time such Incentive Stock Option is granted and (ii) such Incentive Stock
Option is not exercisable after the expiration of five years from the date such
Incentive Stock Option is granted.
(3) Only Employees are eligible to be granted Incentive Stock
Options. Directors and Consultants are not eligible to be granted Incentive
Stock Options.
(e) Cash Bonuses and Loans
(1) The Committee may, in its absolute discretion, grant to any
Participant a cash bonus in an amount determined by the Committee to enable the
Participant to pay any federal, state or local income taxes arising out of the
exercise of an Option.
(2) The Committee may, in its absolute discretion, provide a loan
to any Participant in an amount determined by the Committee to enable the
Participant to pay (i) any federal, state or local income taxes arising out of
the exercise of an Option or (ii) the exercise price with respect to any Option.
Any such loan (i) shall be for such term and at such rate of interest as the
Committee may determine, (ii) shall be evidenced by a promissory note in a form
determined by the Committee and executed by the Participant and (iii) shall be
subject to such other terms and conditions as the Committee may determine.
(f) Consequences Upon Certain Transactions. Not more than ten (10) days
prior to a Change of Control, all outstanding Options and Stand-Alone SARs shall
vest and become immediately exercisable.
7. Tandem Stock Appreciation Rights
The Committee may grant in connection with any Option granted hereunder
one or more Tandem SARs relating to a number of shares of Common Stock less than
or equal to the number of shares of Common Stock subject to the related Option.
Notwithstanding anything herein to the contrary, no Tandem SARs shall be granted
prior to the existence of a Public Market for the Common Stock. A Tandem SAR may
be granted at the same time as, or subsequent to the time that, its related
Option is granted. Each Tandem SAR shall be evidenced by an agreement in such
form as the Committee shall from time to time approve. Tandem SARs shall comply
with and be subject to the following terms and conditions:
(a) Benefit Upon Exercise. The exercise of a Tandem SAR with respect to
any number of shares of Common Stock shall entitle a Participant to (i) a cash
payment, for each
10
<PAGE> 11
such share, equal to the excess of (A) the Fair Market Value of a share of
Common Stock on the effective date of such exercise over (B) the exercise price
of the related Option, (ii) the issuance or transfer to the Participant of a
number of shares of Common Stock which on the date of the exercise of the Tandem
SAR have a Fair Market Value equal to such excess or (iii) a combination of cash
and shares of Common Stock in amounts equal to such excess, all as determined by
the Committee in its discretion.
(b) Term and Exercise of Tandem SAR.
(1) A Tandem SAR shall be exercisable at the same time and to the
same extent (on a proportional basis, with any fractional amount being rounded
down to the immediately preceding whole number) as its related Option.
(2) The exercise of a Tandem SAR with respect to a number of shares
of Common Stock shall cause the immediate and automatic cancellation of its
related Option with respect to an equal number of shares. The exercise of an
Option, or the cancellation, termination or expiration of an Option (other than
pursuant to this Paragraph (2)), with respect to a number of shares of Common
Stock shall cause the automatic and immediate cancellation of its related Tandem
SARs to the extent that the number of shares of Common Stock subject to such
Option after such exercise, cancellation, termination or expiration is less than
the number of shares subject to such Tandem SARs. Such Tandem SARs shall be
cancelled in the order in which they became exercisable.
(3) Each Tandem SAR shall be exercisable in whole or in part, as
provided in the applicable agreement. The partial exercise of a Tandem SAR shall
not cause the expiration, termination or cancellation of the remaining portion
thereof.
(4) During the lifetime of a Participant, each Tandem SAR granted
to him shall be exercisable only by him. No Tandem SAR shall be assignable or
transferable other than by will, the laws of descent and distribution, or as
provided in Paragraph 17 hereof and otherwise than together with its related
Option.
(5) A Tandem SAR shall be exercised by delivering written notice to
Del Monte's principal office, to the attention of the office specified by Del
Monte. Such notice shall specify the number of shares of Common Stock with
respect to which the Tandem SAR is being exercised and the effective date of the
proposed exercise and shall be signed by the Participant.
8. Stand-Alone Stock Appreciation Rights
The Committee may grant Stand-Alone SARs pursuant to the Plan, which
Stand-Alone SARs shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Notwithstanding anything herein to the
contrary, no Stand-Alone SARs shall be granted prior to the existence of a
Public Market for the Common Stock. Stand-Alone SARs shall comply with and be
subject to the following terms and conditions:
11
<PAGE> 12
(a) Exercise Price. The exercise price of any Stand-Alone SAR granted
under the Plan shall be determined by the Committee at the time of the grant of
such Stand-Alone SAR.
(b) Benefit Upon Exercise. The exercise of a Stand-Alone SAR with
respect to any number of shares of Common Stock shall entitle a Participant to
(i) a cash payment, for each such share, equal to the excess of (A) the Fair
Market Value of a share of Common Stock on the effective date of such exercise
over (B) the exercise price of the Stand-Alone SAR, (ii) the issuance or
transfer to the Participant of a number of shares of Common Stock which on the
date of the exercise of the Stand-Alone SAR have a Fair Market Value equal to
such excess or (iii) a combination of cash and shares of Common Stock in amounts
equal to such excess, all as determined by the Committee in its absolute
discretion.
(c) Term and Exercise of Stand-Alone SARs
(1) Each Stand-Alone SAR shall be exercisable on such date or
dates, during such period and for such number of shares of Common Stock as shall
be determined by the Committee and set forth in the Stand-Alone SAR agreement
with respect to such Stand-Alone SAR. Each Stand-Alone SAR shall be subject to
such termination, expiration or cancellation provisions as provided in the
agreement evidencing such Stand-Alone SAR.
(2) Each Stand-Alone SAR may be exercised in whole or in part, as
provided in the applicable agreement. The partial exercise of a Stand-Alone SAR
shall not cause the expiration, termination or cancellation of the remaining
portion thereof.
(3) A Stand-Alone SAR shall be exercised by delivering written
notice to Del Monte's principal office, to the attention of the office
designated by Del Monte. Such notice shall specify the number of shares of
Common Stock with respect to which the Stand-Alone SAR is being exercised and
the effective date of the proposed exercise and shall be signed by the
Participant.
(4) During the lifetime of a Participant, each Stand-Alone SAR
granted to him shall be exercisable only by him. No Stand-Alone SAR shall be
assignable or transferable otherwise than by will, the laws of descent and
distribution, or to the limited extent provided in Paragraph 17 hereof.
9. Stock Bonuses
The Committee may grant Stock Bonuses in such amounts as it shall
determine from time to time. A Stock Bonus shall be paid at such time and
subject to such conditions as the Committee shall determine at the time of the
grant of such Stock Bonus. Notwithstanding anything herein to the contrary, no
Stock Bonus shall be granted prior to the existence of a Public Market for the
Common Stock. Certificates for shares of Common Stock granted as a Stock
Bonus shall be issued in the name of the Participant to whom such grant
was made and delivered to such Participant as soon as practicable after the date
on which such Stock Bonus is required to be paid.
12
<PAGE> 13
10. Adjustment Upon Changes in Common Stock
(a) Shares Available for Grants. In the event of any change in the
number of shares of Common Stock outstanding by reason of any stock dividend or
split, recapitalization, merger, consolidation, combination or exchange of
shares or similar corporate change, the maximum aggregate number of shares of
Common Stock with respect to which the Committee may grant Options, Stand-Alone
SARs and Stock Bonuses shall be appropriately adjusted by the Committee. In the
event of any change in the number of shares of Common Stock outstanding by
reason of any other event or transaction, the Committee may, but need not, make
such adjustments in the number and class of shares of Common Stock with respect
to which Options, Stand-Alone SARs and Stock Bonuses may be granted as the
Committee may deem appropriate.
(b) Outstanding Options, Tandem SARs and Stand-Alone SARs - Increase or
Decrease in Issued Shares Without Consideration. Subject to any required action
by the stockholders of Del Monte, in the event of any increase or decrease in
the number of issued shares of Common Stock resulting from a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend (but
only on the shares of Common Stock), or any other increase or decrease in the
number of such shares effected without receipt or payment of consideration by
Del Monte, the Committee shall proportionally adjust the number of shares of
Common Stock subject to each outstanding Option, Tandem SAR and Stand-Alone SAR
and the exercise price per share of Common Stock of each such Option, Tandem SAR
and Stand-Alone SAR.
(c) Outstanding Options, Tandem SARs and Stand-Alone SARs - Certain
Mergers. Subject to any required action by the stockholders of Del Monte, in the
event that Del Monte shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Common Stock receive securities of another corporation), each
Option, Tandem SAR and Stand-Alone SAR outstanding on the date of such merger or
consolidation shall pertain to and apply to the securities which a holder of the
number of shares of Common Stock subject to such Option, Tandem SAR or
Stand-Alone SAR would have received in such merger or consolidation.
(d) Outstanding Options, Tandem SARs and Stand-Alone SARs - Certain
Other Transactions. In the event of a dissolution or liquidation of Del Monte,
or a sale of all or a substantial portion of the Common Stock held by TPG, the
Committee shall have the power to:
(i) cancel, effective immediately prior to the occurrence of such
event, each Option (including each Tandem-SAR related thereto) and Stand-Alone
SAR outstanding immediately prior to such event (whether or not then
exercisable), and, in full consideration of such cancellation, pay to the
Participant to whom such Option or Stand-Alone SAR was granted an amount in
cash, for each share of Common Stock subject to such Option or Stand-Alone SAR,
respectively, equal to the excess of (A) the value, as determined by the
Committee in good faith, of the property (including cash) received by the holder
of a share of Common Stock as a result of such event over (B) the exercise price
of such Option or Stand-Alone SAR; or
13
<PAGE> 14
(ii) permit Participants to exercise their Options (or Tandem SARs
related thereto) and Stand-Alone SARs and participate in such transaction on a
basis no less favorable than that afforded other owners of Common Stock.
(e) Outstanding Options, Tandem SARs and Stand-Alone SARs - Other
Changes. In the event of any change in the capitalization of Del Monte or
corporate change other than those specifically referred to in Sections 10(b),
(c) or (d) hereof, the Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to Options, Tandem SARs
and Stand-Alone SARs outstanding on the date on which such change occurs and in
the per share exercise price of each such Option, Tandem SAR and Stand-Alone SAR
as the Committee may consider appropriate to prevent dilution or enlargement of
rights.
(f) No Other Rights. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger or consolidation of Del Monte or any other corporation.
Except as expressly provided in the Plan, no issuance by Del Monte of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number of shares of Common Stock subject to an Incentive Award or the
exercise price of any Option, Tandem SAR or Stand-Alone SAR.
11. Rights as a Stockholder
(a) No person shall have any rights as a stockholder with respect to
any shares of Common Stock covered by or relating to any Incentive Award granted
pursuant to this Plan until the date of the issuance of a stock certificate with
respect to such shares. Except as otherwise expressly provided in Section 10
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
(b) Notwithstanding anything herein to the contrary, prior to the
existence of a Public Market, Del Monte shall not be obligated to cause to be
issued or delivered to or for the benefit of any Participant any certificates
evidencing shares of Common Stock pursuant to the Plan unless and until such
Participant executes a Stockholders' Agreement in the form attached hereto as
Exhibit A. Del Monte shall comply with Section 260.140.1 of Title 10 of the
California Code of Regulations with respect to the voting rights of Common
Stock.
(c) Del Monte will provide financial statements to each Participant
prior to such Participant's purchase of shares of Common Stock under the Plan,
and to each Participant annually during the period such Participant has Options
outstanding, or as otherwise required under Section 260.140.46 of Title 10 of
the California Code of Regulations. Notwithstanding the foregoing, Del Monte
will not be required to provide such financial statements to Participants when
issuance is limited to key employees whose services in connection with Del Monte
assure them access to equivalent information.
14
<PAGE> 15
12. No Special Employment Rights; No Right to Incentive Award
Nothing contained in the Plan or any Incentive Award shall confer upon
any Participant any right with respect to the continuation of his employment by
the Company or interfere in any way with the right of the Company, subject to
the terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.
13. Securities Matters
(a) Del Monte shall be under no obligation to effect the registration
pursuant to the Securities Act of 1933 of any shares of Common Stock to be
issued hereunder or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, Del Monte shall not be
obligated to cause to be issued or delivered any certificates evidencing shares
of Common Stock pursuant to the Plan unless and until Del Monte is advised by
its counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authority and the
requirements of any securities exchange on which shares of Common Stock are
traded. The Committee may require, as a condition of the issuance and delivery
of certificates evidencing shares of Common Stock pursuant to the terms hereof,
that the recipient of such shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Committee,
in its sole discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall only be
effective at such time as counsel to Del Monte shall have determined that the
issuance and delivery of shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which shares of Common Stock are
traded. Del Monte may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of shares
of Common Stock pursuant thereto to be made pursuant to registration or an
exemption from registration or other methods for compliance available under
federal or state securities laws. Del Monte shall inform the Participant in
writing of its decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the exercise of
an Option has been deferred, the Participant may, by written notice, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.
(c) In the event that the Committee defers the effectiveness of the
exercise of a Participant of an Option granted hereunder in order to allow the
issuance of shares of Common Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or
15
<PAGE> 16
other methods for compliance available under federal or state securities laws,
such Participant may elect, by delivery of written notice by the Participant to
the Company not later than thirty (30) days following his receipt of notice of
such deferral or the expiration of such deferral, to surrender the exercisable
portion of such Option (or any portion thereof) to the Company in consideration
for a lump sum payment in cash in an amount equal to the product of (A) the
excess of (i) the value of a share of Common Stock as determined by the Board of
Directors as of the date of surrender over (ii) the per share exercise price of
the Option and (B) the number of shares with respect to which such Participant
desires and is entitled to exercise such Option. Notice shall be delivered in
person or by certified mail, return receipt requested and shall be deemed to
have been given when personally delivered or three (3) days after mailing.
14. Withholding Taxes
(a) Cash Remittance. Whenever shares of Common Stock are to be issued
upon the exercise of an Option or the grant of a Stock Bonus, Del Monte shall
have the right to require the Participant to remit to Del Monte in cash an
amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, attributable to such exercise prior to the delivery of any
certificate or certificates for such shares. In addition, upon the exercise of a
Tandem SAR or Stand-Alone SAR, Del Monte shall have the right to withhold from
any cash payment required to be made pursuant thereto an amount sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise.
(b) Stock Remittance. At the election of the Participant, subject to
the approval of the Committee, when shares of Common Stock are to be issued upon
the exercise of an Option or the grant of a Stock Bonus, the Participant may
tender to Del Monte a number of shares of Common Stock determined by such
Participant, the Fair Market Value of which at the tender date the Committee
determines to be sufficient to satisfy the federal, state and local withholding
tax requirements, if any, attributable to such exercise or grant and not greater
than the Participant's estimated total federal, state and local tax obligations
associated with such exercise or grant. Such election shall satisfy the
Participant's obligations under Paragraph 14(a) hereof. In the event that a
Participant makes an election pursuant to this Section 14(b) prior to the
existence of a Public Market for the Common Stock, the delivery by Del Monte of
certificates representing the shares of Common Stock purchased upon such
exercise shall be deferred pending a determination of the exact number of the
shares of Common Stock required to be tendered or withheld.
(c) Stock Withholding. At the election of the Participant, subject to
the approval of the Committee, when shares of Common Stock are to be issued upon
the exercise of an Option or the grant of a Stock Bonus, Del Monte shall
withhold a number of such shares determined by such Participant, the Fair Market
Value of which at the exercise date the Committee determines to be sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise or grant and is not greater than the Participant's
estimated total federal, state and local tax obligations associated with such
exercise or grant. Such election shall satisfy the Participant's obligations
under Paragraph 14(a) hereof.
16
<PAGE> 17
15. Amendment of the Plan
The Board of Directors may at any time suspend or discontinue the Plan
or revise or amend it in any respect whatsoever; provided, however, that without
approval of the stockholders no revision or amendment shall except as provided
in Section 10 hereof, increase the number of shares of Common Stock that may be
issued under the Plan.
16. No Obligation to Exercise
The grant to a Participant of an Option, Tandem SAR or Stand-Alone SAR
shall impose no obligation upon such Participant to exercise such Option, Tandem
SAR or Stand-Alone SAR.
17. Transfers Upon Death
If permitted by the Committee, a Participant may name a beneficiary or
beneficiaries to whom any vested but unpaid Incentive Award shall be paid in the
event of the Participant's death. Each such designation shall revoke all prior
designations by the Participant and shall be effective only if given in a form
and manner acceptable to the Committee. In the absence of any such designation,
any vested benefits remaining unpaid at the Participant's death shall be paid to
the Participant's estate and, subject to the terms of the Plan and of the
applicable Incentive Award agreement, any unexercised vested Incentive Award may
be exercised by the administrator or executor of the Participant's estate. No
such transfer or distribution of any Incentive Award, or the right to exercise
any Incentive Award, shall be effective to bind Del Monte unless the Committee
shall have been furnished with (a) written notice thereof and with a copy of the
will and/or such evidence as the Committee may deem necessary to establish the
validity of the transfer and (b) an agreement by the transferee to comply with
all the terms and conditions of the Incentive Award that are or would have been
applicable to the Participant and to be bound by the acknowledgements made by
the Participant in connection with the grant of the Incentive Award.
18. Expenses and Receipts
The expenses of the Plan shall be paid by Del Monte. Any proceeds
received by Del Monte in connection with any Incentive Award will be used for
general corporate purposes.
19. Failure to Comply
In addition to the remedies of Del Monte elsewhere provided for herein,
failure by a Participant to comply with any of the terms and conditions of the
Plan or the agreement executed by such Participant evidencing an Incentive
Award, unless such failure is remedied by such Participant within ten days after
having been notified of such failure by the Committee, shall be grounds for the
cancellation and forfeiture of such Incentive Award, in whole or in part, as the
Committee, in its absolute discretion, may determine.
17
<PAGE> 18
20. Compliance with Rule 16b-3
Transactions under this Plan with respect to Section 16 Persons are
intended to comply with all applicable conditions of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended. To the extent any provision of the
Plan, Incentive Award agreement or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
21. Applicable Law
The Plan will be administered in accordance with the laws of the State
of California, without reference to its principles of conflicts of law.
22. Effective Date
The Plan shall commence on May 29, 1998 (the date of adoption of the
Plan), and subject to Paragraph 15 (regarding the Board's right to amend or
terminate the Plan), shall remain in effect thereafter. The Plan shall be
approved by stockholders of Del Monte within twelve months before or after the
effective date of the Plan. However, without further stockholder approval, no
Incentive Stock Option may be granted under the Plan after May 29, 2006.
18
<PAGE> 1
EXHIBIT 10.4
DEL MONTE FOODS COMPANY
NON-EMPLOYEE DIRECTOR AND INDEPENDENT CONTRACTOR
1997 STOCK INCENTIVE PLAN
AS AMENDED OCTOBER 21, 1999
<PAGE> 2
1. Purpose of the Plan
This Del Monte Foods Company Non-Employee Director and Independent
Contractor 1997 Stock Incentive Plan is intended to promote the interests of the
Company by providing certain non-employee directors and independent contractors
of the Company with incentives and rewards to encourage them to continue as
service providers to the Company.
2. Definitions
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of Directors of Del Monte
or such Board of Directors of the Board of Directors as may be designated by the
Board of Directors.
(b) "Change of Control" shall mean the occurrence of one or more of the
following events:
(1) 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 individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof (a "Person") or group of related Persons
for purposes of Section 13(d) of the Exchange Act (a "Group"), together with any
Affiliates (as defined below) thereof other than to TPG Partners, L.P. ("TPG")
or its Affiliates;
(2) the approval by the holders of 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 the Company ("Capital Stock") of any plan or proposal for the
liquidation or dissolution of the Company;
(3) (i) any Person or Group (other than TPG or its Affiliates)
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 (ii) TPG and its Affiliates 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
(4) the replacement of a majority of the Board of Directors over a
two-year period from the directors who constituted the Board of Directors 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 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 Affiliates (any
such individual who was a director at the beginning of such period or is so
approved, nominated or designated being referred to herein as an "Incumbent
Director"): provided, however, that no individual shall be considered an
Incumbent Director if the individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
2
<PAGE> 3
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board of
Directors ( a "Proxy Contest") including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or
(5) a merger or consolidation involving the Company in which the
Company is not the surviving corporation, or a merger or consolidation involving
the Company in which the Company is the surviving corporation but the holders of
shares of Common Stock receive securities of another corporation but the holders
of shares of Common Stock receive securities of another corporation and/or other
property, including cash, or any other similar transaction.
For purposes of this Section 2(b), "Affiliate" shall mean, 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" or "controlled" have meanings
correlative of the foregoing.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Common Stock" shall mean common stock of Del Monte, $.01 par value
per share.
(e) "Company" shall mean Del Monte and its subsidiaries.
(f) "Del Monte" shall mean Del Monte Foods Company, a Maryland
corporation.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Option" shall mean an option to purchase shares of Common Stock
granted pursuant to Section 6 hereof.
(i) "Participant" shall mean a person who is eligible to participate in
the Plan and to whom an Option is granted pursuant to the Plan, and upon his
death, his successors, heirs, executors and administrators, as the case may be.
(j) "Plan" shall mean this Del Monte Foods Company Non-Employee
Director and Independent Contractor 1997 Stock Incentive Plan, as it may be
amended from time to time.
(k) A "Public Market" for the Common Stock shall be deemed to exist if
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
or if trading regularly occurs in such Common Stock in, on or through the
facilities of securities exchanges and/or inter-dealer quotation systems in the
United States (within the meaning of Section 902(n)
3
<PAGE> 4
of the Securities Act) or any designated offshore securities market (within the
meaning of Rule 902(a) of the Securities Act).
(l) "Securities Act" shall mean the Securities Act of 1933, as amended.
3. Stock Subject to the Plan
Subject to adjustment as provided in Section 7 hereof, the Board of
Directors may grant Options to Participants with respect to 792 shares of Common
Stock. In the event that any outstanding Option expires, terminates or is
cancelled for any reason, the shares of Common Stock subject to the unexercised
portion of such Option shall again be available for grants under the Plan.
Shares of Common Stock issued under the Plan may be either newly issued
shares or treasury shares, as determined by the Board of Directors.
4. Administration of the Plan
The Plan shall be administered by the Board of Directors. The Board of
Directors shall from time to time designate the persons who shall be granted
Options, the number of shares subject to each Option and the terms and
conditions on which each Option shall be granted.
The Board of Directors shall have full authority to administer the
Plan, including authority to interpret and construe any provision of the Plan
and the terms of any Option issued under it and to adopt such rules and
regulations for administering the Plan as it may deem necessary. Decisions of
the Board of Directors shall be final and binding on all parties and all
decisions, determinations, selections and other actions permitted or required to
be taken or made by the Board of Directors with respect to the Plan shall be
subject to the absolute discretion of the Board of Directors. No member of the
Board of Directors shall be liable to any Participant for any action, omission,
or determination relating to the Plan.
5. Eligibility
The persons who shall be eligible to receive Options pursuant to the
Plan shall be such non-employee directors of the Company and independent
contractors retained by the Company as the Board of Directors shall select from
time to time.
6. Options
Each Option granted pursuant to the Plan shall be evidenced by an
agreement in the form attached hereto as Exhibit A. Options shall comply with
and be subject to the following terms and conditions:
(a) Identification of Options. All Options shall be clearly identified
in the agreement evidencing their grant as non-qualified stock options that are
not intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Code.
4
<PAGE> 5
(b) Exercise Price. The exercise price per share of each Option shall
be such price as the Board of Directors shall determine at the time at which the
Option is granted.
(c) Term and Exercise of Options. Each Option shall be exercisable on
such date or dates, during such period and for such number of shares of Common
Stock as shall be determined by the Board of Directors on the day on which such
Option is granted and set forth in the Option agreement with respect to such
Option; provided, however, that no Option shall be exercisable after the
expiration of ten (10) years from the date such Option is granted; and provided,
further, that each Option shall be subject to earlier expiration, termination,
cancellation or exercisability as provided in this Plan.
(d) Effect of Termination of Membership on Board; Independent
Contractor Status.
(1) In the event of the termination of the membership of a
Participant on the Board of Directors for any reason at any time other than on
account of permanent disability or death of the Participant (i) Options granted
to such Participant, to the extent that they were exercisable at the time of
such termination, shall remain exercisable until the expiration of ninety (90)
days after such termination, on which date they shall expire, and (ii) Options
granted to such Participant, to the extent that they were not exercisable at the
time of such termination, shall expire at the close of business on the date of
such termination; provided, however, that no Option shall be exercisable after
the expiration of its term. In the event of the termination of membership of a
Participant on the Board of Directors on account of the permanent disability or
death of the Participant, (x) Options granted to such Participant, to the extent
that they were exercisable at the time of such termination, shall remain
exercisable until the expiration of one (1) year after such termination, on
which date they shall expire, and (y) Options granted to such Participant, to
the extent that they were not exercisable at the time of such termination, shall
expire at the close of business on the date of such termination; provided,
however, that no Option shall be exercisable after the expiration of its term.
The agreement evidencing the grant of an Option to any person who is not a
member of the Board of Directors shall include such terms and conditions as the
Board of Directors deems appropriate concerning the termination of the Option
prior to the expiration of its term.
(e) Certain Terms and Conditions
(1) Each Option shall be exercisable in whole or in part with
respect to not less than one share of Common Stock. The partial exercise of an
Option shall not cause the expiration, termination or cancellation of the
remaining portion thereof.
(2) An Option shall be exercised by delivering notice to Del
Monte's principal office in the form attached hereto as Exhibit B, to the
attention of its Chief Financial Officer with a copy to its General Counsel, no
less than three business days in advance of the effective date of the proposed
exercise. Such notice shall specify the number of shares of Common Stock with
respect to which the Option is being exercised and the effective date of the
proposed exercise and shall be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close of business on the business
day immediately preceding the effective date of the proposed exercise. Payment
for shares of Common Stock purchased upon the exercise of an
5
<PAGE> 6
Option shall be made on the effective date of such exercise in cash, by
certified check, bank cashier's check or wire transfer, or by tender to Del
Monte of shares of Common Stock already owned and held by the Participant for at
least six (6) months, which shares shall be valued as determined by the Board of
Directors on the effective date of the proposed exercise. In the event that,
prior to the existence of a Public Market for the Common Stock, a Participant
elects to pay the exercise price upon the exercise of an Option by the tender of
previously-owned shares, the delivery by Del Monte of certificates representing
the shares of Common Stock purchased upon such exercise shall be deferred
pending a determination of the exact number of the shares of Common Stock
required to be tendered by the Participant.
(3) Certificates for shares of Common Stock purchased upon the
exercise of an Option shall be issued in the name of the Participant and
delivered to the Participant as soon as practicable following the effective date
on which the Option is exercised.
(4) During the lifetime of a Participant, each Option granted to
him shall be exercisable only by him. No Option shall be assignable or
transferable otherwise than by will or by the laws of descent and distribution.
Notwithstanding the preceding provisions of this Section 6(e)(4), a Participant
may assign his rights with respect to any Option granted to him to a trust or
custodianship the beneficiaries of which may include only the Participant, the
Participant's spouse, or the Participant's lineal descendants (by blood or
adoption). In the event of any such assignment, such trust or custodianship
shall be subject to all the restrictions, obligations and responsibilities as
apply to the Participant under the Plan and shall be entitled to all the rights
of the Participant under the Plan.
(f) Consequences Upon Certain Transactions. Not more than ten (10) days
prior to a Change of Control, all outstanding Options and Stand-Alone SARs shall
vest and become immediately exercisable.
7. Adjustment Upon Changes in Common Stock
(a) Subject to any required action by the shareholders of Del Monte, in
the event of any increase or decrease in the number of issued shares of Common
Stock resulting from a subdivision or consolidation of shares of Common Stock or
the payment of a stock dividend (but only on the shares of Common Stock), or any
other increase or decrease in the number of such shares effected by Del Monte
without receipt or payment of consideration, the Board of Directors shall
proportionally adjust the number of shares of Common Stock subject to each
outstanding Option and the exercise price per share of Common Stock of each such
Option.
(b) Subject to any required action by the shareholders of Del Monte, in
the event that Del Monte shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Common Stock receive securities of another corporation), each
Option outstanding on the date of such merger or consolidation shall pertain to
and apply to the securities which a holder of the number of shares of Common
Stock subject to such Option would have received in such merger or
consolidation.
6
<PAGE> 7
(c) In the event of a dissolution or liquidation of Del Monte, or a sale
of all or a substantial portion of the Common Stock held by TPG, the Committee
shall have the power to:
(i) cancel, effective immediately prior to the occurrence of such
event, each Option outstanding immediately prior to such event (whether or not
then exercisable), and, in full consideration of such cancellation, pay to the
Participant to whom such Option was granted an amount in cash, for each share of
Common Stock subject to such Option, equal to the excess of (A) the value, as
determined by the Committee in good faith, of the property (including cash)
received by the holder of a share of Common Stock as a result of such event over
(B) the exercise price of such Option; or
(ii) permit Participants to exercise their Options and participate
in such transaction on a basis no less favorable than that afforded other owners
of Common Stock.
(d) In the event of any change in the capitalization of Del Monte or
corporate change other than those specifically referred to herein, the Board of
Directors will make such adjustments in the number and class of shares subject
to Options outstanding on the date on which such change occurs and in the per
share exercise price of each such Option as the Board of Directors may consider
necessary or appropriate.
(e) Except as expressly provided in the Plan, no Participant shall have
any rights by reason of any subdivision or consolidation of shares of stock of
any class, the payment of any dividend, any increase or decrease in the number
of shares of stock of any class or any dissolution, liquidation, merger or
consolidation of Del Monte or any other corporation. Except as expressly
provided in the Plan, no issuance by Del Monte of shares of stock of any class,
or securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to an Option or the exercise price of any Option.
8. Rights as a Stockholder
(a) No person shall have any rights as a stockholder with respect to
any shares of Common Stock covered by or relating to any Option granted pursuant
to this Plan until the date of the issuance of a stock certificate with respect
to such shares.
(b) Notwithstanding anything herein to the contrary, prior to the
existence of a Public Market, Del Monte shall not be obligated to cause to be
issued or delivered to or for the benefit of any Participant any certificates
evidencing shares of Common Stock pursuant to the Plan unless and until such
Participant executes a Stockholders' Agreement in the form attached hereto as
Exhibit C or, in the case of a Participant who is not a member of the Board of
Directors, an agreement in such form as the Board of Directors deems
appropriate.
7
<PAGE> 8
9. No Special Rights; No Right to Option
(a) Nothing contained in the Plan or any Option shall confer upon any
Participant any right with respect to the continuation of his relationship with
the company or interfere in any way with the right of the Company at any time to
terminate such relationship.
(b) No person shall have any claim or right to receive an Option
hereunder. The Board of Directors' granting of an Option to a Participant at any
time shall neither require the Board of Directors to grant an Option to such
Participant or any other Participant or other person at any time nor preclude
the Board of Directors from making subsequent grants to such Participant or any
other Participant or other person.
10. Securities Matters
(a) Del Monte shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws. Notwithstanding
anything herein to the contrary, Del Monte shall not be obligated to cause to be
issued or delivered any certificates evidencing shares of Common Stock pursuant
to the Plan unless and until Del Monte is advised by its counsel that the
issuance and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authority and the requirements of any
securities exchange on which shares of Common Stock are traded. The Board of
Directors may require, as a condition of the issuance and delivery of
certificates evidencing shares of Common Stock pursuant to the terms hereof,
that the recipient of such shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Board of
Directors deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall only be
effective at such time as counsel to Del Monte shall have determined that the
issuance and delivery of shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange on which shares of Common Stock are
traded. Del Monte may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of shares
of Common Stock pursuant thereto to be made pursuant to registration or an
exemption from registration or other methods for compliance available under
federal or state securities laws. Del Monte shall inform the Participant in
writing of its decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the exercise of
an Option has been deferred, the Participant may, by written notice, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.
(c) In the event that the Board of Directors defers the effectiveness
of the exercise by a Participant of an Option granted hereunder in order to
allow the issuance of shares of Common Stock pursuant thereto to be made
pursuant to registration or an exemption from registration or other methods for
compliance available under federal or state securities laws, such Participant
may elect, by delivery of written notice by the Participant to the Company not
later than thirty (30) days following his receipt of notice of such deferral or
the expiration of such deferral, to surrender the exercisable portion of such
Option (or any portion thereof) to the Company in
8
<PAGE> 9
consideration for a lump sum payment in cash in an amount equal to the product
of (A) the excess of (i) the value of a share of Common Stock as determined by
the Board of Directors as of the date of surrender over (ii) the per share
exercise price of the Option and (B) the number of shares with respect to which
such Participant desires and is entitled to exercise such Option. Notice shall
be delivered in person or by certified mail, return receipt requested and shall
be deemed to have been given when personally delivered or three (3) days after
mailing.
11. Termination and Amendment of the Plan
The right to grant Options under the Plan will terminate on August 4,
2007. The Board of Directors may at any time suspend or terminate the Plan or
revise or amend it in any respect whatsoever.
12. Transfers Upon Death
Upon the death of a Participant, outstanding Options granted to such
Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Option, or the
right to exercise any Option, shall be effective to bind the Company unless the
Board of Directors shall have been furnished with (a) written notice thereof and
with a copy of the will and/or such evidence as the Board of Directors may deem
necessary to establish the validity of the transfer and (b) an agreement by the
transferee to comply with all the terms and conditions of the Option that are or
would have been applicable to the Participant and to be bound by the
acknowledgements made by the Participant in connection with the grant of the
Option.
13. No Obligation to Exercise
The grant to a Participant of an Option shall impose no obligation upon
such Participant to exercise such Option.
14. Expenses and Receipts
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Option will be used for general
corporate purposes.
l5. Failure to Comply
In addition to the remedies of the Company elsewhere provided for
herein, failure by a Participant to comply with any of the terms and conditions
of the Plan or the agreement executed by such Participant evidencing an Option,
unless such failure is remedied by such Participant within ten (10) days after
having been notified of such failure by the Board of Directors, shall be grounds
for the cancellation and forfeiture of such Option, in whole or in part, as the
Board of Directors, in its absolute discretion, may determine.
9
<PAGE> 10
16. Applicable Law
The Plan will be administered in accordance with the laws of the State
of California, without reference to its principles of conflicts of law.
10
<PAGE> 1
EXHIBIT 10.5
OFFICE LEASE
THE LANDMARK @ ONE MARKET
San Francisco, California
TMG\ONE MARKET, L.P.
AND
CROSSMARKET, LLC
LANDLORD
and
DEL MONTE CORPORATION
TENANT
OCTOBER 7, 1999
*** - Indicates confidential information that has been omitted pursuant to a
request for confidential treatment and filed separately with the
Securities and Exchange Commission.
<PAGE> 2
OFFICE LEASE
THE LANDMARK @ ONE Market
San Francisco, California
BASIC LEASE INFORMATION
Lease Date: October 7, 1999
Landlord: TMG/ONE MARKET, L.P., A California limited
partnership and Crossmarket, LLC, a Nevada limited
liability company
Tenant: DEL MONTE CORPORATION,
A New York corporation
Premises: 101,298 square feet of Rentable Area located on the
3rd, 9th, 10th and 11th Floor(s) of the Building
(of which 17,000 square feet are located on the 3rd
Floor, 36,310 square feet are located on the 9th
Floor, 36,310 square feet are located on the 10th
Floor, and 11,678 square feet are located on the
11th Floor), as shown on the Floor Plan(s) attached
to this Lease as Exhibit A. The Premises shall also
include the storage area outlined on the Floor
Plan(s) and 3,500 square feet located in the
basement of the Building (the "Storage Space"). The
entire Building contains 345,748 square feet of
Rentable Area.
Term: Commencing on the Possession Date (as defined in
Section 5.1 of Exhibit C attached to this Lease)
and continuing until a date ten (10) years from the
Commencement Date (the "Initial Term"), subject to
two (2) options to extend the Term for periods of
five (5) years each (the "Extended Terms").
Anticipated Possession Date: April 1, 2000
Commencement Date: The later of: (i) October 1, 2000, or (ii) six (6)
months after the Possession Date.
Expiration Date: The date ten (10) years after the Commencement
Date, or the last day of any Extended Term, if such
Extended Term is properly exercised.
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Base Rent: PERIOD OF TERM AMOUNT
<S> <C> <C>
Commencement Date to
Fourth anniversary of
Commencement Date $***/year (the "Initial Base Rent")
Fourth anniversary of
Commencement Date to
Eighth Anniversary of
Commencement Date $***/year (the "Middle Base Rent")
Eighth anniversary of
Commencement Date to
End of Initial Term $***/year (the "Final Base Rent")
Extended Terms: The fair market rent for the
Premises as of the first day of each
Extended Term, as determined in
accordance with Section 3.2 of the
Lease
Base Year: The 2001 calendar year.
Tenant's
Percentage Share: ***%
Permitted Use: General office use
Security Deposit: $***
Building Directory
Spaces: 30
Tenant's Address: 1 Market Plaza
San Francisco, CA 94105
Landlord's Address: 100 Bush Street, Suite 2600
San Francisco, CA 94104
Brokers:
Landlord's Broker: CB Richard Ellis, Inc.
Tenant's Broker: Grubb & Ellis Company
</TABLE>
-ii-
<PAGE> 4
Exhibits and Addenda:
Exhibit A: Floor Plan(s) of Premises
Exhibit A-1: Relocation Premises
Exhibit A-2: Annex Premises
Exhibit B: Legal Description of Land
Exhibit C: Work Letter
Exhibit D: Rules and Regulations of the Building
Exhibit E: Confirmation of Lease Term
Exhibit F: Janitorial Specifications
Exhibit F-1: Holidays
Exhibit F-2: Security
Exhibit G: Security Deposit Definitions and Chart
Addenda: None
The Basic Lease Information is incorporated into and made a part of the Lease.
Each reference in the Lease to any Basic Lease Information shall mean the
applicable information set forth above. In the event of any conflict between an
item in the Basic Lease Information and the Lease, the Lease shall control.
-iii-
<PAGE> 5
OFFICE LEASE
THIS LEASE is made and entered into by and between Landlord and
Tenant as of the Lease Date. Landlord and Tenant hereby agree as follows:
1. Definitions.
1.1. Terms Defined. The following terms have the meanings set
forth below. Certain other terms have the meanings set forth in the Basic Lease
Information or elsewhere in this Lease.
Alterations: Alterations, additions or other improvements
to the Premises made by or on behalf of Tenant (but not including Tenant's
moveable trade fixtures, moveable items of personal property or the alterations,
additions or other improvements, if any, made by or on behalf of Tenant during
the initial improvement of the Premises pursuant to and governed by the
provisions of the Work Letter attached hereto as Exhibit C).
Base Operating Expenses and Base Real Estate Taxes: The
Operating Expenses and the Real Estate Taxes paid or incurred by Landlord in the
Base Year.
Building: The office building consisting of an 11-story
building located on the Land, commonly known as The Landmark @ One Market, One
Market Street, San Francisco, California, and any additions to such Building.
Escalation Rent: Tenant's Percentage Share of the total
dollar increase, if any, in Operating Expenses and in Real Estate Taxes, each as
paid or incurred by Landlord in each calendar year, or part thereof, after the
Base Year, over the amount of Base Operating Expenses and Base Real Estate
Taxes. If the Building is less than ninety-five percent (95%) occupied during
any part of any year (including the Base Year), Landlord shall make an
appropriate adjustment of the variable components of Operating Expenses and Real
Estate Taxes for that year, as reasonably determined by Landlord using sound
accounting and management principles, to determine the amount of Operating
Expenses and Real Estate Taxes that would have been incurred during such year if
the Building had been ninety-five percent (95%) occupied during the entire year
(and, if applicable, if the tenant improvements in the Building had been fully
constructed and the Land, the Building, and all tenant improvements in the
Building had been fully assessed for Real Estate Tax purposes). If the
management fees for the Building for any year are calculated as a different
percentage of gross revenue than in the Base Year, then the percentage used in
the calculation of management fees in any such year shall be adjusted upward or
downward to be identical to the percentage used during the Base Year. This
amount shall be considered to have been the amount of Operating Expenses and
Real Estate Taxes for that year. For purposes hereof, "variable components"
include only those component expenses that are affected by variations in
occupancy levels.
Impositions: Taxes, assessments, charges, excises and
levies, business taxes, licenses, permits, inspection and other authorization
fees, transit development fees, assessments or charges for housing funds,
service payments in lieu of taxes and any other fees or charges of any kind at
any time levied, assessed, charged or imposed by any federal, state or local
entity, (i) upon, measured by or reasonably
-1-
<PAGE> 6
attributable to the cost or value of Tenant's equipment, furniture, fixtures or
other personal property located in the Premises, or the cost or value of any
alterations, additions or other improvements to the Premises made by or on
behalf of Tenant during the initial improvement of the Premises pursuant to and
governed by the Work Letter and any subsequent Alterations; (ii) upon, or
measured by, any Rent payable hereunder, including any gross receipts tax; (iii)
upon, with respect to or by reason of the development, possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof; or (iv) upon this Lease
transaction, or any document to which Tenant is a party creating or transferring
any interest or estate in the Premises. Impositions do not include Real Estate
Taxes, franchise, transfer, inheritance or capital stock taxes, or income taxes
measured by the net income of Landlord from all sources, unless any such taxes
are levied or assessed against Landlord as a substitute for, in whole or in
part, any Imposition.
Land: The parcel of land described on Exhibit B attached
to this Lease.
Operating Expenses: All costs of management, operation,
maintenance and repair of the Building and the Land, including, but not limited
to, the following: (i) salaries, wages, benefits and other payroll expenses of
employees engaged in the operation, maintenance or repair of the Building; (ii)
property management fees and expenses (not to exceed ***% of the gross revenue
from the Building and the Land); (iii) rent (or rental value) and expenses for
Landlord's and any property manager's offices in the Building; (iv) electricity,
natural gas, water, waste disposal, sewer, heating, lighting, air conditioning
and ventilating and other utilities; (v) janitorial, maintenance, security, life
safety and other services, such as alarm service, window cleaning and elevator
maintenance and uniforms for personnel providing services; (vi) repair and
replacement, resurfacing or repaving of paved areas, sidewalks, curbs and
gutters (except that any such work which constitutes a capital improvement shall
be included in Operating Expenses in the manner provided in clause (xiv) below);
(vii) landscaping, ground keeping, management, operation, and maintenance and
repair of all public, private and park areas adjacent to the Building; (viii)
materials, supplies, tools and rental equipment; (ix) license, permit and
inspection fees and costs; (x) insurance premiums and costs (including an
imputed insurance premium if Landlord self-insures, or a proportionate share if
Landlord insures under a "blanket" policy), and the deductible portion of any
insured loss under Landlord's insurance; (xi) sales, use and excise taxes; (xii)
legal, accounting and other professional services for the Building, including
costs, fees and expenses of contesting the validity or applicability of any law,
ordinance, rule, regulation or order relating to the Building; (xiii)
depreciation on personal property, including exterior window draperies provided
by Landlord and floor coverings in the Common Areas and other public portions of
the Building, and/or rental costs of leased furniture, fixtures, and equipment;
and (xiv) the cost of any capital improvements to the Building made at any time
that are intended in Landlord's judgment as labor saving devices, or to reduce
or eliminate other Operating Expenses or to effect other economies in the
operation, maintenance, or management of the Building, or that are necessary or
appropriate in Landlord's judgment for the health and safety of occupants of the
Building, or that are required under any law, ordinance, rule, regulation or
order which was not applicable to the Building as of the Possession Date, all
amortized over such reasonable period as Landlord shall determine at an interest
rate of ten percent (10%) per annum, or, if applicable, the rate paid by
Landlord on funds borrowed for the purpose of constructing or installing such
capital improvements. Operating Expenses shall not include: (A) Real Estate
Taxes; (B) legal fees, brokers' commissions or other costs incurred in the
negotiation, termination, or extension of leases or in proceedings involving a
specific tenant; (C) depreciation, except as set forth above; (D) interest,
amortization or other payments on loans to Landlord except as a component of
-2-
<PAGE> 7
amortization as set forth above; (E) the cost of capital improvements, except as
set forth above; (F) except as provided in item (xiv) above, costs incurred in
connection with the original construction of the Building or in connection with
any major change in the Building, such as adding or deleting floors; (G) except
as provided in item (xiv) above, costs of alterations or improvements, other
than maintenance items to the Premises or the leased premises of other tenants;
(H) interest, principal, late charges, default fees, prepayment penalties or
premiums on any debt owed by Landlord, including any mortgage debt; (i) costs of
correcting defects in or inadequacy of the renovation of the Building; (J)
expenses directly resulting from the gross negligence of the Landlord, its
agents, servants or employees; (K) legal fees, space planners' fees, real estate
brokers' leasing commissions and advertising expenses incurred in connection
with the original development or original leasing of the Building or future
leasing of the Building; (L) costs for which Landlord is fully reimbursed by any
tenant or occupant of the Building or by insurance by its carrier or any
tenant's carrier or by anyone else; (M) any bad debt loss, rent loss, or
reserves for bad debts or rent loss; (N) expenses of extraordinary services
provided to other tenants in the Building which are made available to Tenant at
cost or for which Tenant is separately charged; (O) costs associated with the
operation of the business of the partnership which constitutes Landlord, as the
same are distinguished from the costs of operation of the Building, including
partnership accounting and legal matters, costs of defending any lawsuits with
any mortgagee (except as the actions of Tenant may be the issue), costs of
selling, syndicating, financing, mortgaging or hypothecating any of Landlord's
interest in the Building, costs (including attorneys' fees and costs of
settlement, judgments and payments in lieu thereof) arising from claims,
disputes or potential disputes in connection with potential or actual claims,
litigation or arbitrations respecting Landlord and/or the Building and/or the
site upon which the Building is situated; (P) the wages and benefits of any
employee who does not devote substantially all of his or her time to the
Building unless such wages and benefits are prorated to reflect time spent on
maintaining, securing, repairing, operating or managing the Building vis-a-vis
time spent on matters unrelated to such activities; (Q) damages, costs, fees,
fines, penalties and interest arising from a default by Landlord under any
obligation to a third party; (R) amounts paid as ground rental by Landlord; (S)
any costs or expenses incurred in connection with any portion of the ground
floor, to the extent devoted to retail operation, unless such square footage is
included in the Rentable Area computation for the Building; (T) costs, including
permit, license and inspection costs, incurred with respect to the installation
of tenant improvements made for new tenants in the Building or incurred in
renovating or otherwise improving, decorating, painting or redecorating vacant
space for tenants or other occupants of the Building; (U) costs paid to Landlord
or to affiliates of Landlord for services in the Building to the extent the same
materially exceed or would materially exceed the costs for such services if
rendered by first class unaffiliated third parties on a competitive basis; (V)
electric power costs for which any tenant directly contracts with the local
public service company; (W) costs arising from Landlord's political or
charitable contributions; (X) costs arising from latent defects in the Building
or improvements installed by Landlord; (Y) costs, other than those incurred in
ordinary maintenance, for sculpture, paintings or other objects of art; (Z)
Landlord's general corporate overhead; (AA) all costs in connection with the
ownership, operation and maintenance of any off-site garage facilities
associated with the Building, and all costs in connection with the operation of
any parking facilities in the Building except costs of all utilities (heating,
ventilating, air cooling, if any, electricity, water, serer, elevators), for
repairs and replacements and for steam cleaning; (BB) capital expenditures
required solely by Landlord's failure to comply with laws in effect on the date
Landlord executes this Lease; (CC) income, franchise taxes and dividends; (DD)
capital expenditures to common areas on multi-tenant floors to the extent such
expenditures are made solely to accommodate the tenants on such floors; and (EE)
any loss actually suffered by Landlord as a result of an "Uninsured Casualty"
(as hereinafter defined) (such loss being verified by the payment by Landlord to
one or more third parties of such sum as
-3-
<PAGE> 8
part of the cost of repairing such damage to the Building or the Premises). As
used in this Lease, the term "Uninsured Casualty" shall mean any of the
following: (A) a risk that is not covered by Landlord's insurance, (B) a risk
that would not be insured under the standard form of "All Risk" insurance policy
that a commercially reasonable and prudent owner/manager of a first class office
building in the vicinity of the Building would carry and maintain for such
office building property, and (C) a risk for which Landlord's insurance
deductibles are in excess of customary deductibles for other buildings in San
Francisco comparable to the Building. Subject to the provisions of this
definition, the determination of Operating Expenses shall be made by Landlord in
accordance with generally accepted accounting principles and practices
consistently applied.
Real Estate Taxes: All taxes, assessments and charges now
or hereafter levied or assessed upon, or with respect to, the Building or any
portion thereof, or any personal property of Landlord used in the operation
thereof or located therein, or Landlord's interest in the Building or such
personal property, by any federal, state or local entity, including: (i) all
real property taxes and general and special assessments; (ii) charges, fees or
assessments for transit, housing, day care, open space, art, police, fire or
other governmental services or benefits to the Building; (iii) service payments
in lieu of taxes; (iv) any tax, fee or excise on the use or occupancy of any
part of the Building, or on rent for space in the Building; (v) any other tax,
fee or excise, however described, that may be levied or assessed as a substitute
for, or as an addition to, in whole or in part, any other Real Estate Taxes; and
(vi) reasonable fees and expenses, including those of consultants or attorneys,
incurred in connection with proceedings to contest, determine or reduce Real
Estate Taxes. Real Estate Taxes do not include: (A) franchise, transfer,
inheritance or capital stock taxes, or income taxes measured by the net income
of Landlord from all sources, unless any such taxes are levied or assessed
against Landlord as a substitute for, in whole or in part, any Real Estate Tax;
(B) Impositions and all similar amounts payable by tenants of the Building under
their leases; and (C) penalties, fines, interest or charges due for late payment
of Real Estate Taxes by Landlord. If any Real Estate Taxes are payable, or may
at the option of the taxpayer be paid, in installments, such Real Estate Taxes
shall, together with any interest that would otherwise be payable with such
installment, be deemed to have been paid in installments, amortized over the
maximum time period allowed by applicable law.
Rent: Base Rent, Escalation Rent and all other additional
charges and amounts payable by Tenant in accordance with this Lease.
Rentable Area: As to a floor leased entirely by Tenant,
the sum of: (i) all areas within exterior permanent Building walls measured to
the applicable portion of the glass surface of outer Building walls as specified
in ANZI/BOMA 1996 Standards, including restrooms, janitor, telephone and
electrical closets, mechanical areas, and columns and projections necessary to
the Building, but excluding public stairs, elevator shafts and pipe shafts, plus
(ii) Tenant's pro rata share of building common areas as determined in
accordance with ANZI/BOMA 1996 Standards. As to a floor only a portion of which
is leased by Tenant, the aggregate of (i) the Leased Area (as defined below) of
the portion of the floor occupied by Tenant, plus (ii) the result obtained by
multiplying (1) the area of the Common Area (as defined below) on such floor by
(2) a fraction whose numerator is the Leased Area of Tenant's portion of the
floor and whose denominator is the Leased Area of all tenant space on such
floor, plus (iii) in the event that Landlord must enlarge or alter in any way,
shape or fashion the Common Area to accommodate Tenant's Leased Area, the total
additional Common Area space. For purposes hereof, "Leased Area" shall mean all
floor area in a tenant space, measured to the inside glass surface of exterior
Building walls, to the center of corridors and
-4-
<PAGE> 9
other permanent partitions, and to the center of partitions that separate tenant
space from adjoining tenant spaces, without deduction for columns and
projections necessary to the Building; and "Common Area" shall mean the total
area on a floor consisting of restrooms, janitor, telephone and electrical
closets, mechanical areas and public corridors providing access to tenant space
on such floor, but excluding public stairs, elevator shafts and pipe shafts.
Tenant's Percentage Share: The percentage figure specified
in the Basic Lease Information. Landlord and Tenant acknowledge that Tenant's
Percentage Share has been obtained by dividing the Rentable Area of the
Premises, as specified in the Basic Lease Information by the total Rentable Area
of the Building, and multiplying such quotient by one hundred (100). In the
event Tenant's Percentage Share is changed during a calendar year by reason of a
change in the Rentable Area of the Premises or a change in the total Rentable
Area of the Building, Tenant's Percentage Share shall thereafter mean the result
obtained by dividing the then Rentable Area of the Premises by the then total
Rentable Area of the Building and multiplying such quotient by one hundred
(100). For the purposes of determining Tenant's Percentage Share of Escalation
Rent, Tenant's Percentage Share shall be determined on the basis of the number
of days during such calendar year at each such Percentage Share.
Term: The period from the Possession Date to the
Expiration Date.
Wattage Allowance: The product obtained by multiplying the
Rentable Area of the Premises by 5 watts. "Lighting Wattage Allowance" means
thirty-three percent (33%) of the Wattage Allowance.
1.2. Effect of Certain Defined Terms. The parties acknowledge
that the Rentable Area of the Premises and the Building have been finally
determined by the parties as part of this Lease for all purposes, including the
calculation of Tenant's Percentage Share and will not, except as otherwise
provided in this Lease, be changed.
2. Lease of Premises.
2.1. Premises. Landlord leases to Tenant and Tenant leases from
Landlord the Premises, together with the non-exclusive right to use, in common
with others, the lobbies, entrances, stairs, elevators, plazas, pedestrian
walkways, restrooms, and other public portions of the Building, all subject to
the terms, covenants and conditions set forth in this Lease. All the windows and
exterior walls of the Premises, the terraces adjacent to the Premises, if any,
and any space in the Premises used for shafts, columns, projections, stacks,
pipes, conduits, ducts, electric utilities, sinks or other Building facilities,
and the use thereof and access thereto through the Premises for the purposes of
management, operation, maintenance and repairs, are reserved to Landlord.
2.2. Relocation of Premises. At any time before February 15,
2000, Landlord shall have the right, in Landlord's sole discretion, upon
providing Tenant thirty (30) days' written notice ("Relocation Notice"), to
relocate the portion of the Premises outlined on Exhibit A-1 (the "Relocation
Premises") to a new location either in the Building, in the building (the
"Annex") adjacent to the Building (the "Annex Premises"), or partially in the
Building and partially in adjacent space in the Annex. The Annex Premises are
described on Exhibit A-2 attached to this Lease. If Landlord timely delivers a
Relocation Notice to
-5-
<PAGE> 10
Tenant, then Landlord shall concurrently deliver to Tenant the following: (i) if
all or a portion of the Annex Premises are in the Annex, Landlord shall deliver
to Tenant a lease (or sublease) (the "Annex Lease") between the owner (or master
tenant) of the Annex (the "Annex Landlord") and Tenant with respect to the Annex
Premises, (ii) an amendment to this Lease memorializing the deletion of the
Relocation Premises from the Premises (the "Relocation Amendment"); provided,
however, that if a portion of the Annex Premises is located in the Building,
then the Relocation Amendment shall also memorialize the addition of such
portion of the Annex Premises to the Premises. The Relocation Amendment shall
provide the following: (i) the definition of the Premises shall be modified to
exclude the Relocation Premises and to add any portion of the Annex Premises
that is located in the Building, (ii) Tenant's Percentage Share shall be
decreased to reflect the deletion of the Relocation Premises from the Premises
and the addition of any portion of the Annex Premises that is located in the
Building, (iii) the Construction Allowance shall be modified to reflect any
change in the Rentable Area of the Premises, (iv) the Initial Base Rent shall be
decreased by an amount equal to $*** (the "Initial Multiple") multiplied by any
decrease in the Rentable Area of the Premises, (v) the Middle Base Rent shall be
decreased by an amount equal to $*** (the "Middle Multiple") multiplied by any
decrease in the Rentable Area of the Premises, (vi) the Final Base Rent shall be
decreased by an amount equal to $*** (the "Final Multiple") multiplied by any
decrease in the Rentable Area of the Premises, and (vii) Tenant's obligations
under this Lease shall be cross-defaulted with the Annex Lease. The Annex Lease
shall be on the same terms and conditions as this Lease, except as follows: (i)
the premises under the Annex Lease shall be the portion of the Annex Premises in
the Annex, (ii) the Annex Lease may be a sublease and contain appropriate
reasonable provisions customarily contained in a sublease, (iii) Tenant's
percentage share under the Annex Lease shall be the Rentable Area of the portion
of the Annex Premises in the Annex divided by *** (iv) the construction
allowance under the Annex Lease shall be $*** multiplied by the Rentable Area of
the portion of the Annex Premises in the Annex, (v) the base rent under the
Annex Lease during the period from the Commencement Date to Fourth anniversary
of the Commencement Date shall be the Initial Multiple multiplied by the
Rentable Area of the portion of the Annex Premises in the Annex, (vi) the base
rent under the Annex Lease during the period from the Fourth Anniversary of the
Commencement Date to Eighth anniversary of the Commencement Date shall be the
Middle Multiple multiplied by the Rentable Area of the portion of the Annex
Premises in the Annex, (vii) the base rent under the Annex Lease during the
period from the Eighth anniversary of the Commencement Date to the end of the
Initial Term shall be the Final Multiple multiplied by the Rentable Area of the
portion of the Annex Premises in the Annex, (viii) the base rent under the Annex
Lease during the Extended Term shall be the fair market rent for the Annex
Premises as of the first day of each Extended Term, as determined in accordance
with Section 3.2 of the Lease, (ix) the Annex Lease shall contain such other
reasonable modifications deemed necessary by Landlord to reflect the different
facilities and services that are inherent in the Annex (e.g., absence of
elevators and restrooms), and (x) Tenant's obligations under the Annex Lease
shall be cross-defaulted with this Lease. If Tenant fails to execute the
Relocation Amendment or the Annex Lease within fifteen (15) days after receipt
of the Relocation Amendment and the Annex Lease from Landlord, then Tenant shall
be in default under this Lease and Landlord shall have the right to exercise all
of its rights and remedies under this Lease.
3. Term; Condition and Acceptance of Premises.
3.1 Initial Term and Acceptance of Premises. Except as
hereinafter provided, and unless sooner terminated pursuant to the provisions of
this Lease, the Term of this Lease shall commence on the Possession Date and end
on the Expiration Date. Except as otherwise provided in the Tenant Improvement
-6-
<PAGE> 11
Agreement attached to this Lease as Exhibit C (the "Work Letter"), Landlord
shall deliver the Premises to Tenant on the Possession Date in the condition
required under the Work Letter and this Lease. To the extent that (i) Landlord
has agreed in the Work Letter to make any alterations or improvements to the
Premises prior to the Possession Date, (ii) such alterations and improvements
are completed prior to the Possession Date, and (iii) Tenant desires to take
occupancy of the Premises in advance of the Possession Date, then Landlord shall
deliver the Premises to Tenant in advance of the Possession Date on a date
mutually agreed upon by Landlord and Tenant, and the Term of the Lease shall
commence upon such delivery and the Commencement Date shall then be the later of
(i) October 1, 2000, or (ii) a date six (6) months after such delivery. If
Landlord, for any reason whatsoever, cannot deliver the Premises to Tenant in
the condition specified herein by the anticipated Possession Date, this Lease
shall not be void or voidable, and Landlord shall not be in default or liable to
Tenant for any loss or damage resulting therefrom; provided, however, that if
the Possession Date does not occur on or before January 1, 2001, then Tenant
shall have the right to terminate this Lease by delivering written notice to
Landlord at any time before February 1, 2001. No delay in delivery of the
Premises for any reason whatsoever shall operate to extend the Expiration Date
or the Term. In the event that the Premises are delivered to Tenant on any date
other than the anticipated Possession Date set forth in the Basic Lease
Information of this Lease, Landlord and Tenant shall execute a Confirmation of
Lease Term in the form as set forth in Exhibit E attached to this Lease.
Tenant's occupancy of all or any portion of the Premises shall constitute
Tenant's acceptance of the Premises in the condition called for by this Lease.
Notwithstanding the foregoing, if the Possession Date occurs after September 1,
2000 as a result of events other than delays caused by the acts or omissions of
Tenant, or Tenant's contractors, employees or agents ("Tenant Delays"), then the
"Commencement Date" shall be a date calculated as follows: (i) 180 days after
the Possession Date, plus (ii) the number of days by which the Possession Date
exceeds September 1, 1999, minus (iii) the number of days of delay that Landlord
is actually delayed in delivering the Premises to Tenant caused by Tenant
Delays. Landlord shall use reasonable efforts to notify Tenant in writing of any
suspected acts or omissions of Tenant, or Tenant's contractors, employees or
agents, that Landlord believes may have caused, or is likely to cause, a Tenant
Delay.
3.2 Option to Extend.
3.2.1. Exercise of Option to Extend Term. If no
"Suspension Condition" (as hereinafter defined) exists at the time of Tenant's
exercise of an option to extend the Term or at the commencement of either
Extended Term, as the case may be, Tenant shall have two (2) options (the
"Extension Options" and each an "Extension Option") to extend the Initial Term
for an additional period of five (5) years each (each an "Extended Term" and
collectively, the "Extended Terms"). To exercise Tenant's option with respect to
the Extended Terms, Tenant shall give notice to Landlord not less than twelve
(12) months prior to the expiration of the Initial Term or the first Extended
Term, as the case may be ("Election Notice"). A "Suspension Condition" shall
mean the existence of any event or condition of default after the expiration of
any applicable grace, notice or cure periods. Tenant shall have no right to
exercise the second Extension Option unless Tenant properly exercised the first
Extension Option.
3.2.2. Fair Market Rent. If Tenant properly and timely
exercises either of Tenant's Extension Options to Section 3.2.1 above, such
Extended Terms shall be upon all of the same terms, covenants and conditions of
this Lease; provided, however, that the Base Rent applicable to the Premises for
the Extended Terms shall be one hundred percent (100%) of the "Fair Market Rent"
for space comparable to the Premises as of the commencement of such Extended
Term. "Fair Market Rent" shall mean the annual
-7-
<PAGE> 12
rental being charged for first class space comparable to the Premises in
buildings comparable to the Building in the financial district of San Francisco,
taking into account location, condition and improvements to the space. Tenant
shall pay all leasing commissions and consulting fees payable in connection with
such extensions, unless such leasing commissions or consulting fees arise solely
out of a contractual relationship between Landlord and a broker or consultant.
All other terms and conditions of the Lease, which may be amended from time to
time by the parties in accordance with the provisions of the Lease, shall remain
in full force and effect and shall apply during the Extended Terms, except that:
(i) there shall be no further option to extend the Term beyond a date ten (10)
years after the expiration of the Initial Term, (ii) there shall be no further
rent concessions, and (iii) there shall be no Construction allowance, tenant
improvement allowance or similar provisions.
3.2.3. Determination of Rent. Within forty-five (45) days
after the date of the Election Notice, Landlord and Tenant shall negotiate in
good faith in an attempt to determine Fair Market Rent for the applicable
Extended Term. If they are unable to agree within said forty-five (45) day
period, then the Fair Market Rent shall be determined as provided in Section
3.2.4 below.
3.2.4. Appraisal. If it becomes necessary to determine the
Fair Market Rent for the Premises by appraisal, the real estate appraiser(s)
indicated in this Section 3.2.4, each of whom shall be members of the American
Institute of real Estate Appraisers and each of whom have at least five (5)
years experience appraising office space located in the vicinity of the
Premises, shall be appointed and shall act in accordance with the following
procedures:
(i) If the parties are unable to agree on the Fair Market
Rent within the allowed time, either party may demand an appraisal by giving
written notice to the other party, which demand to be effective must state the
name, address and qualifications of an appraiser selected by the party demanding
the appraisal ("Notifying Party"). Within ten (10) days following the Notifying
Party's appraisal demand, the other party ("Non-Notifying Party") shall either
approve the appraiser selected by the Notifying Party or select a second
properly qualified appraiser by giving written notice of the name, address and
qualification of said appraiser to the Notifying Party. If the Non-Notifying
Party fails to select an appraiser within the ten (10) day period, the appraiser
selected by the Notifying Party shall be deemed selected by both parties and no
other appraiser shall be selected. If two (2) appraisers are selected, they
shall select a third appropriately qualified appraiser. If the two (2)
appraisers fail to select a third qualified appraiser, the third appraiser shall
be appointed by the then presiding judge of the county where the Premises are
located upon application by either party.
(ii) If only one appraiser is selected, that appraiser
shall notify the parties in simple letter form of its determination of the Fair
Market Rent for the Premises within fifteen (15) days following his or her
selection, which appraisal shall be conclusively determinative and binding on
the parties as the appraised Fair Market Rent.
(iii) If multiple appraisers are selected, the appraisers
shall meet not later than ten (10) days following the selection of the last
appraiser. At such meeting, the appraisers shall attempt to determine the Fair
Market Rent for the Premises as of the commencement date of the Extended Term in
question by the agreement of at least two (2) of the appraisers.
-8-
<PAGE> 13
(iv) If two (2) or more of the appraisers agree on the
Fair Market Rent for the Premises at the initial meeting, such agreement shall
be determinative and binding upon the parties hereto and the agreeing appraisers
shall forthwith notify both Landlord and Tenant of the amount set by such
agreement. If multiple appraisers are selected and two (2) appraisers are unable
to agree on the Fair Market Rent for the Premises, each appraiser shall submit
to Landlord and Tenant his or her respective independent appraisal of the Fair
Market Rent for the Premises, in simple letter form, within twenty (20) days
following appointment of the final appraiser. The parties shall then determine
the Fair Market Rent for the Premises by averaging the appraisals; provided that
any high or low appraisal, differing from the middle appraisal by more than ten
percent (10%) of the middle appraisal, shall be disregarded in calculating the
average.
(v) If only one (1) appraiser is selected, then each party
shall pay one-half (1/2) of the fees and expenses of that appraiser. If three
(3) appraisers are selected, each party shall bear the fees and expenses of the
appraiser it selects and one-half (1/2) of the fees and expenses of the third
appraiser.
3.2.5. Restriction on Assignment. The Extension Option
shall be personal to Del Monte Corporation or any Related Entity (defined
below), shall not be assignable or transferable, and shall terminate upon any
assignment of this Lease or any sublease that results in Tenant retaining a
portion of the Premises that is less than fifty percent (50%) of the Rentable
Area of the original Premises.
3.2.6. Amendment to Lease. Immediately after the Fair
Market Rent has been determined, the parties shall enter into an amendment to
this Lease setting forth the Base Rent for the applicable Extended Term and the
new Expiration Date of the Term of the Lease.
4. Rent.
4.1. Obligation to Pay Base Rent. Tenant shall pay Base Rent to
Landlord, in advance, in equal monthly installments, commencing on or before the
Commencement Date, and thereafter on or before the first day of each calendar
month during the Term. If the Commencement Date and/or Expiration Date is other
than the first day of a calendar month, the installment of Base Rent for the
first and/or last fractional month of the Term shall be prorated on a daily
basis. On the Commencement Date, Tenant shall pay to Landlord the first month's
Base Rent.
4.2. Manner of Rent Payment. All Rent shall be paid by Tenant
without notice, demand, abatement, deduction or offset, in lawful money of the
United States of America, payable to Landlord, at Landlord's Address as set
forth in the Basic Lease Information, or to such other person or at such other
place as Landlord may from time to time designate by notice to Tenant.
4.3. Additional Rent. All Rent not characterized as Base Rent or
Escalation Rent shall constitute additional rent, and if payable to Landlord
shall, unless otherwise specified in this Lease, be due and payable fifteen (15)
days after Tenant's receipt of Landlord's invoice therefor.
4.4. Late Payment of Rent; Interest. Tenant acknowledges that
late payment by Tenant of any Rent will cause Landlord to incur administrative
costs not contemplated by this Lease, the exact amount of which are extremely
difficult and impracticable to ascertain based on the facts and circumstances
pertaining as of the Lease Date. Accordingly, if any Rent is not paid by Tenant
when due, Tenant shall pay
-9-
<PAGE> 14
to Landlord, with such Rent, a late charge equal to three percent (3%) of such
Rent; provided, however, that the following additional provisions shall apply to
such late charge: (i) the first late payment in any calendar year shall not
result in any late charge payment unless such payment of Rent is not received
within two (2) days after Landlord's delivery of written notice to Tenant, and
(ii) if there are more than two (2) late payments of Rent by Tenant in any
calendar year, then the late charge for each subsequent late payment in such
calendar year shall be five percent (5%). Any Rent, other than late charges, due
Landlord under this Lease, if not paid when due, shall also bear interest from
the date due until paid, at the rate of ten percent (10%) per annum or, if a
higher rate is legally permissible, at the highest rate legally permitted. The
parties acknowledge that such late charge and interest represent a fair and
reasonable estimate of the administrative costs and loss of use of funds
Landlord will incur by reason of a late Rent payment by Tenant, but Landlord's
acceptance of such late charge and/or interest shall not constitute a waiver of
Tenant's default with respect to such Rent or prevent Landlord from exercising
any other rights and remedies provided under this Lease, at law or in equity.
5. Calculation and Payments of Escalation Rent. During each full or
partial calendar year of the Term subsequent to the Base Year, Tenant shall pay
to Landlord Escalation Rent in accordance with the following procedures:
5.1. Payment of Estimated Escalation Rent. During December of the
Base Year and December of each subsequent calendar year, or as soon thereafter
as practicable (and Landlord shall use reasonable efforts to provide such
information on or before March 1 of each subsequent calendar year), Landlord
shall give Tenant notice of its estimate of Escalation Rent due for the next
ensuing calendar year. On or before the first day of each month during such next
ensuing calendar year, Tenant shall pay to Landlord in advance, in addition to
Base Rent, one-twelfth (1/12th) of such estimated Escalation Rent. In the event
such notice is given after December 31st of any year during the Term, (i) Tenant
shall continue to pay Escalation Rent on the basis of the prior calendar year's
estimate until the month after such notice is given, (ii) subsequent payments by
Tenant shall be based of the estimate of Escalation Rent set forth in Landlord's
notice, and (iii) with the first monthly payment of Escalation Rent based on the
estimate set forth in Landlord's notice, Tenant shall also pay the difference,
if any, between the amount previously paid for such calendar year and the amount
which Tenant would have paid through the month in which such notice is given,
based on Landlord's noticed estimate or, in the alternative, if such amount
previously paid by Tenant for such calendar year through the month in which such
notice is given exceeds the amount which Tenant would have paid through such
month based on Landlord's noticed estimate, Landlord shall credit such excess
amount against the next monthly payments of Escalation Rent due from Tenant. If
at any time Landlord reasonably determines that the Escalation Rent for the
current calendar year will vary from Landlord's estimate by more than five
percent (5%), Landlord may, by notice to Tenant, revise its estimate for such
calendar year, and subsequent payments by Tenant for such calendar year shall be
based upon such revised estimate.
5.2. Escalation Rent Statement and Adjustment. Within one hundred
twenty (120) days after the close of each calendar year, or as soon thereafter
as practicable, Landlord shall deliver to Tenant a statement of the actual
Escalation Rent for such calendar year, accompanied by a statement prepared by
Landlord showing in reasonable detail the Operating Expenses and the Real Estate
Taxes comprising the actual Escalation Rent. If Landlord's statement shows that
Tenant owes an amount less than the payments previously made by Tenant for such
calendar year, Landlord shall credit the difference first
-10-
<PAGE> 15
against any sums then owed by Tenant to Landlord and then against the next
payment or payments of Rent due Landlord, except that if a credit amount is due
Tenant after termination of this Lease, Landlord shall pay to Tenant any excess
remaining after Landlord credits such amount against any sums owed by Tenant to
Landlord. If Landlord's statement shows that Tenant owes an amount more than the
payments previously made by Tenant for such calendar year, Tenant shall pay the
difference to Landlord within fifteen (15) days after delivery of the statement.
Tenant shall have the right to inspect Landlord's books and records relating to
the calculation of Operating Expenses and Real Estate Taxes, subject to the
following limitations: (i) such inspection shall be conducted no more than one
time per calendar year, (ii) such inspection shall be conducted within two (2)
years after Tenant's receipt of Landlord's statement of Operating Expenses and
Real Estate Taxes; (iii) subject to the following, such inspection may not be
conducted by a person or entity whose compensation is in any way calculated
based on the results of such audit; provided, however, that if such inspection
is conducted by such person or entity, then Tenant shall pay to Landlord on
demand all of Landlord's reasonable costs and expenses incurred in connection
with such inspection; and (iv) such information shall be kept in the strictest
confidence by Tenant and any other person or entity performing such inspection.
If Tenant in good faith disputes the accuracy of any statement on the basis of
any such inspection, such dispute must be alleged in reasonable detail in a
written notice to Landlord within ninety (90) days following Tenant's completion
of such inspection. If actual Operating Expenses or Real Estate Taxes are
ultimately determined to have been overstated by Landlord for any calendar year,
then Landlord shall within thirty (30) days thereafter refund to Tenant the
applicable overpayment of Escalation Rent.
5.3. Proration for Partial Year. If this Lease terminates other
than on the last day of a calendar year (other than due to Tenant's default),
the amount of Escalation Rent for such fractional calendar year shall be
prorated on a daily basis. Upon such termination, Landlord may, at its option,
calculate the adjustment in Escalation Rent prior to the time specified in
Section 5.2 above. Tenant's obligation to pay Escalation Rent, as set forth in
Paragraph 5.2, above, shall survive the expiration or termination of this Lease.
6. Impositions Payable by Tenant. Tenant shall pay all Impositions prior
to delinquency. If billed directly to Tenant, then, subject to Tenant's right to
contest such Impositions (upon the posting of a bond or other security
reasonably satisfactory to Landlord), Tenant shall pay such Impositions and
concurrently deliver to Landlord evidence of such payments. If any Impositions
are billed to Landlord or included in bills to Landlord for Real Estate Taxes or
other charges, then Tenant shall pay to Landlord all such amounts within fifteen
(15) days after delivery of Landlord's invoice therefor. If applicable law
prohibits Tenant from reimbursing Landlord for an Imposition, but Landlord may
lawfully increase the Base Rent to account for Landlord's payment of such
Imposition, the Base Rent payable to Landlord shall be increased to net to
Landlord the same return without reimbursement of such Imposition as would have
been received by Landlord with reimbursement of such Imposition. Tenant's
obligation to pay Impositions which have accrued and remain unpaid upon the
expiration or earlier termination of this Lease shall survive the expiration or
earlier termination of this Lease.
7. Use of Premises.
7.1. Permitted Use. The Premises shall be used solely for the
Permitted Use and for no other use or purpose; provided, however, that Tenant
shall also have the right to use a portion of the Premises not exceeding 500
square feet of Rentable Area of kitchen area for the operation of a test kitchen
so long as
-11-
<PAGE> 16
Tenant satisfies the following requirements: (i) Tenant obtains all required
permits for such use, (ii) Tenant constructs, at Tenant's sole cost and expense,
all venting and other capital improvements required for the use or operation of
such test kitchen, (iii) Tenant ensures that no odors or fumes emanate from such
test kitchen into the premises of any other tenant in the Building, and (iv)
Tenant pays to Landlord one hundred percent (100%) of any increase in Landlord's
insurance expenses arising out of such use.
7.2. No Violation of Legal and Insurance Requirements. Tenant
shall not do or permit to be done, or bring or keep or permit to be brought or
kept, in or about the Premises, or any other portion of the Building, anything
which (i) is prohibited by or will in any way conflict with any law, ordinance,
rule or regulation; (ii) would invalidate or be in conflict with the provisions
of any insurance policy carried by Landlord or Tenant on any portion of the
Building or Premises, or any property therein; or (iii) would cause a
cancellation of any such insurance, increase the existing rate of or affect any
such Landlord's insurance, or subject Landlord to any liability or
responsibility for injury to any person or property. If Tenant does or permits
anything to be done which increases the cost of any of Landlord's insurance, or
which results in the need, in Landlord's reasonable judgment, for additional
insurance by Landlord or Tenant with respect to any portion of the Building or
Premises, then Tenant shall reimburse Landlord, upon demand, for any such
additional costs or the costs of such additional insurance, and/or procure such
additional insurance at Tenant's sole cost and expense. Exercise by Landlord of
such right to require reimbursement of additional costs (including the costs of
procuring of additional insurance) shall not limit or preclude Landlord from
prohibiting Tenant's impermissible use of the Premises or from invoking any
other right or remedy available to Landlord under this Lease.
7.3. Compliance with Legal, Insurance and Life Safety
Requirements. Except as provided in clauses (i) through (iii) below, Tenant, at
its cost and expense, shall promptly comply with all laws, ordinances, rules,
regulations, orders and other governmental requirements, the requirements of any
board of fire underwriters or other similar body, any directive or occupancy
certificate issued pursuant to any law by any public officer or officers, the
provisions of all recorded documents affecting any portion of the Building and
all life safety programs, procedures and rules implemented or promulgated by
Landlord ("Laws"). Tenant shall not, however, be required to comply with Laws
requiring Tenant to make structural changes to the Premises unless necessitated,
in whole or in part, by (i) Tenant's special use or occupancy of, or business
conducted in, the Premises, (ii) any acts or omissions of Tenant, its employees,
agents, contractors, invitees or licensees, or (iii) Alterations (including any
alterations, additions or other improvements to the Premises made by or on
behalf of Tenant during the initial improvement of the Premises pursuant to the
Work Letter, but excluding any structural changes which are part of Landlord's
Work under the Work Letter, but excluding any structural changes which are part
of Landlord's Work under the Work Letter).
7.4. No Nuisance. Tenant shall not (i) do or permit anything to
be done in or about the Premises, or any other portion of the Building, which
would injure or annoy, or obstruct or interfere with the rights of, Landlord or
other occupants of the Building, or others lawfully in or about the Building;
(ii) use or allow the Premises to be used in any manner inappropriate for a
Class A office building, or for any improper or objectionable purposes; or (iii)
cause, maintain or permit any nuisance or waste in, on or about the Premises, or
any other portion of the Building.
7.5. Hazardous Substances. The term "hazardous substances" as
used in the Lease, is
-12-
<PAGE> 17
defined as follows:
Any element, compound, mixture, solution, particle or substance, which
presents danger or potential danger of damage or injury to health,
welfare or to the environment including, but not limited to: (i) those
substances which are inherently or potentially radioactive, explosive,
ignitable, corrosive, reactive, carcinogenic or toxic and (ii) those
substances which have been recognized as dangerous or potentially
dangerous to health, welfare or to the environment by any federal,
municipal, state, county or other governmental or quasi-governmental
authority and/or any department or agency thereof.
Tenant represents and warrants to Landlord and agrees that at all times
during the term of this Lease and any extensions or renewals thereof, Tenant
shall:
(i) promptly comply at Tenant's sole cost and expense, with all
laws, orders, rules, regulations, certificates of occupancy, or other
requirements, as the same now exist or may hereafter be enacted, amended
or promulgated, of any federal, municipal, state, county or other
governmental or quasi-governmental authorities and/or any department or
agency thereof relating to the manufacturing, processing, distributing,
using, producing, treating, storing (above or below ground level),
disposing or allowing to be present (the "Environmental Activity") of
hazardous substances in or about the Premises (each, a "Law", and all of
them, "Laws"), to the extent Tenant is responsible for the presence of
such hazardous substances.
(ii) indemnify and hold Landlord, its agents and employees,
harmless from any and all demands, claims, causes of action, penalties,
liabilities, judgments, damages (including consequential damages) and
expenses including, without limitation, court costs and reasonable
attorneys' fees incurred by Landlord as a result of (a) Tenant's failure
or delay in properly complying with any Law as required by item (i)
above, or (b) any adverse effect which results from the Environmental
Activity, whether Tenant or Tenant's subtenants or any of their
respective agents, employees, contractors or invitees, with or without
Tenant's consent has caused, either intentionally or unintentionally,
such Environmental Activity. If any action or proceeding is brought
against Landlord, its agents or employees by reason of any such claim,
Tenant, upon notice from Landlord, will defend such claim at Tenant's
expense with counsel reasonably satisfactory to Landlord. This indemnity
obligation by Tenant of Landlord will survive the expiration or earlier
termination of this Lease.
(iii) promptly disclose to Landlord by delivering, in the manner
prescribed for delivery of notice in this Lease, a copy of any forms,
submissions, notices, reports, or other written documentation (each, a
"Communication") relating to any Environmental Activity, whether any
such Communication is delivered to Tenant or any of its subtenants or is
requested of Tenant or any of its subtenants by any federal, municipal,
state, county or other government or quasi-governmental authority and/or
any department or agency thereof.
(iv) in the event there is a release of any hazardous substance
as a result of or in connection with any Environmental Activity by
Tenant or any of Tenant's subtenants or any of their respective agents,
employees, contractors or invitees, which must be remediated under any
Law, Landlord shall
-13-
<PAGE> 18
perform the necessary remediation; and Tenant shall reimburse Landlord
for all costs thereby incurred within fifteen (15) days after delivery
of a written demand therefor from Landlord (which shall be accompanied
by reasonable substantiation of such costs). In the alternative,
Landlord shall have the right to require Tenant, at its sole cost and
expense, to perform the necessary remediation in accordance with a
detailed plan of remediation which shall have been approved in advance
in writing by Landlord. Landlord shall give notice to Tenant within
thirty (30) days after Landlord receives notice or obtains knowledge of
the required remediation. The rights and obligations of Landlord and
Tenant set forth in this subparagraph (iv) shall survive the expiration
or earlier termination of this Lease.
(v) notwithstanding any other provisions of this Lease, allow
Landlord, and any authorized representative of Landlord, access and the
right to enter and inspect the Premises for Environmental Activity, at
any time deemed reasonable by Landlord, without prior notice to Tenant.
Compliance by Tenant with any provision of this Section 7.5 shall not be
deemed a waiver of any other provision of this Lease. Without limiting
the foregoing, Landlord's consent to any Environmental Activity shall
not relieve Tenant of its indemnity obligations under the terms hereof.
7.6. Special Provisions Relating to The Americans With
Disabilities Act of 1990.
7.6.1. Allocation of Responsibility to Landlord. Subject
to the provisions of the second sentence of Section 10.2 of this Lease, as
between Landlord and Tenant, Landlord shall be responsible that the public
entrances, stairways, corridors, restrooms, elevators and elevator lobbies and
other public areas in the Building comply with the requirements of Title III of
the Americans with Disabilities Act of 1990 (42 U.S.C. 12181, et seq., The
Provisions Governing Public Accommodations and Services Operated by Private
Entities), and all regulations promulgated thereunder, and all amendments,
revisions or modifications thereto now or hereafter adopted or in effect in
connection therewith (hereinafter collectively referred to as the "ADA"), and to
take such actions and make such alterations and improvements as are necessary
for such compliance. As of the Commencement Date, Landlord shall cause such
portions of the Building to so comply with ADA. All costs incurred by Landlord
in discharging its responsibilities under this Section 7.6.1 shall be included
in Operating Expenses as provided in Section 1.1, except to the extent such
costs relate to violations of ADA laws which occurred before the Commencement
Date.
7.6.2. Allocation of Responsibility to Tenant. As between
Landlord and Tenant, Tenant, at its sole cost and expense, shall be responsible
that the Premises (other than the restrooms constructed by Landlord in the
Premises), all Alterations to the Premises, Tenant's use and occupancy of the
Premises, and Tenant's performance of its obligations under this Lease, comply
with the requirements of the ADA, and to take such actions and make such
Alterations as are necessary for such compliance; provided, however, that Tenant
shall not make any such Alterations except upon Landlord's prior written consent
pursuant to the terms and conditions of this Lease. Tenant shall protect,
defend, indemnify and hold Landlord harmless from and against any claim, demand,
cause of action, obligation, liability, loss, cost or expense (including
reasonable attorneys' fees) which may be asserted against or incurred by
Landlord as a result of Tenant's failure in any respect to comply with its
obligations set forth in this Section 7.6.2. Tenant's indemnity obligations set
forth in the immediately preceding sentence shall survive the expiration or
earlier termination of this Lease.
-14-
<PAGE> 19
7.6.3. General. Notwithstanding anything in this Lease to
the contrary, no act or omission of Landlord, including any approval, consent or
acceptance by Landlord or Landlord's agents, employees or other representatives,
shall be deemed an agreement, acknowledgment, warranty, or other representation
by Landlord that Tenant has complied with the ADA or that any action, alteration
or improvement by Tenant complies or will comply with the ADA or constitutes a
waiver by Landlord of Tenant's obligations to comply with the ADA under this
Lease or otherwise. Any failure of Landlord to comply with the obligations of
the ADA shall not relieve Tenant from any obligations under this Lease or
constitute or be construed as a constructive or other eviction of Tenant or
disturbance of Tenant's use and possession of the Premises.
8. Building Services.
8.1. Maintenance of Building. Landlord shall maintain the
Building (other than the Premises and the premises of other tenants of the
Building) in good order and condition, except for ordinary wear and tear, damage
by casualty or condemnation, or damage occasioned by the act or omission of
Tenant or Tenant's employees, agents, contractors, licensees or invitees, which
damage shall be repaired by Landlord at Tenant's expense. Landlord's maintenance
of, and provision of services to, the Building shall be performed in a manner
consistent with that of comparable Class A office buildings in the San
Francisco, California area. Landlord shall have the right in connection with its
maintenance of the Building hereunder (i) to change the arrangement and/or
location of any amenity, installation or improvement in the public entrances,
stairways, corridors, elevators and elevator lobbies, and other public areas in
the Building, and (ii) to utilize portions of the public areas in the Building
from time to time for entertainment, displays, product shows, leasing of kiosks
or such other uses that in Landlord's reasonable judgment tend to attract the
public, so long as such uses do not materially interfere with or impair Tenant's
access to or use or occupancy of the Premises. Landlord shall not be in default
under this Lease or liable for any damages directly or indirectly resulting from
or incidental to, nor shall the rental reserved in this Lease be abated by
reason of, Landlord's failure to make any repair or to perform any maintenance
required to be made or performed by Landlord under this Section 8.1, unless such
failure shall persist for an unreasonable time after written notice of the need
for such repair or maintenance is given to Landlord by Tenant.
8.2. Building Standard Services. Landlord shall cause to be
furnished to Tenant: (i) tepid and cold water to those points of supply and in
volumes provided for general use of tenants in the Building; (ii) electricity up
to the Wattage Allowance for lighting and the operation of electrically powered
office equipment; (iii) heat, ventilation and air conditioning to the extent
reasonably required for the comfortable occupancy by Tenant of the Premises
during the period from 8:00 a.m. to 6:00 p.m. on weekdays (except Building
holidays determined by Landlord), or such shorter period as may be prescribed by
any applicable policies, regulations or guidelines adopted by any federal, state
or local governmental or quasi-governmental entities or utility suppliers; (iv)
passenger elevator service; (v) freight elevator service subject to then
applicable Building standard procedures and scheduling; (vi) lighting
replacement for Building standard lights; (vii) restroom supplies; (viii) window
washing as determined by Landlord (which shall not be less than 2 times per year
for the exterior portions of Building windows, and 2 times per year for the
interior portions of Building windows); (ix) janitor service on a five (5) day
per week basis (excluding Building holidays), except for portions of the
Premises used for preparing or consuming food or beverages (such janitorial
services to include the services described on Exhibit F attached to this Lease);
and (x) security if
-15-
<PAGE> 20
and to the extent deemed appropriate by Landlord for the Building (but not less
than as set forth on Exhibit F-2 attached to this Lease) (but not individually
for Tenant or the Premises - provided that Tenant shall have the right to
install its own security service in the Premises), except that Landlord shall
not be liable in any manner for acts of others, criminal or otherwise, or for
any direct, consequential or other loss, damage, death or injury related to any
interruption, discontinuance, malfunction, circumvention or failure of such
security service. Landlord may establish in the Premises or other portions of
the Building such measures as are required by laws, ordinances, rules or
regulations or as it deems necessary or appropriate to conserve energy,
including automatic switching of lights and/or more efficient forms of lighting.
Security personnel shall be on duty 24 hours/day seven days/week during the
Term. The initial Building holidays are described on Exhibit F-1 attached to
this Lease.
8.3. Interruption or Unavailability of Services. Rent shall not
abate, no constructive or other eviction shall be construed to have occurred,
Tenant shall not be relieved from any of its obligations under this Lease, and
Landlord shall not be in default hereunder or liable for any damages directly or
indirectly resulting from, the failure of Landlord to furnish, or delay in
furnishing, any maintenance or services under this Article 8 as a result of
repairs, alterations, improvements or any circumstances beyond Landlord's
reasonable control. Landlord shall use reasonable diligence to remedy any
failure or interruption in the furnishing of such maintenance or services.
Notwithstanding anything set forth in this Lease to the contrary, if such
interruption or unavailability of services continues for more than thirty (30)
consecutive days and such interruption or unavailability prevents Tenant from
using the Premises, then commencing upon the expiration of such thirty (30) day
period, Rent shall abate until beneficial use of the Premises is restored.
8.4. Tenant's Use of Excess Electricity and Water. Tenant shall
not, without Landlord's prior consent, given or withheld in Landlord's sole
discretion, (i) install in the Premises (A) lighting, the aggregate average
daily power usage of which exceeds the Lighting Wattage Allowance, or lighting
and equipment, the aggregate average daily power usage of which exceeds the
Wattage Allowance, or which requires a voltage other than 110 volts
single-phase, (B) heat generating equipment or lighting other than lights deemed
standard for the Building, or (C) supplementary air conditioning facilities, or
(ii) permit occupancy levels in excess of one person per two hundred fifty (250)
feet of Rentable Area. If, pursuant to this Section 8.4, heat-generating
equipment or lighting other than Building standard lights are installed or used
in the Premises, or occupancy levels are greater than set forth above, or if the
Premises or fixtures therein are reconfigured by Alterations, and such
equipment, lighting, occupancy levels or Premises reconfiguration affects the
temperature otherwise maintained by the Building air conditioning system, or if
equipment is installed in the Premises which requires a separate
temperature-controlled room, Landlord may, at Landlord's election after notice
to Tenant or upon Tenant's request, install supplementary air conditioning
facilities in the Premises, or otherwise modify the ventilating and air
conditioning serving the Premises, in order to maintain the temperature
otherwise maintained by the Building air conditioning system or to serve such
separate temperature-controlled room. Tenant shall pay the cost of any
transformers, additional risers, panel boards and other facilities if, when and
to the extent required to furnish power for, and all maintenance and service
costs of, any supplementary air conditioning facilities or modified ventilating
and air conditioning, or for lighting and/or equipment the power usage of which
exceeds the standards set forth in this Section 8.4. The capital, maintenance
and service costs of such facilities and modifications shall be paid by Tenant
as Rent. Landlord, at its election and at Tenant's expense, may also install and
maintain an electric current meter or water meter (together with all necessary
wiring and related equipment) at the Premises to
-16-
<PAGE> 21
measure the power and/or water usage of such lighting, equipment or ventilation
and air conditioning equipment, or may otherwise cause such usage to be measured
by reasonable methods.
8.5. Provision of Additional Services. If Tenant desires services
in additional amounts or at different times than set forth in Section 8.2 above,
or any other services that are not provided for in this Lease, Tenant shall make
a request for such services to Landlord with such advance notice as Landlord may
reasonably require. If Landlord provides such services to Tenant, Tenant shall
pay Landlord's charges for such services within fifteen (15) days after Tenant's
receipt of Landlord's invoice; provided, however, that Landlord hereby agrees
that upon Tenant's written request Landlord shall provide HVAC service to the
Premises 24 hours per day during the Term so long as Tenant pays Landlord's
charges for such services in accordance with this Section 8.5, which charges
Landlord currently estimates for a traditionally improved floor to be
approximately $225/hour/floor of the Premises.
9. Maintenance of Premises. Tenant shall, at all times during the Term,
at Tenant's cost and expense, keep the Premises in good condition and repair,
except for ordinary wear and tear and damage by casualty or condemnation. Except
as may be specifically set forth in this Lease (including the Work Letter),
Landlord has no obligation to alter, remodel, improve, repair, decorate or paint
the Premises, or any part thereof, or any obligation respecting the condition,
maintenance and repair of the Premises or any other portion of the Building.
Tenant hereby waives all rights, including those provided in California Civil
Code Section 1941 or any successor statute, to make repairs which are Landlord's
obligation under this Lease at the expense of Landlord or to receive any setoff
or abatement of Rent or in lieu thereof to vacate the Premises or terminate this
Lease.
10. Alterations to Premises.
10.1. Landlord Consent; Procedure. Tenant shall not make or
permit to be made any Alterations without Landlord's prior consent, which
consent may be granted or withheld in Landlord's reasonable discretion; no
consent shall be required for non-structural Alterations which do not require a
building permit and which, in the aggregate, cost less than $25,000.00 to
construct.. Any Alterations to which Landlord has consented shall be made in
accordance with procedures as then established by Landlord and the provisions of
this Article 10. Tenant shall provide Landlord with written notice of the
commencement of all Alterations, within five (5) days before the commencement of
such Alterations.
10.2. General Requirements. All Alterations shall be made at
Tenant's cost and expense. Tenant shall be solely responsible for compliance
with applicable laws, ordinances, rules and regulations in connection with all
Alterations. Without limiting the foregoing or any other provisions of this
Lease, if any applicable law, ordinance, rule or regulation provides that any
Alteration by Tenant will result in the requirement of the performance of any
other work, repair, capital improvement or other expenditure with respect to any
portion of the Building (including in the premises of other tenants), then
Tenant shall be solely responsible, at Tenant's sole cost and expense, to
perform such work, repair or capital improvement, or to pay such expenditure.
Tenant shall be responsible for the cost of any additional alterations required
by applicable laws, ordinances, rules and regulations to be made by Landlord to
any portion of the Building as a result of Alterations. Tenant shall promptly
commence or cause the commencement of construction of all Alterations and
complete or cause completion of the same with due diligence as soon as possible
after commencement in order to cause the least disruption to Building operations
and occupants and to continue
-17-
<PAGE> 22
Tenant's business in the Premises. In connection with installing or removing
Alterations, Tenant shall pay to Landlord on demand Landlord's reasonable actual
costs incurred in connection with the administration by Landlord (or its agent)
of the construction, installation or removal of Alterations, and restoration of
the Premises to their previous condition.
10.3. Removal of Alterations. If Landlord has not consented to an
Alteration (for which such consent is required), Tenant shall, prior to the
expiration of the Term or termination of this Lease, remove such Alteration at
Tenant's cost and expense and restore the Premises to the condition existing
prior to the installation of such Alteration. If Tenant fails so to do, then
Landlord may remove such Alteration and perform such restoration and Tenant
shall reimburse Landlord for Landlord's cost and expense incurred to perform
such removal and restoration (which obligation of Tenant shall survive the
expiration or earlier termination of this Lease). Tenant shall repair at its
cost and expense all damage to the Premises or the Building caused by the
removal of any Alteration. Subject to the foregoing provisions regarding
removal, all Alterations (including any above Building standard improvements to
the Premises) shall be Landlord's property and from and after the expiration or
earlier termination of this Lease shall remain on the Premises without
compensation to Tenant.
11. Liens. Tenant shall keep the Premises and the Building free from any
liens arising out of any work performed or obligations incurred by or for, or
materials furnished to, Tenant pursuant to this Lease or otherwise. Landlord
shall have the right to post and keep posted on the Premises any notices
required by law or which Landlord may deem to be proper for the protection of
Landlord, the Premises and the Building from such liens and to take any other
action at the expense of Tenant that Landlord deems necessary or appropriate to
prevent, remove or discharge such liens. Tenant shall protect, defend, indemnify
and hold Landlord harmless from and against any claim, demand, cause of action,
obligation, liability, loss, cost or expense (including reasonable attorneys'
fees) which may be asserted against or incurred by Landlord as a result of
Tenant's failure to comply with the foregoing obligation (which indemnity
obligation shall survive the expiration or earlier termination of this Lease).
12. Damage or Destruction.
12.1. Obligation to Repair. Except as otherwise provided in this
Article 12, if the Premises, or any other portion of the Building necessary for
Tenant's use and occupancy of the Premises, are damaged or destroyed by fire or
other casualty, Landlord shall, within thirty (30) days after such event, notify
Tenant of the estimated time, in Landlord's reasonable judgment, required to
repair such damage or destruction. If Landlord's estimate of time is less than
one hundred eighty (180) days after the date that Landlord obtains the required
building permits for the repair of such damage or destruction, then (i) Landlord
shall proceed with all due diligence to repair the Premises, and/or the portion
of the Building necessary for Tenant's use and occupancy of the Premises, to
substantially the condition existing immediately before such damage or
destruction, as permitted by and subject to then applicable laws, ordinances,
rules and regulations; (ii) this Lease shall remain in full force and effect;
and (iii) to the extent such damage or destruction did not result from the
negligence or willful act or omission of Tenant or Tenant's subtenants or any of
their respective employees, agents, contractors, invitees or licensees, Base
Rent shall abate for such part of the Premises rendered unusable by Tenant, in
Tenant's reasonable, good faith judgment, in the conduct of its business during
the time such part is so unusable, in the proportion that the Rentable Area
contained in the unusable part of the Premises bears to the total Rentable Area
of the Premises.
-18-
<PAGE> 23
12.2. Landlord's Election. If Landlord determines that the
necessary repairs cannot be completed within one hundred eighty (180) days after
the date that Landlord obtains the required building permits for the repair of
such damage or destruction, or if such damage or destruction arises from causes
not covered by Landlord's insurance policy then in force, and would cost in the
aggregate more than $*** to repair, Landlord may elect, in its notice to Tenant
pursuant to Section 12.1, to (i) terminate this Lease or (ii) repair the
Premises or the portion of the Building necessary for Tenant's use and occupancy
of the Premises pursuant to the applicable provisions of Section 12.1 above. If
Landlord terminates this Lease, then this Lease shall terminate as of the date
of occurrence of the damage or destruction.
12.3. Cost of Repairs. Landlord shall pay the cost for repair of
the Building and all improvements in the Premises, other than any Alterations.
Tenant shall pay the costs to repair all Alterations (but Landlord shall make
available to Tenant for such purpose any insurance proceeds received by Landlord
for such purpose under Landlord's insurance policy then in force). Tenant shall
also replace or repair, at Tenant's cost and expense, Tenant's movable
furniture, equipment, trade fixtures and other personal property in the Premises
which Tenant shall be responsible for insuring during the Term of this Lease.
12.4. Damage at End of Term. Notwithstanding anything to the
contrary contained in this Article 12, if the Premises, or any other portion
thereof or of the Building, are materially damaged or destroyed by fire or other
casualty within the last twelve (12) months of the Term, then Landlord shall
have the right, in its sole discretion, to terminate this Lease by notice to
Tenant given within ninety (90) days after the date of such event. Such
termination shall be effective on the date specified in Landlord's notice to
Tenant, but in no event later than the end of such 90-day period. For purposes
hereof, the Premises or other portion of the Building shall be deemed to be
materially damaged if such damage costs more than $*** to repair.
Notwithstanding the foregoing, if Landlord seeks to terminate the Lease in
circumstances where the Premises were not affected by any such damage or
destruction, Landlord may do so only if Landlord is terminating all other office
leases in the Building on account thereof.
12.5. Waiver of Statutes. The respective rights and obligations
of Landlord and Tenant in the event of any damage to or destruction of the
Premises, or any other portion of the Building, are governed exclusively by this
Lease. Accordingly, Tenant hereby waives the provisions of any law to the
contrary, including California Civil Code Sections 1932(2) and 1933(4) providing
for the termination of a lease upon destruction of the leased property.
13. Eminent Domain.
13.1. Effect of Taking. Except as otherwise provided in this
Article 13, if all or any part of the Premises is taken as a result of the
exercise of the power of eminent domain or condemned for any public or
quasi-public purpose, or if any transfer is made in avoidance of such exercise
of the power of eminent domain (collectively, "taken" or a "taking"), this Lease
shall terminate as to the part of the Premises so taken as of the effective date
of such taking. On a taking of a portion of the Premises, Landlord and Tenant
shall each have the right to terminate this Lease by notice to the other given
within thirty (30) days after the effective date of such taking, if the portion
of the Premises taken is of such extent and nature so as to materially impair
Tenant's business use of the balance of the Premises, as reasonably determined
by the party giving such notice. Such termination shall be operative as of the
effective date of the taking. Landlord
-19-
<PAGE> 24
may also terminate this Lease on a taking of any other portion of the Building
if Landlord reasonably determines that such taking is of such extent and nature
as to render the operation of the remaining Building economically infeasible or
to require a substantial alteration or reconstruction of such remaining portion.
Landlord shall elect such termination by notice to Tenant given within thirty
(30) days after the effective date of such taking, and such termination shall be
operative as of the effective date of such taking. Upon a taking of the Premises
which does not result in a termination of this Lease, the Base Rent shall
thereafter be reduced as of the effective date of such taking in the proportion
that the Rentable Area of the Premises so taken bears to the total Rentable Area
of the Premises.
13.2. Condemnation Proceeds. Except as hereinafter provided, in
the event of any taking, Landlord shall have the right to all compensation,
damages, income, rent or awards made with respect thereto (collectively an
"award"), including any award for the value of the leasehold estate created by
this Lease. No award to Landlord shall be apportioned and, subject to Tenant's
rights hereinafter specified, Tenant hereby assigns to Landlord any right of
Tenant in any award made for any taking. So long as such claim will not reduce
any award otherwise payable to Landlord under this Section 13.2, Tenant may seek
to recover, at its cost and expense, as a separate claim, any damages or awards
payable on a taking of the Premises to compensate for the unamortized cost paid
by Tenant for the alterations, additions or improvements, if any, made by or on
behalf of Tenant during the initial improvement of the Premises pursuant to the
Work Letter and for any Alterations, or for Tenant's personal property taken, or
for interference with or interruption of Tenant's business (including goodwill),
or for Tenant's removal and relocation expenses.
13.3. Restoration of Premises. On a taking of the Premises which
does not result in a termination of this Lease, Landlord and Tenant shall
restore the Premises as nearly as possible to the condition they were in prior
to the taking in accordance with the applicable provisions and allocation of
responsibility for repair and restoration of the Premises on damage or
destruction pursuant to Article 12 above, and both parties shall use any awards
received by such party attributable to the Premises for such purpose.
13.4. Tenant Waiver. The rights and obligations of Landlord and
Tenant on any taking of the Premises or any other material portion of the
Building are governed exclusively by this Lease. Accordingly, Tenant hereby
waives the provisions of any law to the contrary, including California Code of
Civil Procedure Sections 1265.120 and 1265.130, or any similar successor
statute.
14. Insurance.
14.1. Liability Insurance. Landlord, with respect to the
Building, and Tenant, at its cost and expense with respect to the Premises,
shall each maintain or cause to be maintained, from the Lease Date and
throughout the Term, a policy or policies of Commercial General Liability
insurance with limits of liability not less than Five Million Dollars
($5,000,000.00) per occurrence and in the aggregate. Each policy shall contain
coverage for blanket contractual liability, personal injury liability, and
premises operations, coverage deleting liquor liability exclusions and, as to
Tenant's insurance, fire legal liability. Landlord shall have the right to
approve the deductible under each policy of Tenant's liability insurance, such
approval not to be unreasonably withheld.
14.2. Form of Policies. All insurance required by this Article 14
shall be issued on an
-20-
<PAGE> 25
occurrence basis by solvent companies qualified to do business in the State of
California. Any insurance required under this Article 14 may be maintained under
a "blanket policy", insuring other parties and other locations, so long as the
amount and coverage required to be provided hereunder is not thereby diminished.
Tenant shall provide Landlord a copy of each policy of insurance or a
certificate thereof certifying that the policies contain the provisions required
hereunder. Tenant shall deliver such policies or certificates to Landlord within
(30) days after the Lease Date, but in no event less than ten (10) business days
prior to the Commencement Date or such earlier date as Tenant or Tenant's
contractors, agents, licensees, invitees or employees first enter the Premises
and, upon renewal, not less than thirty (30) days prior to the expiration of
such coverage. All evidence of insurance provided to Landlord shall provide (i)
that Landlord, Landlord's managing agent and any other person requested by
Landlord who has an insurable interest, is designated as an additional insured
without limitation as to coverage afforded under such policy; (ii) for
severability of interests or that the acts or omissions of one of the insureds
or additional insureds shall not reduce or affect coverage available to any
other insured or additional insured; (iii) that the insurer agrees not to cancel
or alter the policy without at least thirty (30) days prior written notice to
all additional insureds; (iv) that the aggregate liability applies solely to the
Premises and the remainder of the Building; and (v) that Tenant's insurance is
primary and noncontributing with any insurance carried by Landlord.
14.3. Workers' Compensation Insurance. Tenant, at its sole cost
and expense, shall maintain Workers' Compensation insurance as required by law
and employer's liability insurance in an amount of not less than Five Hundred
Thousand Dollars ($500,000).
14.4. Additional Tenant Insurance. Tenant, at its sole cost and
expense, shall maintain such other insurance as Landlord may reasonably require
from time to time, but in no event may Landlord require any other insurance
which is (i) not then being required of comparable tenants leasing comparable
amounts of space in comparable buildings in the vicinity of the Building or (ii)
not then available at commercially reasonable rates.
14.5. Landlord's Casualty Insurance. Landlord shall, during the
Term of this Lease, procure and maintain in full force and effect, at a minimum,
a policy or policies of fire insurance covering the Building and the permanent
tenant improvements in the Premises, with standard extended coverage, vandalism,
malicious mischief and sprinkler leakage endorsements. The amount and scope of
coverage of Landlord's insurance hereunder shall be determined by Landlord from
time to time in its reasonable discretion based on prudent risk management
practices for buildings comparable to the Building (but shall not be less than
90% of full replacement value of the Building and Tenant's permanent tenant
improvements in the Premises, and shall be subject to such deductible amounts as
Landlord may reasonably elect based on prudent risk management practices for
buildings comparable to the Building. Landlord shall have the right to reduce or
terminate any insurance or coverage called for by this Section 14.5 to the
extent that any such coverage is not reasonably available in the commercial
insurance industry from recognized carriers or not available at a cost which is
in Landlord's judgment commercially reasonable under the circumstances.
15. Waiver of Subrogation Rights. Notwithstanding anything to the
contrary contained in this Lease, Landlord and Tenant, for themselves and their
respective insurers, agree to and do hereby release each other of and from any
and all claims, demands, actions and causes of action that each may have or
claim to have against the other for loss or damage to property, both real and
personal, notwithstanding that any such loss or damage may be due to or result
from the negligence of either of the parties hereto or their respective
-21-
<PAGE> 26
employees or agents. Each party shall, to the extent such insurance endorsement
is lawfully available at commercially reasonable rates, obtain or cause to be
obtained, for the benefit of the other party, a waiver of any right of
subrogation which the insurer of such party may acquire against the other party
by virtue of the payment of any such loss covered by such insurance.
16. Tenant's Waiver of Liability and Indemnification.
16.1. Waiver and Release. Except to the extent due to the gross
negligence or willful misconduct of Landlord, Landlord shall not be liable to
Tenant or Tenant's employees, agents, contractors, licenses or invitees for, and
Tenant waives and releases Landlord and Landlord's managing agent from, all
claims for loss or damage to any property or injury, illness or death of any
person in, upon or about the Premises (including claims caused in whole or in
part by the act, omission, or neglect of other tenants, contractors, licensees,
invitees or other occupants of the Building or their agents or employees). The
waiver and release contained in this Section 16.1 extends to the officers,
directors, shareholders, partners, employees, agents and representatives of
Landlord.
16.2. Indemnification of Landlord. Except to the extent due to
Landlord's gross negligence or willful misconduct, Tenant shall indemnify,
defend, protect and hold Landlord harmless of and from any and all loss, liens,
liability, claims, causes of action, damage, injury, cost or expense arising out
of or in connection with (i) the making of any alterations, additions or other
improvements made by or on behalf of Tenant during the initial improvement of
the Premises pursuant to the Work Letter or any Alterations, or (ii) injury to
or death of persons or damage to property occurring or resulting directly or
indirectly from: (A) the use or occupancy of, or the conduct of business in, the
Premises by Tenant or its subtenants or any of their respective officers,
directors, employees, agents, contractors, invitees or licensees; (B) any other
occurrence or condition in or on the Premises; and (C) acts, neglect or
omissions of Tenant, or its subtenants or any of their respective officers,
directors, employees, agents, contractors, invitees or licensees, in or about
any portion of the Building. Tenant's indemnity obligation includes reasonable
attorneys' fees and costs, investigation costs and other reasonable costs and
expenses incurred by Landlord. If Landlord reasonably disapproves the legal
counsel proposed by Tenant for the defense of any claim indemnified against
hereunder, Landlord shall have the right to appoint its own legal counsel, the
reasonable fees, costs and expenses of which shall be included as part of
Tenant's indemnity obligation hereunder. The indemnification contained in this
Section 16.2 shall extend to the officers, directors, shareholders, partners,
employees, agents and representatives of Landlord.
16.3. Indemnification of Tenant. Landlord shall indemnify,
defend, protect and hold Tenant harmless of and from any and all loss, liens,
liability, claims, causes of action, damage, injury, cost or expense arising out
of or in connection with (i) any breach or default by Landlord in the
performance of any of its obligations under this Lease, or (ii) Landlord's gross
negligence or willful misconduct, or (iii) any loss or damage to property or
injury to person occurring in the public entrances, stairways, corridors,
elevators and elevator lobbies, and other public areas in the Building or the
other public areas in the Building (except for such loss, damage or injury for
which Tenant is obligated to indemnify Landlord under Section 16.2).
17. Assignment and Subletting.
-22-
<PAGE> 27
17.1. Compliance Required. Tenant shall not, directly or
indirectly, voluntary or by operation of law, sell, assign or otherwise transfer
this Lease, or any interest herein (collectively, "assign" or "assignment"), or
sublet the Premises, or any part thereof, or permit the occupancy of the
Premises by any person other than Tenant (collectively, "sublease" or
"subletting", the assignee or sublessee under an assignment or sublease being
referred to as a "transferee"), without Landlord's prior consent given or
withheld in accordance with the express standards and conditions of this Article
17 and compliance with the other provisions of this Article 17. Any assignment
or subletting made in violation of this Article 17 shall be void. As used
herein, an "assignment" includes any sale or other transfer (such as by
consolidation, merger or reorganization) of a majority of the voting stock of
Tenant, if Tenant is a corporation, or any sale or other transfer of a majority
of the beneficial interest in Tenant, if Tenant is any other form of entity.
Tenant acknowledges and agrees that the limitations on Tenant's right to sublet
or assign which are set forth in this Article 17 are reasonable and, in
particular, that the express standards and conditions upon Tenant's right to
assign or sublet which are set forth in this Article 17 are reasonable as of the
Lease Date.
17.2. Request by Tenant; Landlord Response. If Tenant desires to
effect an assignment or sublease, Tenant shall submit to Landlord a request for
consent together with the identity of the parties to the transaction, the nature
of the transferee's proposed business use for the Premises, the proposed
documentation for and terms of the transaction, and all other information
reasonably requested by Landlord concerning the proposed transaction and the
parties involved therein, including certified financial information, credit
reports, the business background and references regarding the transferee, and an
opportunity to meet and interview the transferee. Within twenty (20) days after
the later of such interview or the receipt of all such information required by
Landlord, or within thirty (30) days after the date of Tenant's request to
Landlord if Landlord does not request additional information or an interview,
Landlord shall have the right, by notice to Tenant, to: (i) consent to the
assignment or sublease, subject to the terms of this Article 17; (ii) decline to
consent to the assignment or sublease; (iii) in the case of a subletting of at
least one full floor of the Premises, to sublet from Tenant the portion of the
Premises proposed to be sublet on the terms and conditions set forth in Tenant's
request to Landlord; or (iv) in the case of an assignment, to terminate this
Lease as of the date specified by Tenant as the effective date of the proposed
assignment, in which event Tenant will be relieved of all unaccrued obligations
hereunder as of such date, other than those obligations which survive
termination of this Lease. If Landlord elects so to terminate, Tenant shall have
the right, by notice to Landlord within five (5) days after Landlord's exercise
of such right, to rescind its request for the proposed assignment, in which
event this Lease shall not terminate and shall remain in full force and effect.
17.3. Conditions for Landlord Approval. In the event Landlord
elects not to sublet from Tenant or terminate this Lease (in whole or in part)
as provided in clauses (iii) and (iv) of Section 17.2, Landlord shall not
unreasonably withhold its consent to a proposed subletting or assignment by
Tenant. Without limiting the grounds on which it may be reasonable for Landlord
to withhold its consent to an assignment or sublease, Tenant agrees that
Landlord would be acting reasonably in withholding its consent in the following
instances: (i) if Tenant is in default under this Lease; (ii) if the transferee
is a governmental or quasi-governmental agency, foreign or domestic; (iii) if
the transferee is an existing tenant in the Building; (iv) if, in Landlord's
sole judgment, the transferee's business, use and/or occupancy of the Premises
would (A) violate any of the terms of this Lease or the lease of any other
tenant in the Building, or (B) not be comparable to and compatible with the
types of use by other tenants in the Building, (C) fall within any category of
use for which Landlord would not then lease space in the Building under its
leasing guidelines
-23-
<PAGE> 28
and policies then in effect, (D) require any Alterations which would reduce the
value of the existing leasehold improvements in the Premises, or (E) result in
increased density per floor in excess of one person/200 square feet of Rentable
Area, or require increased services by Landlord; (v) in the case of a sublease,
it would result in more than two (2) occupancies on one floor of the Premises,
including Tenant and subtenants; or (vi) if the financial condition of the
transferee does not meet the requirements applied by Landlord for other tenants
in the Building under leases with comparable terms, or in Landlord's reasonable
judgment the business reputation of the transferee is not consistent with that
of other tenants of the Building. If Landlord consents to an assignment or
sublease, the terms of such assignment or sublease transaction shall not be
modified without Landlord's prior written consent pursuant to this Article 17.
Landlord's consent to an assignment or subletting shall not be deemed consent to
any subsequent assignment or subletting.
17.4. Costs and Expenses. As a condition to the effectiveness of
any assignment or subletting under this Article 17, Tenant shall pay to Landlord
a processing fee of Five Hundred Dollars ($500.00) and all reasonable costs and
expenses, including reasonable attorneys' fees and disbursements, incurred by
Landlord in evaluating Tenant's requests for assignment or sublease, whether or
not Landlord consents to an assignment or sublease. Tenant shall pay the
processing fee with Tenant's request for Landlord's consent under Section 17.2.
Tenant shall also pay to Landlord all costs and expenses incurred by Landlord
due to a transferee taking possession of the Premises, including freight
elevator operation, security service, janitorial service and rubbish removal.
17.5. Payment of Excess Rent and Other Consideration. Tenant
shall also pay to Landlord, promptly upon Tenant's receipt thereof, *** of any
and all rent, sums or other consideration, howsoever denominated, realized by
Tenant in connection with any assignment or sublease transaction in excess of
the Base Rent and Escalation Rent payable hereunder (prorated to reflect the
Rent allocable to the portion of the Premises if a sublease), after first
deducting, (i) in the case of an assignment, the unamortized actual out of
pocket, third-party, costs of Alterations paid for by Tenant and actual out of
pocket third party real estate commissions paid by Tenant solely in connection
with such assignment, and (ii) in the case of a sublease, the actual out of
pocket, third-party, cost of Alterations made to the Premises at Tenant's cost
to effect the sublease, and the actual amount of any real estate commissions
paid by Tenant to a third party solely in connection with such sublease, both
amortized over the term of the sublease.
17.6. Assumption of Obligations; Further Restrictions on
Subletting. Each assignee shall, concurrently with any assignment, assume all
obligations of Tenant under this Lease. Each sublease shall be made subject to
this Lease and all of the terms, covenants and conditions contained herein; and
the surrender of this Lease by Tenant, or a mutual cancellation thereof, or the
termination of this Lease in accordance with its terms, shall not work a merger
and shall, at the option of Landlord, terminate all or any existing subleases or
operate as an assignment to Landlord of any or all such subleases. No sublessee
(other than Landlord) shall have the right further to sublet. Any assignment by
a sublessee of its sublease shall be subject to Landlord's prior consent in the
same manner as a sublease by Tenant. No sublease, once consented to by Landlord,
shall be modified without Landlord's prior consent. No assignment or sublease
shall be binding on Landlord unless the transferee delivers to Landlord a fully
executed counterpart of the assignment or sublease which contains the assumption
by the assignee, or recognition by the sublessee, of the provisions of this
Section 17.6, in form and substance satisfactory to Landlord, but the failure or
refusal of a transferee to deliver such instrument shall not release or
discharge such transferee from the provisions and obligations of this Section
17.6, but such failure shall constitute a default by Tenant under this Lease.
-24-
<PAGE> 29
17.7. No Release. Except as expressly set forth in Section
17.7.1, no assignment or sublease shall release Tenant from its obligations
under this Lease, whether arising before or after the assignment or sublease.
The acceptance of Rent by Landlord from any other person shall not be deemed a
waiver by Landlord of any provision of this Article 17. On a default by any
assignee of Tenant in the performance of any of the terms, covenants or
conditions of this Lease, Landlord may proceed directly against Tenant without
the necessity of commencing or exhausting remedies against such assignee. No
consent by Landlord to any further assignments or sublettings of this Lease, or
any modification, amendment or termination of this Lease, or extension, waiver
or modification of payment or any other obligations under this Lease, or any
other action by Landlord with respect to any assignee or sublessee, or the
insolvency, or bankruptcy or default of any such assignee or sublessee, shall
affect the continuing liability of Tenant for its obligations under this Lease
and Tenant waives any defense arising out of or based thereon, including any
suretyship defense of exoneration. Landlord shall have no obligation to notify
Tenant or obtain Tenant's consent with respect to any of the foregoing matters.
17.7.1 Limited Release. If Tenant desires to be released
from liability under this Lease arising after any assignment of this Lease, then
Tenant shall so specify in any notice delivered to Landlord requesting consent
to an assignment. If the proposed assignment is not to a Related Entity, then
upon consummation of the assignment in accordance with the terms of this Article
17 (including the assignee's assumption of all of Tenant's obligations under
this Lease), Tenant shall be released from its obligations under this Lease
arising after the assignment if, and only if, the following requirements are
fully satisfied: (i) the assignee executes an amendment to this Lease in a form
prepared by Landlord pursuant to which Base Rent under this Lease is adjusted to
equal the greater of the Base Rent then in effect, or the then fair market rent
for the Premises as reasonably determined by Landlord, and (ii) the assignee
satisfies the Financial Standards, defined below, as reasonably determined by
Landlord. The term "Financial Standards" as used in this Section 17.1.1 shall
mean that such assignee satisfies all of the following financial tests as of the
date of the assignment: ***
17.8. No Encumbrance. Notwithstanding anything to the contrary
contained in this Article 17, Tenant shall have no right to encumber, pledge,
hypothecate or otherwise transfer this Lease, or any of Tenant's interest or
rights hereunder, as security for any obligation or liability of Tenant.
17.9 Assignment or Sublease to Related Entity. As long as Del
Monte Corporation is the Tenant in possession of the Premises and no Event of
Default then exists, Tenant shall have the right, subject to the terms and
conditions set forth in this Section 17.9, without the consent of Landlord, but
without in any way releasing Del Monte Corporation from any of its obligations
under this Lease, to (a) assign its interest in this Lease to (i) any
corporation which is a successor to Tenant either by merger or consolidation, or
(ii) a purchaser of all or substantially all of Tenant's assets (provided such
purchaser
-25-
<PAGE> 30
shall have also assumed substantially all of Tenant's liabilities), or (iii) to
a corporation or other entity which shall control, be under the control of, or
be under common control with Del Monte Corporation (the term "control" as used
herein shall be deemed to mean ownership of more than fifty percent (50%) of the
outstanding voting stock of a corporation, or other majority equity and control
interest if Tenant is not a corporation) (any such entity being a "Related
Entity"), or (b) sublease all or any portion of the Premises to a Related Entity
or Electronic Data Systems, so long as such sublease does not result in the
demising of any space in the Premises. Any assignment or sublease to a Related
Entity pursuant to this Section 17.9 shall be subject to the following
conditions: (i) the principal purpose of such assignment or sublease is not the
acquisition of Tenant's interest in this Lease (except if such assignment or
sublease is made to a Related Entity and is made for a valid intra-corporate
business purpose and is not made to circumvent the provisions of this Section
17), (ii) any such assignee shall have a net worth and annual income and cash
flow, determined in accordance with generally accepted accounting principles,
consistently applied, after giving effect to such assignment, in amounts
necessary to perform its duties, obligations and liabilities hereunder, as
reasonably determined by Landlord, (iii) such assignment or sublease shall be
subject to the terms of this Lease, including the provisions of Sections 17.6
and 17.7, and (iv) such Related Entity shall have executed all documents
reasonably requested by Landlord to memorialize the foregoing. Tenant shall,
within ten (10) business days after execution thereof, deliver to Landlord (A) a
duplicate original instrument of assignment in form and substance reasonably
satisfactory to Landlord, duly executed by Tenant, (B) if applicable, evidence
reasonably satisfactory to Landlord establishing compliance by the assignee with
the net worth, income and cash flow requirements of clause (b)(ii) above, an
instrument in form and substance reasonably satisfactory to Landlord, duly
executed by the assignee, in which such assignee shall assume observance and
performance of, and agree to be personally bound by, all of the terms, covenants
and conditions of this Lease on Tenant's part to be observed and performed or
(D) a duplicate original sublease in form and substance reasonably satisfactory
to Landlord, duly executed by Tenant and subtenant.
18. Rules and Regulations. Tenant shall observe and comply, and shall
cause its sublessees, employees, agents, contractors, licensees and invitees to
observe and comply, with the Rules and Regulations of the Building, a copy of
which are attached to this Lease as Exhibit D, and, after notice thereof, with
all modifications and additions thereto from time to time promulgated in writing
by Landlord. Landlord shall not be responsible to Tenant, or Tenant's
sublessees, employees, agents, contractors, licensees or invitees, for
noncompliance with any Rules and Regulations of the Building by any other
tenant, sublessee, employee, agent, contractor, licensee, invitee or other
occupant of the Building.
19. Entry of Premises by Landlord.
19.1. Right to Enter. Upon 24 hours advance notice to Tenant
(except in emergencies or in order to provide regularly scheduled or other
routine Building standard services or additional services requested by Tenant,
or post notices of nonresponsibility or other notices permitted or required by
law when no such notice shall be required), Landlord and its authorized agents,
employees, and contractors may enter the Premises at reasonable hours to: (i)
inspect the same; (ii) determine Tenant's compliance with its obligations
hereunder; (iii) exhibit the same to prospective purchasers, lenders or tenants;
(iv) supply any services to be provided by Landlord hereunder; (v) post notices
of nonresponsibility or other notices permitted or required by law; (vi) make
repairs, improvements or alterations, or perform maintenance in or to, the
Premises or any other portion of the Building, including Building systems; and
(vii) perform such
-26-
<PAGE> 31
other functions as Landlord deems reasonably necessary or desirable. Landlord
may also grant access to the Premises to government or utility representatives
and bring and use on or about the Premises such equipment as reasonably
necessary to accomplish the purposes of Landlord's entry. Landlord shall use
reasonable good faith efforts to effect all entries and perform all work
hereunder in such manner as to minimize interference with Tenant's use and
occupancy of the Premises. Landlord shall have and retain keys with which to
unlock all of the doors in or to the Premises (excluding Tenant's vaults, safes
and similar secure areas designated in writing by Tenant in advance), and
Landlord shall have the right to use any and all means which Landlord may deem
proper in an emergency in order to obtain entry to the Premises, including
secure areas.
19.2. Tenant Waiver of Claims. Except for damages to persons or
property caused by the gross negligence or willful misconduct of Landlord or its
employees, Tenant waives any claim for damages for any inconvenience to or
interference with Tenant's business, or any loss of occupancy or quiet enjoyment
of the Premises, or any other loss, occasioned by any entry effected or work
performed under this Article 19, and Tenant shall not be entitled to any
abatement of Rent by reason of the exercise of any such right of entry or
performance of such work. No entry to the Premises by Landlord or anyone acting
under Landlord shall constitute a forcible or unlawful entry into, or a detainer
of, the Premises or an eviction, actual or constructive, of Tenant from the
Premises, or any portion thereof.
20. Default and Remedies.
20.1. Events of Default. The occurrence of any of the following
events shall constitute a default by Tenant under this Lease:
a. Nonpayment of Rent. Failure to pay any Rent when due.
b. Unpermitted Assignment. An assignment or sublease made
in contravention of any of the provisions of Article 17 above.
c. Abandonment. Abandonment of the Premises for a
continuous period in excess of five (5) business days. For purposes hereof,
"abandonment" means cessation by Tenant of the conduct of its business in the
Premises or removal from the Premises of the personal property, equipment and
furnishings used by Tenant in its business in the Premises.
d. Other Obligations. Failure to perform or fulfill any
other obligation, covenant, condition or agreement under this Lease.
e. Bankruptcy and Insolvency. A general assignment by
Tenant for the benefit of creditors, any action or proceeding commenced by
Tenant under any insolvency or bankruptcy act or under any other statute or
regulation for protection from creditors, or any such action commenced against
Tenant and not discharged within thirty (30) days after the date of
commencement; the employment or appointment of a receiver or trustee to take
possession of all or substantially all of Tenant's assets or the Premises; the
attachment, execution or other judicial seizure of all or substantially all of
Tenant's assets or the Premises, if such attachment or other seizure remains
undismissed or undischarged for a period of ten (10) days after the levy
thereof; the admission by Tenant in writing of its inability to pay its debts as
they become due; or the filing by Tenant of a petition seeking any
reorganization, arrangement, composition, readjustment,
-27-
<PAGE> 32
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, the filing by Tenant of an answer admitting or failing timely
to contest a material allegation of a petition filed against Tenant in any such
proceeding or, if within thirty (30) days after the commencement of any such
proceeding against Tenant, such proceeding is not dismissed. For purposes of
this Section 20.1(e), "Tenant" means Tenant and any partner of Tenant, if Tenant
is a partnership, or any person or entity comprising Tenant, if Tenant is
comprised of more than one person or entity, or any guarantor of Tenant's
obligations, or any of them, under this Lease.
20.2. Notice to Tenant. Upon the occurrence of any default,
Landlord shall give Tenant notice thereof. Such notice shall replace rather than
supplement any equivalent or similar statutory notice, including any notices
required by California Code of Civil Procedure Section 1161 or any similar or
successor statute; and giving of such notice in the manner required by Article
28 shall replace and satisfy any service-of-notice procedures set forth in any
statute, including those required by California Code of Civil Procedure Section
1162 or any similar or successor statute. If a time period is specified below
for cure of such default, then Tenant may cure such default within such time
period. To the fullest extent allowed by law, Tenant hereby waives any right
under law now or hereinafter enacted to any other time period for cure of
default.
a. Nonpayment of Rent. For failure to pay Rent, within
five (5) days after Landlord's notice, unless Tenant has failed more than one
(1) time during any calendar year timely to pay any Rent, in which event no cure
period shall apply.
b. Other Obligations. For failure to perform any
obligation, covenant, condition or agreement under this Lease (other than
nonpayment of Rent, an assignment or subletting in violation of Article 17 or
Tenant's abandonment of the Premises) within ten (10) days after Landlord's
notice or, if the failure is of a nature requiring more than 10 days to cure,
then an additional twenty (20) days after the expiration of such 10-day period,
but only if Tenant commences cure within such 10-day period and thereafter
diligently pursues such cure to completion within such additional 20-day period.
If Tenant has failed to perform any such obligation, covenant, condition or
agreement more than two (2) times during the Term and notice of such event of
default has been given by Landlord in each instance, then no cure period shall
apply.
c. No Cure Period. No cure period shall apply for any
other event of default specified in Section 20.1.
20.3. Remedies Upon Occurrence of Default. On the occurrence of a
default which Tenant fails to cure after notice and expiration of the time
period for cure, if any, specified in Section 20.2 above, Landlord shall have
the right either (i) to terminate this Lease and recover possession of the
Premises, or (ii) to continue this Lease in effect and enforce all Landlord's
rights and remedies under California Civil Code Section 1951.4 (by which
Landlord may recover Rent as it becomes due, subject to Tenant's right to assign
pursuant to Article 17). Landlord may store any property of Tenant located in
the Premises at Tenant's expense or otherwise dispose of such property in the
manner provided by law. If Landlord does not terminate this Lease, Tenant shall
in addition to continuing to pay all Rent when due, also pay Landlord's costs of
attempting to relet the Premises, any repairs and alterations necessary to
prepare the Premises for such reletting, and brokerage commissions and
attorneys' fees incurred in connection therewith, less the
-28-
<PAGE> 33
rents, if any, actually received from such reletting. Notwithstanding Landlord's
election to continue this Lease in effect, Landlord may at any time thereafter
terminate this Lease pursuant to this Section 20.3.
20.4. Damages Upon Termination. If and when Landlord terminates
this Lease pursuant to Section 20.3, Landlord may exercise all its rights and
remedies available under California Civil Code Section 1951.2, including the
right to recover from Tenant the worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such Rent loss that the Tenant proves could have been
reasonably avoided. As used herein and in Civil Code Section 1951.2, "time of
award" means either the date upon which Tenant pays to Landlord the amount
recoverable by Landlord, or the date of entry of any determination, order or
judgment of any court or other legally constituted body determining the amount
recoverable, whichever occurs first.
20.5. Computation of Certain Rent for Purposes of Default. For
purposes of computing unpaid Rent pursuant to Section 20.4 above, Escalation
Rent for the balance of the Term shall be determined by averaging the amount
paid by Tenant as Escalation Rent for the calendar year prior to the year in
which the default occurred (or, if the prior year is the Base Year or such
default occurs during the Base Year, Escalation Rent shall be based on
Landlord's operating budget for the Building for the Base Year), increasing such
average amount for each calendar year (or portion thereof) remaining in the
balance of the Term at a per annum compounded rate equal to the mean average
rate of increase for the preceding five (5) calendar years in the United States
Department of Labor, Bureau of Labor Statistics, Consumer Price Index (All Urban
Consumers, All Items, 1982-1984 = 100) for the Metropolitan Area of which San
Francisco, California, is a part, and adding together the resulting amounts. If
such Index is discontinued or revised, such computation shall be made by
reference to the index designated as the successor or substitute index by the
United States Department of Labor, Bureau of Labor Statistics, or its successor
agency, and if none is designated, by a comparable index as determined by
Landlord in its sole discretion, which would likely achieve a comparable result
to that achieved by the use of the Consumer Price Index. If the base year of the
Consumer Price Index is changed, then the conversion factor specified by the
Bureau, or successor agency, shall be utilized to determine the Consumer Price
Index.
20.6. Landlord's Right to Cure Defaults. If Tenant fails to pay
Rent (other than Base Rent and Escalation Rent) required to be paid by it
hereunder, or fails to perform any other obligation under this Lease, and Tenant
fails to cure such default within the applicable cure period, if any, specified
in Section 20.2 above, then Landlord may, without waiving any of Landlord's
rights in connection therewith or releasing Tenant from any of its obligations
or such default, make any such payment or perform such other obligation on
behalf of Tenant. All payments so made by Landlord, and all costs and expenses
incurred by Landlord to perform such obligations, shall be due and payable by
Tenant as Rent immediately upon receipt of Landlord's demand therefor.
20.7. Remedies Cumulative. The rights and remedies of Landlord
under this Lease are cumulative and in addition to, and not in lieu of, any
other rights and remedies available to Landlord at law or in equity. Landlord's
pursuit of any such right or remedy shall not constitute a waiver or election of
remedies with respect to any other right or remedy.
21. Subordination, Attornment and Nondisturbance.
-29-
<PAGE> 34
21.1. Subordination and Attornment. This Lease and all of
Tenant's rights hereunder shall be subordinate to any ground lease or underlying
lease, and the lien of any mortgage, deed of trust, or any other security
instrument now or hereafter affecting or encumbering the Building, or any part
thereof or interest therein, and to any and all advances made on the security
thereof or Landlord's interest therein, and to all renewals, modifications,
consolidations, replacements and extensions thereof (an "encumbrance", the
holder of the beneficial interest thereunder being referred to as an
"encumbrancer"). An encumbrancer may, however, subordinate its encumbrance to
this Lease, and if an encumbrancer so elects by notice to Tenant, this Lease
shall be deemed prior to such encumbrance. If any encumbrance to which this
Lease is subordinate is foreclosed, or a deed in lieu of foreclosure is given to
the encumbrancer thereunder, Tenant shall attorn to the purchaser at the
foreclosure sale or to the grantee under the deed in lieu of foreclosure; and if
any encumbrance consisting of a ground lease or underlying lease to which this
Lease is subordinate is terminated, Tenant shall attorn to the lessor thereof.
Tenant shall execute, acknowledge and deliver in the form requested by Landlord
or any encumbrancer, any documents required to evidence or effectuate the
subordination hereunder, or to make this Lease prior to the lien of any
encumbrance, or to evidence such attornment. Landlord shall use reasonable
efforts to obtain a reasonable non-disturbance agreement from the existing
lender of the Building; provided, however, that Tenant shall have no right to
terminate the Lease or exercise any other remedies if Landlord fails to obtain
such non-disturbance agreement.
21.2. Nondisturbance. If any encumbrance to which this Lease is
subordinate is foreclosed, or a deed in lieu of foreclosure is given to the
encumbrancer thereunder, or if any encumbrance consisting of a ground lease or
underlying lease to which this Lease is subordinate is terminated, this Lease
shall not terminate, and the rights and possession of Tenant under this Lease
shall not be disturbed if (i) no default by Tenant then exists under this Lease;
(ii) Tenant attorns to the purchaser, grantee, or successor lessor as provided
in Section 21.1 above or, if requested, enters into a new lease for the balance
of the Term upon the same terms and provisions contained in this Lease; and
(iii) Tenant enters into a written agreement in a form reasonably acceptable to
such encumbrancer with respect to subordination, attornment and non-disturbance.
22. Sale or Transfer by Landlord; Lease Non-Recourse.
22.1. Release of Landlord on Transfer. Landlord may at any time
transfer, in whole or in part, its right, title and interest under this Lease
and in the Building, or any portion thereof. If the original Landlord hereunder,
or any successor to such original Landlord, transfers (by sale, assignment or
otherwise) its right, title or interest in the Building, all liabilities and
obligations of the original Landlord or such successor under this Lease accruing
after such transfer shall terminate, the original Landlord or such successor
shall automatically be released therefrom, and thereupon all such liabilities
and obligations shall be binding upon the new owner. Tenant shall attorn to each
such new owner.
22.2. Lease Nonrecourse to Landlord. Landlord shall in no event
be personally liable under this Lease, and Tenant shall look solely to
Landlord's interest in the Building, for recovery of any damages for breach of
this Lease by Landlord or on any judgment in connection therewith. None of the
persons or entities comprising or representing Landlord (whether partners,
shareholders, officers, directors, trustees, employees, beneficiaries, agents or
otherwise) shall ever be personally liable under this Lease or liable for any
such damages or judgment and Tenant shall have no right to effect any levy of
execution against any assets of such persons or entities on account of any such
liability or judgment. Any lien obtained by Tenant to enforce any such judgment,
and any levy of execution thereon, shall be subject and subordinate to all
-30-
<PAGE> 35
encumbrances as specified in Article 21 above.
23. Estoppel Certificate.
23.1. Procedure and Content. From time to time, and within ten
(10) days after written notice by Landlord, Tenant shall execute, acknowledge,
and deliver to Landlord a certificate as specified by Landlord certifying: (i)
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that this Lease is in full force and effect, as modified,
and identifying each modification); (ii) the Commencement Date and Expiration
Date; (iii) that Tenant has accepted the Premises (or the reasons Tenant has not
accepted the Premises), and if Landlord has agreed to make any alterations or
improvements to the Premises, that Landlord has properly completed such
alterations or improvements (or the reasons why Landlord has not done so); (iv)
the amount of the Base Rent and current Escalation Rent, if any, and the date to
which such Rent has been paid; (v) that Tenant has not committed any event of
default, except as to any events of default specified in the certificate, and
whether there are any existing defenses against the enforcement of Tenant's
obligations under this Lease; (vi) that no default of Landlord is claimed by
Tenant, except as to any defaults specified in the certificate; and (vii) such
other matters as may be requested by Landlord.
23.2. Effect of Certificate. Any such certificate may be relied
upon by any prospective purchaser of any part or interest in the Building or
encumbrancer (as defined in Section 21.1) and, at Landlord's request, Tenant
shall deliver such certificate to Landlord and/or to any such entity and shall
agree to such notice and cure provisions and such other matters as such entity
may reasonably require. In addition, at Landlord's request, Tenant shall provide
to Landlord for delivery to any such entity such information, including
financial information, that may reasonably be requested by any such entity. Any
such certificate shall constitute a waiver by Tenant of any claims Tenant may
have in contravention to the information contained in such certificate and
Tenant shall be estopped from asserting any such claim. If Tenant fails or
refuses to give a certificate hereunder within the time period herein specified,
then the information contained in such certificate as submitted by Landlord
shall be deemed correct for all purposes, but Landlord shall have the right to
treat such failure or refusal as a default by Tenant.
23.3 Landlord's Estoppel Certificate. If Tenant is required by an
unaffiliated third party to produce an estoppel certificate, Landlord shall,
within thirty (30) days after Tenant's request, execute and deliver to Tenant an
estoppel certificate in favor of Tenant and such other persons as Tenant shall
reasonably request, setting forth the following: (a) the Commencement Date and
the Expiration Date; (b) that this Lease is in full force and effect and has not
been assigned, modified, supplemented or amended (except by such writing as
shall be stated); (c) that all conditions under this Lease to be performed by
Tenant have, to Landlord's knowledge, been satisfied, or, in the alternative,
those claimed by Landlord to be unsatisfied; (d) that, to Landlord's knowledge,
no defenses or offsets exist against the enforcement of this Lease by Landlord,
or in the alternative, those claimed by Landlord; (e) that the amount of advance
Rent, if any (or none if such is the case), has been paid by Tenant; (f) the
date to which rent has been paid; and (g) such other information as Tenant may
reasonably request.
24. No Light, Air, or View Easement. Nothing contained in this Lease
shall be deemed, either expressly or by implication, to create any easement for
light and air or access to any view. Any diminution
-31-
<PAGE> 36
or shutting off of light, air or view to or from the Premises by any structure
which now exists or which may hereafter be erected, whether by Landlord or any
other person, shall in no way affect this Lease or Tenant's obligations
hereunder, entitle Tenant to any reduction of Rent, or impose any liability on
Landlord.
25. Holding Over. No holding over by Tenant shall operate to extend the
Term. If Tenant remains in possession of the Premises after expiration or
termination of this Lease, unless otherwise agreed by Landlord in writing, then
(i) Tenant shall become a tenant at sufferance upon all the applicable terms and
conditions of this Lease, except that Base Rent shall be increased to equal 150%
of the Base Rent then in effect; (ii) Tenant shall indemnify, defend, protect
and hold harmless Landlord, and any tenant to whom Landlord has leased all or
part of the Premises, from any and all liability, loss, damages, costs or
expense (including loss of Rent to Landlord or additional rent payable by such
tenant and reasonable attorneys' fees) suffered or incurred by either Landlord
or such tenant resulting from Tenant's failure timely to vacate the Premises;
and (iii) such holding over by Tenant shall constitute a default by Tenant.
26. Security Deposit.
26.1 Initial Security Deposit. If so specified in the Basic Lease
Information, Tenant shall deposit with Landlord, in cash, the Security Deposit
on a date sixty (60) days before the Possession Date (as reasonably determined
by Landlord). At Tenant's option, the Security Deposit may be in the form of an
unconditional, clean, irrevocable, standby letter of credit ("L-C"). The
Security Deposit shall be held by Landlord as security for the performance by
Tenant of all its obligations under this Lease. If Tenant fails to pay any Rent
due hereunder, or otherwise commits a default with respect to any provision of
this Lease, Landlord may use, apply or retain all or any portion of the Security
Deposit for the payment of any such Rent or for the payment of any other amounts
expended or incurred by Landlord by reason of Tenant's default, or to compensate
Landlord for any loss or damage which Landlord may incur thereby (and in this
regard Tenant hereby waives the provisions of California Civil Code Section
1950.7(c) and any similar or successor statute providing that Landlord may claim
from a security deposit only those sums reasonably necessary to remedy defaults
in the payment of Rent, to repair damage caused by Tenant, or to clean the
Premises). Exercise by Landlord of its rights hereunder shall not constitute a
waiver of, or relieve Tenant from any liability for, any default. If Landlord so
uses or applies all or any portion of the Security Deposit, Tenant shall, within
ten (10) days after demand by Landlord, deposit cash, or an L-C (in accordance
with the provisions of this Section 26.1) at Tenant's option, with Landlord in
an amount sufficient to restore the Security Deposit to its full amount. If
Tenant performs all of Tenant's obligations hereunder, the Security Deposit, or
so much thereof as has not theretofore been applied by Landlord, shall be
returned, without interest, to Tenant (or, at Landlord's option, to the last
assignee, if any, of Tenant's interest under this Lease) within thirty (30) days
after the later of (i) the date of expiration or earlier termination of this
Lease, or (ii) vacation of the Premises by Tenant if the Premises has been left
in the condition specified by this Lease. Landlord's receipt and retention of
the Security Deposit shall not create any trust or fiduciary relationship
between Landlord and Tenant and Landlord need not keep the Security Deposit
separate from its general accounts. Upon termination of the original Landlord's
(or any successor owner's) interest in the Premises, the original Landlord (or
such successor) shall be released from further liability with respect to the
Security Deposit upon the original Landlord's (or such successor's) compliance
with California Civil Code Section 1950.7(d), or successor statute.
26.2 Release Provisions. ***
-32-
<PAGE> 37
26.3 Letter of Credit Provisions. If at any time Tenant elects to
deposit an L-C as the Security Deposit, the L-C shall be issued by a bank
reasonably acceptable to Landlord, shall be issued for a term of at least twelve
(12) months, shall be unconditional, clean and irrevocable, and shall be in a
form and with such content reasonably acceptable to Landlord. The L-C shall be
payable on sight with the bearer's draft. The L-C shall state that it shall be
payable against sight drafts presented by Landlord, accompanied by Landlord's
statement that said drawing is in accordance with the terms and conditions of
this Lease; no other document or certification from Landlord shall be required
to negotiate the L-C. Landlord may designate any bank as Landlord's advising
bank for collection purposes and any sight drafts for the collection of the L-C
may be presented by the advising bank on Landlord's behalf. Tenant shall either
replace the expiring L-C with an L-C in an amount equal to the original L-C or
renew the expiring L-C, in any event no later than thirty (30) days prior to the
expiration of the term of the L-C then in effect. If Tenant fails to deposit a
replacement L-C or renew the expiring L-C, Landlord shall have the right to draw
upon the expiring L-C for the full amount thereof and hold the same as the
Security Deposit; provided, however, that if Tenant provides
-33-
<PAGE> 38
a replacement L-C that meets the requirements of this Section 26, then Landlord
shall return to Tenant promptly in cash that amount of the L-C that had been
drawn upon by Landlord. The fee for the maintenance of the L-C shall be at
Tenant's sole cost and expense. The L-C shall not be mortgaged, assigned or
encumbered in any manner whatsoever by Tenant without the prior written consent
of Landlord. The L-C shall be transferable to any of the following parties: (i)
any secured or unsecured lender of Landlord, (ii) any assignee, successor,
transferee or other purchaser of all or any portion of the Building, or any
interest in the Building, (iii) any partner, shareholder, member or other direct
or indirect beneficial owner in Landlord (to the extent of, and in connection
with an assignment of, their interest in the Lease). Further, in the event of
any sale, assignment or transfer by the Landlord of its interest in the Premises
or the Lease, Landlord shall have the right to assign or transfer the L-C to its
grantee, assignee or transferee and in the event of any sale, assignment or
transfer; the landlord so assigning or transferring the L-C shall have no
liability to the Tenant for the return of the L-C, and Tenant shall look solely
to such grantee, assignee or transferee for such return. The use, application or
retention of the L-C, or any portion thereof, by Landlord shall not prevent
Landlord from exercising any other right or remedy provided by this Lease or by
law, it being intended that Landlord shall not first be required to proceed
against the L-C, and such use, application or retention shall not operate as a
limitation on any recovery to which Landlord may otherwise be entitled.
27. Waiver. Failure of Landlord to declare a default by Tenant upon
occurrence thereof, or delay in taking any action in connection therewith, shall
not waive such default, but Landlord shall have the right to declare such
default at any time after its occurrence. To be effective, a waiver of any
provision of this Lease, or any default, shall be in writing and signed by the
waiving party. Any waiver hereunder shall not be deemed a waiver of subsequent
performance of any such provision or subsequent defaults. The subsequent
acceptance of Rent hereunder, or endorsement of any check by Landlord, shall not
be deemed to constitute an accord and satisfaction or a waiver of any preceding
default by Tenant, except as to the particular Rent so accepted, regardless of
Landlord's knowledge of the preceding default at the time of acceptance of the
Rent. No course of conduct between Landlord and Tenant, and no acceptance of the
keys to or possession of the Premises by Landlord before the Expiration Date
shall constitute a waiver of any provision of this Lease or of any default, or
operate as a surrender of this Lease.
28. Notices and Consents; Tenant's Agent for Service. All notices,
approvals, consents, demands and other communications from one party to the
other given pursuant to this Lease shall be in writing and shall be made by
personal delivery, by use of a reputable overnight courier service or by deposit
in the United States mail, certified, registered or Express, postage prepaid and
return receipt requested. Notices shall be addressed if to Landlord, to
Landlord's Address, and if to Tenant, to Tenant's Address. Landlord and Tenant
may each change their respective Addresses from time to time by giving written
notice to the other of such change in accordance with the terms of this Article
28, at least ten (10) days before such change is to be effected. Any notice
given in accordance with this Article 28 shall be deemed to have been given (i)
on the date of personal delivery or (ii) on the earlier of the date of delivery
or attempted delivery (as shown by the return receipt or other delivery record)
if sent by courier service or mailed.
29. Tenant's Authority. Tenant, and each of the persons executing this
Lease on behalf of Tenant, represent and warrant that (i) Tenant is a duly
formed, authorized and existing corporation, partnership or trust (as the case
may be), (ii) Tenant is qualified to do business in California, (iii) Tenant has
the full right and authority to enter into this Lease and to perform all of
Tenant's obligations hereunder, and (iv) each person signing on behalf of Tenant
is authorized to do so. Tenant shall deliver to Landlord, upon Landlord's
-34-
<PAGE> 39
request, such certificates, resolutions, or other written assurances authorizing
Tenant's execution and delivery of this Lease, and such financial information
regarding Tenant and its constituent members, as requested by Landlord from time
to time or at any time in order for Landlord to assess Tenant's then authority
and/or ability to meet its obligations under this Lease.
30. Automobile Parking. There shall be no parking provided to Tenant in
the Building or at any other location except as set forth in this Section 30.
Pursuant to the terms of an "Annex Lease", Landlord currently has the right to
use a certain number of parking spaces (currently 39) located within and outside
the One market Tower project adjacent to the Building (as such number of spaces
increase or decrease, the "Landlord Parking Rights"). For as long as Landlord
maintains the Landlord Parking Rights Landlord shall provide to Tenant, at
market rate costs to be paid by Tenant to Landlord, Tenant's Percentage Share of
the Landlord Parking Rights; provided that Tenant shall be entitled to a minimum
of four (4) parking spaces within the One Market Tower project as part of
Tenant's Percentage Share for as long as Landlord has parking rights pursuant to
the Annex lease to at least four (4) spaces therein. If Landlord's Parking
Rights to spaces within One Market Tower decreases below four (4), then Tenant
shall be entitled to use all Landlord's Parking Rights spaces available to
Landlord within the One Market Tower project.
31. Tenant to Furnish Financial Statements. In order to induce Landlord
to enter into this Lease, Tenant agrees that it shall promptly deliver to
Landlord, from time to time, upon Landlord's written request, financial
statements (including a balance sheet and statement of income and expenses on an
annualized basis) reflecting Tenant's then current financial condition;
provided, however, that so long as Tenant is a company publicly traded on The
New York Stock Exchange or NASDAQ, then Tenant shall only be obligated to
provide to Landlord financial statements that are generally available to the
public. Such statements shall be delivered to Landlord within fifteen (15) days
after Tenant's receipt of Landlord's request. Tenant represents and warrants
that all financial statements, records, and information furnished by Tenant to
Landlord in connection with this Lease are and shall be true, correct and
complete in all respects.
32. Tenant's Signs. Except as expressly provided in this Section 32,
without Landlord's prior consent, which Landlord may withhold in its sole
discretion, Tenant shall not place on the Premises or on the Building any
exterior signs nor any interior signs that are visible from the exterior of the
Premises or Building. Tenant shall pay all costs and expenses relating to any
such sign approved by Landlord, including without limitation, the cost of the
installation and maintenance of the sign. On the date of expiration or earlier
termination of this Lease, Tenant, at its sole cost and expense, shall remove
all signs and repair any damage caused by such removal. Subject to obtaining
Landlord's prior written consent as to size, design and location, which consent
shall not be unreasonably withheld, Tenant shall have the right to place in the
ground floor of the Building a sign 25% larger in size than the lobby signage of
any other tenant in the Building, and no more than Tenant and one other tenant
shall be entitled to signage in the lobby of the Building (other than signage in
the Building Directory); provided, however, that if any other tenant in the
Building occupies premises more than 25% larger than the Premises, then such
tenant shall have the right to maintain a sign in the ground floor of the
Building equal in size to Tenant's signage in the ground floor of the Building.
33. Miscellaneous.
33.1. No Joint Venture. This Lease does not create any
partnership or joint venture or
-35-
<PAGE> 40
similar relationship between Landlord and Tenant.
33.2. Successors and Assigns. Subject to the provisions of
Article 17 regarding assignment, all of the provisions, terms, covenants and
conditions contained in this Lease shall bind, and inure to the benefit of, the
parties and their respective successors and assigns.
33.3. Construction and Interpretation. The words "Landlord" and
"Tenant" include the plural as well as the singular. If there is more than one
person comprising Tenant, the obligations under this Lease imposed on Tenant are
joint and several. References to a party or parties refers to Landlord or
Tenant, or both, as the context may require. The captions preceding the
Articles, Sections and subsections of this Lease are inserted solely for
convenience of reference and shall have no effect upon, and shall be disregarded
in connection with, the construction and interpretation of this Lease. Use in
this Lease of the words "including", "such as", or words of similar import when
following a general matter, shall not be construed to limit such matter to the
enumerated items or matters whether or not language of nonlimitation (such as
"without limitation") is used with reference thereto. All provisions of this
Lease have been negotiated at arm's length between the parties and after advice
by counsel and other representatives chosen by each party and the parties are
fully informed with respect thereto. Therefore, this Lease shall not be
construed for or against either party by reason of the authorship or alleged
authorship of any provision hereof, or by reason of the status of the parties as
Landlord or Tenant, and the provisions of this Lease and the Exhibits hereto
shall be construed as a whole according to their common meaning in order to
effectuate the intent of the parties under the terms of this Lease.
33.4. Severability. If any provision of this Lease, or the
application thereof to any person or circumstance, is determined to be illegal,
invalid or unenforceable, the remainder of this Lease, or its application to
persons or circumstances other than those as to which it is illegal, invalid or
unenforceable, shall not be affected thereby and shall remain in full force and
effect, unless enforcement of this Lease as so invalidated would be unreasonable
or grossly inequitable under the circumstances, or would frustrate the purposes
of this Lease.
33.5. Entire Agreement; Amendments. This Lease, together with the
Exhibits hereto and any Addenda identified on the Basic Lease Information,
contains all the representations and the entire agreement between the parties
with respect to the subject matter hereof and any prior negotiations,
correspondence, memoranda, agreements, representations or warranties are
replaced in total by this Lease, the Exhibits hereto and such Addenda. Neither
Landlord nor Landlord's agents have made any warranties or representations with
respect to the Premises or any other portion of the Building, except as
expressly set forth in this Lease. This Lease may be modified or amended only by
an agreement in writing signed by both parties.
33.6. Governing Law. This Lease shall be governed by and
construed pursuant to the laws of the State of California.
33.7. Litigation Expenses. If either party brings any action or
proceeding against the other (including any cross-complaint, counterclaim or
third party claim) to enforce or interpret this Lease or otherwise arising out
of this Lease, the prevailing party in such action or proceeding shall be
entitled to its costs and expenses of suit, including reasonable attorneys' fees
and accountants' fees.
-36-
<PAGE> 41
33.8. Standards of Performance and Approvals. Unless otherwise
provided in this Lease, (i) each party shall act in a reasonable manner in
exercising or undertaking its rights, duties and obligations under this Lease
and (ii) whenever approval, consent or satisfaction (collectively, an
"approval") is required of a party pursuant to this Lease or an Exhibit hereto,
such approval shall not be unreasonably withheld or delayed. Unless provision is
made for a specific time period, approval (or disapproval) shall be given within
thirty (30) days after receipt of the request for approval. Nothing contained in
this Lease shall, however, limit the right of a party to act or exercise its
business judgment in a subjective manner with respect to any matter as to which
it has been (A) specifically granted such right, (B) granted the right to act in
its sole discretion or sole judgment, or (C) granted the right to make a
subjective judgment hereunder, whether "objectively" reasonable under the
circumstances and any such exercise shall not be deemed inconsistent with any
covenant of good faith and fair dealing implied by law to be part of this Lease.
The parties have set forth in this Lease their entire understanding with respect
to the terms, covenants, conditions and standards pursuant to which their
obligations are to be judged and their performance measured, including the
provisions of Article 17 with respect to assignments and sublettings.
33.9. Brokers. Landlord shall pay to Landlord's Broker as
specified in the Basic Lease Information of this Lease, a commission in
connection with such Broker's negotiation of this Lease pursuant to a separate
agreement or agreements between Landlord and such Broker. Landlord's Broker
shall pay a commission to Tenant's Broker pursuant to a separate agreement.
Other than such Brokers, Landlord and Tenant each represent and warrant to the
other that no broker, agent, or finder has procured or was involved in the
negotiation of this Lease and no such broker, agent or finder is or may be
entitled to a commission or compensation in connection with this Lease. Landlord
and Tenant shall each indemnify, defend, protect and hold the other harmless
from and against any and all liability, loss, damages, claims, costs and
expenses (including reasonable attorneys' fees) resulting from claims that may
be asserted against the indemnified party in breach of the foregoing warranty
and representation.
33.10. Memorandum of Lease. Tenant shall, upon request of
Landlord, execute, acknowledge and deliver a short form memorandum of this Lease
(and any amendment hereto) in form suitable for recording. In no event shall
this Lease or any memorandum thereof be recorded by Tenant.
33.11. Quiet Enjoyment. Upon paying the Rent and performing all
its obligations under this Lease, Tenant may peacefully and quietly enjoy the
Premises during the Term as against all persons or entities claiming by or
through Landlord, subject, however, to the provisions of this Lease and any
encumbrances as specified in Article 21.
33.12. Surrender of Premises. Upon the Expiration Date or earlier
termination of this Lease, Tenant shall quietly and peacefully surrender the
Premises to Landlord in the condition specified in Article 9 above. On or before
the Expiration Date or earlier termination of this Lease, Tenant shall remove
all of its personal property from the Premises and repair at its cost and
expense all damage to the Premises or Building caused by such removal. All
personal property of Tenant not removed hereunder shall be deemed, at Landlord's
option, to be abandoned by Tenant and Landlord may store such property in
Tenant's name at Tenant's expense and/or dispose of the same in any manner
permitted by law.
33.13. Building Directory. Landlord shall reserve on the Building
directory up to the
-37-
<PAGE> 42
number of Building Directory Spaces specified on the Basic Lease Information for
purposes of identifying Tenant's name, divisions and/or principal employees. All
costs for the initial strip of names shall be borne by Landlord and all costs
for replacement of such strips shall be borne by Tenant.
33.14. Name of Building; Address. Tenant shall not use the name
of the Building for any purpose other than as the address of the business
conducted by Tenant in the Premises. Tenant shall, in connection with all
correspondence, mail or deliveries made to or from the Premises, use the
official Building address specified from time to time by Landlord.
33.15. Exhibits. The Exhibits specified in the Basic Lease
Information are by this reference made a part hereof.
-38-
<PAGE> 43
33.16. Time of the Essence. Time is of the essence of this Lease
and of the performance of each of the provisions contained in this Lease.
IN WITNESS WHEREOF, the parties have executed this Lease as of
the Lease Date.
LANDLORD:
TMG/ONE MARKET, L.P.,
A Delaware limited partnership
By: Martin/One Market LLC,
A California limited liability company
Its General Partner
By: The Martin Group of Companies, Inc.,
A California corporation
Its Managing Member
By: /s/
-------------------------
Its:
-------------------------
CROSSMARKET, LLC
A Nevada limited liability company
By: Martin/Crossman, LLC
A California limited liability company
Its: managing member
By: /s/
--------------------------
Michael A. Covarrubias
Managing Member
TENANT:
DEL MONTE CORPORATION,
A New York corporation
By: /s/
--------------------------
Its:
--------------------------
By: /s/
--------------------------
Its:
--------------------------
-39-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE FINANCIAL
STATEMENTS OF DEL MONTE FOODS COMPANY FOR THE QUARTER ENDED DECEMBER 31, 1999,
AS PRESENTED IN THE COMPANY'S FORM 10-Q FILED FOR SUCH PERIOD, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 10,000,000
<SECURITIES> 0
<RECEIVABLES> 162,300,000
<ALLOWANCES> 2,500,000
<INVENTORY> 570,900,000
<CURRENT-ASSETS> 752,400,000
<PP&E> 537,300,000
<DEPRECIATION> 214,700,000
<TOTAL-ASSETS> 1,131,100,000
<CURRENT-LIABILITIES> 559,300,000
<BONDS> 0
0
0
<COMMON> 500,000
<OTHER-SE> (89,300,000)
<TOTAL-LIABILITY-AND-EQUITY> 1,131,100,000
<SALES> 789,100,000
<TOTAL-REVENUES> 789,100,000
<CGS> 496,000,000
<TOTAL-COSTS> 496,000,000
<OTHER-EXPENSES> 2,900,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,600,000
<INCOME-PRETAX> 39,300,000
<INCOME-TAX> 9,600,000
<INCOME-CONTINUING> 29,700,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,700,000
<EPS-BASIC> 0.57
<EPS-DILUTED> 0.56
</TABLE>
